Showing papers in "Journal of Management Studies in 2012"

Microfoundations of routines and capabilities: individuals, processes, and structure

Abstract: This article introduces the Special Issue and discusses the microfoundations of routines and capabilities, including why a microfoundations view is needed and how it may inform work on organizational and competitive heterogeneity. Building on extant research, we identify three primary categories of micro-level components underlying routines and capabilities: individuals, social processes, and structure. We discuss how these components, and their interactions, may affect routines and capabilities. In doing so, we outline a research agenda for advancing the field's understanding of the microfoundations of routines and capabilities.

Innovation for Inclusive Growth: Towards a Theoretical Framework and a Research Agenda

Abstract: Inclusive innovation, which we define as innovation that benefits the disenfranchised, is a process as well as a performance outcome. Consideration of inclusive innovation points to inequalities that may arise in the development and commercialization of innovations, and also acknowledges the inequalities that may occur as a result of value creation and capture. We outline opportunities for the development of theory and empirical research around this construct in the fields of entrepreneurship, strategy, and marketing. We aim for a synthesis in views of inclusive innovation and call for future research that deals directly with value creation and the distributional consequences of innovation.

Management innovation and leadership: The moderating role of organizational size

Abstract: Recent research on management innovation, i.e. new managerial processes, practices, or structures that change the nature of managerial work, suggests it can be an important source of competitive advantage. In this study, we focus on management innovation at the organization level and investigate the role of leadership behaviour as a key antecedent. Due to its prominent role within organizations, top management has the ability to greatly influence management innovation. In particular, we focus on leadership behaviour and examine transformational and transactional leadership. Additionally, as contextual variables like organizational size may influence the impact of leadership, we investigate its moderating role. Findings show that both leadership behaviours contribute to management innovation. Interestingly, our study indicates that smaller, less complex, organizations benefit more from transactional leadership in realizing management innovation. On the other hand, larger organizations need to draw on transformational leaders to compensate for their complexity and allow management innovation to flourish.

How Corporate Social Responsibility Engagement Strategy Moderates the CSR–Financial Performance Relationship

Abstract: We propose that firm profits are shaped by how firms engage in corporate social responsibility. Recent research on the corporate social responsibility (CSR)–corporate financial performance (CFP) relationship proposes a variety of contextual and organizational factors to create a more robust link. However, few of these studies explore the role of the CSR engagement strategy. Drawing on absorptive capacity theory and related perspectives such as time compression diseconomies, asset mass efficiencies, and path dependence theory, we argue that when a firm engages in CSR slowly and consistently, focuses on related CSR dimensions, and starts with internal dimensions of CSR, CFP will be enhanced. With longitudinal data collected from 130 firms from 1995 to 2007, we find that firms benefit more when they adopt a CSR engagement strategy that is consistent, involves related dimensions of CSR, and begins with aspects of CSR that are more internal to the firm. The pace of the CSR engagement strategy, however, does not moderate the CSR–CFP relationship. This study helps fill the gap in CSR research by showing that, regardless of contextual factors, a firm can choose the proper strategy to enhance the financial benefits of the CSR engagement.

Leadership in Organizational Knowledge Creation: A Review and Framework

Abstract: Organizational knowledge creation integrates context, knowledge assets, and knowledge creation processes throughout the organization Using organizational knowledge creation theory as an organizing framework, we conduct a literature review that shows prior work has focused on the role of central, upper-echelon, leadership in knowledge creation processes, without devoting much attention to context and knowledge assets To remedy these weaknesses, we develop a new framework for situational leadership in organizational knowledge creation The framework is based on a continuum that ranges from centralized to distributed leadership at three layers of activity: a core layer of local knowledge creation; a conditional layer that provides the resources and context for knowledge creation; and a structural layer that forms the overall frame and direction for knowledge creation in the organization We discuss the implications of this framework for theory and practice

Dynamics of Organizational Routines: A Generative Model

Abstract: This paper introduces a generative model of organizational routines and their change over time. The model demonstrates that variation and selective retention of patterns of action are necessary and sufficient to explain the features of organizational routines that are most relevant in relation to dynamic capabilities, such as formation, inertia, endogenous change, and learning. The model directly links micro-level actions to the macro-level dynamics of routines. The results suggest that focusing on action provides a useful and parsimonious foundation for a theory of organizational routines and capabilities.

Impact at the ‘Bottom of the Pyramid’: The Role of Social Capital in Capability Development and Community Empowerment

Abstract: Rooted in the notion of inclusive capitalism, the Bottom-of-the-Pyramid (BoP) approach argues for the simultaneous pursuit of profit and social welfare by creating markets for the poor. This idea has been both celebrated and criticized in the literature. We do neither in this paper. Instead, by leveraging insights from Amartya Sen's work on capability development and the literature on social capital, we offer a more socially embedded and community-centric BoP approach. By redefining poverty not just as a lack of income, but also as a lack of ‘capabilities’ in Sen's sense that can be developed through leveraging social capital, we offer a systemic framework for understanding the societal impact of business-driven ventures in the BoP and empowering BoP communities through these ventures. Specifically, we argue that any business initiative in the BoP ought to be evaluated on the basis of whether it advances capability transfer and retention by (a) enhancing the social capital between a particular community and other more resource rich networks, and (b) preserving the existing social capital in the community.

Innovation for Inclusive Business: Intrapreneurial Bricolage in Multinational Corporations

Abstract: It is often argued that multinational corporations (MNCs) are in a unique position to innovate business models that can help to alleviate poverty. This empirical study into intra-organizational aspects of pro-poor business innovation in two MNCs suggests, however, that certain elements of their management frameworks – such as short-term profit interests, business unit based incentive structures, and uncertainty avoidance – may turn into obstacles that prevent MNCs from reaching their full potential in this respect. We introduce the concept of intrapreneurial bricolage to show how middle manager innovators may promote pro-poor business models despite these obstacles. We define intrapreneurial bricolage as entrepreneurial activity within a large organization characterized by creative bundling of scarce resources, and illustrate empirically how it helps innovators to overcome organizational constraints and to mobilize internal and external resources. Our findings imply that intrapreneurial bricolage may be of fundamental importance in MNC innovation for inclusive business. In addition to the field of inclusive business, this study has implications for the study of bricolage in large organizations and social intrapreneurship, as well for managerial practice around innovation for inclusive business.

Linking theory and context: "strategy research in emerging economies" after wright et al. (2005)

Abstract: Emerging economies provide a laboratory for investigating the interaction between firm strategies and local contexts. Mike Wright and colleagues have shaped this research agenda by creating legitimacy for this line of research, and by outlining how research in four types of strategy contexts can advance theories. We assess how this agenda has progressed in eight leading journals in the past decade, particularly during the five years following their review, with the aims to identify broad trends of theorizing, and to outline future research challenges. Emerging economy contexts challenge some of the assumptions of theories originally developed for markets that are relatively stable and efficient. Researchers have advanced several theoretical perspectives by addressing these challenges. Wright and colleagues focused on institutional theory as a major foundation for such work, and we find it continuing to be the most popular theoretical perspective. In addition, new perspectives have emerged, focusing on learning, relationships, real options, and spillovers as focal concepts for theorizing.

Entrepreneurship and Innovation at the Base of the Pyramid: A Recipe for Inclusive Growth or Social Exclusion?

Abstract: Policy makers often see entrepreneurship as a panacea for inclusive growth in underdeveloped ‘Base of the Pyramid’ (BOP) regions, but it may also lead to unanticipated negative outcomes such as crime and social exclusion. Our objective is to improve the understanding of how entrepreneurship policies can lead to socially inclusive growth at the BOP. Drawing on data collected from Brazilian tourism destinations with varying entrepreneurship, innovation, and social inclusion policies, we argue that weak institutions coupled with alert entrepreneurs encourage destructive outcomes, especially if entrepreneurship policies are based solely on economic indicators. Policies addressing both economic and social perspectives may foster more productive entrepreneurial outcomes, albeit at a more constrained economic pace. The study extends the related BOP, entrepreneurship, global value chain, and sustainable tourism literatures by examining the poor as entrepreneurs, the role of local innovation, and how entrepreneurship policies generate different social impacts within poor communities.

The Effects of Culture and Structure on Strategic Flexibility during Business Model Innovation

Abstract: This study uses responses from 107 multinational firms to reveal CEO perceptions of the drivers of strategic flexibility during business model innovation. While the positive effect of creative culture is confirmed, partner reliance reduces strategic flexibility during business model innovation. Further, structural change is disaggregated into efforts that either focus managerial attention on core activities or reconfigure existing activities. CEOs perceive that structural flexibility requires structural simplification while retaining control of non-core functions. We find that the relative magnitude of business model innovation effort moderates the effect of reconfiguration on strategic flexibility. The implications for theories of organizational design and dynamic capabilities are discussed.

A Stupidity‐Based Theory of Organizations

Abstract: In this paper we question the one-sided thesis that contemporary organizations rely on the mobilization of cognitive capacities. We suggest that severe restrictions on these capacities in the form of what we call functional stupidity are an equally important if under-recognized part of organizational life. Functional stupidity refers to an absence of reflexivity, a refusal to use intellectual capacities in other than myopic ways, and avoidance of justifications. We argue that functional stupidity is prevalent in contexts dominated by economy in persuasion which emphasizes image and symbolic manipulation. This gives rise to forms of stupidity management that repress or marginalize doubt and block communicative action. In turn, this structures individuals' internal conversations in ways that emphasize positive and coherent narratives and marginalize more negative or ambiguous ones. This can have productive outcomes such as providing a degree of certainty for individuals and organizations. But it can have corrosive consequences such as creating a sense of dissonance among individuals and the organization as a whole. The positive consequences can give rise to self-reinforcing stupidity. The negative consequences can spark dialogue, which may undermine functional stupidity.

Capital Is Not Enough: Innovation in Developing Economies

Abstract: Economic development and social entrepreneurship often conceive of poverty as a resource allocation problem in which a lack of capital prevents the poor from increasing their income through entrepreneurship. This allocative view, however, represents only one possible approach to conceptualizing entrepreneurial opportunity. The alternative discovery- and creativity-based views place a greater emphasis on innovation which implies that superior ideas are also needed if poverty is to be reduced through firm performance. Drawing from a survey of 201 small business owners involved in a microcredit programme in Nairobi, Kenya, we find that the financial, social, human capital–performance relationships are mediated in part by innovation. Further, we find that differentiation-related innovations lead to better firm performance than novelty-related innovations.

Coping with Workplace Ostracism: The Roles of Ingratiation and Political Skill in Employee Psychological Distress

Abstract: The study reported here examined the relationship between workplace ostracism and employee psychological distress (i.e. job tension, emotional exhaustion, and depressed mood at work) by focusing on the joint moderating effects of ingratiation and political skill. Data from a two-wave survey of 215 employees in two oil and gas firms in China indicated that as predicted, workplace ostracism was positively related to psychological distress. Moreover, the findings showed that when employee political skill was high, ingratiation neutralized the relationship between workplace ostracism and psychological distress, but when it was low, ingratiation exacerbated the relationship.

The Impact of Organizational and National Cultural Differences on Social Conflict and Knowledge Transfer in International Acquisitions

Abstract: The purpose of this paper is to elucidate the effects of organizational and national cultural differences on international acquisitions. We argue that cultural differences prompt social identity building that leads to ‘us versus them’ thinking and thereby creates the potential for social conflict. We also maintain that the same cultural differences can contribute to learning in terms of knowledge transfer. We develop a structural equation model to test these hypothesized effects on a sample of related international acquisitions. Our analysis shows that cultural differences at the organizational level are positively associated with social conflict, but that national cultural differences can decrease social conflict. Furthermore, both organizational and national cultural differences are positively associated with knowledge transfer. This analysis shows the importance of disentangling the various effects that cultural differences have on international acquisitions. It also suggests that national cultural differences are less of a problem in international acquisitions than is usually assumed.

Towards a Social Theory of Agency

Abstract: We challenge critics of agency theory who suggest that agency theory's value does not extend outside a narrow context dominated by egocentric agents seeking only to maximize wealth at the expense of the principal. Instead, we argue that agency theory's flexibility allows for its application to a variety of non-traditional settings where the key elements of agency theory, such as self-interest, information asymmetry, and the mechanisms used to control agency costs can vary beyond the narrow assumptions implied in traditional agency-based research. We suggest that extending agency theory to diverse settings using a deductive approach can be accomplished by formally recognizing and incorporating the institutional context surrounding principal–agent (P–A) relations into agency-based models. Thus, criticisms that agency theory fails to acknowledge the social context in which P–A relations occur provides not a barrier but an opportunity for extending our understanding of P–A relations to a variety of diverse contexts.

Sub-National Institutional Contingencies, Network Positions, and IJV Partner Selection

Abstract: The differences in sub-national institutions within large and complex emerging economies have been increasingly noted. Drawing on social network theory and the institution-based view, we argue that two network structural attributes of domestic firms – centrality and structural holes – have distinctive values in different sub-national regions where institutional contexts differ widely. In addition, these sub-national institutional contingencies influence the attractiveness of different network attributes to foreign entrants seeking international joint venture (IJV) partners. Specifically, in regions where the degree of marketization is high, centrally positioned domestic firms are more likely to be selected by foreign entrants as IJV partners. In regions where the degree of marketization is low, domestic broker firms are more attractive IJV partners. Results from the electrical and information technology industries in 18 provinces in China largely support our hypotheses.

Corporate Governance and the Environment: What Type of Governance Creates Greener Companies?

Abstract: We build on a stakeholder–agency theoretical perspective to explore the impact of particular corporate governance mechanisms on firm environmental performance. Our empirical evidence shows that several important corporate governance mechanisms such as the board of directors, managerial incentives, the market for corporate control, and the legal and regulatory system determine firms' environmental performance levels. These results suggest that these different governance mechanisms resolve, to some extent, the existing divergence of interests between stakeholders and managers with respect to environmental activities.

Context and Action in the Transformation of the Firm: A Reprise

Abstract: This article returns to address the strengths and limitations of Pettigrew 1985 and 1987 It then responds to two of the main deficiencies of those publications These are the failure to link context to process to outcome in those studies and in process scholarship more generally and the limited treatment of the method of process analysis offered by Pettigrew in 1985 and 1987 The article then compares and contrasts the methods of five additional process scholars; Mintzberg, Burgelman, Langley, Van de Ven and Eisenhardt to highlight developments in the conduct of process research since the mid and late 1980’s and to identify a set of pointers for the conduct of future process research

Motivating Employees to Work Beyond Retirement: A Multi-Level Study of the Role of I-Deals and Unit Climate

Abstract: The present study investigates what role I-deals (i.e. the idiosyncratic deals made between employees and their organization) play in the motivation of employees to continue working after retirement. We hypothesized two types of I-deals (i.e. development and flexibility I-deals) to be positively related to motivation to continue working. More specifically, we drew from continuity and personality theory to argue that the motivation to continue working is enhanced by I-deals, because they fulfil people's needs for personalized work arrangements. Moreover, drawing from activity and disengagement theory it was hypothesized that two types of unit climate (i.e. accommodative and development climates) would moderate these relationships. Specifically, it was predicted that I-deals would be positively related to motivation to continue working under conditions of low accommodative or high development climate. Results of a multi-level study among 1083 employees in 24 units largely supported the above expectations; flexibility I-deals related positively to motivation to continue working, and unit climate moderated the relation between development I-deals and motivation to continue working.

Transactive Memory Systems: A Microfoundation of Dynamic Capabilities

Abstract: A persistent puzzle in management research is competitive advantage and why certain firms excel in getting ahead while others falter (Knott, 2003). One explanation is the dynamic capability argument, which emphasizes a firm’s superior ability in sensing new opportunities in its environment and seeking those opportunities by continuously adapting, integrating, and reconfiguring its key assets and competences (Teece et al., 1997). Researchers have called for more work to identify the micro-processes or mechanisms through which firms develop dynamic capabilities (Argote and Ingram, 2000; Spender and Grant, 1996; Teece, 2007). In this paper, we present transactive memory as a microfoundation of dynamic capabilities and describe how an organizational system for collectively encoding, storing, and retrieving knowledge can facilitate the combinative integration and renovation of an organization’s knowledge assets.

An Integrative HRM Process Theorization: Beyond Signalling Effects and Mutual Gains

Abstract: How and for whom HRM creates value are key questions in management research. The present study develops and tests an integrative HRM process theorization positing the existence of mutually reinforcing ability–motivation–opportunity, signalling, and identity-based control mechanisms of the influence of HRM on both employee performance and work intensification. In addition to providing empirical support for the ‘how’ of value creation through HRM, the study contributes to the growing critique of the dominant mutual-gains perspective, the notion that HRM outcomes are straightforwardly positive for both employers and employees. The integrative theorization also opens up interesting avenues for future research on the individual and organizational performance effects of HRM.

Psychological ownership: How having control matters.

Abstract: The study builds a cross-level work process control-based model of psychological ownership in a Chinese context. We operationalize individual-level control as participative decision-making and unit-level control as the self-managing team climate. We further theorize how the value orientation of employees to power differentials moderates the mediating effects of psychological ownership on the relationship between the two levels of control and employee outcomes. We found that the positive effects of control experiences on some outcomes are mediated by psychological ownership. Additionally, power distance moderates the mediating role of psychological ownership. Our results suggest that, in order to cultivate the positive effects of perceived control on employee contributions, managers should pay attention to employees high in power distance since these individuals are reluctant to exercise control. Training or encouraging these individuals to participate in decision making may help them cultivate the positive feelings of psychological ownership.

Dynamics of Performing and Remembering Organizational Routines

Abstract: This study addresses the dynamic interplay between action and memory in organizational routines. We consider three distinct forms of memory – procedural, declarative, and transactive – and examine their roles in the formation, efficiency, and adaptability of organizational routines. We introduce an agent-based model simulating organizational routines as repeated patterns of sequential tasks accomplished by networks of individuals. We model the formation of new routines, and changes in established organizational routines resulting from loss of personnel (due to downsizing) and changes in environmental demands. We find that transactive memory enhances problem-solving efficiency and facilitates adaptation to novel problems. Declarative memory built from past experience facilitates efficient routines in stable contexts, but obstructs efficiency gains when the organization encounters novel problems.

Do Powerful CEOs Determine Microfinance Performance

Abstract: Recently, microfinance has been coming under public and media attacks. The microcredit crisis following from microfinance-induced suicides in 2010 in the Indian state of Andhra Pradesh indicates that weak corporate governance and imprudent risk taking have far-reaching consequences. Yet, analyses of corporate governance mechanisms among microfinance institutions (MFIs) remain underdeveloped. As a response, this study examines the impact of CEO power on MFI risk taking by deriving explicit predictions of this effect from a characterization of the microfinance industry. Based on a sample of 280 microfinance institutions, our results suggest that powerful CEOs of microfinance non-governmental organizations (NGOs) have more decision-making freedom than powerful CEOs of other types of MFIs. This induces them to make more extreme decisions that increase risk. Furthermore, the decision-making freedom powerful CEOs have in NGOs appears to lead to worse decisions, because the presence of powerful CEOs in microfinance NGOs is associated with lower performance.

Knowledge Benefits of Social Capital upon Repatriation: A Longitudinal Study of International Assignees

Abstract: This study integrates social resources theory and social exchange theory arguments to examine the knowledge benefits that international assignees' host-unit social capital entails upon repatriation. Specifically, I hypothesize that assignees' host-unit social capital, operationalized as their number of work group contacts and their proportion of trusted ties at the host unit, positively relates to two specific knowledge benefits upon repatriation: continued access to host-unit knowledge; and continued transfer of host-unit knowledge to colleagues in assignees' new positions. Assignees' perceptions of career and repatriation support are expected to moderate these relationships. The hypotheses are tested with a longitudinal sample of 85 inpatriate assignees in 10 German multinationals. I contribute to the literatures on international assignments, social capital, and MNC knowledge flows by explaining how and under what conditions assignees' host-unit social capital entails knowledge benefits upon repatriation.

Herbert A. Simon on What Ails Business Schools: More than ‘A Problem in Organizational Design’

Abstract: We critically examine Herbert Simon's 1967 essay, ‘The business school: a problem in organizational design’. We consider this essay within the context of Simon's key ideas about organizations, particularly those closely associated with the ‘Carnegie perspective’ on organizations and how they influenced the reinvention of American business schools in the post-Second World War era, and were deeply influenced by the post-War context and also were appropriated by the Ford and Carnegie Foundations to reform business school teaching and research. We argue that management educators misappropriated Simon's concept of an intellectually robust and relevant research and educational agenda for business schools that has in part contributed to the intellectual stasis that now characterizes business education research and its capacity to inform management practice.

Victim or Victimizer: Firm Responses to Government Corruption

Abstract: What is the relationship between government corruption and firm performance? To address this question, I conduct a review of articles published in the leading management journals on government-business interactions pertaining to rent-seeking activities and integrate findings from the fields of international business, social issues in management, public organization, institutional change, and corporate political activity. I find that while much empirical work corroborates the earlier findings suggesting a corrosive impact of government corruption on firm performance in general, management research also points to the heterogeneous impact of government corruption on individual firm performance, driven by the strategic activities conducted by firms in response to corruption. I propose an integrative model of firm strategy vis-a-vis corruption that predicts the activity choice of the firm as predicated by its organizational structure, political resources, industry regulation, and surrounding political and social institutions.

Foreign Direct Investment and Managerial Knowledge Spillovers through the Diffusion of Management Practices

Abstract: Although managerial knowledge spillovers have long been claimed to be a major benefit of foreign direct investment (FDI), such spillovers have not yet been systematically analysed. This paper adds to the literature by analysing the nature and extent of managerial knowledge spillovers from FDI through the diffusion of management practices. Taking into account the tacit and explicit elements of management practices and distinguishing between industry and non-industry specific practices, the paper identifies different types of spillovers and discusses their transmission mechanisms. Evidence from establishment-level panel data from the UK attests to the existence and significance of intra-industry, linkage, and non-linkage based inter-industry spillovers of managerial knowledge from foreign to local firms, although the strength varies for different types of practices. The spillovers are geographically localized, especially in channels without supply chain linkages. Local firms are selective in the adoption of individual practices and the spillover effects are more significant at the cluster and management system level. Reverse spillovers from local firms to MNEs from industrialized countries appear to be limited despite significant spillovers of practices amongst local firms.