Showing papers in "Strategic Management Journal in 1991"
TL;DR: In this paper, a detailed analysis of nine international alliances yielded a fine-grained understanding of the determinants of interpartner learning, concluding that not all partners are equally adept at learning, that asymmetries in learning alter the relative bargaining power of partners, stability and longevity may be inappropriate metrics of partnership success, and partners may have competitive, as well as collaborative aims, vis-a-vis each other.
Abstract: Global competition highlights asymmetries in the skill endowments of firms. Collaboration may provide an opportunity for one partner to internalize the skills of the other, and thus improve its position both within and without the alliance. Detailed analysis of nine international alliances yielded a fine-grained understanding of the determinants of interpartner learning. The study suggests that not all partners are equally adept at learning; that asymmetries in learning alter the relative bargaining power of partners; that stability and longevity may be inappropriate metrics of partnership success; that partners may have competitive, as well as collaborative aims, vis-a-vis each other; and that process may be more important than structure in determining learning outcomes.
4,408 citations
TL;DR: The cross-sectional problem is logically prior to a consideration of dynamics, and better understood, and three promising streams of research that address the longitudinal problem still fall short of exposing the true origins of competitive success.
Abstract: This paper reviews the progress of the strategy field towards developing a truly dynamic theory of strategy. It separates the theory of strategy into the causes of superior performance at a given period in time (termed the cross-sectional problem) and the dynamic process by which competitive positions are created (termed the longitudinal problem). The cross-sectional problem is logically prior to a consideration of dynamics, and better understood. The paper then reviews three promising streams of research that address the longitudinal problem. These still fall short of exposing the true origins of competitive success. One important category of these origins, the local environment in which a firm is based, is described. Many questions remain unanswered, however, and the paper concludes with challenges for future research.
3,780 citations
TL;DR: An ethnographic study of the initiation of a strategic change effort in a large, public university develops a new framework for understanding the distinctive character of the beginning stages of strategic change by tracking the first year of the change through four phases.
Abstract: This paper reports an ethnographic study of the initiation of a strategic change effort in a large, public university. It develops a new framework for understanding the distinctive character of the beginning stages of strategic change by tracking the first year of the change through four phases (labeled as envisioning, signaling, re-visioning, and energizing). This interpretive approach suggests that the CEO's primary role in instigating the strategic change process might best be understood in terms of the emergent concepts of ‘sensemaking’ and ‘sensegiving’. Relationships between these central concepts and other important theoretical domains are then drawn and implications for understanding strategic change initiation are discussed.
3,292 citations
TL;DR: In this article, the total variance in rate of return among FTC Line of Business reporting units was divided into industry factors (whatever their nature), time factors, factors associated with the corporate parent, and business-specific factors.
Abstract: This study partitions the total variance in rate of return among FTC Line of Business reporting units into industry factors (whatever their nature), time factors, factors associated with the corporate parent, and business-specific factors. Whereas Schmalensee (1985) reported that industry factors were the strongest, corporate and market share effects being extremely weak, this study distinguishes between stable and fluctuating effects and reaches markedly different conclusions. The data reveal negligible corporate effects, small stable industry effects, and very large stable business-unit effects. These results imply that the most important sources of economic rents are business-specific; industry membership is a much less important source and corporate parentage is quite unimportant.
2,731 citations
TL;DR: This paper argued that economists really ought to recognize firm differences explicitly and pointed out that differences among firms in the same line of business are repressed, or assumed to reflect differences in the market environments that they face.
Abstract: In virtually all economic analyses, differences among firms in the same line of business are repressed, or assumed to reflect differences in the market environments that they face. In contrast, for students of business management and strategy, firm differences are at the heart of their inquiry. This paper explores the reasons behind this stark difference in viewpoint. It argues that economists really ought to recognize firm differences explicitly.
1,890 citations
TL;DR: In the long run, however, the best strategy is to organize arid operate efficiently as discussed by the authors, which is not to say that strategizing efforts to deter or defeat rivals with clever ploys and positioning are unimportant.
Abstract: best strategy. That is not to say that strategizing efforts to deter or defeat rivals with clever ploys and positioning are unimportant. In the long run, however, the best strategy is to organize arid operate efficiently. Business strategy is a complex subject. It not only spans the functional areas in businessmarketing, finance, manufacturing, international business, etc.-but it is genuinely interdisciplinary-involving. as it does, economics, politics, organization theory, and aspects of the law. Business strategy has become increasingly important with the growth of the multinational enterprise and of international trade and competition. Although several different approaches to the substantive aspects of business strategy can be distinguished, the main contestants cluster under two general headings: strategizing and economizing. The first of these appeals to a power perspective; the second is principally concerned with efficiency. Both of these orientations are pertinent to the study .of business strategy, but power approaches have played a role in the recent business strategy literature that belies its relative importance. Partly that may be because the analysis of efficiency is believed to have reached such an advanced state of development that further work of this kind is not needed. Economizing is important, but we know all about that. What we don’t understand, and need to study, goes the argument, is strategizing. Not only is strategizing where many of the novel practices and new issues are said to reside, but the pressing realities of foreign competition are first and foremost of a strategizing kind. I take exception with arguments of both kinds. Thus, although it is true that efficiency analysis of the firm-as-production function genre has reached a high state of refinement, that does not exhaust all that is relevant to the assessment of efficiency. Efficiency analysis properly encompasses governance costs as well as production costs, and the analysis of comparative economic organization (governance) is still in
1,364 citations
TL;DR: This article examined the differential financial implications of these choices for 141 corporations over a 6-year time period and found that firms opting for independent leadership consistently outperformed those relying upon CEO duality.
Abstract: All public corporations must make a choice regarding board leadership structure. Advocates of more effective corporate governance argue for independent board leadership; yet many firms choose instead to allow the CEO to serve as board chairperson (CEO duality). This study examines the differential financial implications of these choices for 141 corporations over a 6-year time period. Results indicate significant differences in performance between the two groups along a number of performance measures; more specifically, firms opting for independent leadership consistently outperformed those relying upon CEO duality.
1,103 citations
TL;DR: It is suggested that excess physical resources, most knowledge-based resources, and external financial resources are associated with more related diversification, while internal financial Resources are associatedwith more unrelated diversification.
Abstract: In this paper we theoretically and empirically investigate the idea that firms diversify in part to utilize productive resources which are surplus to current operations. Knowledge of these resources allows us to make predictions about the direction of a firm's expansion. In particular, we suggest that excess physical resources, most knowledge-based resources, and external financial resources are associated with more related diversification, while internal financial resources are associated with more unrelated diversification.
1,085 citations
TL;DR: Support was found for the rational/analytical normative choice perspective with objective criteria explaining the greatest amount of total explained variance in evaluation of target firms.
Abstract: Different perspectives of strategic decision-making and outcomes have been advanced in the literature. Among those are the rational normative, external control, and strategic choice models. The current research examined hypothesized effects of factors associated with these three perspectives on strategic acquisition decisions. Strong support was found for the rational/analytical normative choice perspective with objective criteria explaining the greatest amount of total explained variance in evaluation of target firms. However, industry and executive characteristics also produced main effects on target firm evaluations. Furthermore, the strategic decision models were found to vary by industry and executive characteristics of age, educational degree type, amount and type of work experience, and level (CEO and below). The results suggest that strategic decision models are quite complex with significant implications for future research and for strategic decision-making.
1,040 citations
TL;DR: The authors examines the relationship between strategic management and economics and provides a guide to the eight papers contained in the special issue, and offers the guest editors viewpoints on the contributions of each discipline to the other.
Abstract: This essay examines the relationship between strategic management and economics It introduces the special issue on this same topic by providing a guide to the eight papers contained in the special issue, and it offers the guest editors viewpoints on the contributions of each discipline to the other The essay notes the major contribution from economics has been primarily from the industrial organization literature, with promises of important gains to be made from the ‘new’ economics as it breaks away from the neoclassical theory of the firm Contributions from strategic management to economics are noted Areas for further research utilizing the relationship between strategic management and economics are also indicated
949 citations
TL;DR: It is found that the resource-based view of the firm complements economic analysis, and that both are essential to a complete understanding of global strategy.
Abstract: This paper critically examines the contribution of aspects of the resource-based view of the firm to global competition in particular, and to strategic management in general. Three concepts—core competence, organizational capability, and administrative heritage—are defined and compared with the current mainstream economic tradition of strategy. The value of these concepts in analyzing and explaining competitive strategy is determined through a detailed field-based case study of three firms in the worldwide bearings industry. It is found that the resource-based view of the firm complements economic analysis, and that both are essential to a complete understanding of global strategy.
TL;DR: The findings indicate that differences in top management styles have a negative impact on performance in acquisitions characterized by both high and low levels of post-acquisition integration, but no such relationship was observed between differences in the reward and evaluation systems and post- Acquisitions performance in either the high or low integration subgroups.
Abstract: Based on 173 acquisitions in the U.S. manufacturing industry, this study examines the impact of organizational differences between acquiring and acquired firms on post-acquisition performance. The findings indicate that differences in top management styles have a negative impact on performance in acquisitions characterized by both high and low levels of post-acquisition integration. However, no such relationship was observed between differences in the reward and evaluation systems and post-acquisition performance in either the high or low integration subgroups. Implications of the findings, along with directions for future research, have been discussed in the concluding section of this paper.
TL;DR: In this article, the authors provide a different perspective by focusing on the way that top managers use specific control systems to focus organizational attention on strategic uncertainties and thereby guide the development of new strategic initiatives.
Abstract: Management control systems are viewed typically as management-by-exception tools for implementing intended strategies. This study provides a different perspective by focusing on the way that top managers use specific control systems to focus organizational attention on strategic uncertainties and thereby guide the development of new strategic initiatives. Analysis of field-based data from 30 businesses in the U.S. health care products industry is used to develop a model and propositions that distinguish between interactive and diagnostic control systems, and illustrate the selective use of these systems in different strategic contexts.
TL;DR: A theoretical framework is proposed to understand the structure of networks of strategic linkages in global industries and it is argued that global industry structure should be understood in terms of firm membership in ’strategic groups’ and ‘strategic blocks’.
Abstract: A theoretical framework is proposed to understand the structure of networks of strategic linkages in global industries. It is argued that global industry structure should be understood in terms of firm membership in ‘strategic groups’ and ‘strategic blocks’. Strategic groups are based on similarities in the strategic capabilities of firms. Strategic blocks, on the other hand, are based on similarities in their strategic linkages. Two types of strategic blocks are proposed: complementary blocks composed of firms from different strategic groups, and pooling blocks composed of firms from the same strategic group. It is further proposed that in equilibrium, each strategic block will have access to a similar set of strategic capabilities. Empirical support for these arguments is drawn from the global automobile industry during the period 1980-90. The implications of strategic blocks for intra-industry performance differences are discussed in the concluding section of this paper.
TL;DR: It is indicated that different cultures are likely to interpret and respond to the same strategic issue in different ways and these differences may help to explain and predict different responses of European countries to ‘1992’.
Abstract: Perceptions of environmental uncertainty and organizational control influence strategic behavior. As national culture influences these perceptions we expect to find cultural differences in interpretation and response to strategic issues. Given a case describing an issue concerning deregulation of the U.S. banking industry, managers completed questionnaires rating interpretations and responses to that issue. National culture was found to influence interpretation and responses. In particular, Latin European managers when compared with other managers were more likely to interpret the issue as a crisis and as a threat. Latin Europeans were also more likely to recommend proactive behavior. This study indicates that different cultures are likely to interpret and respond to the same strategic issue in different ways. These differences may help to explain and predict different responses of European countries to ‘1992’.
TL;DR: The results showed significant differences among the four board types in their characteristics, internal process, decision-making styles, board effectiveness, and contribution to company performance.
Abstract: A typology of the relative powers of the chief executive officer and the board of directors was derived based on the literature, highlighting four situations: Caretaker, Statutory, Proactive and Participative boards. Data collected from Fortune 500 Industrial and Fortune 500 Service corporations supported the typology. The results showed significant differences among the four board types in their characteristics, internal process, decision-making styles, board effectiveness, and contribution to company performance. Powerful boards were associated with superior corporate financial performance.
TL;DR: Mintzberg's (1990) critique of the ‘design school’ of strategic management is evaluated on two criteria: methodological soundness and factual veracity and the critique is found to be deficient on both criteria.
Abstract: Mintzberg's (1990) critique of the ‘design school’ of strategic management is evaluated on two criteria: methodological soundness and factual veracity. The critique is found to be deficient on both criteria. Mintzberg's own proposal for the basic principles of strategic management is critiqued using the same criteria. It is found that the exposition is deficient methodologically and that Mintzberg's descriptive and prescriptive assertions are at variance with facts observable in the current practice of strategic management. The variance is found to be due to several factors: lack of coherence in Mintzberg's presentation; his use of a definition of strategy which is at variance with the current practice of management, his failure to differentiate between prescriptive and descriptive statements; and his failure to define the context for his prescriptions. Using recent empirical research results on strategic success behaviors, Mintzberg's model is placed in a limited but important context in which it is a valid prescription for successful strategic behavior.
TL;DR: It is argued that technology is the primary determinant of cross-border integration and the importance of manufacturing scale has been overemphasized, and the implications of the increasing cost and complexity of technology for the state-based political system are discussed.
Abstract: The primary concern of this paper is the structural characteristics of an industry that generate returns to transnational integration: manufacturing scale economies and technological intensity. Integration is operationalized as intrafirm flows of resources. Intrafirm trade as a proportion of all international sales is used as an index of integration across 56 manufacturing industries containing U.S.-based firms. Ordinary least-squares analysis of the determinants of integration—technological intensity, manufacturing scale, advertising intensity, and internationalization (as a control) reveals that technological intensity, advertising intensity, and the control are significant and scale is not. I argue that technology is the primary determinant of cross-border integration and the importance of manufacturing scale has been overemphasized, and conclude by discussing the implications of the increasing cost and complexity of technology for the state-based political system.
TL;DR: It is argued in this chapter that on the whole, scholarly research on the functioning of the MNC has suffered both from desire among some scholars to persist with existing paradigms and from other scholars’ ignorance of what existing theories could bring them.
Abstract: The increasing intensity of global competition (Porter 1986), the development of MNCs (Stopford, Dunning and Haberich 1980; Dunning and Pearce 1985), and the attendant academic and managerial interest in the role of the diversified MNC (Ghoshal 1987; Prahalad and Doz 1987; Bartlett and Ghoshal 1989) is too well documented to merit repetition. Although there has been a lot of debate on the nature of global competition and of the diversified multinational corporation (hereafter referred to as the DMNC), very little attention has been paid to the conceptual and theoretical frameworks used to analyze DMNCs and their management. Many attempts have been make to analyze aspects of the MNC starting from an established theoretical base: for example, Buckley and Casson (1986) and Hennart (1982) have attempted to seek a rationale for the MNC using a transaction cost perspective. Others (e.g., Dunning 1980 a and b, 1981b) have emphasized the need for an ‘eclectic’ theory explaining the DMNCs. We shall argue in this chapter that on the whole, scholarly research on the functioning of the MNC has suffered both from desire among some scholars to persist with existing paradigms and from other scholars’ ignorance of what existing theories could bring them. Since existing paradigms, by the very nature of their underlying simplifying assumptions, are not fully able to capture the complexity and richness of the DMNC, and since discipline-based researchers have seldom taken the DMNC as an object of research, this discrepancy is not surprising.
TL;DR: Results of a questionnaire survey sent to a sample of automobile manufacturers in the United States and Japan during the spring of 1990 provide evidence that Japanese practices and performance levels are transferable outside Japan and suggest that considerable improvements are possible for U. S. suppliers supplying U.S. auto plants.
Abstract: This article presents the results of a questionnaire survey sent to a sample of automobile manufacturers in the United States and Japan (including Japanese-managed plants in the United States) during the spring of 1990. The data support observations that Japanese and U.S. practices tend to differ in key areas and Japanese suppliers perform better in dimensions such as quality (defects) and prices (meeting targets, reducing prices over time); and that Japanese-managed auto plants established in the United States have, in general, adopted Japanese practices and receive extremely high levels of quality from Japanese as well as U.S. suppliers. These findings provide evidence that Japanese practices and performance levels are transferable outside Japan and suggest that considerable improvements are possible for U.S. suppliers supplying U.S. auto plants. In addition, the survey indicates that U.S. firms have adopted at least some practices traditionally associated with Japanese firms, apparently reflecting some convergence toward Japanese practices and higher performance levels in supplier management.
TL;DR: The authors found that cultural values, measured from Western and Eastern perspectives, are factors in economic performance which explain more than half the cross-national variance in economic growth over two periods for samples of 18 and 20 nations.
Abstract: Cultural values, measured from Western and Eastern perspectives, are factors in economic performance which explain more than half the cross-national variance in economic growth over two periods for samples of 18 and 20 nations. Performance seems facilitated by ‘Confucian dynamism’—stressing thrift, perseverance, and hierarchical relatedness, but not traditions impeding innovation. Cultural ‘individualism’ seems a liability, while the propensity for work in cohesive groups is an asset for economic performance. With business becoming more international, effective strategic management requires accounting for fundamental national differences such as those of culture identified in this study.
TL;DR: In this paper, the authors test did-clock hypotheses of entry order effects on perfortilance, riieasitred both as market share and survival, and find entry timing tmde-of-jy between rmirket share and survird, is gerierrilizirble to cmes in which N plriisible set of conditions is found.
Abstract: Entry order analysis often shows that early eritrrints to an itidustry or technical subfield of an industr?, outperform laggards. Some studiess, though, hme found thrit late entrrints prervil. This paper tests did-clock hypotheses of entry order effects on perfortilance, riieasitred both as market share and survival. One entry clock records the entry of all entrctrits to a new technical subfield within (in industry, while a second clock records the entry of’ industry incumbents. Relative to the cippropriate clock. early entrmit.s are predicted to oritperforin Irtggards, but when entry is inemired on only one clock, the estiriiuterl influences riiny be inaccurate. Error will be particularly likely if a study contriitis {t surr,ivor bias. The study. which finds entry timing tmde-ofjy between rmirket share and survird, is gerierrilizirble to cmes in which N plriisible set of conditions is found.
TL;DR: In this paper, the authors examined the relationship between R&D spending and institutional ownership over a 10-year period for 129 firms based in four research-intensive industries and found that higher levels of institutional ownership may be associated with higher R&DI expenditures.
Abstract: This paper examines the popular myth that managers in high-technology industries are altering their critical R&D investments in response to the short-term profit pressures of large institutional stockholders. The study entails an empirical examination of the relationship between R&D spending and institutional ownership over a 10-year period for 129 firms based in four research-intensive industries. Contrary to the view that institutional investors are having a damaging affect on R&D spending, after controlling for intervening effects the results suggest that higher levels of institutional ownership may be associated with greater R&D expenditures. A number of possible explanations for this finding are developed.
TL;DR: The authors argued that the history of international competition shows long cycles in country leadership, and that these cycles can be explained by differences in country capabilities, in terms of both technologies and organizing principles, which diffuse more slowly across than within national and regional borders.
Abstract: The history of international competition shows long cycles in country leadership. This paper argues that these cycles can be explained by differences in country capabilities, in terms of both technologies and organizing principles, which diffuse more slowly across than within national and regional borders. The country that innovates in best practices eventually loses leadership, but not before increasing its wealth and claims on foreign assets and investments.
TL;DR: In this article, the authors explore three theoretical perspectives that look at output flexibility as a competitive advantage for small firms as was initially described by Stigler (1939) and show that small firms are more willing to fluctuate their output.
Abstract: We explore three theoretical perspectives that look at output flexibility as a competitive advantage for small firms as was initially described by Stigler (1939). First, small firms are more willing to fluctuate their output. As a result: second, small firms can trade cost inefficiency with volume flexibility to increase their profits; third, output flexibility is a more viable source of competitive advantage in volatile and capital-intensive industries, and less viable in profitable industries. Indeed, the empirical analysis of over 3000 companies representing 83 industries during the 1979-87 time period supports our theoretical perspectives. Future research directions that combine firm flexibility and other strategic dimensions are discussed in the context of providing a general strategic framework for small firms competing against large ones.
TL;DR: This paper found that the size of outside institutional stockholdings has a significant effect on the firm's capital structure, and that family and inside institutional owners moderate the relationship between outside institutional shareholdings and capital structure.
Abstract: In most studies of ownership and firm performance, researchers have assumed different forms of ownership do not interact in their effect on firm strategy or performance. Focusing on the role of institutional owners, this study poses two related questions: (1) What are the relationships between outside institutional shareholdings, on the one hand, and a firm's capital structure and performance, on the other? and; (2) Does the size of stockholdings by corporate executives, family owners, and insider-institutions modify those relationships? The data, collected from 40 pairs of manufacturing firms selected from as many industries over a 3-year period, shows that the size of outside institutional stockholdings has a significant effect on the firm's capital structure. We have also found that family and inside institutional owners' shareholdings moderate the relationship between outside institutional shareholdings and capital structure. Likewise, corporate executives' shareholdings supplement the relationship between outside institutional shareholdings and firms' performance. These findings suggest that internal and external coalitions interact with each other to influence the firm's conduct.
TL;DR: In this article, the ownership strategies of 128 retail franchising systems were examined in the light of existing agency and resource scarcity explanations of this organizational form, finding that franchiser ownership strategies are more heterogeneous than previously recognized, and that neither explanation alone accounts for observed ownership patterns.
Abstract: The ownership strategies of 128 retail franchising systems are examined in the light of existing agency and resource scarcity explanations of this organizational form. Findings suggest that franchiser ownership strategies are more heterogeneous than previously recognized, and that neither explanation, alone accounts for observed ownership patterns. A path model of franchiser ownership patterns embodying agency and resource scarcity elements is developed that is consistent with empirical findings.
TL;DR: A theoretical model is developed that explains the impact of the fit between top executive characteristics and strategic orientation on organizational performance and it was found that firms achieving a greater degree of alignment between their strategy and the profiles of top managers, generally realized superior performance outcomes.
Abstract: This paper develops a theoretical model that explains the impact of the fit between top executive characteristics and strategic orientation on organizational performance. Using the Miles and Snow typology as an integrative framework, the central propositions of the model were evaluated. The results of the empirical examination provided significant support for the administrative dimension, an aspect of the typology that has been largely overlooked thus far. Further, it was found that firms achieving a greater degree of alignment between their strategy and the profiles of top managers, generally realized superior performance outcomes.
TL;DR: This paper developed a set of propositions based on research in economics, social psychology, and marketing on the risk/reward trade-off in signaling, the receiver's signal interpretation, and the receivers' reaction alternatives.
Abstract: Competitive market signals are conceptualized as announcements or previews of potential actions intended to convey or to gain information from competitors. This paper develops a set of propositions based on research in economics, social psychology, and marketing on the risk/reward trade-off in signaling, the receiver's signal interpretation, and the receiver's reaction alternatives. The overall objective is to develop a research agenda toward a theory of competitive market signaling.
TL;DR: In this paper, the authors review the evidence on the two takeover waves of the 1960s and 1980s and discuss the implications of this evidence for corporate strategy, agency theory, capital market efficiency, and antitrust policy.
Abstract: This paper reviews the evidence on takeover waves of the 1960s and 1980s, and discusses the implications of this evidence for corporate strategy, agency theory, capital market efficiency, and antitrust policy. We conclude that antitrust policy played an important role in the two takeover waves, and that the wave of the ';60s presents a problem for efficient capital markets.