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Showing papers in "Strategic Management Journal in 1995"


Journal ArticleDOI
TL;DR: In this paper, the authors examine TQM as a potential source of sustainable competitive advantage, review existing empirical evidence, and report findings from a new empirical study of TQLM's performance consequences.
Abstract: Total Quality Management (TQM) has become, according to one source, ‘as pervasive a part of business thinking as quarterly financial results,’ and yet TQM's role as a strategic resource remains virtually unexamined in strategic management research. Drawing on the resource approach and other theoretical perspectives, this article examines TQM as a potential source of sustainable competitive advantage, reviews existing empirical evidence, and reports findings from a new empirical study of TQM's performance consequences. The findings suggest that most features generally associated with TQM—such as quality training, process improvement, and benchmarking—do not generally produce advantage, but that certain tacit, behavioral, imperfectly imitable features—such as open culture, employee empowerment, and executive commitment—can produce advantage. The author concludes that these tacit resources, and not TQM tools and techniques, drive TQM success, and that organizations that acquire them can outperform competitors with or without the accompanying TQM ideology.

2,696 citations


Journal ArticleDOI
TL;DR: In this article, the diffusion of the "resource-based view of the firm" into academic and practitioner thought is discussed. And some speculations about the future use of these ideas are offered.
Abstract: The article reflects on the diffusion of the ‘resource-based view of the firm’ into academic and practitioner thought. The contributions of many people are noted. In closing, I offer some speculations about the future use of these ideas.

1,840 citations


Journal ArticleDOI
TL;DR: In this article, the authors develop a model of relational governance as a specific form of interorganizational strategy that is distinct from the traditional modes of markets and hierarchies and demonstrate that the combined model explains relational governance better than a model with the traditional determinants of governance form alone.
Abstract: We develop a model of relational governance as a specific form of interorganizational strategy that is distinct from the traditional modes of markets and hierarchies. We conceptualize this form of strategy in terms of structural and processual dimensions and derive a model of its determinants through arguments drawn from transaction cost economics and the sociological exchange literature. Hierarchical regression modeling is employed to test the theoretical model on data collected from a sample of 329 independent insurance agencies. We include the relational variable of trust and demonstrate that the combined model explains relational governance better than a model with the traditional determinants of governance form alone. Further, we observe that governance structure and process are related and discuss implications of the dynamic link between them. Directions for extensions are developed for strategic management research and practice.

1,577 citations


Journal ArticleDOI
TL;DR: In this paper, a concept of strategic flexibility in product competition is developed in which flexibility depends jointly on the resource flexibility of the product creation resources avaialble to a firm and the coordination flexibility of a firm in using its available resources in product markets.
Abstract: This paper investigates competition in dynamic product markets from combined resource base and strategic flexibility perspectives. A concept of strategic flexibility in product competition is developed in which flexibility depends jointly on (1) the resource flexibility of the product creation resources avaialble to a firm and (2) the coordination flexibility of the firm in using its available resources in product markets. Two recent technological innovations affecting product creation processes—CADD/CIM systems and modular product design—are argued to have greatly increased the potential flexibilities of key product creation resources. Managerial innovations in the use of these technologies have also led to important new coordination flexibilities. The combination of recently achievable resource and coordination flexibilities is argued to have transformed the competitive environments of many product markets, leading to new kinds of product strategies, new organizational forms, and a new dominant logic for competing in dynamic product markets.

1,427 citations


Journal ArticleDOI
TL;DR: This paper briefly reviews some history of the concept of dominant logic, and elaborates some of the ways in which the authors have further developed this concept in recent years.
Abstract: This paper briefly reviews some history of the concept of dominant logic, and then elaborates some of the ways in which the authors have further developed this concept in recent years. Discussion focuses on the dominant logic as a filter, on the dominant logic as a level of strategic analysis, on the unlearning (forgetting) curve, on the dominant logic as an emergent property of organizations as complex adaptive systems, and on the relationship between organizational stability and the dominant logic. Throughout emphasis is given to the inherent nonlinear nature of organizations and the mental models that they create.

1,287 citations


Journal ArticleDOI
TL;DR: The concept of ‘environmental technologies’ as a competitive force and a tool for competitive advantage is explained and a new substantive orientation and a management process for minimizing ecological impacts of economic production while enhancing Competitiveness of firms is explored.
Abstract: In this decade and the coming century, the natural environment will be an important arena for economic, competition. Ecological issues regarding energy, natural resources, pollution, and waste offer both competitive opportunities and constraints, and are changing the competitive landscape in many industries. Corporations can gain competitive advantage by managing ecological variables. This paper explains the concept of ‘environmental technologies’ as a competitive force and a tool for competitive advantage. Environmental technologies offer a new substantive orientation and a management process for minimizing ecological impacts of economic production while enhancing Competitiveness of firms. The practical application of environmental technologies is illustrated using a mini case example of 3M Corporation. Strategic implications of environmental technologies for competitiveness are explored.

1,270 citations


Journal ArticleDOI
TL;DR: In this paper, the authors proposed that these inconsistencies can be resolved by integrating agency and stewardship perspectives on duality, using data from 192 firms in 12 industries, and found that both the direction and magnitude of the duality-performance relationship vary systematically across Dess and Beard's environmental dimensions.
Abstract: Several studies have addressed the CEO duality-performance relationship, with inconsistent results. This paper proposes that these inconsistencies can be resolved by integrating agency and stewardship perspectives on duality. Using data from 192 firms in 12 industries, both the direction and magnitude of the duality-performance relationship was found to vary systematically across Dess and Beard's (1984) environmental dimensions. These results provide partial support for both agency and stewardship perspectives.

1,070 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examine the broad nature of the technological changes that are occurring and identify some of the important implications of these changes for strategic management and provide an overall context for the other papers appearing in this special issue.
Abstract: Technology is rapidly altering the nature of competition and strategy in the late twentieth century, moving us toward a ‘new competitive landscape’ in the twenty-first century. The new competitive landscape presents new issues, new concepts, new problems and new challenges. This essay examines the broad nature of the technological changes that are occurring and identifies some of the important implications of these changes for strategic management. The purpose of the paper is to stimulate further research into these issues in strategic management and to provide an overall context for the other papers appearing in this special issue.

1,057 citations


Journal ArticleDOI
TL;DR: A third perspective, that of complex adaptive systems, is proposed, characterized by positive and negative feedback as systems coevolve far from equilibrium, in a self‐organizing manner, toward unpredictable long‐term outcomes.
Abstract: The two perspectives of strategy process most firmly established in the literature—strategic choice and ecology—assume the same about system dynamics: negative feedback processes driving successful systems (individual organizations or populations of organizations) toward predictable equilibrium states of adaptation to the environment. This paper proposes a third perspective, that of complex adaptive systems. The framework is provided by the modern science of complexity: the study of nonlinear and network feedback systems, incorporating theories of chaos, artificial life, self-organization and emergent order. Here system dynamics are characterized by positive and negative feedback as systems coevolve far from equilibrium, in a self-organizing manner, toward unpredictable long-term outcomes.

1,000 citations


Journal ArticleDOI
TL;DR: In this paper, economic, population ecology and strategic perspectives on firm survival are complemented by viewing the same phenomenon from the viewpoint of technology evolution as well, and the authors show that the competitive environment of an industry, and therefore the survival of firms in it, is substantially affected by the evolution of the technology on which it is based.
Abstract: The economic, population ecology and strategic perspectives on firm survival are here complemented by viewing the same phenomenon from the viewpoint of technology evolution as well. The hypothesis tested is that the competitive environment of an industry, and therefore the survival of firms in it, is substantially affected by the evolution of the technology on which it is based. Survival analysis is applied to data from six industries. The results show that by explicitly including technology as a dynamic and strategic variable our understanding of firms' survival potential and success can be enhanced.

800 citations


Journal ArticleDOI
TL;DR: In this article, the substitution effects between alternative internal governance mechanisms for a sample of 81 bank holding companies in the post-deregulation period were examined, and the relationship between monitoring by outside directors and the following mechanisms: monitoring by large outside shareholders, mutual monitoring by inside directors, and incentive effects of shareholdings by managers.
Abstract: Research on the determinants and effects of various governance mechanisms typically assumes that these mechanisms operate independently. However, since a variety of mechanisms are used to achieve alignment of the interests of shareholders and managers, we propose that the level of a particular mechanism should be influenced by the levels of other mechanisms which simultaneously operate in the firm. We examine the substitution effects between alternative internal governance mechanisms for a sample of 81 bank holding companies in the postderegulation period. Specifically, we consider the relationship between monitoring by outside directors and the following mechanisms: monitoring by large outside shareholders, mutual monitoring by inside directors, and incentive effects of shareholdings by managers. Our results provide evidence consistent with the substitution hypothesis. We examine the implications of our findings for future research in the area of corporate governance.

Journal ArticleDOI
TL;DR: In this article, a resource-based approach to modeling interrelationships among businesses and applying it to the analysis of corporate economic performance has been proposed to explain the financial performance of large manufacturing firms, and it promises to be an important source of insight into corporate strategy.
Abstract: The resource-based view of the firm has provided important new insights into corporate strategy (Barney, 1991; Peteraf, 1993); however, there has been only limited empirical research linked to the theory (e.g., Farjoun, 1994). Although a great deal of work has been done on Corporate diversification, the measures and data typically have a weak connection to resource-based theory. Empirical research on resource-based corporate strategy has been particularly dificult because key concepts such as tacit knowledge or capabilities resist direct measurement. This study is an effort to narrow the gap between theory and empirical research on the multibusiness firm. It develops a resource-based approach to modeling interrelationships among businesses and applies it to the analysis of corporate economic performance. This approach proves to be significant in explaining the financial performance of large manufacturing firms, and it promises to be an important source of insight into corporate strategy.

Journal ArticleDOI
TL;DR: It is argued that unobservable constructs lie at the core of a number of influential theories used in the strategic marmgement literature—including agency theory, transaction cost theory, and the resource-based view of the firm.
Abstract: In this paper we argue that unobservable constructs lie at the core of a number of influential theories used in the strategic marmgement literature—including agency theory, transaction cost theory, and the resource-based view of the firm. The debate over how best to deal with the problem of unobservables has raged in the philosophy of science literature for the best part of the current century. On the one hand, there are the positivists, who believe that theories containing unobservable constructs are only useful as tools for making predictions. According to positivists, such theories do not inform us about the deep structure of reality. On the other hand, there are the realists, who believe that our theories can give us knowledge about unobservables. Herein we review this debate, we argue for adopting a realist position, and we draw out the implications for strategic management research.

Journal ArticleDOI
Suresh Kotha1
TL;DR: It is argued that for firms competing in rapidly changing environments the ability to maintain a sustainable competitive advantage depends on the firm's capability to create knowledge by interacting both mass customization and mass production approaches.
Abstract: In many industries the dominant paradigm, ‘mass production,’ is being challenged by the emerging paradigm, ‘mass customization.’ Accordingly, many researchers posit that firms which replace ‘mass production’ with ‘mass customization’ will gain a significant competitive advantage. Based on an in-depth study of the National Bicycle Industrial Company (NBIC), this paper explores the dynamics of pursuing both mass production and mass customization strategies simultaneously. At the operational level, the paper discusses the organizational mechanisms instituted by the NBIC in order to benefit from the simultaneous pursuit of both approaches. At the competitive level, it isolates the relative contributions of both approaches to the overall competitive positioning of this firm in its industry. Based on this discussion, it provides a framework that illustrates the dynamics involved in the pursuit of both approaches. Implicitly, the paper argues that for firms competing in rapidly changing environments the ability to maintain a sustainable competitive advantage depends on the firm's capability to create knowledge by interacting both mass customization and mass production approaches. Finally, the paper concludes with managerial and research implications regarding the emerging paradigm of mass customization.

Journal ArticleDOI
TL;DR: In this article, the authors found that the more often an industry incumbent was among the first to introduce important incremental product innovations, the greater its market share in the industry, while adopting innovations that had been introduced by competitors had a small positive relationship with greater market share.
Abstract: Incremental product innovation is a critically important competitive factor in established industries. Firms in the cardiac pacemaker industry often benefit by bringing incremental innovations to market even though the new products may cannibalize the sales of existing profitable products. The more often an industry incumbent was among the first to introduce important incremental product innovations the greater its market share in the industry, while adopting innovations that had been introduced by competitors had a small positive relationship with greater market share. The greater the number of competitors that introduced similar products, the greater the market share of firms that were first to market. Greater market share, in turn, reduced the likelihood of business dissolution, while introducing important incremental innovations provided little or no reduction in the likelihood of business dissolution net of the effects of the market share that the firm achieved. The results apply most directly to industries in which buyers incur moderate switching costs.

Journal ArticleDOI
TL;DR: Empirical results from a study of 160 new initiatives in 40 organizations from 16 countries suggest that it is feasible to operationalize and measure these constructs and that comprehension and deftness are important correlates of an organization's degree of competence as defined.
Abstract: In this paper, competence is defined in operational terms as the degree to which the firm or its subunits can reliably meet or exceed objectives. Two antecedents to competence (and thus competitive advantage) are then developed and defined. These are the ‘comprehension’ of the management team working on developing competence and the ‘deftness’ of their task execution. Empirical results from a study of 160 new initiatives in 40 organizations from 16 countries suggest that: (1) it is feasible to operationalize and measure these constructs; (2) comprehension and deftness are important correlates of an organization's degree of competence as defined; and (3) a process-centered paradigm for understanding competence development shows promise.

Journal ArticleDOI
Jiatao Li1
TL;DR: In this article, the authors investigated effective strategies that can reduce the risk of failure in international expansion by examining the entry and survival of foreign subsidiaries in the U.S. computer and pharmaceutical industries over the 1974-89 period.
Abstract: This paper investigates effective strategies that can reduce the risk of failure in international expansion by examining the entry and survival of foreign subsidiaries in the U.S. computer and pharmaceutical industries over the 1974-89 period. Using a hazard rate model, we examine the effects of (1) diversification strategies, (2) entry strategies, and (3) organizational learning and experience on the survival probabilities of foreign subsidiaries. The results show a higher exit rate for foreign acquisitions and joint ventures than for subsidiaries established through greenfield investments. The results also indicate a higher exit rate for subsidiaries that diversify than for those that stay in the parent firm's main product areas. Finally, the results show that firms benefit from learning and experience in foreign operations, which improves the chances of success for subsequent foreign investments. These findings shed light on the dynamic process of international expansion and the evolution of the multinational corporation.

Journal ArticleDOI
TL;DR: In this paper, the authors provide an economic explanation for this phenomenon and empirically test the hypotheses that emerge from the analysis and show that refocusing is associated ex post with profitability improvements.
Abstract: During the 198Os, many conglomerates and other diversified firms reduced their diversification by refocusing on their core businesses. This paper provides an economic explanation for this phenomenon and empirically tests the hypotheses that emerge from the analysis. It is shown that refocusing is associated ex post with Profitability improvements.

Journal ArticleDOI
TL;DR: It is proposed that a strategic group acts as a reference point for group members in formulating competitive strategy and predictions of future firm strategies and industry/group structures may also be successfully derived.
Abstract: Previous studies on strategic groups have mainly focused on their static characteristics in order to test the theory of strategic groups and intraindustry performance differences (Porter, 1979; Cool and Schendel, 1988; Fiegenbaum and Thomas, 1990). In contrast, this study takes a longitudinal, dynamic perspective and describes the forces driving strategic group membership and structural evolution. It proposes that a strategic group acts as a reference point for group members in formulating competitive strategy. A partial adjustment model of strategic mobility is then developed which incorporates the idea of a strategic group as a reference group. It models strategic change in an industry both within and across strategic groups. The model is tested in the context of an in-depth industry analysis of the more significant firms in the insurance industry over the 1970-84 time period. The results suggest that strategic groups act as reference points for firm strategies and that predictions of future firm strategies and industry/group structures may also be successfully derived.

Journal ArticleDOI
TL;DR: The relationship between a business's global integration strategy and its performance and this relationship varied significantly by industry; four of the industries studied appeared to be under-globalized, while the remaining three industries were at or near an optimal level of globalization.
Abstract: Both structural determinants and competitive factors can work to define the relevant environment for strategy formulation within an industry. This study examines the effects of each of these two sets of factors on global integration strategies, and finds that their impacts vary considerably from one industry to another. The study also investigates the relationship between a business's global integration strategy and its performance, using an industry-specific perspective. In the aggregate, the businesses studied appear to be under-globalized. However, this relationship varied significantly by industry ; four of the industries studied appeared to be under-globalized, while the remaining three industries were at or near an optimal level of globalization.

Journal ArticleDOI
TL;DR: In this article, the authors examine the network mode at three levels to illuminate the inherent tension between cooperation and competition at each level, and explore the implications of this tension for industrial dynamics.
Abstract: Today's industrial landscape is characterized by rapid change and systemic technologies. Rapid change results in ever shorter product life cycles that demand continual innovation from firms. The systemic nature of technologies makes it difficult, if not impossible, for any one firm to manufacture all components of a technological system. We propose that these challenges be met by designing technological systems that have the potential to yield economies of substitution. Additionally, we propose that these economies be realized by adopting the network mode of governance. We examine the network mode at three levels ― intrafirm, interfirm, and institutional ― to illuminate the inherent tension between cooperation and competition at each level, and to explore the implications of this tension for industrial dynamics.

Journal ArticleDOI
TL;DR: Findings suggest that single firms, horizontal cooperative strategies, small and mixed'sized firms, biochemical industries, cross-industry product offerings,Cross- industry cooperations, the progression of time, and European firms tend to indicate significantly more innovative products.
Abstract: The authors examined 905 new product innovations introduced since September 1988 to determine the influences on product innovativeness, with a specific interest in strategic alliances, or cooperative strategies Findings suggest that single firms, horizontal cooperative strategies, small and mixed'sized firms, biochemical industries, cross-industry product offerings, cross-industry cooperations, the progression of time, and European firms tend to indicate significantly more innovative products Implications are proposed for business practitioners and researchers with specific application to the diffusion of innovation

Journal ArticleDOI
TL;DR: In this article, the authors examine how ownership configuration affects the determination of CEO pay raises and find that pay raises are based on distinctly different factors, depending on the ownership profile of the firm.
Abstract: We examine how ownership configuration affects the determination of CEO pay raises. Based on a sample of 188 firms over a 5-year period, it was found that pay raises were based on distinctly different factors, depending on the ownership profile of the firm. In management-controlled firms—where no single major owner exists—results suggest an overarching pay philosophy: maximize CEO pay, subject to demonstration of face legitimacy of that pay. In externally-controlled firms—where a major (nonmanager) owner exists—results suggest a very different philosophy: minimize CEO pay, subject to the ability to attract/retain a satisfactory CEO.

Journal ArticleDOI
TL;DR: An analysis of 399 banks self typed as prospectors, analyzers or defenders indicated that the self typing paragraph approach was a useful measurement instrument which has reasonable convergent validity.
Abstract: An analysis of 399 banks self typed as prospectors, analyzers or defenders indicated that the self typing paragraph approach was a useful measurement instrument which has reasonable convergent validity, supporting Shortell and Zajac (1990), and providing further evidence of the value of the self typing paragraph approach in strategy research.

Journal ArticleDOI
TL;DR: The findings of the moderated regression analysis indicate that cooperative arrangements are most beneficial to those new ventures whose management teams possess the most experience.
Abstract: This paper reports the results of a study of new ventures which examine the relationships between performance and the experience of a new venture's management team, its choice of competitive strategy, and its use of various cooperative arrangements. The findings of the moderated regression analysis indicate that cooperative arrangements are most beneficial to those new ventures whose management teams possess the most experience.

Journal ArticleDOI
TL;DR: This work investigates the rate at which competing technologies gain organizational support using data on all merchant producers of microprocessors from 1971 to 1989 to find that a community-level framework is useful in understanding this bandwagon phenomenon.
Abstract: In industries characterized by positive network externalities, the market success of a technology or design arises not simply because of its technological superiority, but from the level of organizational support that the technology attracts. Understanding the rate at which competing technologies gain organizational support is quite important because it yields insight into the factors that start technological bandwagons rolling or, correspondingly, bring them to a stop. I investigate this issue using data on all merchant producers of microprocessors from 1971 to 1989. I find that a community-level framework is useful in understanding this bandwagon phenomenon and I explore strategic and theoretical implications for industries characterized by network externalities and increasing returns.

Journal ArticleDOI
TL;DR: This article conducted a survey of executives in manufacturing firms and found that they support Mintzberg's typology of generic strategies and fail to support Porter's typologies, and called for further empirical validation of competing typologies to revitalize research on generic strategies.
Abstract: In spite of the extensive empirical evidence supporting Porter's (1980) typology of generic strategies, many researchers have criticized it for its conceptual limitations. To address these criticisms, Mintzberg (1988) proposed an alternative typology of generic strategies. Our findings, based on a survey of executives in manufacturing firms, provide support for Mintzberg's typology and fail to support Porter's typology. Given the findings, we call for further empirical validation of competing typologies to revitalize research on generic strategies.

Journal ArticleDOI
TL;DR: The results indicate that both firm strategies and the environment play significant roles in influencing profitability and growth, and that capital expenditures and technological change are not negatively associated with profitability but technological change has a positive impact on firm growth.
Abstract: This study examines the roles played by the environment and realized strategies on firm-level performance in the Japanese machine tool industry. We examine the effect of environment and strategy on performance using longitudinal data on a sample of 25 Japanese machine tool firms over the period 1979-92. Our results indicate that both firm strategies and the environment play significant roles in influencing profitability and growth. More specifically, whereas both strategy and environmental variables are significantly related to firm profitability, only environmental variables are associated with firm growth. Additionally, in contrast to U.S. based studies, we find that capital expenditures and technological change are not negatively associated with profitability. Rather technological change has a positive impact on firm growth. We discuss the implications of these results for strategic management and provide suggestions for future research.

Journal ArticleDOI
TL;DR: This exploratory study uses policy capturing to examine managerial and economic information top executives consider when evaluating scenarios representative of cooperative technology development opportunities and suggests a preliminary integrated behavioral model of the factors managers use in assessments of technological collaborative opportunities.
Abstract: Academic scholars, practitioners, and the public press have reported a number of factors believed to be relevant to decisions regarding technological collaboration. However, little is known about how executives actually weigh and integrate the available information during the evaluation process. This exploratory study uses policy capturing to examine managerial and economic information top executives consider when evaluating scenarios representative of cooperative technology development opportunities. Top executives are found to incorporate information associated with several prominent theories in the strategy literature (e.g., normative strategy, transaction cost economics, options theory). Executive cognitive limitations were also found to influence the evaluations. The study's results suggest a preliminary integrated behavioral model of the factors managers use in assessments of technological collaborative opportunities. Implications for research and practice are set forth.

Journal ArticleDOI
TL;DR: This study assesses both the incidence and form of governance changes in the 5‐year period prior to corporate bankruptcy, finding changes by firms at imminent risk of failure do not conform with the prescriptions favored by reform advocates and institutional investors.
Abstract: Firms facing imminent bankruptcy would seemingly be under some pressure to demonstrate effective governance structures as a means for maintaining the support of important external constituents and initiating a turnaround. Little is known, however, about CEO and director turnover and its impact on the composition and structure of the board in failing firms. This study assesses both the incidence and form of governance changes in the 5-year period prior to corporate bankruptcy. Despite extensive board member and CEO replacements, changes by firms at imminent risk of failure do not conform with the prescriptions favored by reform advocates and institutional investors.