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Showing papers in "Strategic Management Journal in 1997"


Journal ArticleDOI
TL;DR: The dynamic capabilities framework as mentioned in this paper analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change, and suggests that private wealth creation in regimes of rapid technology change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm.
Abstract: The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.

27,902 citations


Journal ArticleDOI
TL;DR: In this article, the authors report the results of a rigorous study of the empirical linkages between financial and social performance, finding that corporate social performance (CSP) is positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related.
Abstract: Strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them. Recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management, rather than traditional arenas of strategic management. Using a greatly improved source of data on corporate social performance, this paper reports the results of a rigorous study of the empirical linkages between financial and social performance. Corporate social performance (CSP) is found to be positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related. CSP is also found to be positively associated with future financial performance, supporting the theory that good management and CSP are positively related.? 1997 by John Wiley & Sons, Ltd

5,922 citations


Journal ArticleDOI
Christine Oliver1
TL;DR: In this paper, it is argued that a firm's sustainable advantage depends on its ability to manage the institutional context of its resource decisions and that both resource capital and institutional capital are indispensable to sustainable competitive advantage.
Abstract: This article suggests that the context and process of resource selection have an important influence on firm heterogeneity and sustainable competitive advantage. It is argued that a firm’s sustainable advantage depends on its ability to manage the institutional context of its resource decisions. A firm’s institutional context includes its internal culture as well as broader influences from the state, society, and interfirm relations that define socially acceptable economic behavior. A process model of firm heterogeneity is proposed that combines the insights of a resource-based view with the institutional perspective from organization theory. Normative rationality, institutional isolating mechanisms, and institutional sources of firm homogeneity are proposed as determinants of rent potential that complement and extend resource-based explanations of firm variation and sustainable competitive advantage. The article suggests that both resource capital and institutional capital are indispensable to sustainable competitive advantage. © 1997 John Wiley & Sons, Ltd.

2,783 citations


Journal ArticleDOI
TL;DR: The central argument of as discussed by the authors is that firm behavior is the result of how firms channel and distribute the attention of their decision-makers, and that decision makers do what they focus their attention on depending on what issues and answers they focus on and how the firm's rules, resources, and relationships distribute various issues, answers, and decision makers into specific communications and procedures.
Abstract: The central argument is that firm behavior is the result of how firms channel and distribute the attention of their decision-makers. What decision-makers do depends on what issues and answers they focus their attention on. What issues and answers they focus on depends on the specific situation and on how the firm's rules, resources, and relationships distribute various issues, answers, and decision-makers into specific communications and procedures. The paper develops these theoretical principles into a model of firm behavior and presents its implications for explaining firm behavior and adaptation. ? 1997 by John Wiley & Sons, Ltd.

2,652 citations


Journal ArticleDOI
TL;DR: In this article, the authors examined the IT literature, developed an integrative, resource-based theoretical framework, and presented results from a new empirical study in the retail industry, and found that IT alone has not produced sustainable performance advantages in retail industry.
Abstract: This paper investigates linkages between information technology (IT) and firm performance. Although showing recent signs of advance, the existing IT literature still relies heavily on case studies, anecdotes, and consultants' frameworks, with little solid empirical work or synthesis of findings. This paper examines the IT literature, develops an integrative, resource-based theoretical framework, and presents results from a new empirical study in the retail industry. The findings show that ITs alone have not produced sustainable performance advantages in the retail industry, but that some firms have gained advantages by using ITs to leverage intangible, complementary human and business resources such as flexible culture, strategic planning-IT integration, and supplier relationships. The results support the resource-based approach, and help to explain why some firms outperform others using the same ITs, and why successful IT users often fail to sustain IT-based competitive advantages.

2,110 citations


Journal ArticleDOI
TL;DR: In this paper, the authors empirically examined the conditions under which transactors can simultaneously achieve the twin benejits of high asset specificity and low transaction costs and found that transaction costs do not necessarily increase with an increase in reiation-speciq investments.
Abstract: This study of automotive transaction relationships in the U.S.A. and Japan offers abta which indicate that transaction costs do not necessarily increase with an increase in reiation-specijk investments. We empirically examine the conditions under which transactors can simultaneously achieve the twin benejits of high asset specificity and low transaction costs. This is possible because the dtfferent safeguards which can be employed to control opportunism have different set-up costs and result in different transaction costs over dl~erent time horizons. We examine in detail the ~ractices of Javanese firms which result in effective inteq%n collaboration. @ .. 1997 by John- Wiley & Sons: Ltd. "

1,759 citations


Journal ArticleDOI
TL;DR: The authors examined the importance of year, industry, corporate-parent, and business-specific effects on the profitability of U.S. public corporations within specific 4-digit SIC categories.
Abstract: In this paper, we examine the importance of year, industry, corporate-parent, and business-specific effects on the profitability of U.S. public corporations within specific 4-digit SIC categories. Our results indicate that year, industry, corporate-parent, and business-specific effects account for 2 percent, 19 percent, 4 percent, and 32 percent, respectively, of the aggregate variance in profitability. We also find that the importance of the effects differs substantially across broad economic sectors. Industry effects account for a smaller portion of profit variance in manufacturing but a larger portion in lodging/entertainment, services, wholesale/retail trade, and transportation. Across all sectors we find a negative covariance between corporate-parent and industry effects. A detailed analysis suggests that industry, corporate-parent, and business-specific effects are related in complex ways. © 1997 by John Wiley & Sons, Ltd.

1,321 citations


Journal ArticleDOI
TL;DR: In this article, the role of complementary know-how and other assets in the context of changing conditions in the U.S. petroleum industry during the 1970s and early 1980s was investigated.
Abstract: Dynamic capabilities enable firms to create new products and processes and respond to changing market conditions. This empirical investigation of dynamic R&D capabilities deals with the role of complementary know-how and other assets in the context of changing conditions in the U.S. petroleum industry during the 1970s and early 1980s. The analysis suggests that, in response to rising oil prices, firms with larger amounts of complementary technological knowledge and physical assets also undertook larger amounts of R&D on coal conversion (a synthetic fuels process). © 1997 by John Wiley & Sons, Ltd.

1,175 citations


Journal ArticleDOI
TL;DR: Findings from a sample of 32 firms competing in a wide variety of industries indicate that configurational approaches that align ESM, strategy, and environment have greater predictive power than contingency approaches, but not all high performing configurations are consistent with normative theory.
Abstract: This field study explores the nature of entrepreneurial strategy making (ESM) and its relationship with strategy, environment and performance. In the first phase, we assess the independence of entrepreneurially oriented strategy-making processes through factor analysis. The second phase, using moderated hierarchical regression anlaysis, investigates the relative predictive power of two approaches for exploring the ESM–performance relationship: contingency and configuration. Findings from a sample of 32 firms competing in a wide variety of industries indicate that configurational approaches that align ESM, strategy, and environment have greater predictive power than contingency approaches. However, not all high performing configurations are consistent with normative theory. Thus, alternate theories linking entrepreneurial strategy making to competitive advantage should be developed and tested. © 1997 John Wiley & Sons, Ltd.

1,163 citations


Journal ArticleDOI
TL;DR: In this article, the authors define initiative as a key manifestation of corporate entrepreneurship and examine the types of initiative exhibited in a sample of six subsidiaries of multinational corporations, identifying four distinct types of initiatives: global, local, internal, and hybrid.
Abstract: This paper defines initiative as a key manifestation of corporate entrepreneurship, and examines the types of initiative exhibited in a sample of six subsidiaries of multinational corporations. From a detailed analysis of 39 separate initiatives, four distinct types are identified, which we refer to as ‘global,’ ‘local,’ ‘internal’ and ‘global–internal hybrid,’ to correspond to the locus of the market opportunity whence each arose. Two important conclusions are indicated. First, entrepreneurship at the subsidiary level has the potential to enhance local responsiveness, worldwide learning and global integration, a much broader role than previously envisioned. Second, the use of contextual mechanisms to create differentiated subsidiary roles has its limitations because each initiative type is facilitated in different ways. © 1997 by John Wiley & Sons, Ltd.

1,108 citations


Journal ArticleDOI
Anoop Madhok1
TL;DR: In this article, the authors compare and contrast the mode of foreign market entry decision from the transaction cost/internalization and organizational capability perspectives, and demonstrate the implications of a shift in frame from cost to value in the analysis of decisions related to firm boundaries.
Abstract: This paper compares and contrasts the mode of foreign market entry decision from the transaction cost/internalization and organizational capability perspectives. Each of these perspectives operates at a different level of analysis, respectively the transaction and the firm, and consequently differs in the primary arena of attention, namely transaction characteristics and the capabilities of firms. In making the comparison, a key distinction is made between the cost and the value aspects in the management of know-how, based on which issues pertaining to the transfer of knowledge within and across firm boundaries and the exploitation and enhancement of competitive advantage are closely examined. The main purpose of this paper is to demonstrate the implications of a shift in frame from cost to value in the analysis of decisions related to firm boundaries. Entry into foreign markets is used primarily as a vehicle for the accomplishment of this purpose. The paper shows how the value-based framework of the organizational capability perspective radically and fundamentally shifts the approach towards the governance of firm boundaries and argues that, even though TC/internalization theory raises some valid concerns, the organizational capability framework may be more in tune with today’s business context. Some of the assumptions of the TC/internalization perspective, both direct— ‐opportunism, exploitation of existing advantage—and indirect—preservation of the value of know-how across locational contexts, asymmetry between bounded rationality for transaction and production purposes—are critically examined and questioned. Implications of a shift from a cost to a value-based framework are discussed and the need for a shift in research focus is emphasized.

Journal ArticleDOI
TL;DR: In this paper, the authors studied the impact of foreignness on the survival of interbank currency trading worldwide over the period 1974-93 and developed hypotheses on the behavior of the liability over time and on the consequences of evolving sources of firm-level competitive advantage on this liability.
Abstract: We study the impact of ‘foreignness’ on survival in interbank currency trading worldwide over the period 1974–93. In particular, we develop hypotheses on the behavior of the liability of foreignness over time, and on the consequences of evolving sources of firm-level competitive advantage on this liability. We test these hypotheses on the population of 2667 market-making trading rooms located in 47 countries worldwide that either existed in 1974 or entered the industry between 1974 and 1993. The results show that there is a liability of foreignness, and that it changes over time. Further, strategic and organizational factors such as the adoption of technology by these firms and their mode of internal control significantly influenced survival, as did location-related factors such as the intensity of local and foreign competition. © 1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, a combination of quantitative and qualitative analysis is used to unravel the process of creative destruction in the typesetter industry and argue that the ultimate commercial performance of incumbents vs. new entrants is driven by the balance and interaction of three factors: investment, technical capabilities, and appropriability through specialized complementary assets.
Abstract: When radical technological change transforms an industry established firms sometimes fail drastically and are displaced by new entrants, yet other times survive and prosper. Drawing upon an unusually rich data set that covers the technological and competitive history of the typesetter industry from 1886 to 1990, this paper uses a combination of quantitative and qualitative analysis to unravel this process of creative destruction. It argues that the ultimate commercial performance of incumbents vs. new entrants is driven by the balance and interaction of three factors: investment, technical capabilities, and appropriability through specialized complementary assets. In this industry, specialized complementary assets played a crucial role in buffering incumbents from the effects of competence destruction, and an analysis that examined investment or technical capabilities in isolation would have led to misleading results. This work thus highlights the importance of considering multiple perspectives when examining the competitive implications of technological change.© 1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: The authors examined the effect of divestment of South African business units on the stock return behavior of publicly traded firms and found that significant and negative excess returns accrue to shares of companies announcing divestments of operations.
Abstract: Among the various stakeholders of a firm, senior managers are the most likely targets for private and public political pressures. Other stakeholder groups are less visible and may be perceived as less influential in corporate strategy formulation and implementation. In some situations, consequently, senior executives may adopt corporate strategies in response to political pressures even if these strategies may be costly to shareholders. In this study, a special case is examined: the effect of divestment of South African business units on firm value. Using data from 1984 through 1990, we examine the impact that announcements of divestments have upon the stock return behavior of publicly traded firms. Our results indicate that significant and negative excess returns accrue to shares of companies announcing divestments of South African operations. These results are supportive of the premise that noneconomic pressures may influence managerial strategies rather than value-enhancement goals. © 1997 by John Wiley & Sons, Ltd.


Journal ArticleDOI
TL;DR: In this paper, the authors examine what middle managers think about as they decide whether or not to sell strategic issues to top management and identify factors that middle managers associate with image risk in the context of issue selling.
Abstract: Issue selling is an important mechanism for creating change initiatives in organizations. This paper presents two studies that examine what middle managers think about as they decide whether or not to sell strategic issues to top management. In Study 1 middle managers identify themes that indicate a favorable or unfavorable context for issue selling. Top management’s willingness to listen and a supportive culture were the most often named contributors to context favorability, while fear of negative consequences, downsizing conditions and uncertainty were thought to signal that a context was unfavorable for issue selling. Study 2 identifies factors that middle managers associate with image risk in the context of issue selling. Violating norms for issue selling, selling in a politically vulnerable way and having a distant relationship with top management were regarded as major contributors to a middle manager’s level of image risk. Both studies enrich our understanding of the social psychological mechanisms that undergird the strategic change process.© 1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the determinants of the choice between two alternative methods of pooling similar and complementary assets: the merger/acquisition and the greenfield equity joint venture are investigated on a sample of Japanese investments in the United States.
Abstract: This paper investigates the determinants of the choice between two alternative methods of pooling similar and complementary assets: the merger/acquisition and the greenfield equity joint venture. Two theories of the determinants of that choice are tested on a sample of Japanese investments in the United States. The results show that equity joint ventures are preferred over acquisitions when the desired assets are linked to nondesired assets because the U.S. firm owning them is large and not divisionalized, when the Japanese investor has little previous experience of the American market and hence seeks to avoid postmerger integration problems, when the Japanese investor and the U.S. partner manufacture the same product, and when the industry entered is growing neither very rapidly nor very slowly.

Journal ArticleDOI
TL;DR: The authors developed a theory of strategic group identity that explains how strategic groups emerge in an industry and how they can affect firm behaviors and outcomes, and provided a theoretical basis for the existence of strategic groups.
Abstract: This paper develops a theory of strategic group identity that explains how strategic groups emerge in an industry and how they can affect firm behaviors and outcomes. In so doing, it provides a theoretical basis for the existence of strategic groups. We argue that managers cognitively partition their industry environment to reduce uncertainty and to cope with bounded rationality. Social learning theory and social identification theory are used to describe how cognitive groups coalesce into meaningful substructures and how a group-level identity emerges. We describe the ways in which macro level factors condition the development of groups and their identities. We introduce the notion of a strong identity, which characterizes any group sufficiently recognized and attended to by members to affect individual action. Groups with ‘weak identities’ are no more than transient agglomerations of firms and do not exist in any meaningful sense. These ideas are developed into propositions that describe the conditions under which groups with strong identities are likely to emerge. A second set of propositions describes their transformation over time. Identity strength is linked to both positive and negative outcomes in a final set of propositions. We show how strategic groups with strong identities can affect firm performance, resolving a longstanding problem which has plagued strategic groups research and conclude by suggesting some approaches for measurement and future research. © 1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the authors used a combination of quantitative and qualitative analysis to unravel the process of creative destruction in the typesetter industry and argued that the ultimate commercial performance of incumbents vs. new entrants is driven by the balance and interaction of three factors: investment, technical capabilities, and appropriability through specialized complementary assets.
Abstract: When radical technological change transforms an industry established firms sometimes fail drastically and are displaced by new entrants, yet other times survive and prosper. Drawing upon an unusually rich data set that covers the technological and competitive history of the typesetter industry from 1886 to 1990, this paper uses a combination of quantitative and qualitative analysis to unravel this process of creative destruction. It argues that the ultimate commercial performance of incumbents vs. new entrants is driven by the balance and interaction of three factors: investment, technical capabilities, and appropriability through specialized complementary assets. In this industry, specialized complementary assets played a crucial role in buffering incumbents from the effects of competence destruction, and an analysis that examined investment or technical capabilities in isolation would have led to misleading results. This work thus highlights the importance of considering multiple perspectives when examining the competitive implications of technological change.  1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the authors examine the differences in performance outcomes between diversification-oriented and consolidation-oriented acquisitions in industries within the defense sector, which have experienced significant decline and find a positive relationship between focus and Tobin's q, even when the industry is in decline.
Abstract: U.S.A. The resource-based perspective suggests that firms are bundles of assets, some of which are fungible in nature. To the extent that some resources are fungible, firms should be able to redeploy them to enter new markets when their existing businesses decline. On the other hand, perspectives that emphasize the business-specific nature of routines or managerial skills point to inherent risks in organizational transformation. In a declining market, resources can be redeployed within the firm through diversification-oriented acquisitions, or they can be redeployed through market mechanisms through consolidation-oriented acquisitions. In this paper, we examine the differences in performance outcomes between diversification-oriented acquisitions and consolidation-oriented acquisitions in industries within the defense sector, which have experienced significant decline. Our results indicate that consolidation-oriented acquisitions outperform diversification-oriented acquisitions in the decline phase of their industries in terms of both ex ante (stock market based) and ex post (operating) performance measures. At the corporate level, we find a positive relationship between focus and Tobin's q, even when the industry is in decline. The implication of our results is that assets from declining industries are redeployed more effectively through market mechanisms than within the firm through the acquisition of complementary assets. ?1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the extent of strategic change initiated in a successful turnaround varies systematically with a declining firm's need and capacity to reorient its strategy, and the adaptive role that strategic reorientations have in the turnaround attempts of declining firms with weak strategic positions.
Abstract: Early corporate turnaround theorists argued that strategic reorientations are central to the recovery process at many declining firms. However, subsequent large-sample empirical studies have reported that performance turnarounds for declining firms are primarily associated with cutback actions that increase efficiency, thus creating a gap between theory and empirical findings. We close this gap by presenting and empirically supporting a model proposing that the extent of strategic change initiated in a successful turnaround varies systematically with a declining firm’s need and capacity to reorient its strategy. Based on our model, we offer explanations for why past large-sample researchers were not able to verify the role of strategic change in the turnaround process and we reassert the adaptive role that strategic reorientations have in the turnaround attempts of declining firms with weak strategic positions. © 1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: This paper investigated the influence of own experience and of two types of industry experience on the failure rates of U.S. hotel chains and found that generalist organizations are more weakly affected by their own experience than specialists, and organizations benefit from their industry's operating experience, accumulated both before and after the organization's entry.
Abstract: Organizational learning is central to a number of strategic theories. Recent arguments, however, identify risks associated with learning from own experience in the form of overattention to the short term and local conditions. The experience of the industry may offer opportunities for organizational learning that the experience of the organization does not, because industry experience is more varied, and not tied to the path-dependent history of any one organization. We investigate the influence of own experience and of two types of industry experience on the failure rates of U.S. hotel chains. The two types of industry experience are operating experience, which is a discounted sum of the units operated by U.S. hotel chains in the history of the industry, and competitive experience, which is a discounted sum of the number of failures of U.S. hotel chains in the history of the industry. We find that (a) organizations initially benefit from their own experience, but are harmed in the long run, (b) generalist organizations are more weakly affected by their own experience than specialists, (c) organizations benefit from their industry’s operating experience, accumulated both before and after the organization’s entry, and (d) organizations benefit from their industry’s competitive experience, but only after the organization’s entry. © 1997 by John Wiley & Sons, Ltd.


Journal ArticleDOI
TL;DR: In this paper, the authors investigated the moderating roles of environmental munificence and dynamism in the relationship between process rationality and organizational performance, based on a sample of 62 manufacturing firms.
Abstract: This study investigates the moderating roles of environmental munificence and dynamism in the relationship between process rationality and organizational performance. Based on a sample of 62 manufacturing firms, the study found that environmental munificence and dynamism moderate the relationship between rationality and performance. Further, the study found that rationality is strongly associated with performance in environments high in munificence and dynamism. © 7997 by John Wiley & Sons, Ltd. The relationship between rationality in strategic decision processes and firm performance has been a subject of continuing controversy in the strategic management field. One school of thought favors the 'rational comprehensive' approach (Ansoff, 1965). Another feels that an 'incremental political' approach offers better descriptive accuracy and normative validity (Quinn, 1980). In recent years, the emphasis has moved away from a search for universal relationships that juxtapose these two ideal types to a focus on the context specificity of the rationality-performance relationship. Empirical research on the perfonnance implications of the comprehensiveness of decision processes has yielded confiicting results. In a recent review of this literature, Rajagopalan, Rasheed, and Datta point out that 'most previous studies have focused on one aspect of the

Journal ArticleDOI
TL;DR: In this paper, the authors focus on the impact that reputation has on the decision to proceed with a strategic alliance and find that reputation is a multidimensional construct, personal information processing characteristics of the decision-maker mediate the reputation effect.
Abstract: This paper focuses on the impact that reputation has on the decision to proceed with a strategic alliance. Employing reputation constructs adapted from the Fortune Corporate Reputation Survey, we manipulated a target firm’s reputation in an experimental design. The subjects were placed in the role of CEO of the partner firm and asked whether they would engage in the alliance. Findings indicate that (1) reputation is a multidimensional construct, (2) the personal information-processing characteristics of the decision-maker mediate the reputation effect and may suppress the reputation information, (3) subjects may compensate weaker elements of reputation for stronger ones when making decisions, (4) product and management reputation are the most important factors, and (5) reputation is a factor affecting the decision regardless of whether the proposed target is a supplier or a competitor. © 1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the influence of cultural values on executive open-mindedness toward change was examined using data from a survey of top managers in 20 countries, finding that values of individualism, uncertainty avoidance, power distance, and long-term orientation are significantly related to executives' adherence to existing strategy and leadership profiles.
Abstract: While top executives are argued to play a central role in strategic adaptation, evidence suggests that they are not equally open to organizational change. This study extends earlier investigation of the determinants of top executive commitment to the status quo (CSQ) to the international arena, examining the influence of cultural values on executive open-mindedness toward change. Using data from a survey of top managers in 20 countries, analyses reveal that values of individualism, uncertainty avoidance, power distance, and long-term orientation are significantly related to executives’ adherence to existing strategy and leadership profiles. Further, while confirming earlier findings that industry tenure is positively related to strategy CSQ, results show that tenure does not significantly affect leadership CSQ once cultural values are controlled. In summary, the findings reveal that culture has an important impact on executive mindsets, as demonstrated by the fact that executives of differing cultural background are not equally open to change in organizational strategy and leadership profiles. Second, the findings suggest that executives’ views of appropriate leadership profiles reflect the imprint of cultural socialization moreso than professional experience. Finally, and more broadly, the study offers empirical support for the view that values figure prominently in shaping executives’ strategic and leadership orientations. © 1997 by John Wiley & Sons, Ltd

Journal ArticleDOI
TL;DR: The authors examined the relationship between managerial abilities and compensation by examining pay differences between types of CEO successors who have differential skills, i.e., internal and external successors, and found that internal successors had better skills than external successors.
Abstract: Much research on top management compensation has focused on the relationship between pay and firm performance. Firms, however, may compensate executives for inputs such as skills, as well as for outputs such as firm performance. This study refocuses attention on the links between managerial abilities and compensation by examining pay differences between types of CEO successors who have differential skills—namely, internal and external successors. © 1997 John Wiley & Sons, Ltd.


Journal ArticleDOI
TL;DR: In this paper, the authors propose capability heterogeneity of R&D consortia participants as a condition to distinguish two competing motives for cooperative research: cost-sharing vs. skill-sharing.
Abstract: This article proposes capability heterogeneity of R&D consortia participants as a condition to distinguish two competing motives for cooperative R&D: cost-sharing vs. skill-sharing. An analysis of 398 questionnaire responses from participants in Japanese government-sponsored R&D consortia finds that the relative importance of the cost-sharing motive in R&D consortia increases when participants’ capabilities are homogeneous or projects are large, while the relative importance of the skill-sharing motive in R&D consortia increases with heterogeneous capabilities. The skill-sharing motive is likely to increase a firm’s R&D spending, implying an additional consideration for management’s evaluation of cooperative R&D participation, as well as adding a new public policy implication of cooperative R&D. © 1997 by John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the authors argue that foreign firms operating in a host country generate information spillovers that have potential value for later foreign direct investment, and they find that foreign direct investments will be more likely to survive the greater the foreign presence in the target industry at the time of investment.
Abstract: We argue that foreign firms operating in a host country generate information spillovers that have potential value for later foreign direct investment. We test two predictions. First, we expect foreign direct investments by firms with experience in a host country to be more likely to survive than investments made by first-time entrants. Second, foreign direct investments will be more likely to survive the greater the foreign presence in the target industry at the time of investment, subject to two contingencies. The first contingency is that the relationship will be weak or nonexistent among firms with no experience in the host country, because these firms have difficulty evaluating and taking advantage of the information spillovers. The second contingency is that the presence of other foreign firms will not affect investment survival among firms that already have a presence in the target industry and undertake expansion. These firms already possess general information about the target industries and are unlikely to gain additional benefit from information spillovers. We find supportive evidence based on the survival to 1992 among 354 U.S. investments undertaken by foreign firms in manufacturing industries during 1987. © 1997 by John Wiley & Sons, Ltd. Strat. Management J. Vol. 18: 811‐824, 1997 No of Figures: 1. No of Tables: 3. No of References: 35.