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Showing papers in "Strategic Management Journal in 2001"


Journal ArticleDOI
TL;DR: In this article, the authors explore the theoretical foundations of value creation in e-business by examining how 59 American and European e-Businesses that have recently become publicly traded corporations create value.
Abstract: We explore the theoretical foundations of value creation in e-business by examining how 59 American and European e-businesses that have recently become publicly traded corporations create value. We observe that in e-business new value can be created by the ways in which transactions are enabled. Grounded in the rich data obtained from case study analyses and in the received theory in entrepreneurship and strategic management, we develop a model of the sources of value creation. The model suggests that the value creation potential of e-businesses hinges on four interdependent dimensions, namely: efficiency, complementarities, lock-in, and novelty. Our findings suggest that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e-business. Rather, an integration of the received theoretical perspectives on value creation is needed. To enable such an integration, we offer the business model construct as a unit of analysis for future research on value creation in e-business. A business model depicts the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities. We propose that a firm's business model is an important locus of innovation and a crucial source of value creation for the firm and its suppliers, partners, and customers. Copyright © 2001 John Wiley & Sons, Ltd.

5,082 citations


Journal ArticleDOI
TL;DR: In this article, the authors test the relationship between shareholders' value, stakeholder management, and social issue participation and find that, while the latter is positively associated with shareholders' wealth, the former is negatively associated with their value.
Abstract: We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value for shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright © 2001 John Wiley & Sons, Ltd.

3,465 citations


Journal ArticleDOI
TL;DR: The results indicate that the social interaction and network ties dimensions of social capital are indeed associated with greater knowledge acquisition, but that the relationship quality dimension is negatively associated with knowledge acquisition.
Abstract: Employing a sample of 180 entrepreneurial high-technology ventures based in the United Kingdom, we examine the effects of social capital in key customer relationships on knowledge acquisition and knowledge exploitation. Building on the relational view and on social capital and knowledge-based theories, we propose that social capital facilitates external knowledge acquisition in key customer relationships and that such knowledge mediates the relationship between social capital and knowledge exploitation for competitive advantage. Our results indicate that the social interaction and network ties dimensions of social capital are indeed associated with greater knowledge acquisition, but that the relationship quality dimension is negatively associated with knowledge acquisition. Knowledge acquisition is, in turn, positively associated with knowledge exploitation for competitive advantage through new product development, technological distinctiveness, and sales cost efficiency. Further, our results provide evidence that knowledge acquisition plays a mediating role between social capital and knowledge exploitation. Copyright © 2001 John Wiley & Sons, Ltd.

2,556 citations


Journal ArticleDOI
TL;DR: A typology of exploration behaviors is created that finds that the impact of exploration on subsequent technological evolution within the optical disk domain is highest when the exploration spans organizational boundaries but not technological boundaries, and when exploration spans both organizational and technological boundaries.
Abstract: Recognition of the firm's tendency toward local search has given rise to concepts celebrating exploration that overcomes this tendency. To move beyond local search requires that exploration span some boundary, be it organizational or technological. While several studies have encouraged boundary-spanning exploration, few have considered both types of boundaries systematically. In doing so, we create a typology of exploration behaviors: local exploration spans neither boundary, external boundary-spanning exploration spans the firm boundary only, internal boundary-spanning exploration spans the technological boundary only, and radical exploration spans both boundaries. Using this typology, we analyze the impact of knowledge generated by these different types of exploration on subsequent technological evolution. In our study of patenting activity in optical disk technology, we find that exploration that does not span organizational boundaries consistently generates lower impact on subsequent technological evolution. In addition, we find that the impact of exploration on subsequent technological evolution within the optical disk domain is highest when the exploration spans organizational boundaries but not technological boundaries. At the same time, we find that the impact of exploration on subsequent technological development beyond the optical disk domain is greatest when exploration spans both organizational and technological boundaries. Copyright © 2001 John Wiley & Sons, Ltd.

2,417 citations


Journal ArticleDOI
Richard Makadok1
TL;DR: In this paper, two distinct causal mechanisms (resource-picking and capability-building) have been proposed in the strategic management literature about how firms create economic rents: resource picking and capability building.
Abstract: Two distinct causal mechanisms—resource-picking and capability-building—have been proposed in the strategic management literature about how firms create economic rents. Under the resource-picking mechanism, managers gather information and analysis to outsmart the resource market in picking resources, similar to the way that a mutual fund manager tries to outsmart the stock market in picking stocks. Under the capability-building mechanism, managers design and construct organizational systems to enhance the productivity of whatever resources the firm acquires. These two rent-creation mechanisms are certainly not mutually exclusive, and it is likely that firms generally use both of them. It is therefore important to consider the interaction between these two rent-creation mechanisms: Do they complement each other? Or are they substitutes for each other? In other words, do they enhance each other's value, or detract from each other's value? Answering these questions is a necessary precondition to understanding how firms should allocate their time and effort between these two rent-creation mechanisms. The present paper develops a basic theoretical model to address these questions, and derives testable hypotheses from the model. The model predicts that the two rent-creation mechanisms are complementary in some circumstances but substitutes in others. Copyright © 2001 John Wiley & Sons, Ltd.

2,385 citations


Journal ArticleDOI
TL;DR: In this paper, the impact of acquisitions on the subsequent innovation performance of acquiring firms in the chemicals industry is examined, and the authors distinguish between technological acquisitions, acquisitions in which technology is a component of the acquired firm's assets, and non-technological acquisitions: acquisitions that do not involve a technological component.
Abstract: This paper examines the impact of acquisitions on the subsequent innovation performance of acquiring firms in the chemicals industry We distinguish between technological acquisitions, acquisitions in which technology is a component of the acquired firm's assets, and nontechnological acquisitions: acquisitions that do not involve a technological component We develop a framework relating acquisitions to firm innovation performance and develop a set of measures for quantifying the technological inputs a firm obtains through acquisitions We find that within technological acquisitions absolute size of the acquired knowledge base enhances innovation performance, while relative size of the acquired knowledge base reduces innovation output The relatedness of acquired and acquiring knowledge bases has a nonlinear impact on innovation output Nontechnological acquisitions do not have a significant effect on subsequent innovation output Copyright © 2001 John Wiley & Sons, Ltd

2,147 citations


Journal ArticleDOI
TL;DR: In this article, the authors identify three organizational pathologies that inhibit breakthrough inventions: the familiarity trap, the maturity trap and the propinquity trap, and argue that by experimenting with novel technologies in which the firm lacks prior experience, emerging technologies that are recent or newly developed in the industry, and pioneering technologies that do not build on any existing technologies firms can overcome these traps and create breakthrough inventions.
Abstract: We present a model that explains how established firms create breakthrough inventions. We identify three organizational pathologies that inhibit breakthrough inventions: the familiarity trap – favoring the familiar; the maturity trap – favoring the mature; and the propinquity trap – favoring search for solutions near to existing solutions. We argue that by experimenting with novel (i.e., technologies in which the firm lacks prior experience), emerging (technologies that are recent or newly developed in the industry), and pioneering (technologies that do not build on any existing technologies) technologies firms can overcome these traps and create breakthrough inventions. Empirical evidence from the chemicals industry supports our model. Copyright © 2001 John Wiley & Sons, Ltd.

2,140 citations


Journal ArticleDOI
TL;DR: It is found that alliances with partners with local knowledge can be an effective strategy to overcome the deficiencies SMEs face in resources and capabilities, when they expand into international markets.
Abstract: We discuss and explore the effects of internationalization, an entrepreneurial strategy employed by small and medium-sized enterprises (SMEs), on firm performance. Using concepts derived from the international business and entrepreneurship literatures, we develop four hypotheses that relate the extent of foreign direct investment (FDI) and exporting activity, and the relative use of alliances, to the corporate performance of internationalizing SMEs. Using a sample of 164 Japanese SMEs to test these hypotheses, we find that the positive impact of internationalization on performance extends primarily from the extent of a firm's FDI activity. We also find evidence consistent with the perspective that firms face a liability of foreignness. When firms first begin FDI activity, profitability declines, but greater levels of FDI are associated with higher performance. Exporting moderates the relationship FDI has with performance, as pursuing a strategy of high exporting concurrent with high FDI is less profitable than one that involves lower levels of exports when FDI levels are high. Finally, we find that alliances with partners with local knowledge can be an effective strategy to overcome the deficiencies SMEs face in resources and capabilities, when they expand into international markets. Copyright © 2001 John Wiley & Sons, Ltd.

2,085 citations


Journal ArticleDOI
TL;DR: In this paper, the influence of internal capabilities and external networks on firm performance was examined by using data from 137 Korean technological start-up companies, where internal capabilities were operationalized by entrepreneurial orientation, technological capabilities, and financial resources invested during the development period.
Abstract: This study examined the influence of internal capabilities and external networks on firm performance by using data from 137 Korean technological start-up companies. Internal capabilities were operationalized by entrepreneurial orientation, technological capabilities, and financial resources invested during the development period. External networks were captured by partnership- and sponsorship-based linkages. Partnership-based linkages were measured by strategic alliances with other enterprises and venture capitalists, collaboration with universities or research institutes, and participation in venture associations. Sponsorship-based linkages consisted of financial and nonfinancial support from commercial banks and the Korean government. Sales growth indicated the start-up's performance. Regression results showed that the three indicators of internal capabilities are important predictors of a start-up's performance. Among external networks, only the linkages to venture capital companies predicted the start-up's performance. Several interaction terms between internal capabilities and partnership-based linkages have a statistically significant influence on performance. Sponsorship-based linkages do not have individual effects on performance but linkage with financial institutions has a multiplicative effect with technological capabilities and financial resources invested on a start-up's performance. Implications and directions for future research were discussed. Copyright © 2001 John Wiley & Sons, Ltd.

2,020 citations


Journal ArticleDOI
TL;DR: A model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990) is proposed and results suggest that trust and management support from foreign parents are associated with IJV performance but not learning.
Abstract: This paper proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). First, trust between an IJV's parents and the IJV's relative absorptive capacity with its foreign parent are suggested to influence its ability to understand new knowledge held by foreign parents. Second, an IJV's learning structures and processes are proposed to influence its ability to assimilate new knowledge from those parents. Third, the IJV's strategy and training competence are suggested to shape its ability to apply the assimilated knowledge. Revisiting the Hungarian IJVs studied by Lyles and Salk (1996) 3 years later, we find support for the knowledge understanding and application predictions, and partial support for the knowledge assimilation prediction. Unexpectedly, our results suggest that trust and management support from foreign parents are associated with IJV performance but not learning. Our model and results offer a new perspective on IJV learning and performance as well as initial insights into how those relationships change over time. Copyright © 2001 John Wiley & Sons, Ltd.

1,928 citations


Journal ArticleDOI
TL;DR: Wang et al. as discussed by the authors investigated the impact of guanxi utilization on firm performance, primarily sales growth and net profit growth, based on a survey of 128 firms in central China, and provided strong support that institutional, strategic, and organizational factors are critical determinants of Guanxi with competitive forces.
Abstract: This paper focuses on the utilization of guanxi, which is an important cultural and social element in China, and the impact of guanxi on firm performance. Although guanxi is embedded in every aspect of Chinese social life, companies demonstrate different needs and capacity for guanxi cultivation. Chinese firms develop guanxi as a strategic mechanism to overcome competitive and resource disadvantages by cooperating and exchanging favors with competitive forces and government authorities. We develop an integrative framework theorizing guanxi utilization according to institutional, strategic, and organizational factors, and we explore the impact of guanxi on firm performance, primarily sales growth and net profit growth. Our findings, based on a survey of 128 firms in central China, provide strong support that institutional, strategic, and organizational factors are critical determinants of guanxi with competitive forces. However, only institutional and strategic factors are significant for guanxi utilization with government authorities. In general, guanxi leads to higher firm performance, but is limited to increased sales growth, and has little impact on profit growth. Guanxi benefits market expansion and competitive positioning of firms, but does not enhance internal operations. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: The authors define cultural entrepreneurship as the process of storytelling that mediates between extant stocks of entrepreneurial resources and subsequent capital acquisition and wealth creation, and propose a framework that focuses on how entrepreneurial stories facilitate the crafting of a new venture identity that serves as a touchstone upon which legitimacy may be conferred by investors, competitors, and consumers.
Abstract: We define cultural entrepreneurship as the process of storytelling that mediates between extant stocks of entrepreneurial resources and subsequent capital acquisition and wealth creation. We propose a framework that focuses on how entrepreneurial stories facilitate the crafting of a new venture identity that serves as a touchstone upon which legitimacy may be conferred by investors, competitors, and consumers, opening up access to new capital and market opportunities. Stories help create competitive advantage for entrepreneurs through focal content shaped by two key forms of entrepreneurial capital: firm-specific resource capital and industry-level institutional capital. We illustrate our ideas with anecdotal entrepreneurial stories that range from contemporary high-technology accounts to the evolution of the mutual fund industry. Propositions are offered to guide future empirical research based on our framework. Theoretically, we aim to extend recent efforts to synthesize strategic and institutional perspectives by incorporating insights from contemporary approaches to culture and organizational identity. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the authors develop hypotheses about the effects of group affiliation on firm profitability: affiliation could either boost or depress firm profitability, and members of a group are likely to earn rates of return similar to other members of the same group.
Abstract: Business groups—confederations of legally independent firms—are ubiquitous in emerging economies, yet very little is known about their effects on the performance of affiliated firms. We conceive of business groups as responses to market failures and high transaction costs. In doing so, we develop hypotheses about the effects of group affiliation on firm profitability: affiliation could either boost or depress firm profitability, and members of a group are likely to earn rates of return similar to other members of the same group. Using a unique data set compiled largely from local sources, we test for these effects in 14 emerging markets: Argentina, Brazil, Chile, India, Indonesia, Israel, Mexico, Peru, the Philippines, South Africa, South Korea, Taiwan, Thailand, and Turkey. We find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine. Group affiliation appears to have as profound an effect on profitability as does industry membership, yet strategy scholars have a much clearer grasp of industries than of groups. Moreover, membership in a group raises the profitability of the average group member in several of the markets we examine. This runs contrary to the wisdom, conventional in advanced economies, that unrelated diversification depresses profitability. Overall, our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts; conclusions drawn in one context may well not apply to another. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: It is suggested that both cohesive and sparse networks are conducive to firm performance when they are aligned with and address firms' evolving resource challenges.
Abstract: This paper addresses whether cohesive networks of socially embedded ties or sparse networks rich in structural holes are more conducive to the success of new firms. We propose that the networks of emerging firms evolve in order to adapt to the firm's changing resource needs and resource challenges. As firms emerge, their networks consist primarily of socially embedded ties drawn from dense, cohesive sets of connections. We label these networks identity based. As firms move into the early growth stage, their networks evolve toward more ties based on a calculation of economic costs and benefits. This shift from identity-based to more calculative networks is manifested in the evolution of the firm networks: (1) from primarily socially embedded ties to a balance of embedded and arm's-length relations; (2) from networks that emphasize cohesion to those that exploit structural holes; and (3) from a more path-dependent to a more intentionally managed network. Thus, this paper suggests that both cohesive and sparse networks are conducive to firm performance when they are aligned with and address firms' evolving resource challenges. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the authors explore strategic entrepreneurship in several important organizational domains to include external networks and alliances, resources and organizational learning, innovation and internationalization, and integrate, extend and test theory and research from entrepreneurship and strategic management in new ways such as creative destruction (discontinuities), resource-based view, organizational learning and transaction costs.
Abstract: Entrepreneurship involves identifying and exploiting entrepreneurial opportunities. However, to create the most value entrepreneurial firms also need to act strategically. This calls for an integration of entrepreneurial and strategic thinking. We explore this strategic entrepreneurship in several important organizational domains to include external networks and alliances, resources and organizational learning, innovation and internationalization. The research in this special issue examines both traditional (e.g., contingency theory, strategic fit) and new theory (e.g., cultural entrepreneurship, business model drivers). The research also integrates, extends, and tests theory and research from entrepreneurship and strategic management in new ways such as creative destruction (discontinuities), resource-based view, organizational learning, network theory, transaction costs and institutional theory. The research presented herein provides a basis for future research on strategic entrepreneurship for wealth creation. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the internal patterns of competence building in the multinational enterprise (MNE), with a focus on the creation of capabilities in its foreign subsidiaries, are discussed, and a new framework is presented to synthesize 10 types of MNE-subsidiary linkages leading to capability development.
Abstract: This paper discusses the internal patterns of competence building in the multinational enterprise (MNE), with a focus on the creation of capabilities in its foreign subsidiaries We present a new framework to synthesize 10 types of MNE–subsidiary linkages leading to capability development We find that several of the 10 capability development processes are associated with subsidiary-specific advantages We discuss the process of subsidiary-specific advantage development within the organizational structure of the MNE when it is a differentiated network of dispersed operations Copyright © 2001 John Wiley & Sons, Ltd

Journal ArticleDOI
TL;DR: In this article, the relative impact of industry and firm-specific factors on sustainable competitive advantage is explored by referring to respective assertions of two major perspectives over the last two decades: the Porter framework of competitive strategy and the more recent resource-based view of the firm.
Abstract: In this study we revisit some fundamental questions that are increasingly at the heart of current strategic management discourse regarding the relative impact of industry and firm-specific factors on sustainable competitive advantage. We explore this issue by referring to respective assertions of two major perspectives that dominate the literature over the last two decades: the Porter framework of competitive strategy and the more recent resource-based view of the firm. A composite model is proposed which elaborates upon both perspectives' divergent causal logic with respect to the conditions relevant for firm success. Empirical findings suggest that industry and firm specific effects are both important but explain different dimensions of performance. Where industry forces influence market performance and profitability, firm assets act upon accomplishments in the market arena (i.e., market performance), and via the latter, to profitability. The paper concludes with directions for future research that will seek to integrate both content and process aspects of firm behavior. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the authors draw on the resource-based view of the firm to suggest that four capabilities (market orientation, entrepreneurship, innovativeness, and organizational learning) each contribute to the creation of positional advantages for some firms.
Abstract: A recent series of articles in the Strategic Management Journal has discussed the potential value of an organization developing a market orientation in its quest to achieve success. We posit that market orientation can enhance success, but that its potential value should not be considered in isolation. Specifically, we draw on the resource-based view of the firm to suggest that four capabilities—market orientation, entrepreneurship, innovativeness, and organizational learning—each contribute to the creation of positional advantages for some firms. The data used are drawn from 181 large multinational corporations (MNC). The results indicate that positional advantages arising from the confluence of market orientation, entrepreneurship, innovativeness, and organizational learning have a positive effect on MNC performance (five-year average change in ROI, income, and stock price). Overall, the results support the contention that market orientation can enhance success, albeit within the context of other important phenomena. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the authors examine interfirm cooperation between incumbents and new entrants as a mechanism for incumbents to adapt to radical technological change through exploitation of complementary assets, and find that incumbents that focus their network strategy on exploiting complementary assets outperform incumbents who focus on exploring the new technology.
Abstract: I examine interfirm cooperation between incumbents and new entrants as a mechanism for incumbents to adapt to radical technological change through exploitation of complementary assets. The research setting is the biopharmaceutical industry, where I analyze 889 strategic alliances between 32 large pharmaceutical firms and providers of the new biotechnology. I find that incumbents that focus their network strategy on exploiting complementary assets outperform incumbents that focus on exploring the new technology. However, there are limits to this strategy due to diminishing marginal returns to alliance intensity. I am also able to show that an incumbent's new product development is positively associated with its performance. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the authors explore the geographic origins of the knowledge sources utilized by foreign subsidiaries during the process of technological innovation and develop and test a set of hypotheses that explain the conditions under which innovating subsidiaries are likely to draw upon sources of knowledge located in the home base of the firm and/or the subsidiary's host country environment.
Abstract: This study contributes to the literature on the nature and evolution of the multinational enterprise by exploring the geographic origins of the knowledge sources utilized by foreign subsidiaries during the process of technological innovation. Through a synthesis of the multinational literature and the broader literature on external sources of innovation, I develop and test a set of hypotheses that explain the conditions under which innovating subsidiaries are likely to draw upon sources of knowledge located in the home base of the firm and/or the subsidiary's host country environment. The hypotheses are tested through an analysis of the citations listed on over 10,000 patents issued to U.S. greenfield subsidiaries between 1980 and 1990. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the authors show that an automaker needs capabilities to coordinate various activities both externally with a supplier and internally within its own organization, in order to gain better component development performance.
Abstract: Outsourcing has become an important strategy for many firms. Yet, firms need to compete with their competitors who also outsource and may share the same suppliers. This article explores how a firm could outperform others in managing the division of labor with a supplier in product development. Drawing on the empirical data collected from the Japanese auto industry, this paper shows that an automaker needs capabilities to coordinate various activities both externally with a supplier and internally within its own organization, in order to gain better component development performance. Overall, the results imply that outsourcing does not work effectively without extensive internal effort. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: A dynamic model is used to analyze sequential entries into the United States from 1975 to 1992 and shows that several independent variables which explain a firm's initial mode of entry do not explain the modes of subsequent entries.
Abstract: Relatively few studies have examined the importance of an entry's sequential position to the choice of foreign entry mode. We use a dynamic model to analyze sequential entries into the United States from 1975 to 1992. Our findings show that several independent variables which explain a firm's initial mode of entry do not explain the modes of subsequent entries. These findings underscore the importance of experience in foreign investment, as companies learn from early entries and adapt the modes of subsequent ones. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: The logical and philosophical foundations of the competitive advantage hypothesis are explored, locating its philosophical foundations in the epistemologies of Bayesian induction, abductive inference and an instrumentalist, pragmatic philosophy of science.
Abstract: Strategic management theories invoke the concept of competitive advantage to explain firm performance, and empirical research investigates competitive advantage and describes how it operates. But as a performance hypothesis, competitive advantage has received surprisingly little formal justification, particularly in light of its centrality in strategy research and practice. As it happens, the core hypothesis - that competitive advantage produces sustained superior performance - finds little support in formal deductive or inductive inference, and the leading theories of competitive advantage incorporate refutation barriers that preclude meaningful empirical tests. The logical and philosophical foundations of the competitive advantage hypothesis are explored, locating its philosophical foundations in the epistemologies of Bayesian induction, abductive inference and an instrumentalist, pragmatic philosophy of science.

Journal ArticleDOI
Abstract: While boards of directors are usually recognized as having the potential to affect strategic change in organizations, there is considerable debate as to whether such potential is typically realized. We seek to reconcile the debate on whether boards are typically passive vs. active players in the strategy realm by developing a model that specifies when boards are likely to influence organizational strategy and whether such an influence is likely to impel vs. impede change. Specifically, we develop arguments as to when certain demographic and processual features of boards imply a greater inclination for strategic change, when these features imply a greater preference for the status quo, and how differences in such inclinations will influence strategic change. We then also propose that a board's inclination for strategic change interacts with a board's power to affect change, generating a multiplicative effect on strategic change. These ideas are tested using survey and archival data from a national sample of over 3000 hospitals. The supportive findings suggest that strategic change is significantly affected by board demography and board processes, and that these governance effects manifest themselves most strongly in situations where boards are more powerful. We discuss these findings in terms of their relevance for theories of demography, agency, and power. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: This study finds that organizations which use cross-national teams, teams with members who have prior overseas experience, or teams whose members communicate frequently with overseas managers in order to acquire information about tacit differences among countries have greater transnational product development capabilities.
Abstract: Based on a survey of 90 transnational product introductions, we find that the transnational product development capabilities of organizations significantly depend upon their ability to transfer and deploy tacit knowledge concerning overseas markets. Specifically, we find that organizations which use cross-national teams, teams with members who have prior overseas experience, or teams whose members communicate frequently with overseas managers in order to acquire information about tacit differences among countries have greater transnational product development capabilities. This study contributes to our understanding of how organizations transfer and deploy knowledge across borders for competitive advantage and makes an important contribution to the literature on global strategy. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: The findings show that, while the experience of new CEOs appears to predict corporate strategic change, these effects disappear after accounting for board experience, suggesting that executive effects on strategy can mask board effects.
Abstract: We develop a theory of board-directed strategic change in which directors (1) conceive changes in corporate strategy that reflect the strategies of their own home companies, and (2) select new CEOs who have prior experience with similar strategies to facilitate implementation. The findings show that, while the experience of new CEOs appears to predict corporate strategic change, these effects disappear after accounting for board experience. Thus, our results suggest that executive effects on strategy can mask board effects. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the authors describe a new instrument that was developed specifically for operationalizing Stevenson's conceptualization and test it on a very large (1200+ cases) stratified random sample of firms with different size, governance structure and industry affiliation.
Abstract: Stevenson (1983) holds that entrepreneurial management, defined as a set of opportunity-based management practices, can help firms remain vital and contribute to firm and societal level value creation. While his conceptualization has received much attention, little progress has been made because of a lack of empirical tools to examine his propositions. This article seeks to resolve this by describing a new instrument that was developed specifically for operationalizing Stevenson's conceptualization. After two pre-tests, the instrument was tested full scale on a very large (1200+ cases) stratified random sample of firms with different size, governance structure, and industry affiliation. The results show that both in the full sample and in various sub-samples it was possible to identify six sub-dimensions with high discriminant validity and moderate to high reliability, which represent dimensions of Stevenson's theoretical reasoning. We label these Strategic Orientation, Resource Orientation, Management Structure, Reward Philosophy, Growth Orientation and Entrepreneurial Culture. We were further able to show that these dimensions only partly overlap with ‘Entrepreneurial Orientation’, the hitherto best established empirical instrument for assessing a firm's degree of entrepreneurship. Our instrument should open up opportunities for researchers to further evaluate entrepreneurship in existing firms. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this article, the authors take a resource-based view to develop and test hypotheses that relate managers' perceptions of causal ambiguity to their firm's performance and examine relationships between firm performance and causal ambiguity regarding the link between competencies and competitive advantage, and causally ambiguous characteristics of competencies.
Abstract: Resource-based theory argues that resources must be valuable, rare, inimitable, and lack substitutes to confer competitive advantage. Inimitability is a lynchpin of resource-based theory and central to understanding the sustainability of competitive advantage. Although scholars recognize a positive relationship between causal ambiguity and inimitability, the relationship among critical resources called competencies, causal ambiguity, and firm performance remains an unresolved conundrum. One perspective suggests that causal ambiguity regarding competencies and performance is necessary among internal and external managers for sustainable competitive advantage because it severely limits imitation. Causal ambiguity, therefore, enhances firm performance. Another view holds that causal ambiguity places a constraint on the transfer and leveraging of these competencies within a firm. In this case, causal ambiguity may adversely influence firm performance. This paper takes a resource-based view to develop and test hypotheses that relate managers' perceptions of causal ambiguity to their firm's performance. The hypotheses examine relationships between firm performance and (1) causal ambiguity regarding the link between competencies and competitive advantage, and (2) causally ambiguous characteristics of competencies. Research involving 224 executives in 17 organizations provides valuable insights into the relationships between causal ambiguity and firm performance. A model is then developed based on these findings. Particular consideration is given to the differing ways top and middle managers in a firm may experience causal ambiguity and to how these differences may be understood and managed. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: This article examined how other competitors' traits affect performance in Texas's lodging industry and found that chain hotels and larger hotels contribute to positive externalities, while independent hotels and smaller hotels gain the most.
Abstract: While competition decreases rents for firms, the presence of competitors may create benefits. Competitors that agglomerate, that are physically proximate, may create externalities—production efficiencies or heightened demand that increases rents. When such externalities exist, then who gains from and who contributes to them? We examine how other competitors' traits affect performance in Texas's lodging industry. In rural markets, we find that chain hotels and larger hotels contribute to positive externalities. While expecting those hotels similar to the establishments creating these externalities to gain, we find the opposite. Independent hotels and smaller hotels gain the most. Interestingly, some establishments are harmed. Copyright © 2001 John Wiley & Sons, Ltd.

Journal ArticleDOI
TL;DR: In this paper, the authors argue that the mix of company-owned and franchised units affects the balance between centralization and standardization required for efficiency with the adaptation needed for success in varied local markets.
Abstract: Franchising provides an increasingly important vehicle for entrepreneurial wealth creation and accounts for a large and growing share of business in the retail and service sectors. Chains—which operate in dispersed markets—most frequently use this form of governance. These firms must balance the centralization and standardization required for efficiency with the adaptation needed for success in varied local markets. By adopting an organizational learning perspective, we argue that the mix of company-owned and franchised units affects this balance, thereby influencing chain performance. In particular, the different incentives facing company managers and the entrepreneurs that manage franchises encourage distinct patterns of organizational learning. Franchised establishments provide better opportunities for the firm to learn through experimentation; however, companies find it easier to diffuse this information and enforce standards through their company-owned units. Analyses of franchised restaurant chains in the United States provide empirical evidence of this trade-off. Copyright © 2001 John Wiley & Sons, Ltd.