Showing papers in "Strategic Management Journal in 2003"
TL;DR: In this paper, the strategic substance of capabilities involves patterning of activity, and that costly investments are typically required to create and sustain such patterning, for example, in product development, and whether higher-order capabilities are created or not depends on the costs and benefits of the investments relative to ad hoc problem solving.
Abstract: Defining ordinary or ‘zero-level’ capabilities as those that permit a firm to ‘make a living’ in the short term, one can define dynamic capabilities as those that operate to extend, modify or create ordinary capabilities. Logically, one can then proceed to elaborate a hierarchy of higher-order capabilities. However, it is argued here that the strategic substance of capabilities involves patterning of activity, and that costly investments are typically required to create and sustain such patterning—for example, in product development. Firms can accomplish change without reliance on dynamic capability, by means here termed ‘ad hoc problem solving.’ Whether higher-order capabilities are created or not depends on the costs and benefits of the investments relative to ad hoc problem solving, and so does the ‘level of the game’ at which strategic competition effectively occurs. Copyright © 2003 John Wiley & Sons, Ltd.
4,393 citations
TL;DR: The capability lifecycle (CLC) as mentioned in this paper provides a structure for a more comprehensive approach to dynamic resource-based theory, incorporating the founding, development, and maturity of capabilities in a manner that helps to explain the sources of heterogeneity in organizational capabilities.
Abstract: This article introduces the concept of the capability lifecycle (CLC), which articulates general patterns and paths in the evolution of organizational capabilities over time. The capability lifecycle provides a structure for a more comprehensive approach to dynamic resource-based theory. The analysis incorporates the founding, development, and maturity of capabilities in a manner that helps to explain the sources of heterogeneity in organizational capabilities. In addition, the analysis includes the ‘branching’ of an original capability into several possible altered forms. Copyright © 2003 John Wiley & Sons, Ltd.
2,902 citations
TL;DR: It is argued that knowledge-based resources (applicable to discovery and exploitation of opportunities) are positively related to firm performance and that EO enhances this relationship.
Abstract: While theory suggests that management has discretion in manipulating resources in order to build competitive advantage, resource-based research has focused on the characteristics of resources, paying less attention to the relationship between those resources and the way firms are organized. In explaining performance, entrepreneurship scholars have focused on a firm’s entrepreneurial strategic orientation (EO), leaving its interrelationship with internal characteristics aside. We argue that EO captures an important aspect of the way a firm is organized. Our findings suggest that knowledge-based resources (applicable to discovery and exploitation of opportunities) are positively related to firm performance and that EO enhances this relationship. Copyright 2003 John Wiley & Sons, Ltd.
2,540 citations
TL;DR: In this article, an empirical analysis of the linkages between environmental strategy and stakeholder management is presented, showing that several simultaneous improvements in various resource domains are required for firms to shift to an empirically significant, higher level of proactiveness.
Abstract: This paper includes an empirical analysis of the linkages between environmental strategy and stakeholder management. First, it is shown that several simultaneous improvements in various resource domains are required for firms to shift to an empirically significant, higher level of proactiveness. Second, more proactive environmental strategies are associated with a deeper and broader coverage of stakeholders. Third, environmental leadership is not associated with a rising importance of environmental regulations, thereby suggesting a role for voluntary cooperation between firms and government. Finally, the linkages between environmental strategies and stakeholder management, based on a sample of 197 firms operating in Belgium, appear more limited than expected. Country-specific characteristics may to a large extent account for these results. Copyright © 2002 John Wiley & Sons, Ltd.
1,842 citations
TL;DR: In this article, the authors developed the concept of IT competency using structural equations modeling with data collected from managers in 271 manufacturing firms, and they showed that organizational learning plays a significant role in mediating the effects of IT competence on firm performance.
Abstract: Many companies have developed strategies that include investing heavily in information technology (IT) in order to enhance their performance. Yet, this investment pays off for some companies but not others. This study proposes that organization learning plays a significant role in determining the outcomes of IT. Drawing from resource theory and IT literature, the authors develop the concept of IT competency. Using structural equations modeling with data collected from managers in 271 manufacturing firms, they show that organizational learning plays a significant role in mediating the effects of IT competency on firm performance. Copyright 2003 John Wiley & Sons, Ltd.
1,705 citations
TL;DR: In this article, the authors introduce the concept of dynamic managerial capabilities to underpin the finding of heterogeneity in managerial decisions and firm performance in the face of changing external conditions, and show that within a single industry, where managers face the same external environment, time-varying corporate effects associated with corporate level managerial decisions are statistically significant.
Abstract: Corporate effects in variance decomposition capture heterogeneity of business performance derived from factors internal to firms at the corporate level. Most estimates of corporate effects do not include effects associated with fluctuations in returns over time, except insofar as the fluctuations affect the average corporate return for the time period in question. Exclusion of the time-varying dimension of the corporate effect makes it difficult to fully understand the effect of corporate strategy and the actions of corporate managers, particularly in response to a changing environment. The evidence in this article shows that within a single industry, where managers face the same external environment, time-varying corporate effects associated with corporate level managerial decisions are statistically significant. We introduce the concept of dynamic managerial capabilities to underpin the finding of heterogeneity in managerial decisions and firm performance in the face of changing external conditions. Copyright © 2003 John Wiley & Sons, Ltd.
1,320 citations
TL;DR: It is found that timing, cost, and learning effects foster the emergence of robust performance differences among firms with strikingly similar dynamic capabilities, and the results show that even small initial Differences among firms can generate significant intraindustry differential firm performance.
Abstract: This paper explores how the dynamic capabilities of firms may be linked to differential firm performance within an industry. A formal model is presented in which dynamic capabilities are treated as a set of routines guiding the evolution of a firm's resource configuration. The model centers on the endogenous choice firms make between resource deployment through imitation and experimentation in order to generate alternative resource configurations. Three performance-relevant attributes of dynamic capabilities are proposed: timing, cost, and learning of resource deployment. Theoretical propositions are developed that suggest how these attributes contribute to the emergence of differential intraindustry firm performance. Simulation analysis offers insights into the trajectories of evolutionary change engendered by dynamic capability, and serves to refine the theoretical propositions. It is found that timing, cost, and learning effects foster the emergence of robust performance differences among firms with strikingly similar dynamic capabilities. Moreover, the results show that even small initial differences among firms can generate significant intraindustry differential firm performance, especially when the effects of timing, cost and learning are combined. Copyright © 2002 John Wiley & Sons, Ltd.
1,246 citations
TL;DR: In this paper, the authors examined the effects of two forms of knowledge exchange together with the prior duration of the buyer-supplier relationship and found similar interaction patterns in two survey samples of Japanese and U.S. automotive suppliers.
Abstract: We study sources of operational performance improvement in supplier partnerships. We argue that supplier performance will benefit most where time-bound relational assets have developed between a buyer and supplier and the firms exploit the resulting communication efficiency by transferring productive knowledge. We examine the effects of two forms of knowledge exchange together with the prior duration of the buyer–supplier relationship. We find similar interaction patterns in two survey samples of Japanese and U.S. automotive suppliers. The effect of ordinary technical exchanges on supplier performance improvement does not vary with relationship duration. The effect of higher-level technology transfer, however, grows more positive as relationship duration increases. Other results show relevant contrasts consistent with heterogeneous sourcing behavior between the two countries. The findings highlight the role of relational assets and show that it is important to distinguish between simple techniques and higher-level technological capabilities when studying interfirm relationships. This research extends the literatures on knowledge transfer, buyer–supplier partnerships, and the performance dynamics of interfirm and intrafirm relationships in general. Copyright © 2002 John Wiley & Sons, Ltd.
972 citations
TL;DR: It is suggested that a more expansive discussion of sustained differences among firms and thereby develop a broad theory of competitive heterogeneity is suggested.
Abstract: Although the resource-based view (RBV) is one of the most popular and fruitful areas of strategy research, it often perplexes scholars from other disciplines. Also, it is unclear whether strategy scholars themselves agree on the RBV's basic issues and premises. To clarify the contribution of the RBV, in this paper we elaborate its basic tenets and relate them to other current research on interfirm performance variance. We suggest a more expansive discussion of sustained differences among firms and thereby develop a broad theory of competitive heterogeneity. Copyright © 2003 John Wiley & Sons, Ltd.
936 citations
TL;DR: In this article, a case study of the strategic planning systems of eight of the world's largest oil companies identified fundamental changes in the nature and role of strategic planning since the end of the 1970s.
Abstract: The long-running debate between the ‘rational design’ and ‘emergent process’ schools of strategy formation has involved caricatures of firms' strategic planning processes, but little empirical evidence of whether and how companies plan. Despite the presumption that environmental turbulence renders conventional strategic planning all but impossible, the evidence from the corporate sector suggests that reports of the demise of strategic planning are greatly exaggerated. The goal of this paper is to fill this empirical gap by describing the characteristics of the strategic planning systems of multinational, multibusiness companies faced with volatile, unpredictable business environments. In-depth case studies of the planning systems of eight of the world's largest oil companies identified fundamental changes in the nature and role of strategic planning since the end of the 1970s. The findings point to a possible reconciliation of ‘design’ and ‘process’ approaches to strategy formulation. The study pointed to a process of planned emergence in which strategic planning systems provided a mechanism for coordinating decentralized strategy formulation within a structure of demanding performance targets and clear corporate guidelines. The study shows that these planning systems fostered adaptation and responsiveness, but showed limited innovation and analytical sophistication. Copyright © 2003 John Wiley & Sons, Ltd.
921 citations
TL;DR: In this article, the authors argue that business planning is an important precursor to action in new ventures, by helping firm founders to make decisions, to balance resource supply and demand, and to turn abstract goals into concrete operational steps.
Abstract: Many prior researchers have criticized business planning, arguing that it interferes with the efforts of firm founders to undertake more valuable actions to develop their fledgling enterprises. In this paper, we challenge this negative view of business planning, arguing that business planning is an important precursor to action in new ventures. By helping firm founders to make decisions, to balance resource supply and demand, and to turn abstract goals into concrete operational steps, business planning reduces the likelihood of venture disbanding and accelerates product development and venture organizing activity. Empirically, we examine 223 new ventures initiated in the first 9 months of 1998 by a random sample of Swedish firm founders and provide support for our hypotheses. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors investigate the contingent value of interorganizational relationships at the time of a young firm's initial public offering (IPO) and compare the signaling value to young firms of having ties with two types of inter-organizational partnerships: endorsement relationships such as those with venture capital firms and investment banks, and strategic alliance partnerships.
Abstract: This paper investigates the contingent value of interorganizational relationships at the time of a young firm's initial public offering (IPO). We compare the signaling value to young firms of having ties with two types of interorganizational partnerships: endorsement relationships such as those with venture capital firms and investment banks, and strategic alliance partnerships. We propose that, under different equity market conditions, potential investors in an issuing firm attend to different types of uncertainty; attention to these different types of uncertainty affects investors' perceptions of the relative value of a young firm's different kinds of endorsements and partnerships and, hence, IPO success. Results from a sample of young biotechnology firms show that ties to prominent venture capital firms are particularly beneficial to IPO success during cold markets, while ties to prominent investment banks are particularly beneficial to IPO success during hot markets; a firm's strategic alliances with major pharmaceutical/health care firms did not have such contingent effects. Implications for understanding the contingent value of interorganizational ties are discussed. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: This article examined the effect of strategic decision speed on subsequent firm performance and identified environmental and organizational characteristics that relate to decision speed and concluded that fast strategic decision-making predicts subsequent firm growth and profit.
Abstract: This 4-year study examines the effect of strategic decision speed upon subsequent firm performance and identifies environmental and organizational characteristics that relate to decision speed. We draw upon strategic decision-making theory and organization theory to propose that strategic decision speed mediates the relation between environmental and organizational characteristics and performance. Measures of business environment, organization structure, strategic decision speed, and firm performance (growth and profitability) were collected from 318 CEOs from 1996 to 2000. Structural equation modeling confirmed that fast strategic decision-making predicts subsequent firm growth and profit and mediates the relation of dynamism, munificence, centralization, and formalization with firm performance. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: Wang et al. as mentioned in this paper found that the impact of slack on performance is curvilinear, which resembles inverse U-shaped curves and called for a contingency perspective to specify the nature of slack when discussing its impact on firm performance.
Abstract: An Erratum has been published for this article in Strategic Management Journal 25(3) 2004, 307.
How does organizational slack affect firm performance? Organization theory posits that slack, despite its costs, has a positive impact on firm performance. In contrast, agency theory suggests that slack breeds inefficiency and inhibits performance. The empirical evidence, largely from developed economies, has been inconclusive. Moreover, little effort has been made to empirically test whether such an impact (positive or negative) is linear or curvilinear. This article joins the debate by extending empirical work to the largely unexplored context of economic transitions. Specifically, two studies, based on survey and archival data (N = 57 and 1532 firms, respectively), are undertaken in China's emerging economy. Our results suggest (1) that organization theory generates stronger predictions when dealing with unabsorbed slack, and (2) that agency theory yields stronger validity when focusing on absorbed slack. Furthermore, we also find that the impact of slack on performance is curvilinear, which resembles inverse U-shaped curves. Overall, our findings call for a contingency perspective to specify the nature of slack when discussing its impact on firm performance. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors revisited the question of whether firms' performance is driven primarily by industry or firm factors, extending past studies in two major ways: first, they used value-based measures of performance (economic profit or residual income and market-to-book value) instead of accounting ratios (such as return on assets).
Abstract: In this study we revisit the question of whether firms' performance is driven primarily by industry or firm factors, extending past studies in two major ways. Firstly, in a departure from past research, we use value-based measures of performance (economic profit or residual income and market-to-book value) instead of accounting ratios (such as return on assets). We also use a new data set and a different statistical approach for testing the significance of the independent effects. Secondly, we examine whether the findings of past research can be generalized across all firms in an industry or whether they apply to a particular class of firms within the same industry. We find that a significant proportion of the absolute estimates of the variance of firm factors is due to the presence of a few exceptional firms in any given industry. In other words, only for a few dominant value creators (leaders) and destroyers (losers) do firm-specific assets seem to matter significantly more than industry factors. For most other firms, i.e., for those that are not notable leaders or losers in their industry, however, the industry effect turns out to be more important for performance than firm-specific factors. Copyright © 2002 John Wiley & Sons, Ltd.
TL;DR: In this paper, the 4I framework of organizational learning is used to examine the phenomenon of strategic renewal at Canada Post Corporation (CPC) and illustrates the underlying processes that form the tension between exploration and exploitation, demonstrating why strategic renewal is so challenging.
Abstract: This paper attempts to fill an important gap in the integration of strategy and organizational learning through empirical research that examines the process of strategic renewal using a comprehensive framework of organizational learning. The 4I framework of organizational learning is used to examine the phenomenon of strategic renewal at Canada Post Corporation (CPC). The study illustrates the underlying processes that form the tension between exploration and exploitation, demonstrating why strategic renewal is so challenging. Furthermore, it challenges assumptions about organizational learning, suggesting that we need to demystify organizational learning by removing the halo that surrounds it. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this article, a model based on transaction cost economics, the resource-based view, and real options theory was developed to examine how transaction-level characteristics, firm-specific capabilities, and product-market scope influence the governance of production.
Abstract: A large literature has successfully employed transaction cost economic theory to describe how exchange conditions affect the optimal form of organization. However, this approach has historically not accounted for the influence of firm-specific attributes on the governance decision. This paper develops a model based on insights from transaction cost economics, the resource-based view, and real options theory to examine how transaction-level characteristics, firm-specific capabilities, and product-market scope influence the governance of production. Empirical evidence derived from analysis of 469 make-or-buy decisions involving 117 semiconductor firms indicates that decisions regarding the governance of production activities are strongly influenced by both transaction- and firm-level effects. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors find support for the role of experiential learning in the international expansion process by extending the stages model of internationalization to incorporate a sophisticated consideration of temporal and cross-national variation in the credibility of the policy environment.
Abstract: We find support for the role of experiential learning in the international expansion process by extending the stages model of internationalization to incorporate a sophisticated consideration of temporal and cross-national variation in the credibility of the policy environment. Using a sample of 3857 international expansions of 665 Japanese manufacturing firms, we build on the concepts of uncertainty and experiential learning, to show that firms that had gathered relevant types of international experience were less sensitive to the deterring effect of uncertain policy environments on investment. One implication of our results is that research on international strategy should emphasize understanding the political institutions that constrain or enable political actors, just as entry mode research has done. A second implication is that research in the stages model of internationalization should give the same weight to the policy environment as a source of uncertainty to a firm, as it has given to cultural, social and market institutions. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In cooperative game theory, rents appear as negotiated payments for the services of scarce valuable resources, and the division of surplus is determined by the relative values created by different use combinations of resources.
Abstract: Whereas prices serve to allocate many resources in market economies, there remain vast reservoirs of unpriced resources to be managed. Business management and strategy concerns the creation, evaluation, manipulation, administration, and deployment of unpriced specialized scarce resource combinations. This paper applies the formalism of cooperative game theory to these concerns. In cooperative game theory, rents appear as the negotiated payments for the services of scarce valuable resources. The division of surplus is determined by the relative values created by different use combinations of resources. Within this framework, the strategy problem is clearly seen as one of discovering or estimating the value of various resource combinations. New wealth can be created by trade in resources as long as there are hitherto unexamined combinations. Copyright 2003 John Wiley & Sons, Ltd.
TL;DR: This article examined how industrial conditions influence the level of executives' managerial networking with decision-makers in other entities such as buyers, suppliers, competitors, distributors, and regulators in an emerging market.
Abstract: This study examines how industrial conditions influence the level of executives' managerial networking with decision-makers in other entities such as buyers, suppliers, competitors, distributors, and regulators in an emerging market. Corroborating a view that social capital holds contingent value, we theorize that executives facing different industrial conditions have different levels of commitment to exploiting interpersonal ties for fulfilling organizational needs. We propose that managerial networking is influenced by exogenous industrial attributes such as structural uncertainty, sales growth, regulatory stringency, competitive pressure, and production capacity utilization. Our analysis of executives in 364 firms in China demonstrates that the level of managerial networking increases when uncertainty, regulation, and competition increase and production capacity utilization decreases. For a specific firm, the link between industrial dynamics and managerial networking is moderated by its strategic proactiveness. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors argue that the form of competition that each firm chooses will determine the strategic value to the firm of maintaining financial slack, and that firms pursuing such a strategy that fail to recognize the value of financial slack are likely to perform poorly.
Abstract: In this paper, we argue that consideration of firm strategy can help illuminate the choices managers make between debt and equity financing. Within an industry, the form of competition that each firm chooses will determine the strategic value to the firm of maintaining financial slack. Our empirical analysis yields strong support for the proposition that financial slack should be a particularly critical strategic imperative for firms pursuing a competitive strategy premised on innovation. We also demonstrate that firms pursuing such a strategy that fail to recognize the value of financial slack are likely to perform poorly. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors suggest a framework for analyzing strategic factor market imperfections and suggest that a strategic opportunity exists whenever prices fail to reflect the value of a resource's best use.
Abstract: As emphasized by Barney (1986), any explanation of superior profitability must account for why
the resources supporting such profitability could have been acquired for a price below their
rent-generating capacity. Building upon the literature iti economics on coordination failures
and incomplete markets, we suggest a framework for analyzing such strategic factor market
inefficiencies. Our point of departure is that a strategic opportunity exists whenever prices fail
to reflect the value of a resource's best use. This paper examines the challenges of imputing a
resource's value in the absence of explicit price guidance and suggests the likely characteristics of
strategic opportunities. Our framework also suggests that the discovery of strategic opportunity
is often a matter of 'serendipity' and access to relevant idiosyncratic resources. This latter
observation provides prescriptive advice, although the analysis also explains why more detailed
guidance has to be firm specific.
TL;DR: In this paper, the authors argue that highperforming CEOs vary their relative scanning emphases on different domains according to the level of dynamism they perceive in their external environments, and they use dominant logic and sector importance to develop predictions about which external domains and which internal domains should receive relatively more or less scanning emphasis.
Abstract: Chief executives must allocate their scarce time for scanning efforts among relevant domains of their firms' external environment and their firms' internal circumstances. We argue that high-performing CEOs vary their relative scanning emphases on different domains according to the level of dynamism they perceive in their external environments. The concepts of dominant logic and sector importance were used to develop predictions about which external domains and which internal domains should receive relatively more or less scanning emphasis in external environments that, overall, are more dynamic or more stable. A field survey of 105 single-business manufacturing firms evaluated CEOs' scanning emphases and firm performance. Results indicated that, for dynamic external environments, relatively more CEO attention to the task sectors of the external environment and to innovation-related internal functions was associated with high performance. In stable external environments, however, simultaneously increased scanning of the general sectors in the external environment and efficiency-related internal functions produced higher performance. These relationships were strongest between relative scanning emphases among domains and sales growth. We discuss the implications of these results for researchers and practitioners. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: This article found that the relationship between economic performance and international asset dispersion is positive, but country environment diversity is negatively associated with performance, with a positive interaction between them, and disentangled the unique effects of the latent subcomponents of geographic scope on firm performance.
Abstract: Through an internalization theory lens, an argument is developed to suggest that the traditional concept of geographic scope should be split into two related, but more precise, elements of international asset dispersion and country environment diversity. Subsequently, these new concepts are tested using a structural equation modeling approach on a sample of 580 large multinational enterprises (MNEs). We find that the relationship between economic performance and international asset dispersion is positive, but that country environment diversity is negatively associated with performance, with a positive interaction between them. This study adds to our theoretical understanding of MNEs, and also provides a bridge between the mixed findings of prior research on multinationality by disentangling the unique effects of the latent subcomponents of geographic scope on firm performance. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors integrate agency and behavioral perspectives to develop a theory of reasoned risk-taking, whereby the nature of risks undertaken is a consequence of the interaction of governance mechanisms and stakeholder characteristics.
Abstract: Research on the governance of risky ventures, like the initial public offerings (IPOs) of high-technology firms, has focused primarily on the relationship between governance mechanisms and firm performance. While such an emphasis is clearly important, it does little to shed light on potential relationships between governance and the strategies pursued by risky firms, nor does it take into account the complementary role of key stakeholders in affecting those strategies. To partially remedy this deficit we integrate agency and behavioral perspectives to develop a theory of ‘reasoned risk-taking,’ whereby the nature of risks undertaken is a consequence of the interaction of governance mechanisms and stakeholder characteristics. We demonstrate our theory by predicting when corporate governance should be associated with strategic risk-seeking beyond a firm's technical core—as seen in the degree to which it has expanded internationally. Surprisingly, even though venture capitalists (VC) are risk specialists, we find that technology-based IPO firms are less likely (i.e., a negative relationship) to have extensive global sales when they are backed by a VC. In support of our reasoned risk-taking theoretical framework, we find that VCs are indeed risk-seeking when VC backing is complemented by the international experience of their board appointees, top management team (TMT) members, or both. IPO firms with significant insider ownership are similarly global risk-seekers, and those effects are strongest with an internationally seasoned board and TMT at the helm. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors argue that while social capital is essential for the acquisition, integration, and release of resources at the core of a dynamic capability, actors can also use social capital for personal gain.
Abstract: Who reaps the fruits of a dynamic capability? We argue that while social capital is essential for the acquisition, integration, and release of resources at the core of a dynamic capability, actors can also use social capital for personal gain. Thus, social capital may be a key to understanding both rent generation and rent appropriation. Even when causal ambiguity obscures individual contributions, they may use their social capital to establish credible claims on the rent. Specifically, employees who occupy structural holes, span organizational boundaries, or who are highly central may be most able to appropriate rent because their social capital grants credibility to their claims. Rent that is appropriated in this way may be unobservable in performance measures that fail to distinguish normal compensation from rent. We contribute by identifying the specific role of social capital in a dynamic capability and linking social capital to rent appropriation patterns. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors apply a conceptual framework to questions of how, why, and when founders participate in the firms that they establish and empirically test for the persistent influence of the founder on the firm after start-up.
Abstract: The purpose of this research is to apply a conceptual framework to questions of how, why, and when founders participate in the firms that they establish and to empirically test for the persistent influence of the founder on the firm after start-up. A definition of the term ‘founder’ is proposed. Empirical tests compare firms with founder CEOs to those with nonfounder CEOs to determine whether governance and ownership relationships are distinguishable at initial public offering (IPO). In addition, investor reaction to founder-led firms at IPO is tested. Results suggest that founder influence does persist in governance and ownership arrangements and that the stock market reaction to founder-led firms is higher than for the comparison group, relative to accounting value. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this article, a market-based and resource-based framework for scanning complex competitive fields is proposed, which reveals relevant commonalities in an otherwise heterogeneous competitive set, and also advances resourcebased theory as a theory of competitive advantage.
Abstract: Heterogeneity among rivals implies that each firm faces a unique competitive set, despite overlapping market domains. This suggests the utility of a firm-level approach to competitor identification and analysis, particularly under dynamic environmental conditions. We take such an approach in developing a market-based and resource-based framework for scanning complex competitive fields. By facilitating a search for functional similarities among products and resources, the framework reveals relevant commonalities in an otherwise heterogeneous competitive set. Beyond its practical contribution, the paper also advances resource-based theory as a theory of competitive advantage. Most notably, we show that resource substitution conditions not only the sustainability of a competitive advantage, but the attainment of competitive advantage as well. With equifinality among resources of different types, the rareness condition for even temporary competitive advantage must include resource substitutes. It is not rareness in terms of resource type that matters, but rareness in terms of resource functionality. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: The empirical analysis showed that many firms designed strategies to share technological knowledge with competitors, and those firms that shared knowledge with their innovation system earned higher innovative performance than firms that did not share knowledge.
Abstract: This paper explores the relationship between firms' strategies to share knowledge with their innovation system and innovative performance. The empirical analysis showed that many firms designed strategies to share technological knowledge with competitors, and those firms that shared knowledge with their innovation system earned higher innovative performance than firms that did not share knowledge. In addition, firms that interacted with their global innovation system earned higher innovative performance than firms that interacted with only their national innovation system. These results should help managers and researchers understand how to devise technology strategies in globally integrated industries. Copyright © 2003 John Wiley & Sons, Ltd.
TL;DR: In this article, a study of some two dozen firms shows how some of them were able to overcome this dilemma by building not so much on resources and capabilities as on asymmetries, typically skills, processes, or assets a firm's competitors do not and cannot copy at a cost that affords economic rents.
Abstract: The resource-based view of the firm postulates that sustainable abnormal rents can accrue to firms having valuable, rare, inimitable, non-substitutable resources and capabilities. Given these criteria, sustainable resources are hard to attain. Our study of some two dozen firms shows how some of them were able to overcome this dilemma by building not so much on resources and capabilities as on asymmetries. Asymmetries are typically skills, processes, or ‘assets’ a firm's competitors do not and cannot copy at a cost that affords economic rents. They are rare, inimitable and non-substitutable, although not connected to any engine of value creation, and, in fact, often act as liabilities. By discovering and reconceptualizing these asymmetries, embedding them within a complementary organizational design, and leveraging them across appropriate market opportunities, many firms were able to turn asymmetries into sustainable capabilities. Copyright © 2003 John Wiley & Sons, Ltd.