Showing papers in "Strategic Management Journal in 2007"
TL;DR: In this paper, the authors draw on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability.
Abstract: This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long- run business performance. The microfoundations of dynamic capabilities—the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines—which undergird enterprise-level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long-run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition. Copyright 2007 John Wiley & Sons, Ltd.
9,400 citations
TL;DR: Analysis of the evolution of strategic alliances helps transcend too simple depictions of inertia and adaptation by suggesting that initial conditions may lead to a stable 'imprinting' of fixed processes that make alliances highly inertial or to generative and evolutionary processes that makes them highly adaptive, depending on how they are set.
Abstract: We examine how the learning, along several dimensions (environment, task, process, skills, goals), that takes place in strategic alliances between firms mediates between the initial conditions and the outcomes of these alliances. Through a longitudinal case study of two projects in one alliance, replicated and extended in another four projects in two alliances, a framework was developed to analyze the evolution of cooperation in strategic alliances. Successful alliance projects were highly evolutionary and went through a sequence of interactive cycles of learning, reevaluation and readjustment. Failing projects, conversely, were highly inertial, with little learning, or divergent learning between cognitive understanding and behavioral adjustment, or frustrated expectations. Although strategic alliances may be a special case of organizational learning, we believe analyzing the evolution of strategic alliances helps transcend too simple depictions of inertia and adaptation, in particular by suggesting that initial conditions may lead to a stable 'imprinting' of fixed processes that make alliances highly inertial or to generative and evolutionary processes that make them highly adaptive, depending on how they are set.
2,236 citations
TL;DR: It is suggested that scholars avoid the tendency to test models reflecting early incarnations of the RBV and instead test those that incorporate its more contemporary theoretical extensions.
Abstract: The resource-based view (RBV) is one of the most widely accepted theories of strategic management. However, to date no systematic assessment of the RBV's level of empirical support has been conducted. In response, a sample of RBV-grounded empirical articles was analyzed from which it was found that the RBV has received only modest support overall and that this support varies considerably with the independent variable and theoretical approach employed. It is therefore suggested that scholars avoid the tendency to test models reflecting early incarnations of the RBV and instead test those that incorporate its more contemporary theoretical extensions. Copyright © 2007 John Wiley & Sons, Ltd.
1,870 citations
TL;DR: A model of knowledge management is developed that builds on the interplay between articulated and tacit knowledge at four different levels: the individual, the small group, the organization, and the interorganizational domain and the alternative N-form is characterized and suggested as more appropriate.
Abstract: A model of knowledge management is developed. It builds on the interplay between articulated and tacit knowledge at four different levels: the individual, the small group, the organization, and the interorganizational domain. The model is applied on differences between Western and Japanese patterns of knowledge management. These are related to organizational characteristics, such as employment systems, career patterns, and organization structure. Effective knowledge management is argued to require departures from the logic of hierarchical organization and the M-form structure. The alternative N-form is characterized and suggested as more appropriate. It entails combination of knowledge rather than its division, which is the basic principle in the M-form. Other attributes of the N-form are: temporary constellations of people, the importance of personnel at 'lower levels', lateral communication, a catalytic and architectural role for top management, strategies aimed at focusing and economies of depth, and heterarchical structures. In recent discussions of needed foci for the analysis of corporate strategy and theories of the firm, two types of calls for a shift of emphasis are increasingly heard. First, the internal organization and management of firms are emphasized. Rumelt, Schendel and Teece (1991: 22) stress 'organizational capabilities, rather than productmarket positions or tactics, as the enduring source of advantage.' Nelson and Winter (1982: 135) posed the challenge of developing the subject of 'organizational genetics,' indicating that 'the real work remains to be done.' Almost a decade later, Nelson (1991) insists even more strongly that differences between individual firms constitute a core problem, and that analyses have to consider firm strategies, structures and core capabilities in greater depth. The emerging ideas are claimed to serve as a basis 'not only as a guide to management, but also as a basis for a
1,610 citations
TL;DR: The use of logit and probit models has become critical parts of the management researcher's analytical arsenal, growing rapidly from almost no use in the 1980s to appearing in 15% of all articles published in Strategic Management Journal in 2005.
Abstract: The logit and probit models have become critical parts of the management researcher's analytical arsenal, growing rapidly from almost no use in the 1980s to appearing in 15% of all articles published in Strategic Management Journal in 2005. However, a review of three top strategy journals revealed numerous areas in their use and interpretation where current practice fell short of ideal. Failure to understand how these models differ from ordinary least squares can lead researchers to misunderstand their statistical results and draw incorrect conclusions regarding the theory they are testing. Based on a review of the methodological literature and recent empirical papers in three leading strategy journals, this paper identifies four critical issues in their use: interpreting coefficients, modeling interactions between variables, comparing coefficients between groups (e.g., foreign and domestic firms), and measures of model fit. For each issue, the paper provides a background, a review of current practice, and recommendations for best practice. A concluding section presents overall implications for the conduct of research with logit and probit models, which should assist both authors and readers of strategic management research. Copyright © 2007 John Wiley & Sons, Ltd.
1,376 citations
TL;DR: A network-analytic approach for identifying the evolution of firms' technological positions that permits graphical and quantitative assessments of the extent to which firms' search behavior is locally bounded, and enables firms to be positioned and grouped according to the similarities in their innovative capabilities.
Abstract: The assumption that ‘local search’ constrains the direction of corporate R&D is central in evolutionary perspectives on technological change and competition. In this paper, we propose a network-analytic approach for identifying the evolution of firms' technological positions. The approach (1) permits graphical and quantitative assessments of the extent to which firms' search behavior is locally bounded, and (2) enables firms to be positioned and grouped according to the similarities in their innovative capabilities. The utility of the proposed framework is demonstrated by an analysis of strategic partnering and the evolution of the technological positions of the 10 largest Japanese semiconductor producers from 1982 to 1992.
1,189 citations
TL;DR: The last section of this paper aims to develop an alternative approach, which aims at preserving the original merits of organizational capability and solving the rigidity issue not by integrating a dynamic dimension into the capability construct but rather by establishing a separate function (‘capability monitoring’).
Abstract: The recent discussion in the field of strategic management broadly favors the idea of dynamic capabilities in order to overcome potential rigidities of organizational capability building. The major question addressed in this paper is whether capabilities can actually be conceived as being in flux—and if so, to what extent and in which way? After briefly recapitulating the distinguishing features of organizational capabilities, path dependency, structural inertia, and commitment are identified as the main capability-rigidity drivers causing a managerial dilemma. In the search for a resolution of this dilemma different approaches of dynamic capabilities are identified and discussed. The analysis shows that the approaches suffer from inherent conceptual contradictions: the dynamization runs the risk of dissolving the original idea and strength of organizational capability building. Ultimately, capabilities would lose the strategic power attributed to them in the resource-based view. The last section of this paper therefore aims to develop an alternative approach, which aims at preserving the original merits of organizational capability and solving the rigidity issue not by integrating a dynamic dimension into the capability construct but rather by establishing a separate function (‘capability monitoring’). The suggestions mount up to a tier solution. Its logic builds on the dynamics of countervailing processes and second-level observation. Copyright © 2007 John Wiley & Sons, Ltd.
936 citations
TL;DR: This work proposes that the resources are made up of factor networks which have specific interfactor and inter-resource relationships that result in the characteristic traits being evidenced, and proposes specific paths to sustainable competitive advantage for a factor, contingent on resource factor traits and relationship configurations.
Abstract: The resource-based view (RBV) of the firm holds that certain assets with certain characteristics will lead to sustainable competitive advantage. All the traits are required to be present to result in sustainable competitive advantage. Such a trait approach overlooks the dynamics of the creation of firm resources especially the strategically important factors as identified by the resource based view theory. We propose that the resources are made up of factor networks which have specific interfactor and inter-resource relationships that result in the characteristic traits being evidenced. These strategic resource factor relationships include network type, available substitutes and cogency relationships (compensatory, enhancing and suppressing.) Specific configurations that lead to high or very high support of sustainable competitive advantage are proposed. Twenty-two specific paths to sustainable competitive advantage for a factor, contingent on resource factor traits and relationship configurations, are proposed. The implications, upon confirmation of these configurations, are discussed.
932 citations
TL;DR: It is shown that an alliance learning process that involves articulation, codification, sharing, and internalization of alliance management know-how is positively related to a firm's overall alliance success, and that process partly mediates the relationship between the alliance function and alliance success observed in prior work.
Abstract: In recent years, academics and managers have been very interested in understanding how firms develop alliance capability and have greater alliance success. In this paper, we show that an alliance learning process that involves articulation, codification, sharing, and internalization of alliance management know-how is positively related to a firm's overall alliance success. Prior research has found that firms with a dedicated alliance function, which oversees and coordinates a firm's overall alliance activity, have greater alliance success. In this paper we suggest that such an alliance function is also positively related to a firm's alliance learning process, and that process partly mediates the relationship between the alliance function and alliance success observed in prior work. This implies that the alliance learning process acts as one of the main mechanisms through which the alliance function leads to greater alliance success. Our paper extends prior alliance research by taking a first step in opening up the ‘black box’ between the alliance function and a firm's alliance success. We use survey data from a large sample of U.S.-based firms and their alliances to test our theoretical arguments. Although we only examine the alliance learning process and its relationship with firm-level alliance success, we also make an important contribution to research on the knowledge-based view of the firm and dynamic capabilities of firms in general by conceptualizing this learning process and its key aspects, and by empirically validating its impact on performance. Copyright © 2007 John Wiley & Sons, Ltd.
893 citations
TL;DR: In this paper, the authors argue that the traditional way of measuring relatedness between two businesses is incomplete because it ignores the strategic importance and similarity of the underlying assets residing in these businesses, and the way researchers have traditionally thought of relatedness is limited.
Abstract: Despite nearly 30 years of academic research on the benefits of related diversification, there is still considerable disagreement about precisely how and when diversification can be used to build long-run competitive advantage. In this paper we argue that the disagreement exists for two main reasons: (a) the traditional way of measuring relatedness between two businesses is incomplete because it ignores the ‘strategic importance’ and similarity of the underlying assets residing in these businesses, and (b) the way researchers have traditionally thought of relatedness is limited, primarily because it has tended to equate the benefits of relatedness with the static exploitation of economies of scope (asset amortization), thus ignoring the main contribution of related diversification to long-run, competitive advantage; namely the potential for the firm to expand its stock of strategic assets and create new ones more rapidly and at lower cost than rivals who are not diversified across related businesses. An empirical test supports our view that ‘strategic’ relatedness is superior to market relatedness in predicting when related diversifies outperform unrelated ones.
890 citations
TL;DR: Zhang et al. as discussed by the authors examined how various types of managerial resources (i.e., political networking and functional experience) can be beneficial to new ventures in a transition economy.
Abstract: Drawing upon the resource-based view and transaction cost economics, this study aims to examine how various types of managerial resources (ie, political networking and functional experience) can be beneficial to new ventures in a transition economy Using survey data from a sample of new ventures in China's high-technology industries, we demonstrate that managers' political networking and functional experience are positively related to new venture performance We also find that the positive relationship between functional experience and new venture performance is moderated by the type of ownership of the ventures and the level of dysfunctional competition in their environments Theoretical and managerial implications are discussed Copyright © 2007 John Wiley & Sons, Ltd
TL;DR: This special issue of the Strategic Management Journal presents creative and new thinking dealing with substantive issues and methodologies that can lead to the evolution of a new paradigm(s).
Abstract: The fundamental structural transitions in a wide variety of industries brought about by major catalysts such as deregulation, global competition, technological discontinuities, and changing customer expectations are imposing new strains on managers around the world. Old recipes do not work anymore. Managers, concerned with restoring competitiveness of their firms, are abandoning traditional approaches to strategy; they are searching for new approaches that give guidance in a turbulent environment. Many academics, confronted with the same reality, are reexamining the relevance of the concepts and tools of the strategy field. In the absence of a consistent and useful strategy paradigm that they can use, managers appear to have embraced attention to ‘implementation’ as their saviour, more or less abandoning strategy as either unimportant or uninteresting. Academics continue to search for new approaches. This special issue of the Strategic Management Journal presents creative and new thinking dealing with substantive issues and methodologies that can lead to the evolution of a new paradigm(s).
TL;DR: This paper found that strategic management's success as a field emerges from an underlying consensus that enables it to attract multiple perspectives, while still maintaining its coherent distinctiveness, as tacitly held by its members.
Abstract: It is commonly asserted that the field of strategic management is fragmented and lacks a coherent identity. This skepticism, however, is paradoxically at odds with the great success that strategic management has enjoyed. How might one explain this paradox? We seek answers to this question by relying first on a large-scale survey of strategic management scholars from which we derive an implicit consensual definition of the field—as tacitly held by its members. We then supplement this implicit definition with an examination of the espoused definitions of the field obtained from a group of boundary-spanning scholars. Our findings suggest that strategic management's success as a field emerges from an underlying consensus that enables it to attract multiple perspectives, while still maintaining its coherent distinctiveness. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors reveal the multifaceted contribution of alliance portfolios to firms' market performance and highlight the trade-offs that alliance portfolios impose on firms that seek to manage and leverage their alliances.
Abstract: This study reveals the multifaceted contribution of alliance portfolios to firms' market performance. Extending prior research that has stressed the value-creation effect of network resources, it uncovers how prominent partners may undermine a firm's capacity to appropriate value from its alliance portfolio. Analysis of a comprehensive panel dataset of 367 software firms and their 20,779 alliances suggests that the contribution of network resources to value creation varies with the complementarity of those resources. Furthermore, the relative bargaining power of partners in the alliance portfolio constrains the firm's appropriation capacity, especially when many of these partners compete in the focal firm's industry. In turn, the firm's market performance improves with the intensity of competition among partners in its alliance portfolio. These findings advance network research by highlighting the trade-offs that alliance portfolios impose on firms that seek to manage and leverage their alliances. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: In this paper, comparative longitudinal case study research is employed to investigate why and how strong dyadic interfirm ties and two alternative network architectures (a strong ties network and a dual network) impact the innovative capability of the lead firm in an alliance network.
Abstract: This paper employs comparative longitudinal case study research to investigate why and how strong dyadic interfirm ties and two alternative network architectures (a ‘strong ties network’ and a ‘dual network’) impact the innovative capability of the lead firm in an alliance network. I answer these intrinsically cross-level research questions by examining how three design-intensive furnishings manufacturers managed their networks of joint-design alliances with consulting industrial design firms over more than 30 years. Initially, in order to explore the sample lead firms' alliance behavior, I advance an operationalization of interorganizational tie strength. Next, I unveil the strengths of strong ties and the weaknesses of a strong ties network. Finally, I show that the ability to integrate a large periphery of heterogeneous weak ties and a core of strong ties is a distinctive lead firm's relational capability, one that provides fertile ground for leading firms in knowledge-intensive alliance networks to gain competitive advantages whose sustainability is primarily based on the dynamic innovative capability resulting from leveraging a dual network architecture. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: It is suggested that strategic alliances serve an important legitimating function for firms and that this role, mediated by alliance governance structure and partner selection preferences, has a significant influence on firm and alliance performance.
Abstract: Drawing on an institutional perspective, this paper suggests that strategic alliances serve an important legitimating function for firms and that this role, mediated by alliance governance structure and partner selection preferences, has a significant influence on firm and alliance performance. A theoretical framework is proposed that identifies five types of legitimacy associated with strategic alliances and the specific conditions under which legitimation may be an important outcome of strategic alliances. Propositions are developed to explain when firms are most likely to enter into alliances for legitimacy purposes and how the legitimating role of strategic alliances contributes to firm and alliance performance. The paper concludes with a summary and implications of a legitimacy-based view of alliances. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: The results suggest that complexity of strategic schemas promotes strategic flexibility and success in fast clockspeed industries, whereas focus of strategic Schemas fosters strategic persistence, which is effective in slow‐clockspeed industries.
Abstract: We examine the moderating effect of industry clockspeed on the relationship between strategic schemas, strategic flexibility and firm performance. We employ two key properties of strategic schemas: complexity and focus. Using a sample of 225 firms from 14 industries, we show that the pattern of relationships among the theoretical constructs is different in fast- and slow-clockspeed industries. The results suggest that complexity of strategic schemas promotes strategic flexibility and success in fast clockspeed industries, whereas focus of strategic schemas fosters strategic persistence, which is effective in slow-clockspeed industries. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: In this article, the impact of social capital derived from micro-managerial networking relationships and ties with top managers at other firms and government officials on macro-organizational performance using data from Ghana was examined.
Abstract: This study replicates and extends previous research focusing on China, to a sub-Saharan African emerging economy environment. Specifically, the study directly replicates the impact of social capital derived from the micro-managerial networking relationships and ties with top managers at other firms and government officials on macro-organizational performance using data from Ghana. This study further extends previous work by examining the impact of social capital derived from managerial social networking relationships and ties with community leaders on organizational performance. It examines how the relationship between social capital and organizational performance is contingent on an organization's competitive strategic orientation. The findings suggest that social capital developed from managerial networking and social relationships with top managers at other firms, government officials (political leaders and bureaucratic officials), and community leadership enhance organizational performance. The findings from the contingency analyses reveal some interesting trends. The impact of social capital on organizational performance differs between firms that pursue the different competitive strategies (low-cost, differentiation, and combination of low-cost and differentiation) and those who do not pursue those strategies. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: In contrast to prior studies examining strategic alliances as discrete governance structures (e.g., alliances vs. MA) rather, repeat collaborators are less likely to adopt contractual provisions that are informational in nature and are geared to the coordination of the alliance as discussed by the authors.
Abstract: In contrast to prior studies examining strategic alliances as discrete governance structures (e.g., alliances vs. MA rather, repeat collaborators are less likely to adopt contractual provisions that are informational in nature and are geared to the coordination of the alliance. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: It is found that synergies exist between a culture of competitiveness and knowledge development: their interaction has a positive association with performance and market turbulence moderates these relationships.
Abstract: For many firms, using their supply chains as competitive weapons has become a central element of the strategic management process in recent years. Drawing on the resource-based view and theory from the organizational learning and information-processing literatures, this study uses a sample of 201 firms to examine the influence of a culture of competitiveness and knowledge development on supply chain performance in varied market turbulence conditions. We found that synergies exist between a culture of competitiveness and knowledge development: their interaction has a positive association with performance. In addition, based on behavioral and contingency theories, we found that market turbulence moderates these relationships, having a positive influence on the knowledge development–performance link and a negative influence on the culture of competitiveness–performance link. Managers who are confident about the level of market turbulence they will face can use this sense to decide whether to emphasize developing either a culture of competitiveness or knowledge development in their supply chains. For those firms whose managers are unlikely to be able to predict the degree of turbulence they will face over time, a focus on both a culture of competitiveness and knowledge development is critical to ensuring success. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: This article identifies discipline, stretch, trust and support as the primary dimensions of organizational context and describes how each of these dimensions can be developed and how these dimensions influence the levels of individual initiative, mutual cooperation and collective learning within companies.
Abstract: Organizational context is created and renewed through tangible and concrete management actions. The context, in turn, influences the actions of all those within the company. In this article, we elaborate this theme of an interactive development of context and action that, we argue, lies at the core of a company's management process and is a key influencer of its performance. Based on a longitudinal field-study in one company, we identify discipline, stretch, trust and support as the primary dimensions of organizational context and we describe how each of these dimensions can be developed and how these dimensions, in turn, influence the levels of individual initiative, mutual cooperation and collective learning within companies. Shaping the organizational context, we suggest, is the central task of general managers and we propose our model of context as a way to assess an organization's quality of management.
TL;DR: It is useful to conceptualize strategy making in a large, complex firm as an iterated process of resource allocation, which reflects top managers' crude strategic intent in shaping strategic initiatives of business-unit managers.
Abstract: Capitalizing on the Bower-Burgelman process model of strategy making in a large, complex organization, we investigate the multilevel managerial activities that lead firms facing similar new business opportunities to respond with different strategic commitments. Our field-based data provide evidence on (I) the role of ‘corporate contexts’ that reflects top managers' crude strategic intent in shaping strategic initiatives of business-unit managers; (2) the critical influence of early business development results on increasing or decreasing middle managers' enthusiasm to the new businesses and top managers' confidence in these middle managers in a resource allocation; (3) the escalation or deescalation of a firm's strategic commitment to the new businesses as a consequence of iterations of resource allocation. We conclude that it is useful to conceptualize strategy making in a large, complex firm as an iterated process of resource allocation.
TL;DR: A differentiated productivity model of knowledge sharing in organizations proposing that different types of knowledge have different benefits for task units is developed, and a micro-foundation for understanding why and how a firm's knowledge capabilities translate into performance of knowledge work is provided.
Abstract: We develop a differentiated productivity model of knowledge sharing in organizations proposing that different types of knowledge have different benefits for task units. In a study of 182 sales teams in a management consulting company, we find that sharing codified knowledge in the form of electronic documents saved time during the task, but did not improve work quality or signal competence to clients. In contrast, sharing personal advice improved work quality and signaled competence, but did not save time. Beyond the content of the knowledge, process costs in the form of document rework and lack of advisor effort negatively affected task outcomes. These findings dispute the claim that different types of knowledge are substitutes for each other, and provide a micro-foundation for understanding why and how a firm's knowledge capabilities translate into performance of knowledge work. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors developed theoretical propositions that seek to clarify what determines the configuration and evolution of an alliance portfolio, and then presented the results of a longitudinal study to illustrate the developed theoretical framework.
Abstract: Interorganizational relationships are recognized as an increasingly important source of competitive advantage. Hence, goal-oriented management of the alliance portfolio—all the alliances of the focal firm—plays a decisive role in company performance. Consequently, the configuration and development of the alliance portfolio become important strategic issues. In light of that, this article develops theoretical propositions that seek to clarify what determines the configuration and evolution of an alliance portfolio, and then presents the results of a longitudinal study to illustrate the developed theoretical framework. Building on contingency theory and a coevolutionary framework, we were able to identify three distinctive types of portfolio strategies at business level and to illustrate how they interact with the development of the business strategy and the business environment. Encompassing all this, the study illustrates and explains developmental paths and patterns in the evolution of an alliance portfolio. The developmental course typically evolves from adapting to shaping and to exploiting (stabilizing), according to the state of strategic uncertainty and the firm's resource endowment. A sudden increase in exogenous strategic uncertainty, however, can lead to a strategic shift back to an exploration or hybrid strategy. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors extend the situational considerations explaining firm R&D search intensity beyond the behavioral theory of the firm by including shifts in the focus of attention among bankruptcy, aspirations, and slack.
Abstract: Our theory extends the situational considerations explaining firm R&D search intensity beyond the behavioral theory of the firm by including shifts in the focus of attention among bankruptcy, aspirations, and slack. We also allow that search can reflect institutionalized investment patterns within firms and industries. We find stable firm-specific R&D investment patterns (i.e., institutionalized search) and variations in R&D intensity depending on firms' situations—including performance relative to aspirations, proximity to bankruptcy, and slack. Our empirical results evidence shifts in the focus of attention relevant to explaining R&D search intensity for subsamples of firms in different situations. Copyright © 2007 John Wiley & Sons, Ltd.
TL;DR: It is proposed that competitive success and failure evolve through an ecology of organizational learning, and the conditions under which this self-reinforcing process, known in evolutionary theory as the ‘Red Queen,’ is likely to be adaptive or maladaptive.
Abstract: We propose that competitive success and failure evolve through an ecology of organizational learning. An organization facing competition is likely to engage in a search for ways to improve performance. When successful, this search results in learning that is likely to increase the organization's competitive strength, which in turn triggers learning in its rivals—consequently making them stronger competitors and so again triggering learning in the first organization. We elaborate the conditions under which this self-reinforcing process, known in evolutionary theory as the ‘Red Queen,’ is likely to be adaptive or maladaptive. Adaptive consequences are predicted only for recently experienced learning. Experience in the more distant past of an organization's life, by contrast, is predicted to backfire into a ‘competency trap.’ We predict maladaptive consequences when organizations face many, varied cohorts of rivals. We empirically distinguish these effects using ecological models of competition. Estimates of organizational failure rales reveal a Red Queen among Illinois banks, and support our predictions.
TL;DR: It is argued that chaos theory provides a useful theorectical framework for understanding the dynamic evolution of industries and the complex interactions among industry actors and, by understanding industries as complex systems, managers can improve decision making and search for innovative solutions.
Abstract: This paper argues that chaos theory provides a useful theorectical framework for understanding the dynamic evolution of industries and the complex interactions among industry actors. It is argued that industries can be conceptualized and modeled as complex, dynamic systems, which exhibit both unpredictability and underlying order. The relevance of chaos theory for strategy is discussed, and a number of managerial implications are suggested. To illustrate the application of chaos theory, a simulation model is presented that depicts the interactions between a manufacturer of computers, its suppliers, and its market. The results of the simulation demonstrate how managers might underestimate the costs of international production. The paper concludes that, by understanding industries as complex systems, managers can improve decision making and search for innovative solutions.
TL;DR: In this article, the authors study the relationship between shareholder proposal activism, managerial response, and corporate social performance (CSP) and find that shareholders are more likely to settle proposals filed by'salient' shareholders (i.e., those with power, legitimacy, and urgency).
Abstract: We study relationships between shareholder proposal activism, managerial response, and corporate social performance (CSP). We find that shareholder proposal activism reduces CSP. We infer that rather than pressuring firms to improve CSP, activism may engender diversion of resources away from CSP into political activities used by managers to resist external pressures and retain discretion. We also find that managers are more likely to settle proposals filed by ‘salient’ shareholders (i.e., those with power, legitimacy, and urgency). Settlement with salient shareholders, however, also reduces CSP, suggesting that managers’ responses are symbolic; i.e., they settle with salient shareholders to demonstrate conformance but continue to resist making the substantive changes to core policies that may compromise their discretion. Copyright 2007 John Wiley & Sons, Ltd.
TL;DR: The article focuses on how managers can understand and guide knowledge development processes in organizations and broadens strategic management to also include the advancement activities of the organization.
Abstract: The objective of this essay is to contribute to a new perspective of strategic management by developing a new theory of organizational knowledge. The article focuses on how managers can understand and guide knowledge development processes in organizations. Our epistemology broadens strategic management to also include the advancement activities of the organization. In addition to discussing development of organizational knowledge, the essay also emphasises fundamental consequences for research methodology.
TL;DR: It is argued that the lack of information on private targets limits the breadth of the acquirer's search and increases its risk of not evaluating properly the assets of private targets, and the expectation that acquirer returns from their target choice (private/public) are not universal but depend on the acquiringr's type of search and on the merging firms' attributes.
Abstract: The acquisition of privately held firms is a prevalent phenomenon that has received little attention in mergers and acquisitions research. In this study, we examine three questions: (1) What drives the acquirer's choice between public and private targets? (2) Do acquisitions of private targets elicit a more positive stock market reaction than acquisitions of public targets, which, on average, destroy value for acquirers' shareholders? (3) Do acquirers gain when their selection of a public or private target fits the theory? In this paper, we argue that the lack of information on private targets limits the breadth of the acquirer's search and increases its risk of not evaluating properly the assets of private targets. At the same time, less information on private targets creates more value-creating opportunities for exploiting private information, whereas the market of corporate control for public targets already serves as an information-processing and asset valuation mechanism for all potential bidders. Using an event study and survey data, we find that: (1) acquirers favor private targets in familiar industries and turn to public targets to enter new business domains or industries with a high level of intangible assets; (2) acquirers of private targets perform better than acquirers of public targets on merger announcement, after controlling for endogeneity bias; (3) acquirers of private firms perform better than if they had acquired a public firm, and acquirers of public firms perform better than if they had acquired a private firm. These results support the expectation that acquirer returns from their target choice (private/public) are not universal but depend on the acquirer's type of search and on the merging firms' attributes. Copyright © 2007 John Wiley & Sons, Ltd.