Showing papers in "Strategic Management Journal in 2010"
TL;DR: In this article, the authors characterize the external environment according to the structure of interdependence and show that the success of an innovating firm often depends on the efforts of other innovators in its environment.
Abstract: The success of an innovating firm often depends on the efforts of other innovators in its environment. How do the challenges faced by external innovators affect the focal firm's outcomes? To address this question we first characterize the external environment according to the structure of interdependence. We follow the flow of inputs and outputs in the ecosystem to distinguish between upstream components that are bundled by the focal firm, and downstream complements that are bundled by the firm's customers. We hypothesize that the effects of external innovation challenges depend not only on their magnitude, but also on their location in the ecosystem relative to the focal firm. We identify a key asymmetry that results from the location of challenges relative to a focal firm—greater upstream innovation challenges in components enhance the benefits that accrue to technology leaders, while greater downstream innovation challenges in complements erode these benefits. We further propose that the effectiveness of vertical integration as a strategy to manage ecosystem interdependence increases over the course of the technology life cycle. We explore these arguments in the context of the global semiconductor lithography equipment industry from its emergence in 1962 to 2005 across nine distinct technology generations. We find strong empirical support for our framework. Copyright © 2009 John Wiley & Sons, Ltd.
1,605 citations
TL;DR: In this paper, the authors examined the effect of a firm's intangible resources in mediating the relationship between corporate responsibility and financial performance and concluded that there is no direct relationship between corpora responsibility and performance.
Abstract: This paper examines the effects of a firm's intangible resources in mediating the relationship between corporate responsibility and financial performance. We hypothesize that previous empirical findings of a positive relationship between social and financial performance may be spurious because the researchers failed to account for the mediating effects of intangible resources. Our results indicate that there is no direct relationship between corporate responsibility and financial performance—merely an indirect relationship that relies on the mediating effect of a firm's intangible resources. We demonstrate our theoretical contention with the use of a database comprising 599 companies from 28 countries. Copyright © 2009 John Wiley & Sons, Ltd.
1,420 citations
TL;DR: In this article, the authors conduct a firm-level analysis of the impact of breadth in both innovation objectives and knowledge sources and find that broader horizons with respect to innovation objectives are associated with successful innovation.
Abstract: Given the inherent risk of innovative activity. firms can improve the odds of success by pursuing multiple parallel objectives. Because innovation draws on many sources of ideas, firms also may improve their odds of successful innovation by accessing a large number of knowledge sources. In this study, we conduct one of the first firm-level statistical analyses of the impact on innovation of breadth in both innovation objectives and knowledge sources. The empirical results suggest that broader horizons with respect to innovation objectives and knowledge sources are associated with successful innovation. We do not find diminishing returns to breadth in innovation objectives, which suggests that firms may tend to search too narrowly. We interpret these results in light of well-known cognitive biases toward searching in relatively familiar domains. Copyright (C) 2009 John Wiley & Sons, Ltd.
1,145 citations
TL;DR: SMEs' performance is likely to improve as they increase the degree to which they mirror large manufacturing firms with respect to formal strategy and structure, and toWhich they recognize that innovation culture and strategy are closely aligned throughout the innovation process.
Abstract: Small and medium enterprises (SMEs) in the manufacturing sector make a significant contribution to economic growth, yet most of the research into innovation management in the manufacturing sector has focused on large organizations. This article, however, identifies innovation drivers and their performance implications in manufacturing SMEs. Its study gathered survey data from a sample of 600 Australian SMEs and found that SMEs are similar to large firms with respect to the way that innovation strategy and formal structure are the key drivers of their performance, but do not appear to utilize innovation culture in a strategic and structured manner. This study therefore concludes that SMEs' performance is likely to improve as they increase the degree to which they mirror large manufacturing firms with respect to formal strategy and structure, and to which they recognize that innovation culture and strategy are closely aligned throughout the innovation process. Copyright © 2010 John Wiley & Sons, Ltd.
754 citations
TL;DR: In this article, a firm that manages for stakeholders allocates more resources to satisfy the needs and demands of its legitimate stakeholders than would be necessary to simply retain their willful participation in the firm's productive activities.
Abstract: A firm that manages for stakeholders allocates more resources to satisfy the needs and demands of its legitimate stakeholders than would be necessary to simply retain their willful participation in the firm's productive activities. We explain why this sort of behavior unlocks additional potential for value creation, as well as the conditions that either facilitate or disrupt the value-creation process. Firms that manage for stakeholders develop trusting relationships with them based on principles of distributional, procedural, and interactional justice. Under these conditions, stakeholders are more likely to share nuanced information regarding their utility functions, thereby increasing the ability of the firm to allocate its resources to areas that will best satisfy them (thus increasing demand for business transactions with the firm). In addition, this information can spur innovation, as well as allow the firm to deal better with changes in the environment. Competitive advantages stemming from a managing-for-stakeholders approach are argued to be sustainable because they are associated with path dependence and causal ambiguity. These explanations provide a strong rationale for including stakeholder theory in the discussion of firm competitiveness and performance. Copyright © 2009 John Wiley & Sons, Ltd.
702 citations
TL;DR: The creation and management of temporary competitive advantages has emerged as an alternative to sustainable models of competitive advantage in the strategy literature as discussed by the authors, and a review of the literature and questions related to the antecedents, consequences and the management temporary advantage is presented in this special issue.
Abstract: The creation and management of temporary competitive advantages has emerged as an alternative to sustainable models of competitive advantage in the strategy literature. We review the literature and discuss questions related to the antecedents, consequences and the management temporary advantage in the introduction of this special issue. The overall goal is to ask: What would the field of strategic management look like if sustainable advantages did not exist? We summarize the papers published in this special issue and highlight directions for future research. Copyright © 2010 John Wiley & Sons, Ltd.
615 citations
TL;DR: It is submitted that board capital breadth leads to more strategic change, while board capital depth leads to less, and CEO power as a moderator of these relationships is recognized.
Abstract: We develop the construct of board capital, composed of the breadth and depth of directors' human and social capital, and explore how board capital affects strategic change. Building upon resource dependence theory, we submit that board capital breadth leads to more strategic change, while board capital depth leads to less. We also recognize CEO power as a moderator of these relationships. Our hypotheses are tested using a random sample of firms on the S&P 500. We find support for the effect of board capital on strategic change, and partial support for the moderating effect of CEO power. Copyright © 2010 John Wiley & Sons, Ltd.
579 citations
TL;DR: This article found that firms from home countries characterized by weaker institutional constraints on policy makers or greater redistributive pressures associated with political rent seeking will be less sensitive to host-country policy risk in their international expansion strategies.
Abstract: Whereas conventional wisdom holds that multinational enterprises (MNEs) invest less in host countries that pose greater policy risk—the risk that a government will opportunistically alter policies to expropriate an investing firm’s profits or assets—we argue that MNEs vary in their response to host-country policy risk as a result of differences in organizational capabilities for assessing such risk and managing the policy-making process. We hypothesize that firms from home countries characterized by weaker institutional constraints on policy makers or greater redistributive pressures associated with political rent seeking will be less sensitive to host-country policy risk in their international expansion strategies. Moreover, firms from home countries characterized by sufficiently weak institutional constraints or sufficiently strong redistributive pressures will seek out riskier host countries for their international investments to leverage their political capabilities, which permit them to attain and defend attractive positions or industry structures. We find support for our hypotheses in a statistical analysis of the foreign direct investment location choices of MNEs in the electric power generation industry during the period 1990–1999, the industry’s first decade of internationalization. Copyright 2010 John Wiley & Sons, Ltd.
555 citations
TL;DR: It is proposed that new ventures' ties with service intermediaries enable the ventures to plug into these networks and contribute to the ventures' product innovation by broadening the scope of their external innovation search and reducing their search cost.
Abstract: In this study, we examine the relationships between new ventures' ties with service intermediaries (i.e., technology service firms, accounting and financial service firms, law firms, and talent search firms) and their product innovation in the context of a technology cluster. Because service intermediaries sit at the intersection of many firms, organizations and industries, they maintain extensive networks in a cluster. We propose that new ventures' ties with service intermediaries enable the ventures to plug into these networks and contribute to the ventures' product innovation by broadening the scope of their external innovation search and reducing their search cost. Moreover, we argue that the positive relationships between new ventures' ties with service intermediaries and their product innovation will become stronger when search in the networks in the cluster is more important to the ventures' product innovation. Based upon a sample of new ventures in a technology cluster in China, our results support these arguments. Copyright (C) 2009 John Wiley & Sons, Ltd.
518 citations
TL;DR: In this paper, the authors hypothesize that internal exploitation experience has positive effects on R&D project performance, while alliance exploration experience has negative effects, and they further posit that an internal exploration competence allows firms to leverage their external exploitation experience more fully.
Abstract: Although one tenet in the alliance literature is that firms learn from prior experience, we posit that any potential learning effects depend on the type of experience. In particular, we hypothesize that alliance exploitation experience has positive effects on R&D project performance, while alliance exploration experience has negative effects. We further posit that an internal exploration competence allows firms to leverage their external exploitation experience more fully. In contrast, when firms combine internal exploitation experience with external exploration experience, the negative effects on R&D project performance become more pronounced. To test this integrative model of organizational learning, we leverage a unique and detailed dataset of 412 R&D projects in biotechnology conducted by large pharmaceutical companies between 1980 and 2000. Using a competing risk event history model predicting successful product approval versus project termination, we find support for our theoretical model. Copyright © 2010 John Wiley & Sons, Ltd.
413 citations
TL;DR: In this paper, the authors examined the relationship between the level of strategic change in the pattern of resource allocation and firm performance and found that the effect of change has an inverted U-shaped relationship with firm performance.
Abstract: In this study, we examine how the relationship between the level of strategic change in the pattern of resource allocation and firm performance differs between firms led by outside CEOs and those led by inside CEOs. Based on longitudinal data on the tenure histories of 193 CEOs who left office between 1993 and 1998, we find that the level of strategic change has an inverted U-shaped relationship with firm performance. As the level of change increases from slight to moderate, performance increases; as the level of change increases from moderate to great, performance declines. Further, we find that this inverted U-shaped relationship differs between firms led by outside CEOs and those led by inside CEOs. That is, both the positive effect of strategic change on firm performance when the level of change is relatively low and the negative effect of strategic change on firm performance when the level of change is relatively high are more pronounced for outside CEOs than for inside CEOs. Supplementary analyses also suggest that this difference between outside and inside CEOs exists in later years but not in the early years of CEO tenure. Copyright © 2009 John Wiley & Sons, Ltd.
TL;DR: The diversity of FDI country origins in an industry has a positive relationship with the productivity of domestic firms in the industry and this positive relationship is stronger when domestic firms are larger, and when the technology gap between FDI and the domestic firms is intermediate.
Abstract: Prior literature on foreign direct investment (FDI) spillovers has mainly focused on how the presence of FDI affects the productivity of domestic firms. In this study, we advance the literature by examining the effect of the diversity of FDI country origins on the productivity of domestic firms. We propose that the diversity of FDI country origins can facilitate FDI spillovers by increasing the variety of technologies and management practices brought by foreign firms, to which domestic firms are exposed and that they can potentially utilize. Further, the extent to which domestic firms can utilize these technologies and practices depends upon their absorptive capacity. Using panel data on Chinese manufacturing firms during the period 1998–2003, our results support these propositions. We find that the diversity of FDI country origins in an industry has a positive relationship with the productivity of domestic firms in the industry. This positive relationship is stronger when domestic firms are larger, and when the technology gap between FDI and the domestic firms is intermediate. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: It is shown that the effects of subnational region are far stronger in China than they are in the United States, thus suggesting that regional differences are more critical in their explanatory power for firm performance in emerging economies than they were in advanced economies.
Abstract: This study examines the extent to which subnational regions can explain foreign affiliate performance in two host country settings, the United States and China, the world's two largest economies at polar ends of the economic spectrum (i.e., an advanced versus an emerging economy). Our results suggest that the subnational region is significant in explaining foreign affiliate performance, thus confirming its importance as an additional unit of analysis for firm performance. This study also shows that the effects of subnational region are far stronger in China than they are in the United States, thus suggesting that regional differences are more critical in their explanatory power for firm performance in emerging economies than they are in advanced economies. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: In this paper, a comprehensive alliance portfolio diversity construct that includes partner, functional, and governance diversity is proposed, based on the resource-and dynamic capabilities-based views of the partners' industry, organizational and national background.
Abstract: In this paper, we offer a comprehensive alliance portfolio diversity construct that includes partner, functional, and governance diversity. Grounding our work primarily with the resource- and dynamic capabilities-based views, we argue that increased diversity in partners' industry, organizational, and national background will incur added complexity and coordination costs but will provide broadened resource and learning benefits. Increased functional diversity results in a more balanced portfolio of exploration and exploitation activities that expands the firm's knowledge base while increased governance diversity inhibits learning and routine building. Hypotheses were tested with alliance portfolio and performance data for 138 multinational firms in the global automobile industry during the twenty-year period from 1985 to 2005. We found alliance portfolios with greater organizational and functional diversity and lower governance diversity were related to higher firm performance while industry diversity had a U-shaped relationship with firm performance. We suggest firms manage their alliances with a portfolio perspective, seeking to maximize resource and learning benefits by collaborating with a variety of organizations in various value chain activities while minimizing managerial costs through a focused set of governance structures. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: The authors make a clear analytical distinction between scale free capabilities and those that are subject to opportunity costs and must be allocated to one use or another, thereby shifting the discourse back to Penrose's (1959) original argument regarding the stock of organizational capabilities.
Abstract: The resource-based view on firm diversification, subsequent to Penrose (1959), has focused primarily on the fungibility of resources across domains. We make a clear analytical distinction between scale free capabilities and those that are subject to opportunity costs and must be allocated to one use or another, thereby shifting the discourse back to Penrose's (1959) original argument regarding the stock of organizational capabilities. The existence of resources and capabilities that must be allocated across alternative uses implies that profit-maximizing diversification decisions should be based upon the opportunity cost of their use in one domain or another. This opportunity cost logic provides a rational explanation for the divergence between total profits and profit margins. Firms make profit-maximizing decisions to increase total profit via diversification when the industries in which they are currently competing become relatively mature. Due to the spreading of these capabilities across more segments, we may observe that firms' profit-maximizing diversification actions lead to total profit growth but lower average returns. The model provides an alternative explanation for empirical observations regarding the diversification discount. The self-selection effect noted in recent work in corporate finance may not be indicative of inferior capabilities of diversifying firms but of the limited opportunity contexts in which these firms are operating. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors examined how several hundred firms responded to corporate environmental ratings issued by a prominent independent social rating agency, and take advantage of an exogenous shock that occurred when the agency expanded the scope of its ratings.
Abstract: While many rating systems seek to help buyers overcome information asymmetries when making purchasing decisions, we investigate how these ratings also influence the companies being rated. We hypothesize that ratings are particularly likely to spur responses from firms that receive poor ratings, and especially those that face lower-cost opportunities to improve or that anticipate greater benefits from doing do. We test our hypotheses in the context of corporate environmental ratings that guide investors to select ‘socially responsible,’ and avoid ‘socially irresponsible,’ companies. We examine how several hundred firms responded to corporate environmental ratings issued by a prominent independent social rating agency, and take advantage of an exogenous shock that occurred when the agency expanded the scope of its ratings. Our study is among the first to theorize about the impact of ratings on subsequent performance, and we introduce important contingencies that influence firm response. These theoretical advances inform stakeholder theory, institutional theory, and economic theory. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: This study seeks to improve understanding of the resource-performance link in two main ways: first, a careful measurement of resources and capabilities in a well-defined functional area (sales and distribution) is shown, and second, four clusters of firms that deploy different configurations of Resources and capabilities are identified.
Abstract: As one of the most widely accepted theoretical perspectives in strategy, the resource-based view (RBV) suggests that a firm's resources underlie its ability to achieve competitive advantage. However, much of the extant work in this stream has examined the characteristics that resources must have in order to yield rents, while efforts to specify the crucial link between resources and value creation have been sparse. As a consequence, current theory is not sufficiently clear on how different kinds of resources and capabilities contribute to performance, nor does it clarify how firms can combine different resources and capabilities to achieve superior performance outcomes. Analyzing data obtained from 230 technology ventures with partial least squares (PLS) structural equation modeling and cluster analysis, this study seeks to improve understanding of the resource-performance link in two main ways. Based on a careful measurement of resources and capabilities in a well-defined functional area (sales and distribution), we first show how these resources and capabilities contribute to performance in that functional area. Second, we identify four clusters of firms that deploy different configurations of resources and capabilities. Among the four configurational solutions, two are associated with superior (equifinal) performance outcomes.
TL;DR: Evidence is found to suggest that CEOs whose personalities reflect higher core self‐evaluations have a stronger positive influence on their firms' entrepreneurial orientation, and that this influence is particularly strong in firms facing dynamic environments, but negligible in stable environments.
Abstract: Although much has been attributed to a CEO's personality, one particularly intriguing, and as yet unexplored, investigation is its impact on the firm's entrepreneurial orientation. Additionally, despite calls from the upper-echelon literature, CEO personality research has been hobbled by the absence of a unifying construct that captures core dimensions of personality, and by the difficulty in obtaining such intimate assessments from executives. Building on recent advances in personality research, in particular the identification and validation of the core self-evaluation construct that captures the core facets of an executive's sense of self-potency, we develop and test a model of the impact of CEO core self-evaluation on entrepreneurial orientation. Then, consistent with upper echelons and personality theory, we specify the contingent role of environmental dynamism. Using multisource data from a sample of CEOs and their top management teams from 129 firms, including a time-lagged assessment of the firm's entrepreneurial orientation, we find evidence to suggest that CEOs whose personalities reflect higher core self-evaluations have a stronger positive influence on their firms' entrepreneurial orientation. In addition, we find that this influence is particularly strong in firms facing dynamic environments, but negligible in stable environments. Copyright © 2009 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors analyzed hundreds of board meeting transcripts and found that board members do not maintain constant levels of attention toward monitoring, but instead selectively allocate attention to their monitoring function.
Abstract: Boards of directors' attention to monitoring represents an understudied topic in corporate governance. By analyzing hundreds of board meeting transcripts, we find that board members do not maintain constant levels of attention toward monitoring, but instead selectively allocate attention to their monitoring function. Drawing from the attention-based view, prospect theory, and the literature on power, we find that deviation from prior performance and CEO duality affect this allocation. Specifically, while negative deviation from prior performance increases boards' attention to monitoring, positive deviation from prior performance reduces it. The presence of duality also reduces the boards' allocation of attention to monitoring. Additional analysis demonstrates that the effects of duality are realized in part by the CEO-chair's control of the meeting's agenda and location. Finally, the results show that duality and deviation from prior performance interactively affect boards' attention to monitoring. In total, we find that board members do not consistently monitor management in order to protect shareholder value, a proposition often assumed within governance research; rather, our results demonstrate that board members' monitoring behaviors are contextually dependent. The contextual dependency of board attention to monitoring suggests that additional efforts may be needed to ensure the protection of shareholders' interests. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: Using data from 123 U.S. based MNEs over a seven‐year period and leveraging both sales‐based and subsidiary‐based measures for diversification, it is found that performance increases at an increasingly higher rate as firms concentrate more heavily on intra‐regional diversification.
Abstract: Engaging the debate regarding the appropriate level of geographic diversification for multinational enterprises (MNEs), we examine a critical, yet unresolved, question: How is performance impacted by the MNE's level of intra- and inter-regional diversification versus the total level of geographic diversification? Using data from 123 U.S.-based MNEs over a seven-year period and leveraging both sales-based and subsidiary-based measures for diversification, we find that performance increases at an increasingly higher rate as firms concentrate more heavily on intra-regional diversification. Regarding inter-regional diversification and total geographic diversification, we find inverted-U relationships to exist between firm performance and the level of geographic diversification. Different from recent research on multinationality, our robustness checks indicate no evidence of a sigmoidal relationship between the degree of regional diversification and performance. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: In this paper, the antecedents and consequences of pay dispersion were studied using theory that focuses on the social comparisons that occur among members of the CEO's top team and found that when members of this elite group were similar on a variety of dimensions, and thus likely to compare their pay, the board allowed less dispersion.
Abstract: The antecedents and consequences of pay dispersion are studied using theory that focuses on the social comparisons that occur among members of the CEO's top team. Results from a sample of large public firms indicate that when members of this elite group were similar on a variety of dimensions, and thus likely to compare their pay, the board allowed less dispersion. In addition, pay dispersion was negatively related to company performance, particularly when it exceeded what could be justified by characteristics of the industry, firm, or team. But the strength of that relationship depended on how uniformly members of the team would benefit from subsequent performance gains. Specifically, the negative effect was particularly strong in firms where major differences in compensation—that is, some executives were given significantly more stock options—combined with a volatile stock price to provide only a few team members with the opportunity to realize very large financial gains in the future. The study demonstrates that the social-psychological factors that affect comparisons among members of the CEO's top team impact the board's pay setting process, which in turn affects pay dispersion, and ultimately firm performance. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: In this article, a behavioral view of decision making and two distinct decision-making processes, resource conceptualization and resource development, are compared in a simulated decision making environment representing a highly competitive and dynamically complex industry, and the authors argue that heterogeneity in the resources of rival firms arises from the interplay of these two processes.
Abstract: A framework is presented that connects managerial decision making to resource building and firm performance. The framework takes a behavioral view of decision making and distinguishes two distinct decision-making processes. First there is the creative conceptualization of new resource configurations that are intended to deliver competitive advantage. Then there is the painstaking development of resources required to implement strategy. We argue that heterogeneity in the resources of rival firms arises from the interplay of these two processes: resource conceptualization and resource development. Heterogeneity spawns performance differences that can be explained ex ante from characteristics of managerial decision-making processes. We illustrate the approach in a simulated decision-making environment representing a highly competitive and dynamically complex industry. Results from repeated simulation experiments conducted with executive and MBA students show vast differences in performance among firms, even when they started with identical resource positions. In a departure from traditional resource-based literature, we explain how these differences stem from path dependent accumulation of resources and spontaneous variety in the way rivals conceptualize resources. Copyright (C) 2010 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors examine the direct and integrated effects of sets of capability strengths and capability weaknesses on competitive advantage and its empirical correlate, relative performance, and explore how environmental and firm-specific factors influence change in these drivers of competitive advantage over time.
Abstract: Foundational RBV work suggests that firms possess capabilities that represent strengths and others that represent weaknesses. In contrast, contemporary research has examined capability strengths while largely ignoring weaknesses. Addressing this oversight, we examine the direct and integrated effects of sets of capability strengths and capability weaknesses on competitive advantage and its empirical correlate—relative performance. Additionally, we explore how environmental and firm-specific factors influence change in these drivers of competitive advantage over time. Results suggest that weakness sets have a negative effect on relative performance, while strength sets have an increasingly positive effect. The integrative effects of strength and weakness sets affect relative performance in a complex manner. For example, while high strength/low weakness firms perform at high levels, firms integrating high strength with high weakness perform well, but experience considerably more variance in their realized outcomes. Lastly, we find that the strength and weakness sets change significantly over time in markets where competition is more intense, thereby undermining the durability of competitive advantage. Our theory and results indicate that achieving temporary advantage is more difficult than previously thought and that the erosion of advantage occurs routinely as a result of dynamic and interactive rivalry. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: It is found that exporting is associated with the ex post increase in innovative productivity for both technologically leading and lagging firms, however, subsequent to exporting, technologically leading firms apply for more patents than technologically lagged firms.
Abstract: An interesting theoretical debate arises when considering firm heterogeneity in learning from exporting. One perspective intimates that technologically lagging firms stand to benefit more from exporting because exposure to technological knowledge in foreign markets allows these firms to close the gap with their more technologically endowed counterparts. A contrasting perspective posits that technologically superior firms benefit more from exporting since these firms are better equipped to translate knowledge acquired in foreign markets into innovation. Using a sample of 1,744 Spanish manufacturing firms from 1990–1997, this study empirically investigates how exporting differentially influences the patent output of technologically leading versus technologically lagging firms. We find that exporting is associated with the ex post increase in innovative productivity for both technologically leading and lagging firms. However, subsequent to exporting, technologically leading firms apply for more patents than technologically lagging firms. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: This study's findings show that the hypercompetitive environment and TMT sociobehavioral integration have direct and interacting effects on firms' action aggressiveness, and shows that performance variation is greater within this context.
Abstract: Recognizing that both the hypercompetition and competitive dynamics research streams rely on Austrian economics and its idea of temporary advantage as an intellectual cornerstone, the present study merges these related, but thus far, disparate perspectives. It develops hypotheses that relate the intensity of the hypercompetitive environment and a firm's TMT dynamics to its action aggressiveness, or the volume and speed with which a firm engages its rivals. Using a survey-based sample of 104 Taiwanese firms, this study's findings show that the hypercompetitive environment and TMT sociobehavioral integration have direct and interacting effects on firms' action aggressiveness. Moreover, action aggressiveness is an important mediator between TMT integration and firm performance, particularly under hypercompetitive conditions. As such, the study contributes to our understanding of temporary advantage by revealing TMT integration and action aggressiveness as two essential organizational mechanisms for navigating in the hypercompetitive context. Finally, reflective of temporary advantage as a defining feature of hypercompetition, our findings show that performance variation is greater within this context. The article contributes to hypercompetition and competitive dynamics research by providing an integrated perspective of competitive behavior within the broad context of hypercompetitive environment, TMT dynamics, and firm performance. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors propose a multilevel framework by bridging the resource-based view and the social network perspective, with their respective emphases on the importance of firms' internal resource endowments and external resource opportunities.
Abstract: Extending prior firm boundary research that tends to focus on economic explanations and rely on atomistic assumptions, we propose a multilevel framework by bridging the resource-based view and the social network perspective, with their respective emphases on the importance of firms' internal resource endowments and external resource opportunities. Specifically, we argue that firms' boundary choices can be better understood by considering the tension between the need for external resources and the need for risk controls, affected by internal and external resource factors at three important levels: firm characteristics, dyadic differences, and network attributes. We also explore firms' boundary choices under two conditions: whether to initiate external relationships (non-partnering vs. partnering) and whether to pursue either alliances or acquisitions if external relationships are needed. Our analyses of the United States computer industry over a nine-year span largely support our theoretical framework and demonstrate the importance of unique factors at and across individual, dyadic, and network levels in understanding firms' boundary choices. Copyright © 2009 John Wiley & Sons, Ltd.
TL;DR: Data show that interim CEO succession processes are widely employed by publicly-traded U.S. firms, and that they are associated with lower performance during the period in which the interim serves, however, whether the interim CEO also simultaneously serves as chairman moderates the impact of this type of succession on firm performance, as well as on long-term firm survival.
Abstract: Our study investigates an unexplored succession process—interim CEO successions. We define an interim CEO succession as a case where the title of chief executive officer is vacated by the incumbent and the board of directors has not announced a permanent successor, but instead designates a particular individual as ‘interim CEO,’ or ‘acting CEO,’ or ‘CEO until a permanent successor is named.’ Theory predicts that interim CEO successions will lead to the type of disruption that can harm firm performance, even after a permanent successor is appointed. Our data show that interim CEO succession processes are widely employed by publicly-traded U.S. firms, and that they are associated with lower performance during the period in which the interim serves. However, whether the interim CEO also simultaneously serves as chairman moderates the impact of this type of succession on firm performance, as well as on long-term firm survival. Copyright © 2009 John Wiley & Sons, Ltd.
TL;DR: In this article, the authors examined the impact of coordination costs and organizational rigidity on the returns to diversification and found that coordination costs offset economies of scope, while rigidity increases coordination costs.
Abstract: This paper examines the impact of coordination costs and organizational rigidity on the returns to diversification. The central thesis is that coordination costs offset economies of scope, while organizational rigidity increases coordination costs, further constraining economies of scope. The empirical tests of this proposition identify the effects of coordination and organizational rigidity costs on business unit and firm productivity, using novel data from the Economic Census on taxicab and limousine firms. The key results show that coordination and organizational rigidity costs are economically and statistically significant, while organizational rigidity itself accounts for a 16 percent decrease in paid ride-miles per taxicab in incumbent diversifiers, controlling for the other costs and benefits of diversification and incumbency. The findings suggest that coordination costs, in general, and organizational rigidity costs, in particular, limit the scope of the firm. Copyright © 2010 John Wiley & Sons, Ltd.
TL;DR: It is shown that routines are stable to the loss of key employees, but the advantages derived from them are not, which challenges the traditional argument that socially complex routines create sustainable competitive advantages.
Abstract: We extend our theoretical understanding of the effect of key employee mobility on organizational performance. We find that when an organization with an advantageous set of routines loses a key employee to a competitor, the advantaged organization's competitive position is reduced vis-a-vis the hiring competitor. What is more interesting is that we also show that the diffusion of an advantageous set of routines through the mobility of key employees may affect competitive advantage in at least two additional ways. Our findings result from an analysis of 412 competitive events between the San Francisco 49ers and all other teams in the National Football League during the 24-year period when the San Francisco 49ers perfected the routines of a strategic innovation that has become known as the West Coast Offense. First, we find that there is a loss of advantage for the organization when competitors increasingly compete against additional organizations that hired key employees from it. Second, we find that there is a loss of advantage for the organization when competitors expect future competition against additional organizations that hired key employees from it. Our results challenge the traditional argument that socially complex routines create sustainable competitive advantages because they are not easily imitated and do not rely on any single individual. Instead, we show that routines are stable to the loss of key employees, but the advantages derived from them are not. Copyright © 2009 John Wiley & Sons, Ltd.
TL;DR: In this paper, the authors report on data from a qualitative case study of a failed attempt to form an international joint venture (IJV) agreement and analyze issues related to distributive, procedural, interpersonal and informational fairness and the roles of their occurrence in the course of the formation stage of an IJV.
Abstract: We report on data from a revelatory qualitative case study of a failed attempt to form an international joint venture (IJV) agreement. We analyze issues related to distributive, procedural, interpersonal, and informational fairness and the roles of their occurrence in the course of the formation stage of an IJV. We find that perceptions of fairness types shape the partners' decision making logics (a property rights logic, a control rights logic, and a relational quality logic), which in turn influence the partners' evaluations of efficiency and equity of the proposed alliance and their decision on whether or not to form it. We develop propositions around this argument. Copyright © 2010 John Wiley & Sons, Ltd.