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Journal ArticleDOI

Resource Allocation as an Outcropping of Strategic Consistency: Performance Implications

TL;DR: Similarities in financial resource allocations across the lines of business of diversified firms may indicate corporate strategic consistency, which may lead to superior corporate performance as discussed by the authors. But, as discussed in Section 2.
Abstract: Similarities in financial resource allocations across the lines of business of diversified firms may indicate corporate strategic consistency, which may lead to superior corporate performance. In s...
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TL;DR: In this article, the authors develop a theoretical framework grounded in the "familiness" of the family firm and explore how selection processes tend to lead to family franchisor/family franchisee matches that enable a more effective sharing of complementary resources.
Abstract: The paucity of research examining family firms engaged with franchising is surprising. We theorize about differences in franchising behavior between family and nonfamily firms and the relative advantages accruing to family firms in this context. We also explore how selection processes tend to lead to family franchisor/family franchisee matches that enable a more effective sharing of complementary resources. The theoretical framework we develop is grounded in the “familiness” of the family firm as suggested by the logic of the resourcebased view. Additionally, our theoretical analysis extends and complements the frequent use of agency theory as the basis for studying franchising.

85 citations

Journal ArticleDOI
TL;DR: It is argued that to better guide managers the literature needs to develop along a complementary path – whereas past research has often focused on answering the big question of does diversification affect firm performance, this second path would focus more on identifying the precise micro-mechanisms through which diversification adds or subtracts value.
Abstract: We review the literature on the diversification-performance (D-P) relationship to a) propose that the time is ripe for a renewed attack on understanding the relationship between diversification and firm performance, and b) outline a new approach to attacking the question. Our paper makes four main contributions. First, through a review of the literature we establish the inherent complexities in the D-P relationship and the methodological challenges confronted by the literature in reaching its current conclusion of a non-linear relationship between diversification and performance. Second, we argue that to better guide managers the literature needs to develop along a complementary path – whereas past research has often focused on answering the big question of does diversification affect firm performance, this second path would focus more on identifying the precise micro-mechanisms through which diversification adds or subtracts value. Third, we outline a new approach to the investigation of this topic, based on (a) identifying the precise underlying mechanisms through which diversification affects performance; (b) identifying performance outcomes that are “proximate” to the mechanism that the researcher is studying, and (c) identifying an appropriate research design that can enable a causal claim. Finally, we outline a set of directions for future research.

65 citations

Journal ArticleDOI
TL;DR: In this article, the authors compare various measures of success, explore the differences in their outcomes, and analyze whether a model of success measurement using configurational fit can be used to overcome subjective biases.
Abstract: The problems associated with measuring success in small businesses are primarily caused by a lack of comparable data due to the ambiguity of success and by subjective biases. Success evaluation is dominated by the estimates of business owners, who tend to overestimate overall success and internal strengths. However, reliable success measurement instruments would be useful for small business owners/managers as well as small business policymakers. The main purposes of this article are to compare various measures of success, to explore the differences in their outcomes, and to analyze whether a model of success measurement using configurational fit can be used to overcome subjective biases. The study is based on a recent survey of 103 small family-owned businesses in the eastern Austrian border region. Our analysis of the data confirmed the existence of the measurement problems mentioned above. While some individual indicators show significant biases as well as effects due to company age, size and industry, the aggregated indicator based on the concept of configurational fit seems to be an appropriate means of overcoming most of these drawbacks.(author's abstract)

64 citations

Journal ArticleDOI
TL;DR: This paper found that firms that exhibit uniformly positive or uniformly negative indicators in particular dimensions of CSP outperform firms that exhibited a mixed picture of positives and negatives, which supports the notion that stakeholders' judgments of CSR reward uniformity.
Abstract: Firms typically present a mixed picture of corporate social performance (CSP), with positive and negative indicators exhibited by the same firm. Thus, stakeholders' judgments of corporate social responsibility (CSR) typically evaluate positives in the context of negatives, and vice versa. Building on social judgment theory, we present two alternative accounts of how stakeholders respond to such complexity, which provide differing implications for the financial effects of CSP: reciprocal dampening and rewarding uniformity. Echoing notable findings on strategic consistency, our US panel study finds that firms that exhibit uniformly positive or uniformly negative indicators in particular dimensions of CSP outperform firms that exhibit a mixed picture of positives and negatives, which supports the notion that stakeholders' judgments of CSR reward uniformity.

60 citations

Journal ArticleDOI
TL;DR: In this paper, the effects of business relatedness and corporate international experience on the choice of mode of entry to a foreign market is explored, and it was found that product/market and intangible resource relatedness between the foreign business unit and the industrial firm's core business unit favored a full control entry mode based on sole ownership.

54 citations

References
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Book ChapterDOI
TL;DR: In this article, the authors examined the link between firm resources and sustained competitive advantage and analyzed the potential of several firm resources for generating sustained competitive advantages, including value, rareness, imitability, and substitutability.

46,648 citations


Additional excerpts

  • ...Causal ambiguity exists when the relationship between the resources a firm controls and the profits they create are imperfectly understood (Barney, 1991)....

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  • ...A Resource-based Perspective on Diversification From a resource-based view, business executives should manage diversified resources so as to achieve a sustainable competitive advantage (Barney, 1991), which should lead to short- and long-term economic profits (Mahoney & Pandian, 1992)....

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  • ...A key issue in determining whether a resource can generate profits is whether it is idiosyncratic (Barney, 1991; Mahoney & Pandian, 1992)....

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Journal ArticleDOI
TL;DR: In this paper, the authors explore the usefulness of analyzing firms from the resource side rather than from the product side, in analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested.
Abstract: Summary The paper explores the usefulness of analysing firms from the resource side rather than from the product side. In analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested. These tools are then used to highlight the new strategic options which naturally emerge from the resource perspective.

18,677 citations


Additional excerpts

  • ...The purpose of this article is to present theory and empirical evidence that support a resource-based view of the relationship between diversification and performance (Barney, 1988; Harrison, Hitt, Hoskisson, & Ireland, 1991; Mahoney & Pandian, 1992; Wernerfelt, 1984)....

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  • ...The findings reported herein lend some support to the viability of a resource-based approach to the study of diversity (Harrison et al., 1991; Mahoney & Pandian, 1992; Wernerfelt, 1984)....

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01 Jan 1998
TL;DR: Porter's concept of the value chain disaggregates a company into "activities", or the discrete functions or processes that represent the elemental building blocks of competitive advantage as discussed by the authors, has become an essential part of international business thinking, taking strategy from broad vision to an internally consistent configuration of activities.
Abstract: COMPETITIVE ADVANTAGE introduces a whole new way of understanding what a firm does. Porter's groundbreaking concept of the value chain disaggregates a company into 'activities', or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Now an essential part of international business thinking, COMPETITIVE ADVANTAGE takes strategy from broad vision to an internally consistent configuration of activities. Its powerful framework provides the tools to understand the drivers of cost and a company's relative cost position. Porter's value chain enables managers to isolate the underlying sources of buyer value that will command a premium price, and the reasons why one product or service substitutes for another. He shows how competitive advantage lies not only in activities themselves but in the way activities relate to each other, to supplier activities, and to customer activities. That the phrases 'competitive advantage' and 'sustainable competitive advantage' have become commonplace is testimony to the power of Porter's ideas. COMPETITIVE ADVANTAGE has guided countless companies, business school students, and scholars in understanding the roots of competition. Porter's work captures the extraordinary complexity of competition in a way that makes strategy both concrete and actionable.

17,979 citations


"Resource Allocation as an Outcroppi..." refers background in this paper

  • ...For example, it is possible for two companies to produce the same product but have very different perspectives on the usefulness of research and development in the way it is produced (Porter, 1985)....

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Book
01 Jan 1959
TL;DR: In this article, the authors studied the role of large and small firms in a growing economy and found that large firms are more likely to acquire and merge smaller firms in order to increase their size.
Abstract: Introduction Preface 1. Introduction 2. The Firm in Theory 3. The Productive Opportunity of the Firm and the 'Entrepreneur' 4. Expansion Without Merger: The Receding Managerial Limit 5. 'Inherited' Resources and the Direction of Expansion 6. The Economies of Size and the Economies of Growth 7. The Economics of Diversification 8. Expansion Through Acquisition and Merger 9. The Rate of Growth of Firms Through Time 10. The Position of Large and Small Firms in a Growing Economy 11. Growing Firms in a Growing Economy: The Process of Industrial Concentration and the Pattern of Dominance

14,137 citations

Book
01 Jan 1983

13,643 citations


Additional excerpts

  • ...Barney classified firm resources into three types: physical (Williamson, 1975), human (Becker, 1964), and organizational (Tomer, 1987)....

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  • ...From a transaction-cost-economics perspective, the question is whether the advantages related-diversified firms gain can be just as easily obtained by their competitors as they trade goods and services in an open market (Teece, 1984; Williamson, 1975)....

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