Showing papers on "Competitive advantage published in 2005"

A supply chain view of the resilient enterprise

Abstract: Many companies leave risk management and business continuity to security professionals, business continuity planners or insurance professionals. However, the authors argue, building a resilient enterprise should be a strategic initiative that changes the way a company operates and increases its competitiveness. Reducing vulnerability means both reducing the likelihood of a disruption and increasing resilience. Resilience, in turn, can be achieved by either creating redundancy or increasing flexibility. Redundancy is the familiar concept of keeping some resources in reserve to be used in case of a disruption. The most common forms of redundancy are safety stock, the deliberate use of multiple suppliers even when the secondary suppliers have higher costs, and deliberately low capacity utilization rates. Although necessary to some degree, redundancy represents pure cost with no return except in the eventuality of disruption. The authors contend that significantly more leverage, not to mention operational advantages, can be achieved by making supply chains flexible. Flexibility requires building in organic capabilities that can sense threats and respond to them quickly. Drawing on ongoing research at the MIT Center for Transportation and Logistics involving detailed studies of dozens of cases of corporate disruption and response, the authors describe how resilient companies build flexibility into each of five essential supply chain elements: the supplier, conversion process, distribution channels, control systems and underlying corporate culture. Case examples of Land Rover, Aisin Seiki Co. (a supplier to Toyota), United Parcel Service, Dell, Baxter International, DHL and Nokia, among others, are offered to illustrate how building flexibility in these supply chain elements not only bolsters the resilience of an organization but also creates a competitive advantage in the marketplace.

Benchmarking Marketing Capabilities for Sustainable Competitive Advantage

Abstract: Market-based organizational learning has been identified as an important source of sustainable competitive advantage. One particular learning mechanism, benchmarking, is a widely used management tool that has been recognized as appropriate for identifying and enhancing valuable marketing capabilities. However, despite widespread admonitions to managers, the benchmarking of marketing capabilities as a route to sustainable competitive advantage has received scant empirical attention. The authors empirically examine the potential business performance benefits available from benchmarking the marketing capabilities of top-performing firms. The results suggest that benchmarking has the potential to become a key learning mechanism for identifying, building, and enhancing marketing capabilities to deliver sustainable competitive advantage.

Resolving the Capability–Rigidity Paradox in New Product Innovation:

Abstract: Managers face an important strategic dilemma in product innovation: how to exploit existing product innovation competencies (competence exploitation) while avoiding their dysfunctional rigidity effects by renewing and replacing them with entirely new competencies (competence exploration). Although the resolution of what is termed the “capability–rigidity paradox” is considered a fundamental managerial task in enhancing product innovation outcomes and the firm's competitive advantage, it has received little research attention. The author argues and finds support that market orientation provides a key to this paradox. Specifically, customer and competitor orientations ensure simultaneous investments in exploiting existing product innovation competencies and exploring new ones. The author also finds that the effects of these orientations on competence exploitation and exploration are differentially moderated by interfunctional coordination and perceived market opportunity. Regarding outcomes, compet...

Corporate Governance and Competitive Advantage in Family-Controlled Firms

Abstract: Recent attempts to identify the basis of family–controlled firms’ competitive advantage have drawn upon the resource–based view of the firm. This article supplements these efforts and advances the argument that family–controlled firms’ competitive advantage arises from their system of corporate governance. Systems of corporate governance embody incentives, authority patterns, and norms of legitimation that generate particular organizational propensities to create competitive advantages and disadvantages. For comparative purposes, the characteristics of managerial, alliance, and family governance are reviewed. The impact of a family's control rights over a firm's assets generates three dominant propensities (parsimony, personalism, and particularism). These propensities give advantages in scarce environments, facilitate the creation and utilization of social capital, and engender opportunistic investment processes. The experience of family–controlled firms in emerging markets is drawn upon to illustrate th...

The Internationalization of Chinese Firms: A Case for Theoretical Extension?[1]

Abstract: This paper examines the patterns of, and motives for, internationalization by prominent market-seeking Chinese firms. Case studies of these firms indicate that they are seeking technological and brand assets to create a competitive position in international markets. While mainstream theory tends to assume that firms internationalize to exploit competitive advantages, Chinese firms are generally making such investments in order to address competitive disadvantages. They are engaging in ‘inward’ internationalization by means of original equipment manufacture (OEM) and joint venture partnerships, and ‘outward’ internationalization by means of acquisition and organic expansion abroad. Each of these routes offers certain benefits coupled with its own challenges or risks. The paper concludes that the Chinese case offers an opportunity to extend present theorizing in four primary areas concerning the latecomer perspective and catch-up strategies, institutional analysis with reference to the role of government, the relations between entrepreneurs and institutions, and the liability of foreignness.

Types of Information Technology Capabilities and Their Role in Competitive Advantage: An Empirical Study

Abstract: During the past two decades, both business managers and academic researchers have shown considerable interest in understanding how information technologies (IT) help to create competitive advantage for a firm. While recently the idea of competitive differentiation through IT has been challenged, this study contrasts the traditional thinking about competitive advantage with the resource-based view. Specifically, it is argued that by demarcating specific types of capabilities, we can contribute to better understanding of the sources of IT-based competitive advantage. Conceptually, we distinguish here between value, competitive, and dynamic capabilities as three distinct types of capabilities. Within each type, we identify specific capabilities, such as quality of the IT infrastructure, IT business experience, relationship infrastructure, and intensity of organizational learning, and present a model that describes relationships between these capabilities and competitive advantage. We then empirically test the model using data collected via a national mail survey from chief IT executives from 202 manufacturing firms. While the quality of the IT infrastructure is hypothesized as a value capability and expectedly did not have any significant effect on competitive advantage, the quality of IT business expertise and the relationship infrastructure (competitive capabilities) did. The results of the study also indicate that the intensity of organizational learning (dynamic capability) was significantly related to all of the capabilities. These results point to the importance of delineating capabilities such as relationship infrastructure that can facilitate differentiation in the marketplace, and dynamic capabilities such as organizational learning as an important antecedent to IT capability building.

The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage

Abstract: Stories from Nokia, Dell, UPS, Toyota, and other companies show how firms can reduce their vulnerability to high-impact disruptions, from earthquakes to strikes, from SARS to terrorism, and use them for competitive advantage.

The Role of Entrepreneurial Orientation in Stimulating Effective Corporate Entrepreneurship

Abstract: This article discusses research that examines the relationship between a firm's entrepreneurial orientation and their overall performance. The authors note that firms that follow a strategy of corporate entrepreneurship are able to pursue growth through new venture opportunities and strategic renewal. Firms that are able to effectively follow this strategy experience sustainable advantages and yield above-average returns. They outline and discuss five dimensions of corporate entrepreneurship including autonomy, innovativness, proactiveness, competitive aggressiveness and risk-taking. They examine what implications these strategies have for managers and identify areas of future research.

Logistics and supply chain management : creating value-adding networks

Abstract: ToC (new and updated chapters in bold) Chapter 1 : Logistics & Competitive Strategy This chapter will look at how logistics capabilities and supply chain excellence can help companies gain a competitive advantage. It will also look at the relationship between logistics and financial performance. Case Study : Dell (updated from 1998 version) Chapter 2 : Logistics & Customer Value This chapter focuses on the ways in which customer value can be created and delivered through the supply chain. The theme will be demand-driven and responsive supply chain strategies. Case Study : Zara (updated from 1998 version) Chapter 3 : Measuring Logistics Costs and Performance The content of this chapter will be about the need to understand the 'costs-to-serve'. Issues such as customer profitability analysis and benchmarking will be included. Case Study : Wal-Mart/K-Mart (new) Chapter 4 : Creating the Agile Supply Chain The concept of the agile supply chain is developed in this chapter and the building blocks of the agile paradigm explained. The differences between 'lean' and 'agile' will be discussed. Case Study : The challenge of the 3-day car (new) Chapter 5 : Strategic Lead-Time Management Time compression is the focus of this chapter including the search for ways in which non-value adding time can be removed from the pipeline. Case Study : Hewlett Packard CD/RW (new) Chapter 6 : Managing the Global Pipeline The particular challenges of global supply chains will be discussed in this chapter. The pros and cons of global sourcing and offshore manufacturing will be presented. The need to understand the total supply chain impact of globalisations will be emphasised. Case Study : Dyson (new) Chapter 7 : Managing the Supply Chain in an Era of Uncertainty This chapter will examine the ideas of supply chain risk and vulnerability and will explore ways in which supply chain resilience can be improved. Case Study : Nokia/Ericsson (new) Chapter 8 : Managing Networks and Relationships The idea of the supply chain as an interdependent network of organisations that jointly combine to deliver customer value is introduced. The idea of supply chain 'orchestration' is discussed. Case Study : Li & Fung (new) Chapter 9 : Overcoming the Barriers to Supply Chain Integration The fundamental business transformations that are required to enable supply chain integration to become a reality are examined. The characteristics of effective supply chains will be presented. Case Study : GM/Vectra (new)

Managing For The Long Run: Lessons In Competitive Advantage From Great Family Businesses

Abstract: Conventional thinking holds that family-controlled businesses are beset by inherent weaknesses from "clan" cultures to stable ownership that hobble success and erode competitive advantage. This book argues that those very traits are part of what has ensured the sustained success of some of the world's leading and long-lived family controlled businesses. This is not a book for "mom and pop" family businesses. Rather, it is for firms of all kinds and sizes who want to emulate the strategies of the best family-controlled businesses for long term success.

Does brand trust matter to brand equity

Abstract: Purpose – The most recent literature on competitive advantage views brand equity as a relational market‐based asset because it arises from the relationships that consumers have with brands Given the fact that trust is viewed as the corner‐stone, as well as one of the most desirable qualities in any relationship, the objective of this study is to analyze the importance of brand trust in the development of brand equity Specifically, the paper examines the relationships network in which brand trust is embeddedDesign/methodology/approach – A quantitative methodology was adopted The data are based on a survey conducted in a region in the south‐eastern part of Spain, resulting in 271 surveysFindings – The findings reveal that brand trust is rooted in the result of past experience with the brand, and it is also positively associated with brand loyalty, which in turn maintains a positive relationship with brand equity Furthermore, the results suggest that, although brand trust does not play a full mediating

Where do capabilities come from and how do they matter? A study in the software services industry

Abstract: Recent years have witnessed a surge of interest in the notion of capabilities as an important source of competitive advantage. This recognition has, in turn, placed emphasis on the question of where and how these capabilities emerge and how they influence firm performance. The present paper is an attempt to address this question. Using a large sample of detailed project-level data from a leading firm in the global software services industry, we attempt to empirically study the importance of capabilities. We find that two broad classes of capabilities are significant. The first class, which we label client-specific capabilities, is a function of repeated interactions with clients over time and across different projects. This learning from repeated interactions with a given client reduces project execution costs and helps improve project contribution. The second class, termed project management capabilities, is acquired through deliberate and persistent investments in infrastructure and systems to improve the firm's software development process. Our empirical results suggest that the marginal returns to acquiring different capabilities may be different and an understanding of such trade-offs can improve firm decisions to improve and/or acquire such capabilities. We discuss the key contributions of our paper and the implications for future research on capabilities. Copyright © 2004 John Wiley & Sons, Ltd.

Review: it-dependent strategic initiatives and sustained competitive advantage: a review and synthesis of the literature

Abstract: The role of information systems in the creation and appropriation of economic value has a long tradition of research, within which falls the literature on the sustainability of IT-dependent competitive advantage. In this article, we formally define the notion of IT-dependent strategic initiative and use it to frame a review of the literature on the sustain- ability of competitive advantage rooted in information systems use. We offer a framework that articulates both the dynamic approach to IT-dependent strategic advantage currently receiving attention in the literature and the underlying drivers of sustainability. This framework models how and why the characteristics of the IT-dependent strategic initiative enable sustained competitive advantage, and how the determinants of sustainability are developed and strengthened over time. Such explanation facilitates the pre-implementation analysis of planned initiatives by innovators, as well as the post-implementation evaluation of existing initiatives so as to identify the basis of their sustainability. In carrying out this study, we examined the interdisciplinary literature on strategic information systems. Using a structured methodology, we reviewed the titles and abstracts of 648 articles drawn from information systems, strategic management, and marketing literature. We then examined and individually coded a relevant subset of 117 articles. The literature has identified four barriers to erosion of competitive advantage for IT-dependent strategic initiatives and has surfaced the structural determinants of their magnitude. Previous work has also begun to theorize about the process by which these barriers to erosion evolve over time. Our review reveals that significant exploratory research and theoretical development have occurred in this area, but there is a paucity of research providing rigorous tests of theoretical propositions. Our work makes three principal contributions. First, it formalizes the definition of IT-dependent strategic initiative. Second, it organizes the extant interdisciplinary research around an integrative framework that should prove useful to both research and practice. This framework offers an explanation of how and why IT-dependent strategic initiatives contribute to sustained competitive advantage, and explains the process by which they evolve over time. Finally, our review and analysis of the literature offers the basis for future research directions.

The F–PEC Scale of Family Influence: Construction, Validation, and Further Implication for Theory:

Abstract: For a solution to the family business definition dilemma, we propose the application of a scale that assesses the extent and the quality of family influence via the measurement of three dimensions: Power, Experience, and Culture. The Family Influence on Power, Experience, and Culture (F-PEC) scale is tested rigorously, utilizing a sample of more than 1,000 randomly selected companies, through the application of exploratory and confirmatory factor analytic techniques. The scale demonstrates high levels of reliability. F-PEC has been applied in a number of studies, contributing to theory development, particularly in terms of the impact of family influence on distinct resources, and as a source of competitive advantage.

E‐government adoption: architecture and barriers

Abstract: Purpose – To provide an integrated architecture framework for e‐government that represents the alignment of IT infrastructure with business process management in public sector organisations and classify the barriers that might complicate the implementation of the proposed architecture framework. The study will help IT practitioners in the public sector learn how to use and manage information technologies to revitalise business processes, improve decision‐making, and gain a competitive advantage from the adoption of e‐government. The proposed architecture framework for e‐government adoption will reduce confusion surrounding e‐government infrastructure in the public sector through understanding the implementation processes, identifying requirements of information and communications technology tools, highlighting the importance of the organisational management resources and the impact of barriers.Design/methodology/approach – A range of earlier studies have been critically examined and analysed to provide an...

Entrepreneurial Orientation, Dynamic Capabilities and International Performance

Abstract: In order to be able to seize the opportunities that a dynamic operating environment opens up, entrepreneurial firms have to reconfigure their existing asset base and processes. This study explores the effect of an entrepreneurial orientation and a firm's reconfiguring capabilities on international performance by using survey data from 217 manufacturing and service organizations. Our findings indicate that a firm's entrepreneurial orientation and reconfiguring capabilities have an effect on its international performance and provide empirical support for the dynamic capability view of the firm. Entrepreneurial behavior combined with organizational reconfiguring capabilities constitutes a potential source of competitive advantage.

Information technology and the board of directors.

Abstract: Ever since the Y2K scare, boards have grown increasingly nervous about corporate dependence on information technology. Since then, computer crashes, denial of service attacks, competitive pressures, and the need to automate compliance with government regulations have heightened board sensitivity to IT risk. Unfortunately, most boards remain largely in the dark when it comes to IT spending and strategy, despite the fact that corporate information assets can account for more than 50% of capital spending. A lack of board oversight for IT activities is dangerous, the authors say. It puts firms at risk in the same way that failing to audit their books would. Companies that have established board-level IT governance committees are better able to control IT project costs and carve out competitive advantage. But there is no one-size-fits-all model for board supervision of a company's IT operations. The correct approach depends on what strategic "mode" a company is in whether its operations are extremely dependent on IT or not, and whether or not it relies heavily on keeping up with the latest technologies. This article spells out the conditions under which boards need to change their level of involvement in IT decisions, explaining how members can recognize their firms' IT risks and decide whether they should pursue more aggressive IT governance. The authors delineate what an IT governance committee should look like in terms of charter, membership, duties, and overall agenda. They also offer recommendations for developing IT policies that take into account an organization's operational and strategic needs and suggest what to do when those needs change. Given the dizzying pace of change in the world of IT, boards can't afford to ignore the state of their IT systems and capabilities. Appropriate board governance can go a long way toward helping a company avoid unnecessary risk and improve its competitive position.

The Paradox of Diversity Management, Creativity and Innovation

Abstract: This conceptual and discursive paper argues that diversity is a recognizable source of creativity and innovation that can provide a basis for competitive advantage. On the other hand, diversity is also a cause of misunderstanding, suspicion and conflict in the workplace that can result in absenteeism, poor quality, low morale and loss of competitiveness. Firms seeking competitive advantage therefore face a paradoxical situation. If they embrace diversity, they risk workplace conflict, and if they avoid diversity, they risk loss of competitiveness. The advantages and disadvantages associated with workforce diversity put organizations in a position of managing a paradoxical situation. To give support to this assertion, the paper considers what is meant by diversity, how it is best managed, what its relationship with creativity and innovation might be and how the problems created by the management of diversity, creativity and innovation might be resolved.

Strategic Management and Competitive Advantage: Concepts and Cases

Abstract: PART ONE: The Tools of Strategic Analysis Chapter 1 What Is Strategy and the Strategic Management Process? Chapter 2 Evaluating a Firm's External Environment Chapter 3 Evaluating a Firm's Internal Capabilities Cases: Bill Drayton's Ashoka, Apple Computer Inc.: iPod and iTunes, Swatch and the Global Watch Industry, Wal-Mart Stores, Inc., Harlequin Enterprises: The Mira Decision, Nucor in 2005 PART TWO: Business Level Strategies Chapter 4 Cost Leadership Chapter 5 Product Differentiation Cases: Samsung Electronics, JetBlue: Too Much Turbulence, Bang & Olufsen: The Electronics Entertainment Industry in 2003, The Levi's Personal Pair Proposal, Hong Kong's Ocean Park: Taking on Disney PART THREE: Corporate Strategies Chapter 6 Vertical Integration Chapter 7 Corporate Diversification Chapter 8 Organizing to Implement Corporate Diversification Chapter 9 Strategic Alliances Chapter 10 Mergers and Acquisitions Cases: eBay: To Drop Off or Not, Nucleon, Inc., British Sky Broadcasting, L'Oreal- Body Shop Acquisition, Extending the "easy" Business Model: What Should easyGroup do Next?, Hallmark Cards in 2006, Cooper Industries (A), Ben & Jerry's Japan, Toyota's Strategies and Initiatives in Europe, Hewlett Packard in 2001, Vodafone: Out of Many One

Do Suppliers Benefit from Collaborative Relationships with Large Retailers? An Empirical Investigation of Efficient Consumer Response Adoption

Abstract: Collaborative manufacturer–retailer relationships based on efficient consumer response (ECR) have become ubiquitous over the past decade. Yet academic studies of ECR adoption and its impact on marketing relationships are relatively scarce. Inspired by the relational view of competitive advantage, the authors empirically investigate whether the extent to which suppliers of a major retailer adopt ECR has a beneficial impact on their outcomes. The results demonstrate that whereas ECR adoption has a positive impact on supplier economic performance and capability development, it also generates greater perceptions of negative inequity on the part of the supplier. However, retailer capabilities and supplier trust moderate some of these main effects. The overall results are robust with respect to differences in supplier size as well as between branded and private-label suppliers.

How dynamics, management, and governance of resource deployments influence firm‐level performance

Abstract: To help understand how firms develop and maintain dynamic capabilities, we examine the effects of the dynamics, management, and governance of R & D and marketing resource deployments on firm-level economic performance. In a sample of technology-based entrepreneurial firms, we find that a history of increased investments in marketing is an enduring source of competitive advantage. We also find that managers' firm-specific experience positively moderates the relationship between R & D deployment intensity and economic returns. In addition, institutional ownership boosts economic returns from marketing deployments by subjecting these deployments to increased scrutiny and by sending positive signals to the market about the firm. Copyright © 2005 John Wiley & Sons, Ltd.

Schumpeter's ghost: Is hypercompetition making the best of times shorter?

Abstract: At the center of Schumpeter's theory of competitive behavior is the assertion that competitive advantage will become increasingly more difficult to sustain in a wide range of industries. More recently, this assertion has resurfaced in the notion of hypercompetition. This research examines two large longitudinal samples of firms to discover which industries, if any, exhibit performance that is consonant with Schumpeterian theory and the assertions of hypercompetition. We find support for the argument that over time competitive advantage has become significantly harder to sustain and, further, that the phenomenon is limited neither to high-technology industries nor to manufacturing industries but is seen across a broad range of industries. We also find evidence that sustained competitive advantage is increasingly a matter not of a single advantage maintained over time but more a matter of concatenating over time a sequence of advantages. Copyright © 2005 John Wiley & Sons, Ltd.

Business Responses to Climate Change: Identifying Emergent Strategies

Abstract: Companies face much uncertainty about the competitive effects of the recently adopted Kyoto Protocol on global climate change and the current and future regulations that may emerge from it. Companies have considerable discretion to explore different market strategies to address global warming and reduce greenhouse gas emissions. This article examines these strategic options by reviewing the market-oriented actions that are currently being taken by 136 large companies that are part of the Global 500. There are six different market strategies that companies use to address climate change and that consist of different combinations of the market components available to managers. Managers can choose between more emphasis on improvements in their business activities through innovation or employ compensatory approaches such as emissions trading. They can either act by themselves or work with other companies, NGOs, or (local) governments.

How much you know versus how well I know you: selecting a supplier for a technically innovative component

Abstract: How do firms select a supplier for an innovative component? Three literatures speak to this question. Transaction cost economics focuses on the value of internalization, the literature on inter-firm relationships on the value of past relationships, and the firm capabilities literature on the value of superior capabilities. Choosing a supplier means choosing a bundle of these characteristics—internal vs. external, amount of prior transactions, and capabilities—but no study has integrated all three characteristics, making it impossible to understand the trade-offs involved either theoretically or managerially. I propose and test a model integrating all three factors, allowing us to understand the trade-offs involved. I find that when uncertainty is low, the decision is made primarily on the basis of differences in technical capabilities. As uncertainty increases, prior relationships and a supplier being internal take on greater positive significance relative to the importance of technical capabilities. At extreme levels of uncertainty, the value of internal supply relationships becomes very high and past relationships lose their significance. While adherents of each literature have criticized the others for what they omit, this model moves beyond this mutual recrimination by incorporating the key concerns of each literature, setting the stage for future research that draws upon the strength of each. The model provides guidance for any situation where a firm must chose a partner under uncertainty. Lastly, it addresses the strategic question of how companies should organize in the long run to access the capabilities needed for competitive success. Copyright © 2004 John Wiley & Sons, Ltd.

The Paradox of Diversity Management, Creativity and Innovation

Abstract: This conceptual and discursive paper argues that diversity is a recognizable source of creativity and innovation that can provide a basis for competitive advantage. On the other hand, diversity is also a cause of misunderstanding, suspicion and conflict in the workplace that can result in absenteeism, poor quality, low morale and loss of competitiveness. Firms seeking competitive advantage therefore face a paradoxical situation. If they embrace diversity, they risk workplace conflict, and if they avoid diversity, they risk loss of competitiveness. The advantages and disadvantages associated with workforce diversity put organizations in a position of managing a paradoxical situation. To give support to this assertion, the paper considers what is meant by diversity, how it is best managed, what its relationship with creativity and innovation might be and how the problems created by the management of diversity, creativity and innovation might be resolved.

Strategic Divestments in Family Firms: Role of Family Structure and Community Culture

Abstract: Timely acquisition and divestment of resources is essential for sustaining the competitive advantage and longevity of family firms. A combination of past successes, emotional attachments, and path dependencies can lead to extensive inertia toward divestment in these firms. This article develops a framework to understand the influence of community culture and family structure on divestment decisions in family firms. Propositions on the varying levels of inertia to divest—depending on the values held by the owning family and the culture prevailing in their community—are developed. Research and practical implications are discussed.

Understanding Business Group Performance in an Emerging Economy: Acquiring Resources and Capabilities in Order to Prosper*

Abstract: The prevalent organizational form in most emerging markets is business groups. These groups have typically been viewed through a transaction cost economics perspective where they are perceived as responses to inefficiencies in the market. However, the evidence to date on what generates a positive business group-performance relationship in such environments is not well understood. This study expands the understanding of business groups by employing the resource-based and institutional theoretical perspectives to examine how groups acquire resources and capabilities to prosper. The empirical evidence is based on over 224 business groups in the emerging economy context of China and shows that most of the endowed government resources do not help business groups to create a competitive edge. Instead, those business groups with strategic actions to develop a unique portfolio of market-oriented resources and capabilities are most likely to prosper. The results provide critical insights on the relationship between the initiation of institutional transformation and the desired outcome to be realized by organizational transformation, thus enriching our understanding of institutions and strategic choices facilitated or constrained by organizational resources in emerging economies.