Absorptive capacity,learning, and performance in international joint ventures

This paper proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). First, trust between an IJV's parents and the IJV's relative absorptive capacity with its foreign parent are suggested to influence its ability to understand new knowledge held by foreign parents. Second, an IJV's learning structures and processes are proposed to influence its ability to assimilate new knowledge from those parents. Third, the IJV's strategy and training competence are suggested to shape its ability to apply the assimilated knowledge. Revisiting the Hungarian IJVs studied by Lyles and Salk (1996) 3 years later, we find support for the knowledge understanding and application predictions, and partial support for the knowledge assimilation prediction. Unexpectedly, our results suggest that trust and management support from foreign parents are associated with IJV performance but not learning. Our model and results offer a new perspective on IJV learning and performance as well as initial insights into how those relationships change over time. Copyright © 2001 John Wiley & Sons, Ltd.     

The changing face of research anddevelopment in the public sector

This paper examines the changes that have occurred in the management and scale of R & D, in the contextof the'gas industry's experience. As a resultof the discovery o f North Sea gas and new and expanding operations, R & D has become larger, more central, and thus more integrated into and accountable to the organization as a whole. This has resulted in greater centralization and planning administered according to the ‘sponsorship’ principle. These changes have highlighted the problems of R & D choice and the comparison of commercial and non-commercial objectives in a public sector industry. The unique constraints under which nationalized industries operate and their commitment to the ‘public interest’ as well as to commercial goals, are discussed. These bear upon the way in which R & D decisions not amenable to cost/benefit analysis (such as the balance between long and short term work) are made. It is emphasized that these decisions are made by the industry as a whole and that R & D must thus be seen to be complying with industry objectives. The example of British Gas R & D Planning is used to show how ‘sponsorship’ operates and its values for R & D and the restof the industry. Comparison with other public sector industries indicates that there is no one great system for R & D and that its administration is a function of the history, technological characteristics, and present situation of the industry. These imply different procedures appropriate for the innovation process within the Industry. The role of British Gas within a national energy policy is discussed. The separation of the fuel industries affects the assumptions on which R & D plans are made and thus the degree of uncertainty inherent in all R & D planning. This raises interest- ing questions about the degree of flexibility possible in defining each industry's own objectives.     

Progression in Technology Education in New Zealand: Components of Practice as a Way Forward

Understanding and undertaking technological practice is fundamental to student learning in technology education in New Zealand, and the enhancement of student technological literacy. The implementation of technology into New Zealand’s core curriculum has reached the stage where it has become critical that learning programmes are based on student progression to allow for a seamless education in technology from early primary to senior secondary. For this to occur, teachers and students need to focus learning on key features of technology education. This paper is based on research initiated in 2001 which explored the nature of progression of student learning in technology. It draws on findings from research undertaken in New Zealand classrooms in 1999–2000 that resulted in the development of the technology assessment framework (TAF), (as reported in detail Compton & Harwood 2003). The 1999–2001 research was funded by the New Zealand Ministry of Education. Findings from the 2001 research allowed for the identification of key features of technology education that are relevant across all age groups, contexts and technological areas. These key features were collectively termed components of practice. The three components of practice established to date are brief development, planning for practice, and outcome development and evaluation. This paper discusses the development of progression matrices for each of these and provides illustrative examples of student work levelled against the matrix indicators of progression for brief development.     

Consequences of misspecified mental models: Contrasting effects and the role of cognitive fit

Research summary: Mental models, reflecting interdependencies among managerial choice variables, are not always correctly specified. Mental models can be underspecified, missing interdependencies, or overspecified, containing nonexistent interdependencies. Using a simulation model, we find that under‐ and overspecification have opposite effects on exploration, and thereby, performance. The effects are also opposite, depending on whether a manager controls all choice variables. The mechanism underlying our results is a feedback loop: misspecified mental models influence managerial learning about the effectiveness of choices; this learning guides how the environment is explored, which in turn, affects which information will be generated for future learning. We explore implications of these results for strategic management and introduce the notion of “cognitive fit” between the mental model of the decision‐maker and the strategic environment. Managerial summary: Managers often rely on mental models to guide their decision‐making. These mental models, however, are often misspecified, that is, more or less complex than the situation managers are facing. Using a simulation model, we study the consequences of such misspecified mental models. We find that the performance implications of misspecified mental models crucially depend on whether the manager controls all choice variables. We identify situations in which simpler mental models are better than overly complex ones, and vice versa. Copyright © 2015 John Wiley & Sons, Ltd.     

Toward Further Understanding the Market‐sensing Capability–Value Creation Relationship

Earlier writings have speculated that the components of customer focus may have differential effects on customer value. This research is responsive to this call as it identifies the behavioral and cultural components that underlie a market‐sensing capability (i.e., customer focus), and undertakes a finer‐grained examination of the impact of the routines through which customer focus is manifested. Specifically, this research investigates the market learning activities (ML) that can affect the depth of the understanding achieved regarding the buyer's requirements and usage context, and the customer‐oriented practices (CO) that can affect the breadth of potential solutions generated to address those requirements. Given the possibility that some buyers may have more sophisticated needs, the role of a customer's performance standards is also considered as a moderating variable. Based on data collected from computer and electronics manufacturers via two separate surveys, the results support that a supplier's ML and CO, respectively, affect perceived customer value. The results also show that a customer's performance standards do not moderate the ML–customer value relationship. Regardless of whether the customer's performance standards (along the lines of product quality, defect rates, and on‐time delivery) are high or low, the seller must be adept at discerning changes in the buying firm's requirements and operational realities. Thus, market learning practices are needed across all customers in order for the supplier to remain synchronized with market changes and deliver superior value to them. Additionally, the results support that the positive association between a seller's CO and perceived customer value is stronger when buyers have more demanding performance standards. The generation of a broader array of potential solutions that is commensurate with a more outward focus is likely to be needed to satisfy customers with more stringent requirements. The disaggregated approach taken in this research contributes to theory by (1) providing greater insight into the domain of the customer focus construct, (2) tracing the mechanisms through which customer focus is reified, and (3) evaluating the possibility that the components of customer focus may have differential effects on customer value. The main practical implication stems from the proposal that market sensing can serve as a core competence and thereby provide the foundation for differential advantage.     

Growth hacking: Insights on data-driven decision-making from three firms

Theoretical backgroundThe work explores how Big Data analysis can reshape marketing decision-making in B2B sector. Deriving from Data-Driven Decision-Making (DDDM) approach, the Growth Hacking model is employed to investigate the role of cognitive computing and big data analytics in redefining business processes.PurposeThe main objectives of the study are: 1) to assess how a data-driven orientation to the use of big data analytics and cognitive computing can reframe marketing decisions in B2B segment; 2) to explore whether the adoption Growth Hacking can be helpful in exploiting the opportunities offered by big data analytics and cognitive computing in B2B marketing.MethodologyThe paper is based on Action Research (AR) methodology that permits researchers to participate actively in the observation of businesses and to examine how decisions are undertaken and managed over time.ResultsThe main findings allow identifying the most common strategies and tactics employed in three companies operating in different B2B sectors to exploit the opportunities offered by cognitive computing and big data analytics according to a data-driven marketing approach. Based on the application of the Growth Hacking model, the tools of analytics and the main objectives, outcomes and implications on marketing decision-making are revealed.OriginalityThe identification of the main objectives and outcomes produced across the three dimensions of the Growth Hacking model (data analysis, marketing and programming) can help academics and practitioners to understand the main levers to attain marketing goals, such as the enhancement of relationship with customers (CRM), continuous learning and development of new products and potential innovation.     

Heterogeneous social motives and interactions: The three predictable paths of capability development

Research summary : Limited attention has been paid to the crucial role of individuals' motivation and social interactions in capability development. Building on literature in social psychology and behavioral economics that links heterogeneity in individual social motives to social interactions, we explain how the variation, selection, and retention processes underlying a group's deliberate capability development are affected by the composition of the group in terms of individuals' social motives in interplay with the organizational‐level motivational levers designed by managers. Our multilevel theoretical model suggests that individual‐level heterogeneity leads to the development of capabilities along different paths. For practice, this implies that, according to the composition of the group in terms of social motives, capabilities are more or less technically and evolutionary adequate and a source of business process performance. Managerial summary :We propose that when a group of employees engages in developing one of the firm's capabilities, capability development will follow a different path according to what motivates most of the employees composing the group. We identify and discuss three paths. Two of these paths (convergence and congruence) can help improve business process performance in a stable environment, the third one (open‐ended) in a dynamic environment. Our work invites managers to not only think in terms of more or less capability development, but also in terms of capability development path(s): the path(s) in which groups in the firm are currently engaged and the one(s) that are desirable given the firm's objectives and the nature of the environment(s) the firm faces in deploying its business processes. © 2016 The Authors. Strategic Management Journal published by John Wiley & Sons, Ltd.     

Resource ambidexterity through alliance portfolios and firm performance

Research summary : Partner resources can be an important alternative to internal firm resources for attaining dual and seemingly incompatible strategic objectives. We extend arguments about managing conflicting objectives typically made at the firm level to the level of a firm's alliance portfolio. Specifically, will a balance between revenue enhancement and cost reduction attained collectively through partner resources accessed via a firm's various alliances be similarly beneficial for firm performance? Additionally, how do strategic attributes of alliance portfolio configuration, specifically alliance portfolio size and partner resource scope, condition the balance‐performance relationship? Based on data from the global airline industry, we find support for the balance‐performance relationship, though such balance is less beneficial for firms in the case of access to a broader resource scope per partner . Managerial summary : Increasing revenue and reducing costs simultaneously can potentially enhance firm competitiveness. We highlight that an alliance strategy can be an important alternative to internal resources for attaining such dual strategic objectives, particularly when partner resources accessed through alliances are treated collectively as portfolios. We examine the importance of balancing product‐market extending and efficiency‐improving partner resources in the global airline industry as well as the impact of two alternate strategies for accessing resources through alliances: fewer partners with more resources per partner or more partners with fewer resources per partner. We find that resource balance at the portfolio level helps airlines improve performance. Our results also suggest that managers should be cautious of accessing too many resources through just a few partners . Copyright © 2015 John Wiley & Sons, Ltd.     

Firm‐specific human capital,organizational incentives,and agency costs: Evidence from retail banking

This paper explores conflicting implications of firm‐specific human capital (FSHC) for firm performance. Existing theory predicts a productivity effect that can be enhanced with strong incentives. We propose an offsetting agency effect: FSHC may facilitate more‐sophisticated ‘gaming’ of incentives, to the detriment of firm performance. Using a unique dataset from a multiunit retail bank, we document both effects and estimate their net impact. Managers with superior FSHC are more productive in selling loans but are also more likely to manipulate loan terms to increase incentive payouts. We find that resulting profits are two percentage points lower for high‐FSHC managers. Finally, profit losses increase more rapidly for high‐FSHC managers, indicating adverse learning. Our results suggest that FSHC can create agency costs that outweigh its productive benefits. Copyright © 2013 John Wiley & Sons, Ltd.     

Sparking self-sustained learning: report on a design experiment to build technological fluency and bridge divides

In this article we report assessment results from two studies in an ongoing design experiment intended to provide a single school system with a sequence of secondary school level (ages 14–18) computer technology courses. In our first study, we share data on students’ learning as a function of the required introductory course and their pre-course history of technological experience. In order to go beyond traditional assessments of learning we assessed two aspects of students’ “learning ecologies”: their use of a variety of learning resources and the extent to which they share their knowledge about technology with others. In our second study we present patterns of course taking by male and female students who have almost completed their secondary schooling. In addition, we share case studies of students who elected to take more technology classes and leveraged their course experiences for internships, further education, and jobs. The quantitative and qualitative data are consistent with our hypothesis that students would become more technologically fluent and that their learning ecologies would diversify as a result of their project-based experiences.     

Predicting academic success and technological literacy in secondary education: a learning styles perspective

This paper aims to investigate the predictive validity of learning styles on academic achievement and technological literacy (TL). For this purpose, secondary school students were recruited (n = 150). An empirical research design was followed where the TL test was used with a learning style inventory measuring learning orientation, processing information, thinking, perceiving information, physical and time learning preferences, and sociological, emotional, and environmental learning preferences. Student performance was measured with grade point average (GPA) and TL level. Results show that 69 and 65 % of the variance in GPA and TL, respectively, can be explained by learning style predictors. Responsible and visual learning styles are the best positive predictors of GPA, while a reflective learner is the best negative predictor. Self-motivated and global learners are the best positive predictors of TL, while the need for authority figures and a theorist learning orientation are the best negative predictors of TL. The practical implications are that secondary schools should collect learning style data before helping students accordingly to be successful and more technologically literate. Highly conforming, global, and visual theorists might be offered more challenging tasks and special commendations on their projects, whereas more reflective and kinaesthetic students could receive more unstructured instruction in a busy environment with learning objects that incorporate innovative experiences, personalised information, and many associations. Assimilators need more textual material, more criterion-referenced instructions to achieve higher-order thinking learning objectives, more time to complete activities or assignments, more abstract problems, and unconstrained design conditions to improve their TL.     

Overcoming localization of knowledge — the role of professional service firms

The literature on organizational learning asserts that external learning is often limited geographically and technologically. We scrutinize to what extent organizations acquire external knowledge by accessing external knowledge repositories. We argue that professional service firms (PSFs) grant access to nonlocalized knowledge repositories and thereby not only facilitate external learning but also help to overcome localization. Focusing on patent law firms, we test our predictions using a unique dataset of 544,820 pairs of European patent applications. Analyzing patterns of knowledge flows captured in patent citations, we find that accessing a PSF's repository facilitates the acquisition of external knowledge. As the effect is more pronounced for knowledge that is distant to a focal organization, we conclude that having access to a knowledge repository compensates for localization disadvantages. Copyright © 2013 John Wiley & Sons, Ltd.     

Motivation matters: Corporate scope and competition in complementary product markets

Research summary : We argue that a pure capabilities‐based view does not accurately explain the competitive dynamics of increasingly common settings in which firms act as both complementors and competitors. We propose that the Awareness‐Motivation‐Capability framework is more appropriate for these settings. We derive predictions from both a pure capabilities view and the AMC framework, and test those predictions in the U.S. auto leasing market, in which the leasing subsidiaries of car manufacturers directly compete with the same independent lessors who provide complements to the manufacturers. Although our results are consistent with capabilities playing an important role, motivation appears to be a critical factor explaining the competitive dynamics of the market. Managerial summary : Firms that compete with business units owned by larger corporate parents face additional considerations. Such subsidiary competitors can be motivated by broader corporate considerations, shifting their objectives, and consequently, their strategic actions. Expecting subsidiary competitors to pursue business unit profitability can mislead managers toward pricing, product mix, or market entry errors. We present an important example from consumer finance, where independent auto lessors, such as Bank of America (BoA), compete with captive leasing subsidiaries like Ford Motor Credit (FMC). Since FMC is motivated to subsidize and support vehicle sales for its manufacturer parent, a cost advantage is not enough for BoA to dominate the market. Understanding broader corporate motivations of competitors helps managers anticipate competition levels in potential markets, thereby improving decision‐making and performance. Copyright © 2015 John Wiley & Sons, Ltd.     

Strategic resources and performance: a meta‐analysis

Resource‐based theory (RBT) has emerged as a key perspective guiding inquiry into the determinants of organizational performance. Since the early 1990s, numerous studies have examined RBT's assertion that the extent to which organizations possess strategic resources is positively related to performance. Although many studies appear to support this assertion, there is no consensus regarding how strongly strategic resources relate to performance. To help resolve this issue, we meta‐analyze 125 studies of RBT that collectively encompass over 29,000 organizations. Our conservative estimate is that the effect size of the strategic resources–performance relationship is r?_c = 0.22. Moderator tests suggest that the resources‐performance link is stronger (1) when resources meet the criteria laid out in RBT and (2) for those performance measures that are not affected by potential value appropriation. When resources meet RBT's criteria and when performance measures are not affected by potential appropriation, the strength of the relationship grows to r?_c = 0.29. This suggests that the identification, development, and distribution of value from strategic resources should be a primary consideration for scholars, managers, and shareholders. Copyright © 2008 John Wiley & Sons, Ltd.     

On the Intricacies of the Chinese Guanxi: A Process Model of Guanxi Development

Guanxi (personal connection) has been identified as a necessary condition to do business successfully in China. In this paper, we seek a clear conceptual understanding of this prevalent construct and propose a three-stage model of guanxi development so as to stimulate systematic research in this area. Our conceptual and theoretical discussion of guanxi bases,guanxi objectives, and the operating principles at different stages of guanxi development will also help practitioners to use guanxi more effectively.     

Does experience imply learning?

Research summary : Research traditionally uses experiential learning arguments to explain the existence of a positive relationship between repetition of an activity and performance. We propose an additional interpretation of this relationship in the context of discrete corporate development activities. We argue that firms choose to repeat successful activities, thereby accumulating high experience with them. Data on 437 aircraft projects introduced through three governance modes show that the positive performance effect of the firm's experience with the focal mode becomes insignificant after accounting for experience endogeneity. We suggest that in a general case, experience with corporate development activities may be tinged with both learning and selection effects. Therefore, omitting to account for experience endogeneity may lead to incorrect conclusions from an “empirically observed” positive experience–performance relationship. Managerial summary : This paper emphasizes that firms generally choose to undertake the corporate development activities (new product introductions, diversification moves, international expansions, alliances, acquisitions, etc.) with which they have been the most successful in the past and that they expect to be the most successful in the future. Hence, if a firm possesses certain capabilities, it will repeatedly engage in certain activities corresponding to those capabilities, thereby simultaneously achieving high levels of activity experience as well as superior activity performance. This view suggests that an “empirically observed” positive experience–performance relationship may not be due solely to learning‐based enhanced capabilities but may also be driven by astute self‐selection. Overall, we provide a new interpretation of the relationship between experience and performance in the context of infrequent, heterogeneous, and causally‐ambiguous corporate development activities. Copyright © 2015 John Wiley & Sons, Ltd.     

Toward a behavioral theory of real options: Noisy signals,bias, and learning

Research Summary: We develop a behavioral theory of real options that relaxes the informational and behavioral assumptions underlying applications of financial options theory to real assets. To do so, we augment real option theory's focus on uncertain future asset values (prospective uncertainty) with feedback learning theory that considers uncertain current asset values (contemporaneous uncertainty). This enables us to incorporate behavioral bias in the feedback learning process underlying the option execution/termination decision. The resulting computational model suggests that firms that inappropriately account for contemporaneous uncertainty and are subject to learning biases may experience substantial downside risk in undertaking real options. Moreover, contrary to the standard option result, greater uncertainty may decrease option value, making commitment to an investment path more effective than remaining flexible. Managerial Summary: Executives recognize the need to make uncertain investments to grow their business while mitigating downside risk. The analogy between financial options and real corporate investments provides an appealing method to consider the practical challenge of such investment decisions. Unfortunately, the “real options” analogy seems to break down in practice. We identify how a second form of uncertainty confounds real options intuition, leading managers to overestimate the value of uncertain investments. We present a behavioral real options model that accounts for both forms of uncertainty and suggest how uncertainty interacts with behavioral bias in the option execution/termination decision. Our model facilitates assessment of the conditions under which investments in uncertain opportunities are usefully considered as real options, and provides a means to evaluate their attractiveness.     

Performance measurement in R&D: exploring the interplay between measurement objectives, dimensions of performance and contextual factors

Measuring research and development (R&D) performance has become a fundamental concern for R&D managers and executives in the last decades. As a result, the issue has been extensively debated in innovation and R&D management literature. The paper contributes to this growing body of knowledge, adopting a systemic and contextual perspective to look into the problem of measuring R&D performance. In particular, it explores the interplay between measurement objectives, performance dimensions and contextual factors in the design of a performance measurement system (PMS) for R&D activities. The paper relies on a multiple case study analysis that involved 15 Italian technology-intensive firms. The results indicate that firms measure R&D performance with different purposes, i.e. motivate researchers and engineers, monitor the progress of activities, evaluate the profitability of R&D projects, favour coordination and communication and stimulate organisational learning. These objectives are pursued in clusters, and the importance firms attach to each cluster is influenced by the context (type of R&D, industry belonging, size) in which measurement takes place. Furthermore, a firm's choice to measure R&D performance along a particular perspective (i.e. financial, customer, business processes or innovation and learning) is influenced by the classes of objectives (diagnostic, motivational or interactive) that are given higher priority. The implications of these results for R&D managers and scholars are discussed in the paper.     

On Welfare Losses Due to Imperfect Competition

Corporate managers and executive compensation in many industries place significant emphasis on measures of firm size, such as sales revenue or market share. Such objectives have an important—yet thus far unquantified—impact on market performance. With n symmetric firms, equilibrium welfare losses are of order 1/n⁴, and thus vanish extremely quickly. Welfare losses are less than 5% for many empirically relevant market structures, despite significant firm asymmetry and industry concentration. They can be estimated using only basic information on market shares. These results also apply to oligopsonistic competition (e.g., for retail bank deposits) and strategic forward trading (e.g., in restructured electricity markets).     

Revisiting the imitation assumption: Why imitation may increase,rather than decrease,performance heterogeneity

Research Summary: Imitation is a central construct in strategy theory because it is assumed to diminish inter‐firm performance heterogeneity within an industry. We revisit this assumption, which is premised on the logic that imitated practices act directly to make the imitator more similar to its target. This logic is incomplete because imitation also acts indirectly—via its effect on an imitator's post‐imitation experiential learning efforts through which it refines imitated practices and fills remaining knowledge gaps. We examine how an imitator's focus of attention during this post‐imitation experiential learning process impacts performance heterogeneity. Employing a computational model, we contrast the heterogeneity resulting from imitative entry with that from de novo (non‐imitative) entry and identify conditions under which imitation may increase, rather than decrease, inter‐firm performance heterogeneity. Managerial Summary: Imitation is commonly assumed to be a low‐risk strategy by which firms can narrow the performance gap to the market leader. This assumption is predicated on an understanding of imitation that neglects the impact of imitation on subsequent, post‐imitation, learning. Such learning serves to refine the imitated practices and fill remaining knowledge gaps. Our theory suggests that imitation is more risky than is typically assumed. Imitation leads to bifurcated performance outcomes. An imitator is more likely to: (a) catch up to the market leader, and (b) perform far worse than it would have without imitation. Key factors driving the riskiness of imitation are the observability of the market leader's practices and an imitator's decision regarding its focus of attention in post‐imitation learning.