Adapting within relationships to adapt to market-led change: Does relationship success lead to marketplace inertia?

The use of relationships is a key means of adapting to marketplace needs. Paradoxically deepening relational commitments lead to inertia through the institutionalisation of relationship norms, resulting in less marketplace adaptability over time. This article examines this paradox and identifies how firms manage the dual process of adapting within relationships, and to a changing external environment. Findings are based on 24 case studies of New Zealand wineries, supplemented by 20 network interviews. Relationships were used by the firms to adapt to the marketplace, and firms that formed deeper relationships placed themselves in a better competitive position vis-à-vis those that didn't, if they fit their relationship strategy to the demands of the environment. To avoid inertia firms needed to complement strong relational ties with weak market-based ties to gain insight into emerging trends. This informed decisions regarding further relational commitments, and helped strengthen their position within established networks.     

Leaders’ social ties, knowledge acquisition capability and firm competitive advantage

Drawing on the relational and knowledge-based views of competitive advantage, this study links leaders?? social ties and knowledge acquisition capability to competitive advantage of a firm. Specifically, it posits that leaders?? business ties and government ties have differential effects on firm competitive advantage. It further posits that the effect of leaders?? business ties on firm competitive advantage will be positively moderated by knowledge acquisition capability, and the effect of leaders?? government ties on firm competitive advantage will be negatively moderated by knowledge acquisition capability. The hypotheses are tested based on a survey of 386 firms in China. The results provide support for the hypotheses.     

Sustaining the International Competitive Advantage of Asian Firms: A Conceptual Framework and Research Propositions

The sudden loss of export markets by many Asian firms during the Asian financial crisis (AFC) has raised important questions on how firms in the region can regain and sustain their competitive advantage in international markets. This paper develops a conceptual model which focuses on certain key elements of a firm's internal resources as critical sources of competitive advantage and offers research propositions. It is argued that Asian firms can enhance their international competitive advantage by leveraging their internal resources within an external environment generally conducive to growth.     

Religiosity and psychological contracts in Asian B2B service relationships

The growing significance of Asia in global trade has meant that service organizations within the region need to build robust relationships with customers that may reside in nations with different socio-cultural backgrounds. This paper draws on the theories of social exchange and social capital to examine how Indonesian service providers build B2B relationships with their Asian customers in the region, when the customers are from non-Islamic nations. This study used a survey to collect its primary data. Data from 312 Indonesian firms revealed that Asian cultural-specific concepts of religiosity not only had a positive impact on transactional and relational psychological contracts, but also dampened psychological contract breaches. Only relational psychological contracts had a positive effect on relational capital and relational wellbeing, despite transactional contracts being intrinsic to these relationships. Relational capital helped to reduce psychological contract breaches and improve relationship wellbeing, whereas psychological contract breaches reduced such wellbeing. Our findings significantly extend research on B2B service relationships and offer valuable managerial insights for service decision makers operating in Asia that involves B2B relationships between organizations with specific and different socio-cultural backgrounds.     

Market frictions and the competitive advantage of internal labor markets

Research summary : We show that frictions in labor and capital markets can be a source of competitive advantage for affiliates of corporate groups over stand‐alone firms in environments where benefits from internal markets' flexibility are high. We argue that the advantage of flexibility in changing labor inputs is related to how difficult it is to change capital inputs. We predict that if substituting labor with capital is difficult, the group advantage of flexibly changing labor would be stronger in countries with high levels of financial development. Consistent with this prediction, we find a stronger competitive advantage for group affiliates in countries with rigid labor markets but flexible capital markets. In these environments, group affiliates are more prevalent and outperform stand‐alone firms in terms of growth and profitability. Managerial summary : This research shows that the capacity to redeploy workers across internal units of the firm can be a source of competitive advantage in countries that impose strict employment protection laws. We show that the strategic advantage of labor flexibility is affected by how difficult it is to change capital inputs and that labor flexibility is a stronger source of competitive advantage in countries where developed financial markets allow for more flexible capital adjustment. In these settings, strategies designed to lower costs of internal mobility (e.g., locations of greater geographic concentration between units and in regions with less competitive external markets), development of corporate culture supportive of frequent change, and personnel development through internal rotation can result in substantial financial payoffs. Copyright © 2015 John Wiley & Sons, Ltd.     

The impact of psychological contract breaches within east-west buyer-supplier relationships

The expanding role of Asian firms in global supply chains has meant that their Western counterparts need to be capable of transcending the East-West divide in their relational building efforts if they wish to successfully participate in these networks. This paper draws upon social exchange (SE) theory to integrate the exit, voice, loyalty, neglect (EVLN) typology with the psychological contract (PSYCON) literature, to examine how Australian buyer firms build and nurture relationships with their Chinese suppliers. Data from 327 Australian managers collected using an online self-administered questionnaire reveals the negative effects of PSYCON breaches towards their suppliers on neglect, voice and loyalty in the relationship. In addition, contrasting effects of neglect and voice behaviours on trust and commitment, suggest that these behaviours can help erode and build East-West B2B relationships, respectively. These findings extend research on B2B relationships and offer useful managerial insights for decision makers operating in global supply chains involving relationships between firms from Eastern and Western backgrounds.     

The network perspective and the internationalization of small and medium sized software firms from Syria

This study has employed a case-based approach to explore the relevance of relational factors in explaining the internationalization of six software B2B SMEs from Syria. It contributes by providing rare empirical insights on the internationalization behavior of Middle Eastern SMEs and redressing, albeit slightly, the apparent research gap in the internationalization of knowledge-based SMEs from developing countries. Analysis results suggest the importance of the relational perspective in explaining the initial internationalization, market selection and internationalization speed of the investigated software firms. It emerged that the case firms either reacted to the cross-border opportunities offered by their relational contacts or proactively pursued overseas opportunities through existing and newly developed relationships. Their market entry decisions and internationalization pace also appear to have been influenced by these relationships. Both social and business networks were found to be important, but social ties seemed more influential at initial stages, with business networks becoming more dominant subsequently. The article concludes with appropriate recommendations for managerial decision making and future research.     

How to manage strategic alliances in OEM-based industrial clusters: Network embeddedness and formal governance mechanisms

The rapidly growing original equipment manufacturer (OEM)-based industrial clusters have been a prominent form of economic organization in several emerging Asian markets. Characterized by close interdependence and intertwined personal linkages, firms of Asian OEM-based industrial clusters participate in the phenomenon of strategic alliances. However, how these alliances can be effectively managed through formal governance mechanisms within embedded networks requires further investigation. This study uses social network analysis to identify personal, ownership, and technology networks in 141 semiconductor firms in an OEM-based industrial cluster in Taiwan that feature different types of OEM-led alliances and the prevalence of Guanxi. We find that relational embeddedness based on personal ties and structural embeddedness based on ownership ties support the employment of formal governance mechanisms. We also pay particular attention to the moderating role of network embeddedness in diminishing the relationship between transaction hazards and formal governance mechanisms. By identifying the embeddedness context in the governance of alliances, our research contributes to a better understanding of the ways in which formal governance mechanisms are contingent on the network embeddedness of OEM-based industrial clusters in Taiwan and other similar Asian economies.     

Tensions and ties in social media networks: Towards a model of understanding business relationship development and business performance enhancement through the use of LinkedIn

The era of social media networks has created significant opportunities for business relationship development yet there exists a paucity of research in this area. To address this, this paper identifies four key tensions within the current literature: relational versus transactional exchanges, emergent versus strategic social media network development, the pace of social media network formation versus the development of trust, and the notions of sharing and reciprocity versus competitive advantage. This study draws on the principles of netnography, incorporating data from 554 LinkedIn group interactions and 12 interviews with professionals in one global industry to provide insight into business relationship development stemming from one social media network. Significant contributions to theoretical and practical knowledge are made through the recognition of tensions in the literature, the application of the notion of Granovetter's ties to a contemporary context and the novel use of netnography. Furthermore, the resultant model conceptualises the use of social media networking in building networks and relationships which lead to new business and enhance business performance.     

Managerial social capital,strategic orientation,and organizational performance in an emerging economy

This study replicates and extends previous research focusing on China, to a sub‐Saharan African emerging economy environment. Specifically, the study directly replicates the impact of social capital derived from the micro‐managerial networking relationships and ties with top managers at other firms and government officials on macro‐organizational performance using data from Ghana. This study further extends previous work by examining the impact of social capital derived from managerial social networking relationships and ties with community leaders on organizational performance. It examines how the relationship between social capital and organizational performance is contingent on an organization's competitive strategic orientation. The findings suggest that social capital developed from managerial networking and social relationships with top managers at other firms, government officials (political leaders and bureaucratic officials), and community leadership enhance organizational performance. The findings from the contingency analyses reveal some interesting trends. The impact of social capital on organizational performance differs between firms that pursue the different competitive strategies (low‐cost, differentiation, and combination of low‐cost and differentiation) and those who do not pursue those strategies. Copyright © 2007 John Wiley & Sons, Ltd.     

Managing corporate-government relationships in a multi-cultural setting: How political corporate social responsibility (PCSR) as a response to legitimacy pressures affects firm reputation

As many multinationals set up subsidiaries in emerging markets, they face legitimacy pressures from the host countries. This pressure leads firms to engage in political corporate social responsibility (PCSR) activities. We distinguish two types of attributions of PCSR activities – public-serving and self-serving – and study how these two types of PCSR attributions affect firm reputation. Analyzing 463 PCSR activities by 104 firms in China between 2015 and 2017, we find that public-serving PCSR enhances firm reputation, while self-serving PCSR diminishes it. In addition, we document a negative interaction effect between the two attributions of PCSR. We also find that CEO participation attenuates the negative effect of self-serving PCSR whereas administrative distance accentuates the positive effect of public-serving PCSR. Our research contributes to the nascent literature on government relation networks and sheds light on how firms should manage their relationships with the host countries in a multi-cultural setting.     

Which ties matter when? the contingent effects of interorganizational partnerships on IPO success

This paper investigates the contingent value of interorganizational relationships at the time of a young firm's initial public offering (IPO). We compare the signaling value to young firms of having ties with two types of interorganizational partnerships: endorsement relationships such as those with venture capital firms and investment banks, and strategic alliance partnerships. We propose that, under different equity market conditions, potential investors in an issuing firm attend to different types of uncertainty; attention to these different types of uncertainty affects investors' perceptions of the relative value of a young firm's different kinds of endorsements and partnerships and, hence, IPO success. Results from a sample of young biotechnology firms show that ties to prominent venture capital firms are particularly beneficial to IPO success during cold markets, while ties to prominent investment banks are particularly beneficial to IPO success during hot markets; a firm's strategic alliances with major pharmaceutical/health care firms did not have such contingent effects. Implications for understanding the contingent value of interorganizational ties are discussed. Copyright © 2003 John Wiley & Sons, Ltd.     

Supporting product innovativeness and customer value at the bottom of the pyramid through context-specific capabilities and social ties

Local firms operating in bottom of the pyramid (BoP) markets face significant challenges in managing their innovation practices and creating value for customers. Operating in resource-constrained environments, local BoP firms need to behave as bricoleurs, deploy capabilities that help creatively combine and leverage their limited available resources to innovate and create value for customers. Employing the capability-based view (CBV) of the firm and social capital theory (SCT), we develop a research model to explain the extent that local BoP manufacturers use bricolage to develop innovative products that create value for BoP customers. Analysis of data obtained from 150 local BoP manufacturing firms (three managers in each firm) and two of their major customer firms shows that the relationship between bricolage and product innovativeness is more complex than previously understood. Results show that the curvilinear relationship is attenuated differently by social ties with government versus ties with civil society organizations. Furthermore, findings also support the contingency role of BoP firms' marketing capabilities in translating product innovativeness into customer value in BoP markets. These findings present specific implications for scholars and practitioners interested in BoP markets.     

Global corporate competition: Who's winning,who's losing,and the R&D factor as one reason why

This study summarizes the major changes over the period 1960–86 in the shares of world markets of the world'S leading American, European and Asian corporations based in 15 major industries. It relates the differential sales growth rates of the gaining and losing firms to national trends in industrial competitiveness, to employment change and to long-term returns to shareholders. One principal determinant of firms' global growth rates, and thence gains and losses in ‘world market share’, corporate research and development (R&D) intensity, is examined and tested on an 83-firm, six-industry subset of the overall data base. The proportion of corporate sales revenues allocated to commercially oriented R&D emerges as a, perhaps the, principal indicator of subsequent sales growth performance relative to competition over 5–10-year periods. Insofar as many U.S. and U.K. firms have lost global market share relative to Asian and European competitors over the past two decades, a significant contributory factor would appear to have been negligence on the part of many U.S. and U.K. firms of investment in technology as a factor determining strategic, competitive advantage.     

Trust formation in Korean new product alliances: How important are pre-existing social ties?

The focus of this study is on the nature and influence of social connections versus other relational mechanisms on trust formation in an emerging Asian economy. We examine the role of communication quality, perceived fairness, and pre-existing social relationships for the formation of trust in 47 vertical new product development alliances in South Korea. The empirical results indicate a relatively minor importance of pre-existing social ties vis-à-vis communication quality and fairness for the development of trust. Contrary to widespread perceptions, pre-existing social ties do not appear to directly contribute to establishing trust with external alliance partners in Korea. Multiple explanations are offered for this unexpected finding. Instead, existing social relationships moderate the importance of fairness for trust formation. When conducting partnerships with Korean firms, managers should focus more on a quality communication and fair behavior when trust formation is the objective, than on social connections.     

Structural social capital evolution and knowledge transfer: Evidence from an Irish pharmaceutical network

Businesses are becoming increasingly involved in collaboration networks to access external knowledge and sustain innovation. In this context, knowledge and knowledge transfer are considered an important source of innovation and competitive advantage. Social capital theory offers a theoretical approach to explain how individuals, groups, and organizations manage relationships and access knowledge resources. The structural dimension of social capital has stimulated debate regarding optimal network configuration to achieve innovation. The extant literature suggests network structures evolve from a bridging configuration to a bonding configuration without examining the details of how the evolution occurs within the network and its stage-by-stage impact on knowledge transfer. This study explores this relationship by analyzing the evolution of a successful Irish pharmaceutical network involving organizations from industry and academia. This research setting encompasses a rare network configuration in an industry known for its lack of collaboration among competing firms. Findings show that structural holes provide access to a set of complementary and heterogeneous knowledge. However, for such knowledge to be exploited, the network configuration has to evolve from a sparse network (small in size and characterized by weak ties across multiple organizational networks), to a large and cohesive network configuration characterized by high levels of commitment, trust, fine-grained information exchange, and joint problem solving. Mechanisms crucial to this evolution include consistently-scheduled meetings, training to communicate tacit knowledge, wide diffusion of knowledge through an on online portal, and relationship specific investments designed to safeguard intellectual property. Surprisingly, industry members appear to transition to a cohesive network faster than do academic members.     

The Context-Specific Nature of Competence and Corporate Development

Based on an analysis of knowledge-intensive innovations, this paper argues that much of the knowledge that provides distinctive competence for sustained competitive advantage is context specific. The development of this competence is a path-dependent process of numerous learning events in particular situations and practices. Because competence is embedded in the specific context in which it was created, it is very difficult to imitate and can become the basis for sustained competitive advantage. This represents an important opportunity for firms who have grown up in a developing country and learned how to compete successfully there. Firms from developing countries who run in packs to build and expand on their context-specific competencies can be more successful in expanding into other developing countries with similar national political institutional contexts than firms from developed countries who have not acquired this tacit knowledge of local practices.     

Knowledge management and innovation in knowledge-based and high-tech industrial markets: The role of openness and absorptive capacity

Knowledge, as resource, and technological innovation, as a dynamic capability, are key sources for firm's sustained competitive advantage and survival in knowledge-based and high-tech industries. Under this rationale has emerged a research stream where knowledge management, organizational learning, or intellectual capital, help to understand and constitute the key pieces of one of the most complex business phenomena; the ‘firm's technological advantage’. This being so, it is also true that in knowledge-based and high-tech industrial markets, competitive success comes directly from continuous technological innovations, where a single organization cannot successfully innovate in isolation; therefore, firms should rely on external relationships and networks in order to complement its knowledge domains, and then, develop better and faster innovations. In this sense, I would like to highlight the cross-fertilizing role of three constructs that are nurtured by different research traditions: ‘collaborative/open innovation’, from Strategy and Innovation Management research; ‘absorptive capacity’, from ‘A Knowledge-Based View’; and ‘market orientation’, from Marketing research.     

Pioneering Advantage in New Service Development: A Multi-Country Study of Managerial Perceptions

Pioneering advantage in manufacturing firms has received much attention in the management and marketing literature. Few research studies, however, have been conducted to investigate the pioneering advantages and disadvantages involved in new service development, especially across several geographic regions. We build a theoretical framework of pioneering advantage in service industries based on the distinguishing characteristics of services. From this framework, we develop a set of testable propositions about the importance of several types of pioneering advantage (economic, preemptive, technological, and behavioral advantages) to service managers. Specifically, we propose that all of these types of pioneering advantages are important to service managers, and that these managers perceive that pioneering results in improved firm performance. We also propose that, due to the distinguishing characteristics of services such as intangibility and heterogeneity, service managers will not perceive the risks of pioneering in a service industry to be severe. In addition, we propose that certain types of pioneering advantage will be more important to service managers in Western countries than in Asian Pacific countries due to cultural and business environmental differences. In particular, we propose that service managers from Western firms perceive preemptive advantages of pioneering to be more important than do their Asian Pacific counterparts, and service managers from Asian Pacific firms perceive behavioral advantages of pioneering to be more important than do their Western counterparts. To test our propositions empirically, we develop a set of pioneering principles from the literature. We then collect and analyze data from a sample of 982 senior managers in service industries from nine countries: the United States, the United Kingdom, Germany, Japan, China, Taiwan, Hong Kong,1 South Korea, and Singapore. We find evidence of several significant cross‐cultural differences consistent with our propositions. In fact, seven of the eight propositions are strongly or partially supported. The only nonsupported proposition concerned the importance of technological advantage. We find that technological advantages of pioneering are much less important to service managers than are other pioneering advantages. We conclude with strategic recommendations for managers involved in new service development and international or global competition, and provide directions for future research. We note that the insights from this study can help managers from both the West and the Asian Pacific region to better understand their global competitors who pursue a new service pioneering strategy, and can potentially help them select entry deterrence strategies more effectively.