An empirical examination of transaction‐ and firm‐level influences on the vertical boundaries of the firm

A large literature has successfully employed transaction cost economic theory to describe how exchange conditions affect the optimal form of organization. However, this approach has historically not accounted for the influence of firm‐specific attributes on the governance decision. This paper develops a model based on insights from transaction cost economics, the resource‐based view, and real options theory to examine how transaction‐level characteristics, firm‐specific capabilities, and product‐market scope influence the governance of production. Empirical evidence derived from analysis of 469 make‐or‐buy decisions involving 117 semiconductor firms indicates that decisions regarding the governance of production activities are strongly influenced by both transaction‐ and firm‐level effects. Copyright © 2003 John Wiley & Sons, Ltd.     

企业网络研究综述

现代企业网络研究呈现出多学科交叉、多角度切入的特点。文章对企业网络研究进行了脉络梳理,划分出企业网络研究的四个视角,即基于交易成本理论的资源配置方式,基于资源基础理论的企业战略选择,基于社会网络理论的企业生存方式以及基于多理论整合的价值创造和实现机制。在整理和综述的基础上分析了现有研究存在的问题,并对未来研究进行了展望。     

Strategic frameworks for understanding employer participation in school‐to‐work programs

The knowledge and skills inherent in human capital are increasingly recognized as the essence of competitive advantage. Extending the emerging literature on capability building, this paper explores the strategic decision of participating in school‐to‐work programs from the transaction cost and resource‐based view of the firm. Using data from a national sample, we find that both strategic perspectives help to explain decisions to participate in school‐to‐work activities. Our findings indicate that school‐to‐work programs and activities may be understood as interorganizational strategies from a transaction cost view and evidence of a firm's motivation to develop human capital to build competitive advantage from a resource‐based view. Implications for school‐to‐work public policy development in the United States and future research are identified. Copyright © 2005 John Wiley & Sons, Ltd.     

Market frictions as building blocks of an organizational economics approach to strategic management

This paper shows that market frictions are fundamental building blocks for an organizational economics approach to strategic management. Various organizational economic approaches (transaction costs, property rights, real options, and resource‐based) have distinctive focal problems and emphasize different combinations of market frictions. A wider recognition of the role of market frictions is useful for three main objectives. First, it helps identify an evolving market‐frictions paradigm in strategic management. Second, it shows how two primary questions in strategy of why firms exist and why some firms outperform others and the three primary strategic goals of cost minimization, value creation, and value capture can be better joined and evaluated. Third, different combinations of market frictions can generate new research questions and advance theory development in the strategic management field. Copyright © 2013 John Wiley & Sons, Ltd.     

Product‐market strategy and the marketing capabilities of the firm: impact on market effectiveness and cash flow performance

We report on two studies (a single and a multi‐industry) that empirically investigate a nomological network of relationships between strategic business unit product‐market strategy (differentiation, cost‐focus, and product‐market scope), marketing capabilities (architectural and specialized capabilities, as well as their integration), and business unit performance (market effectiveness and subsequent one‐year objective cash flow), along with a series of controls. Addressing important lacunae in the resource‐based view our main research objective is to augment understanding of how critical firm‐level marketing capabilities enable the realization of strategy, thus, further advancing both the resource‐based view and more recent capabilities theorizing. Specifically, we test seven hypotheses and find strong evidence that both architectural and specialized marketing capabilities, and their integration, positively mediate the product‐market strategy and derived business unit performance relationship. In contrast to many extant studies, both survey and objectively measured data are combined, and because the secondary data collected contains both resource‐level (input) data and subsequent one‐year financial data, a higher level of confidence may be attributable to our findings. Copyright © 2009 John Wiley & Sons, Ltd.     

R&D Cooperation in a Transaction Cost Perspective

This paper investigates R&Dcooperation between buyers and suppliers, drawing bothon transaction cost theory and resource-based theoryof the firm. Results of logistic regression analyses,using a unique firm-level database containing 689manufacturing firms located in a Dutch region, supportassumptions of transaction cost theory. Frequentknowledge transfer and moderate and high levels ofasset specificity increase probabilities of R&Dcooperation. In particular, Williamson's assumptionsconcerning the moderating influences of uncertainty onbilateral governance are confirmed. Extending theoriginal transaction cost model with indicatorsderived from resource based theory of the firmincreases the performance of the model.     

COST,VALUE AND FOREIGN MARKET ENTRY MODE: THE TRANSACTION AND THE FIRM

This paper compares and contrasts the mode of foreign market entry decision from the transaction cost/internalization and organizational capability perspectives. Each of these perspectives operates at a different level of analysis, respectively the transaction and the firm, and consequently differs in the primary arena of attention, namely transaction characteristics and the capabilities of firms. In making the comparison, a key distinction is made between the cost and the value aspects in the management of know-how, based on which issues pertaining to the transfer of knowledge within and across firm boundaries and the exploitation and enhancement of competitive advantage are closely examined. The main purpose of this paper is to demonstrate the implications of a shift in frame from cost to value in the analysis of decisions related to firm boundaries. Entry into foreign markets is used primarily as a vehicle for the accomplishment of this purpose. The paper shows how the value-based framework of the organizational capability perspective radically and fundamentally shifts the approach towards the governance of firm boundaries and argues that, even though TC/internalization theory raises some valid concerns, the organizational capability framework may be more in tune with today’s business context. Some of the assumptions of the TC/internalization perspective, both direct—–opportunism, exploitation of existing advantage—and indirect—preservation of the value of know-how across locational contexts, asymmetry between bounded rationality for transaction and production purposes—are critically examined and questioned. Implications of a shift from a cost to a value-based framework are discussed and the need for a shift in research focus is emphasized. © 1997 by John Wiley & Sons, Ltd.     

Small forces and large firms: Foundations of the RBV

The article presents a synthesis of several papers I have written, mostly in the economics literature, since the publication of ‘A resource‐based view of the firm’ (Wernerfelt, 1984). The starting point is a very small force: the reduction in bargaining costs when several bargains are pooled into one. I show how one can construct a theory of the firm based on this force and defend the theory by arguing that it makes predictions consistent with several stylized facts. In addition, the theory suggests that firms should decide on their strategy and scope based on excess capacity of productive resources—exactly like the RBV.     

Theories of the (state-owned) firm

State-owned enterprises (SOEs) contribute approximately 10% of the world’s GDP. SOEs at one time were predicted to disappear from the economic landscape of the world, but today SOEs are growing more prevalent in the world economy. The current theories of the firm that form the pillars of the management discipline largely ignore the theoretical differences that SOEs introduce into the conceptualization of the firm. Therefore, we extend four core theories of the firm by incorporating SOEs as a mainstream (not special or marginal) organizational form into these theories. We focus specifically on property rights theory, transaction cost theory, agency theory, and resource-based theory, culminating in a research agenda with 12 testable propositions.     

Ordered to Innovate: A Longitudinal Examination of the Early Periods of a New Product Development Process Implementation in a Manufacturing Firm

Firms can generate rather long‐lasting growth spurts through continuous innovation. Moreover, literature suggests that, when growing organically, firm performance is enhanced through a revenue expansion emphasis encompassing new‐to‐the‐world or new‐to‐the‐firm physical goods or service augmentations. This organic approach usually outperforms cost‐reduction programs, which often yield minor improvements to existing products; or an emphasis on simultaneous revenue expansion and cost reduction. While this finding has the major implication that firms should focus and generate more radical new products for long‐term success, there is need for research that investigates how firms should implement the strategy change to organic growth via innovation. The authors present a case study, which suggests that in the short run, it might be better to commence a revenue expansion strategy by focusing on incremental new product development (NPD) efforts, rather than focusing too much on new‐to‐the‐world or new‐to‐the‐firm products. Moreover, analyses of the rich, multimethod data, collected over a two‐and‐a‐half‐year interaction with the focal firm, illustrates that to increase success prospects of an organic innovation strategy, managers should not only engage incrementally innovative new product projects initially, but also ensure proficiency in commercializing the new product with cross‐functional NPD teams. Thus, in early stages of organization transformation, the merits of the organic growth strategy will be swiftly demonstrated, the cross‐functional teaming skills are learned and tested, and the new strategy becomes institutionalized. While somewhat contradictory to other studies on this topic, this more evolutionary exploration provides a new perspective for organizational change, especially when a firm is ordered to innovate. In conclusion, the insights gleaned in this study shed light on the journey from stagnating firm to a successful serial innovator via formalized NPD process implementation.     

Innovations and the role of complementarities in a strategic theory of the firm

In the resource‐based view of strategy and in evolutionary economics, complementary assets play a crucial role in explaining sustainable competitive advantages and innovations. Despite the apparent importance of complementary assets for the understanding of corporate strategy, their creation and the associated managerial problems have been much less discussed. We believe this to be a major weakness in the strategic theory of the firm. Interestingly, problems of coordination and cooperation are center stage in the contract‐based theories of the firm, and we try to integrate some of their insights into a resource‐based perspective. Specifically, we show how complementary assets raise the need for strategic direction by a firm's top management. Moreover, complementary assets magnify internal incentive problems, and their management has an impact on the innovativeness of a firm. Lastly, complementary assets play a crucial role in the internal appropriation of innovative rents. We demonstrate the fruitfulness of our integrated framework by relating some of our findings to the literature on corporate strategy, industry evolution, and organizational structures. Copyright © 2007 John Wiley & Sons, Ltd.     

Models of causal inference: Imperfect but applicable is better than perfect but inapplicable

We assess a recent paper by Durand and Vaara (2009) that advances causal graph modeling as a tool for inferring causes in strategy research. We focus on the Markov condition, a key assumption on which causal graph modeling is based, and show why this condition is invariably violated in strategic management in general and the resource‐based view of the firm in particular. We then introduce vector space modeling as a quantitative alternative to causal graph modeling, and consider how improved methods of causal inference might enhance our ability to test some of the central propositions of the resource‐based view. Copyright © 2013 John Wiley & Sons, Ltd.     

A Bayesian operationalization of the resource‐based view

This paper argues that the gap between the theoretical utility and the practical utility of the resource‐based view (RBV) may be narrowed by operationalizing the theory more consistently with Penrose's original framework. The operationalization proposed here is a twofold approach. First, the RBV may be enhanced by the explicit recognition of Penrose's two classes of resources, namely, administrative resources and productive resources. This distinction suggests a focus on the administrative decisions of managers that lead to economic performance. Second, we argue that the RBV is a theory about extraordinary performers or outliers—not averages. Therefore, the statistical methods used in applying the theory must account for individual firm differences, and not be based on means, which statistically neutralize firm differences. We propose a novel Bayesian hierarchical methodology to examine the relationship between administrative decisions and economic performance over time. We develop and explain a measure of competitive advantage that goes beyond comparisons of economic performance. This Bayesian methodology allows us to make meaningful probability statements about specific, individual firms and the effects of the administrative decisions examined in this study. Copyright © 2004 John Wiley & Sons, Ltd.     

Attention allocation to multiple goals: The case of for‐profit social enterprises

The complexity of issues firms have to attend to make it impossible for CEOs to give their full attention to all issues concurrently. Drawing on the “attention‐based view” of the firm, this paper opens the black box of attention allocation in for‐profit social enterprises by showing how attention structures and the context in which the firm operates interplay. Utilizing empirical data on 148 for‐profit social enterprises, findings show that the attention structures—other‐regarding values, utilitarian identity, and resource availability—have a significant impact on the relative attention to social goals, while past firm performance as a context variable moderates these relations. Applying the principles of structural and situated attention, this paper makes an important contribution to management theory and attention allocation in for‐profit social enterprises. Copyright © 2014 John Wiley & Sons, Ltd.     

How do interdependencies among human‐capital deployment,development, and diversification strategies affect firms' financial performance?

Using key insights from the resource‐based view of the firm, we develop and test a theory of how firms can successfully deploy and develop their strategic human assets while managing the trade‐offs in their service and geographical diversification strategies. In a sample of large law firms we find that, even though firms profit from expert human‐capital leveraging strategy and service and geographical diversification strategies individually, pursuing these strategies simultaneously at high levels produces negative interaction effects on firm profitability. In addition, the internally developed, firm‐specific associate human capital strategically fits better with high levels of expert human‐capital leveraging. While lateral hiring helps firms build new knowledge bases and take advantage of growth opportunities, pursuing high levels of both expert human‐capital leveraging and lateral hiring of associates results in lower profitability. To fully capture the economic benefits from strategies of diversification, human‐capital leveraging and lateral hiring, firms should understand and manage the complex interdependencies among multiple levels of strategy. Copyright © 2005 John Wiley & Sons, Ltd.     

The performance implications of “grow or buy” decisions in the wine industry

This paper investigates how wineries’ decisions to grow or buy their provisions of grape affect their viticultural performance. While previous literature in agrarian economics suggests a direct association between vertical integration and performance, this research largely neglects the impact of transaction cost variables on governance mode choice and firm performance. This paper first demonstrates that neither outsourcing nor vertical integration per se result in superior performance; rather, a winery’s viticultural performance is contingent upon the alignment of winery’s governance decisions with the predictions of transaction cost theory.     

Technology Exploitation Paths: Combining Technological and Complementary Resources in New Product Development and Licensing

Technological resources in the form of patents, trade secrets, and know‐how have become key assets for modern enterprises. This paper addresses a critical issue in technology and innovation management, namely, the commercial exploitation of technological resources resulting from research and development (R&D) investments. Extracting economic value from these resources by maximizing the benefits for shareholders is an extremely challenging task because technological resources are intangible, idiosyncratic, uncertain, predominantly tacit, and with poorly defined property rights. In their attempt to extract the maximum value from their technological resources, firms increasingly combine their internal exploitation through new product development (NPD) with external exploitation through licensing. However, most existing studies on NPD and technology licensing have treated the two exploitation paths independently and in isolation, which has resulted in two separate research streams using different theories and addressing different managerial challenges. The purpose of this paper is to contribute to filling this gap by developing and testing a comprehensive conceptual framework that simultaneously considers the antecedents affecting the successful implementation of NPD and licensing strategies as well as their consequences on firm profitability. The paper in particular investigates the effects of the interplay between technological resources and three types of complementary resources, marketing, manufacturing, and relational. We test the model using structural equation modeling on a sample of 733 Spanish manufacturing firms observed from 2003 to 2007. The data provide support for the existence of different paths to market firm technologies: an internal path, whereby the ownership of technological resources fully explains NPD performance, and an external path, whereby high intensity of marketing and relational resources reinforces the positive effect of technological resources on licensing performance. This sustains the relevance of the resource‐based value‐enhancing effects of complementary resources in licensing, as opposed to the motivation‐reducing effects advanced by transaction cost‐based literature. Moreover, the empirical analysis shows a substitution effect between NPD and licensing, whereby their simultaneous pursuit at intense levels is associated with lower profit margins. This provides evidence of the much theorized, but seldom tested, rent dissipation effect. These findings offer several contributions to research on licensing, NPD, open innovation, and the resource‐based view of the firm. On a managerial level, they suggest that achieving maximum value from proprietary technologies may not entail exploiting them both through external and internal paths. Managers are also informed that the resource combinations that enhance licensing performance include marketing and relational resources.     

Information diffusion and value redistribution among transaction partners of the IPO firm

This paper examines the diffusion of information around the initial public offering (IPO) process and identifies transaction partners on which IPO firms are dependent. Using a resource payments perspective, we argue that this dependence will lead to greater cumulative abnormal stock returns for transaction partners when this information is revealed in the market (when the initial form S‐1 is filed with the SEC). Moreover, we examine the uniqueness of the resource configuration between the IPO firm and transaction partners and find that greater uniqueness is associated with higher valuation for these transaction partners. We also find that multiple dependencies (by the IPO firm) reduce the valuation effect for transaction partners, indicating that a bargaining effect reduces the potential value that any transaction partner can appropriate. Copyright © 2013 John Wiley & Sons, Ltd.