Measuring organizational knowledge: a conceptual and methodological framework

Knowledge is fundamental to strategic success. Limited progress has been made, however, in measuring organizational knowledge. We employ research on resource‐based theory and organizational epistemology to suggest a perceptual approach to measuring knowledge. We present a research protocol to identify a domain of organizational knowledge resources within industries. Using a sample of organizations from the hospital and textile industries, we interviewed CEOs to identify the feasible set of knowledge resources. We presented this set to managers at those organizations to measure their perceptions of the value‐added of each knowledge resource for their organizations. The results demonstrate that the importance of knowledge resources varies by industry and organization, and calls to question efforts to generate an inventory of generic knowledge resources that is applicable across industries. Copyright © 2003 John Wiley & Sons, Ltd.     

The creation of momentum for change through the process of strategic issue diagnosis

This paper presents a model of how decision-makers interpret stategic issues. The model of strategic issue diagnosis identifies three critical events: activation, assessments of urgency and assessments of feasibility. The relationship of each of these interpretive assessments to the creation of momentum for change allows one to predict if and how organizations will respond to a changed decision environment. The paper further links strategic issue diagnosis to organizational responses by highlighting the systematic effect of two contextual variables—the organization's belief structure and its resources—upon the assessments in diagnosis. In this way, the model of issue diagnosis provides a framework for understanding how and why organizations respond differently to strategic issues.     

Strategic decision speed and firm performance

This 4‐year study examines the effect of strategic decision speed upon subsequent firm performance and identifies environmental and organizational characteristics that relate to decision speed. We draw upon strategic decision‐making theory and organization theory to propose that strategic decision speed mediates the relation between environmental and organizational characteristics and performance. Measures of business environment, organization structure, strategic decision speed, and firm performance (growth and profitability) were collected from 318 CEOs from 1996 to 2000. Structural equation modeling confirmed that fast strategic decision‐making predicts subsequent firm growth and profit and mediates the relation of dynamism, munificence, centralization, and formalization with firm performance. Copyright © 2003 John Wiley & Sons, Ltd.     

Generalized vs. specific locus of control expectancies of chief executive officers

Hodgkinson (1992) recently advocated in this journal that measures of generalized control expectancies, such as the well known Rotter I-E scale (Rotter, 1966), are not suited to study the relationship between the locus of control beliefs of Chief Executive Officers (CEOs) on the one hand and strategic, structural and performance variables on the other hand. According to Hodgkinson (1992) a more specific scale, measuring strategic control expectancies, should be used in future research. We argue and empirically illustrate that such a methodology will not lead to interesting research results in the ‘strategic leadership’ domain. More specifically, measures of firm-specific control expectancies are likely to be influenced by the CEO's perception of the situational context of the firm and are therefore not indicative of fundamental personality differences between CEOs. Consequently, such measures cannot give an answer to the basic research question whether and why the personality of CEOs plays an important role in explaining organizational behavior and performance.     

CEO career horizon,corporate governance,and real options: The role of economic short‐termism

Research Summary: Combining studies on real options theory and economic short‐termism, we propose that, depending on CEOs’ career horizons, CEOs have heterogeneous interests in strategic flexibility, and thus, have different incentives to make real options investments. We argue that compared to CEOs with longer career horizons, CEOs with shorter career horizons will be less inclined to make real options investments because they may not fully reap the rewards during their tenure. In addition, we argue that long‐term incentives and institutional ownership will mitigate the relationship between CEOs’ career horizons and real options investments. U.S. public firms as an empirical setting produced consistent evidence for our predictions. Our study is the first to theoretically explain and empirically show that a CEO's self‐seeking behavior will impact real options investments. Managerial Summary: This article helps to explain how a CEO's self seeking‐behavior may shape a firm's real option investment, which could result in different level of strategic flexibility. We argue that CEOs with short career horizons have less time to exercise their firms’ real options, which should lower the investments in the firms’ real options portfolios relative to CEOs with long career horizons. We study a sample of U.S. public firms and find strong evidence that a CEO's expected tenure in the firm is positively related to the real options investments at the firm level. We find that this agency issue can be mitigated by adopting appropriate corporate governance mechanisms such as long‐term incentives and institutional investors.     

Size (and competition) among organizations: modeling scale‐based selection among automobile producers in four major countries, 1885–1981

Based on previous empirical research, size is perhaps the most powerful explanatory organizational covariate in strategic analysis. We suggest that theoretical arguments about size be examined carefully to specify models with explicit comparison sets and with mechanisms linking size and underlying processes to outcomes. We illustrate the approach here by advancing arguments about scale competition within an organizational population. In this effort, we feature a theoretical model of scale‐based selection, which posits that a firm's chances of survival decrease with its aggregate distance from larger competitors on a transformed size gradient. The model assumes that the appropriate comparison set consists of all contemporaneous similar organizations competing on the basis of scale and operating in a localized geographic setting. We argue that aggregate distance of a focal firm from larger other firms (a specific form of relative position in the size distribution) reflects the extent to which it can capitalize on potential competitive advantages of scale emanating from economic, political, and social processes. Analyzing the mortality rates of large organizations across the entire histories of automobile industries in four major countries provides support for the theory. We discuss the general implications of our findings for strategic and organizational analysis. Copyright © 2003 John Wiley & Sons, Ltd.     

Organizational control as antidote to politics in the pursuit of strategic initiatives

In contrast to the contingency approach advanced by most prior work, we suggest a complementary perspective on organizational control and its relationship with performance. We argue that the simultaneous use of behavior and outcome control capitalizes on their respective advantages, and is therefore more effective than a sole reliance on either control type. Moreover, with organizational control seeking alignment between individual and organizational goals, the benefits of such a complementary approach may be more pronounced in a context characterized by high levels of organizational politics, or the pursuit of individual at the expense of organizational goals. Our analysis of strategic initiatives pursued by 184 European corporations provides support for both a complementary approach to organizational control and a contingency effect of organizational politics. Copyright © 2014 John Wiley & Sons, Ltd.     

Why do some outside successions fare better than others? The role of outside CEOs' prior experience with board diversity

Research summary: We develop a theory to explain why new outside CEOs can better manage their relationship with the board if they previously served on boards that were more diverse than the focal board. We predict that a new outside CEO's prior experience with more diverse boards not only reduces the likelihood of post‐succession CEO turnover and director turnover, but also improves firm performance. Results from an analysis of 188 outside CEOs in a sample of Fortune 500 companies provide support for our theory. This study contributes to upper echelon theory and research by identifying outside CEOs' prior experience with board diversity as an important aspect of their background that influences a range of major organizational outcomes, including CEO turnover, director turnover, and firm performance. Managerial summary: It is challenging to be a new CEO who comes from outside of the organization. Our study examines why some new outside CEOs fare better than others. We suggest that a positive relationship with the board of directors is a key factor in a new outside CEO's success. A new outside CEO can better manage the relationship with the board if he or she has prior experience working with other demographically diverse boards. In contrast, when the focal board is more diverse than the other boards on which the new CEO previously served, the new CEO tends to struggle in managing his or her relationship with the board, experiencing a higher likelihood of turnover and delivering worse financial performance. Copyright © 2015 John Wiley & Sons, Ltd.     

Independent director death and CEO acquisitiveness: Build an empire or pursue a quiet life?

Research summary : This study examines the relationship between an independent director's death and CEO acquisitiveness. Using a sample of large U.S. public firms, we find that CEOs who have experienced an independent director's death undertake fewer acquisitions in the post‐director death period, in particular fewer large acquisitions. Our findings are consistent with the prediction of posttraumatic growth theory that mortality awareness can induce CEOs to reevaluate their life priorities and reduce the importance of extrinsic goals in their decision making. This study contributes to the strategic leadership literature by highlighting the influence of the death of CEOs ' social peers on CEOs ' strategic decisions . Managerial summary : Does the death of CEOs ' social peers influence CEOs ' strategic decisions? We find that CEOs who have experienced an independent director's death engage in fewer acquisitions in the post‐director death period, in particular fewer large acquisitions. One likely explanation for our findings is that the death of an independent director may heighten CEOs ' mortality awareness, lead the CEOs to pursue a quieter life, and weaken their propensities for undertaking decisions (i.e., acquisitions) that increase their compensation and social status . Copyright © 2016 John Wiley & Sons, Ltd.     

How dynamic can organizational capabilities be? Towards a dual‐process model of capability dynamization

The recent discussion in the field of strategic management broadly favors the idea of dynamic capabilities in order to overcome potential rigidities of organizational capability building. The major question addressed in this paper is whether capabilities can actually be conceived as being in flux—and if so, to what extent and in which way? After briefly recapitulating the distinguishing features of organizational capabilities, path dependency, structural inertia, and commitment are identified as the main capability‐rigidity drivers causing a managerial dilemma. In the search for a resolution of this dilemma different approaches of dynamic capabilities are identified and discussed. The analysis shows that the approaches suffer from inherent conceptual contradictions: the dynamization runs the risk of dissolving the original idea and strength of organizational capability building. Ultimately, capabilities would lose the strategic power attributed to them in the resource‐based view. The last section of this paper therefore aims to develop an alternative approach, which aims at preserving the original merits of organizational capability and solving the rigidity issue not by integrating a dynamic dimension into the capability construct but rather by establishing a separate function (‘capability monitoring’). The suggestions mount up to a tier solution. Its logic builds on the dynamics of countervailing processes and second‐level observation. Copyright © 2007 John Wiley & Sons, Ltd.     

Who is governing whom? Executives,governance, and the structure of generosity in large U.S. firms

We examine how organizational structure influences strategies over which corporate leaders have significant discretion. Corporate philanthropy is a strategic activity commonly managed through a specific, differentiated organizational structure—the corporate foundation—that formalizes and constrains the influence of individual senior managers and directors on corporate strategy. Our analysis of Fortune 500 firms from 1996 to 2006 shows that characteristics of senior management and directors affect corporate philanthropic contributions. We also find that organizational structure constrains the philanthropic influence of board members, but not of senior managers, a result contrary to what existing theory would predict. We discuss how these findings advance understanding of how organizational structure and corporate leadership interact and how organizations can more effectively realize the strategic value of corporate social responsibility activities.     

Organizational learning and strategic renewal

This paper attempts to fill an important gap in the integration of strategy and organizational learning through empirical research that examines the process of strategic renewal using a comprehensive framework of organizational learning. The 4I framework of organizational learning is used to examine the phenomenon of strategic renewal at Canada Post Corporation (CPC). The study illustrates the underlying processes that form the tension between exploration and exploitation, demonstrating why strategic renewal is so challenging. Furthermore, it challenges assumptions about organizational learning, suggesting that we need to demystify organizational learning by removing the halo that surrounds it. Copyright © 2003 John Wiley & Sons, Ltd.     

The relationships between intangible organizational elements and organizational performance

Despite the growing awareness of the importance of researching core strategic resources and activities, the work that has been done to date has largely taken the form of anecdotal reports and case study analysis. We have yet to see large‐sample studies demonstrating how organizational elements, independently, complementarily and interactively, may or may not enhance the organization's performance. Moreover, little attention has been given to researching this topic in public sector organizations. The present study aims to bridge this gap by examining the impact of a set of independent intangible organizational elements and the interactions among them on a set of objective organizational performance measures in a sample of local government authorities in Israel. The results of a multivariate analysis indicate that organizational performance (measured by self‐income ratio, collecting efficiency ratio, employment rate, and municipal development) can be well explained by six intangible organizational elements (managerial capabilities, human capital, internal auditing, labor relations, organizational culture, and perceived organizational reputation) and the interactions among them, which need to be taken into account in any cost effective development. Copyright © 2004 John Wiley & Sons, Ltd.     

企业环境绩效与经济绩效的动态关系模型

企业环境绩效与经济绩效的关系是企业战略管理研究领域里一个比较新的研究对象。现有的研究除方法和数据方面的缺陷外,主要问题是理论模型的解释力不强。本文认为组织能力是企业环境绩效与经济绩效之间内在联系的纽带,一个基于企业组织能力的环境绩效评估体系能够对企业改善环境绩效产生持续的激励作用。据此提出“基于组织能力的企业环境绩效”的理论模型,旨在从环境管理能力建设的角度来讨论企业环境绩效评估的基础方法和原则。     

Top executive commitment to the status quo: Some tests of its determinants

Some top executives are more committed to the status quo—particularly to their organization's current strategy and leadership profile—than are others. Most empirical research on upper echelons treats psychological phenomena as a ‘black box’—the unobserved intervening mechanisms—that causes associations between more observable executive characteristics and organizational outcomes. In contrast, this paper attempts to directly examine the determinants of an important element of an executive's psychological orientation—commitment to the status quo (CSQ). We focus on a select set of variables which have been posited in prior research as determinants of executive CSQ, but which have not been directly tested for such a relationship. Based on a large-scale survey methodology, results suggest that an executive's tenure in an industry is a pronounced determinant of CSQ, and has significantly more impact than organizational tenure. As expected, the firm's current performance was found to be positively related to CSQ; this relationship was stronger in high-discretion than in low-discretion industries. Finally, the project reaffirms a well known human tendency: incumbent CEOs tend to believe that their eventual successors should be just like them.     

Corporate social responsibility or CEO narcissism? CSR motivations and organizational performance

This study builds on insights from both upper echelons and agency perspectives to examine the effects on corporate social responsibility (CSR) practices of CEO's narcissism. Drawing on prior theory about CEO narcissism, we argue that CSR can be a response to leaders' personal needs for attention and image reinforcement and hypothesize that CEO narcissism has positive effects on levels and profile of organizational CSR; additionally, CEO narcissism will reduce the effect of CSR on performance. We find support for our ideas with a sample of Fortune 500 CEOs, operationalizing CEO narcissism with a novel media‐based measurement technique that uses third‐party ratings of CEO characteristics with validated psychometric scales. Copyright © 2014 John Wiley & Sons, Ltd.     

Guanxi and organizational dynamics: organizational networking in Chinese firms

This paper focuses on the utilization of guanxi, which is an important cultural and social element in China, and the impact of guanxi on firm performance. Although guanxi is embedded in every aspect of Chinese social life, companies demonstrate different needs and capacity for guanxi cultivation. Chinese firms develop guanxi as a strategic mechanism to overcome competitive and resource disadvantages by cooperating and exchanging favors with competitive forces and government authorities. We develop an integrative framework theorizing guanxi utilization according to institutional, strategic, and organizational factors, and we explore the impact of guanxi on firm performance, primarily sales growth and net profit growth. Our findings, based on a survey of 128 firms in central China, provide strong support that institutional, strategic, and organizational factors are critical determinants of guanxi with competitive forces. However, only institutional and strategic factors are significant for guanxi utilization with government authorities. In general, guanxi leads to higher firm performance, but is limited to increased sales growth, and has little impact on profit growth. Guanxi benefits market expansion and competitive positioning of firms, but does not enhance internal operations. Copyright © 2001 John Wiley & Sons, Ltd.     

Who directs strategic change? Director experience,the selection of new CEOs,and change in corporate strategy

We develop a theory of board-directed strategic change in which directors (1) conceive changes in corporate strategy that reflect the strategies of their own home companies, and (2) select new CEOs who have prior experience with similar strategies to facilitate implementation. The findings show that, while the experience of new CEOs appears to predict corporate strategic change, these effects disappear after accounting for board experience. Thus, our results suggest that executive effects on strategy can mask board effects. Copyright © 2001 John Wiley & Sons, Ltd.     

Once an outsider,always an outsider? CEO origin,strategic change,and firm performance

In this study, we examine how the relationship between the level of strategic change in the pattern of resource allocation and firm performance differs between firms led by outside CEOs and those led by inside CEOs. Based on longitudinal data on the tenure histories of 193 CEOs who left office between 1993 and 1998, we find that the level of strategic change has an inverted U‐shaped relationship with firm performance. As the level of change increases from slight to moderate, performance increases; as the level of change increases from moderate to great, performance declines. Further, we find that this inverted U‐shaped relationship differs between firms led by outside CEOs and those led by inside CEOs. That is, both the positive effect of strategic change on firm performance when the level of change is relatively low and the negative effect of strategic change on firm performance when the level of change is relatively high are more pronounced for outside CEOs than for inside CEOs. Supplementary analyses also suggest that this difference between outside and inside CEOs exists in later years but not in the early years of CEO tenure. Copyright © 2009 John Wiley & Sons, Ltd.     

Predicting organizational identification at the CEO level

To develop further insight into antecedents of the CEO's psychological orientation toward the firm, we investigate what might lead CEOs to identify with their firms. Although research suggests that CEO organizational identification can be quite consequential for the firm, little research attention has been paid to its determinants. To predict how the special context of the CEO position might lead to identification, we consider a set of motives that members have for identifying with their organizations and consider how unique features of the CEO position might be relevant to those motives. Our theory and supportive findings help explain how the context of the CEO position, including variables often conceptualized as control mechanisms in agency theory research, can have important effects on subsequent CEO organizational identification. Copyright © 2014 John Wiley & Sons, Ltd.