Strategic flexibility, rigidity and barriers to the development of absorptive capacity in business markets: Themes and research perspectives

The marketing and strategy literature hail strategic flexibility as a key success factor in creating continuously customer value and generating competitive advantage. However, empirical evidence indicates that rigidity in market strategies and actions is more the rule than the exception in organizations. The focus of this special issue is on better understanding rigidity and flexibility in business markets. This lead article seeks to elaborate on why companies face rigidity and how they can create flexibility. To do this, we relate rigidity in organizations to the concepts of dominant logic, industry recipe and persistence. The case illustrations highlight barriers to the development of absorptive capacity in business organizations. Identifying such barriers is a first step in better understanding how companies can remain agile and flexible in demanding and fast changing markets. The paper then proceeds with a brief introduction to the other contributions of this special issue and concludes with a research agenda.     

Outsourcing decision-making aspects considered by IT departments in Brazilian companies

The study of Information Technology (IT) outsourcing is relevant because companies are outsourcing their activities more than ever. An important IT outsourcing research area is the decision-making process. In other words, the comprehension of how companies decide about outsourcing their IT operations is relevant from research point of view. Therefore, the objective of this study is to understand the decision-making process used by Brazilian companies when outsourcing their IT operations. An analysis of the literature that refers to this subject showed that six aspects are usually considered by companies on the evaluation of IT outsourcing service alternatives. This research verified how these six aspects are considered by Brazilian companies on IT outsourcing decisions. The survey showed that Brazilian companies consider all the six aspects, but each of them has a different level of importance. The research also grouped the aspects according to their level of importance and interdependency, using factorial analysis to understand the logic behind IT outsourcing decision process.     

Offshore outsourcing of services: An evolutionary perspective

Offshore outsourcing is gaining increasing importance and attention in both theory and practice. The purpose of this research is to use nine in-depth case studies to analyze the evolution of offshore services outsourcing with regard to how expectations and governance structures change over time. Five testable propositions are presented, building on institutional theory, transaction cost, and resource-based perspectives. The cases demonstrate that offshore outsourcing is initiated because of increasing internal and external pressure to conform and reduce costs. Moreover, companies “chase” efficiency improvements in other geographic locations. But after reducing costs, companies discover more strategic benefits such as the potential to increase quality and market share. Importantly, as buyer–supplier relationships move from tactical to more strategic, expectations and governance structures change.     

Artificial intelligence-based systems applied in industrial marketing: An historical overview,current and future insights

Intelligent systems have particular potentialities and strengths to support decisional situations faced by companies, especially those of a strategic nature, where good strategic intelligence is necessary. In this paper, we carry out an historical literature review of artificial intelligence-based systems applied to marketing, covering a time period of several decades (from the 1970s to the present day), with special focus on applications to industrial marketing. A detailed review is presented, along with conclusions and some future insights. Then, we briefly introduce the set of papers in this special issue.     

Managing integration in outsourcing relationships — The influence of cost and quality priorities

Outsourcing has become increasingly popular in the contemporary business context. This study aims to develop the understanding of outsourcing by addressing the management of integration in the outsourcing relationship between buyers and contract manufacturers. Specifically, we address the effect of strategic priorities of cost and quality on how different modes of integration are used both before and in the early phase of production. The paper elaborates the strategic contingency argument by analyzing qualitative data from eight cases in the food and electronics industries. The results indicate that managing the outsourcing relationship requires considerable resources after the decision to outsource has been made. The results show that integration in the outsourcing relationship evolves over time and the use of integration modes is contingent on the strategic priority. The study provides an understanding of the contextual nature of integration in the outsourcing relationship, as well as a contextualized understanding of buyer-supplier relationships. It also provides an illustration of theory elaboration research.     

The growth and management of R&D outsourcing: evidence from UK pharmaceuticals

Outsourcing of research and development (R&D) activities has become a major management issue for R&D and technical managers within firms. It has also been of growing concern to academics who are trying to chart the implications of the increasingly distributed nature of research and innovative activities in advanced economies. This study is based on a survey of research-based pharmaceutical companies operating in the United Kingdom conducted in 2004–2006. The aim of this paper is to outline the main reasons for pharmaceutical firms to outsource R&D and the management practices followed by such companies in relation to outsourcing. The research results provide interesting findings in relation to, for example, the reasons behind outsourcing, the decision-making processes behind such practices and barriers to outsourcing arrangements. These issues are evaluated together with the characteristics of the firms and the specific project outsourced.     

The transition from product to service in business markets: An agenda for academic inquiry

In recent years, industrial manufacturers around the world have deployed growing efforts in developing services in addition to their traditional product business in order to secure long-term growth and to remain competitive in the marketplace. Against this background, the present article introduces the reader to this special issue. It first recalls key aspects of the emerging service-dominant logic of marketing and examines how it relates to the business marketing field. It then illustrates the challenges faced by top executives of industrial companies in the transition from a product-centric to a service-centric business perspective through an interview with the managing director of ThyssenKrupp Service AG. After discussing how the articles included in this special issue advance the extant literature on industrial services marketing, the article finally develops a number of directions for future research on services in business markets.     

Digital servitization: Crossing the perspectives of digitization and servitization

For over three decades now, several product companies around the world have been undertaking servitization paths. They have been devoting growing and substantial efforts to expand their service business. Expanding the service business in addition to their traditional core product business secures long-term growth and strengthens competitive advantages in business-to-business marketplaces. Recently, service business expansion has taken up many of the new digital technologies offered through the digital transformation. Thus, the servitization literature has progressed toward a dialogue on digital servitization . Against this background, the present article introduces the reader to this special issue. It first recalls key aspects of the emerging digital servitization discussion, and then depicts, through illustrative case studies, the growth paths utilized by industrial product companies when they take advantage of the digital servitization process. After discussing how the articles included in this special issue advance the literature, the article develops a number of directions for future research on digital servitization.     

Operationalizing strategic planning

This article reports on a study which had the purpose of probing the reality of strategic planning, of highlighting some of its shortcomings then contrasting that reality with the literature-based constructs which are taught in business schools worldwide. In this way it is shown that the benefits of strategic planning are not realized unless the process is totally integrated with current operations. This study shows that only rarely is strategic planning a live process within companies. However, to make an improvement is extremely difficult because frequently the commitment and energy does not exist in companies. As a result, many companies are failing to benefit from their strategic planning efforts and are thus failing to establish appropriate long-term corporate positionings.     

Balancing vertical integration and strategic outsourcing: effects on product portfolio,product success,and firm performance

Most prior research has focused on vertical integration or strategic outsourcing in isolation to examine their effects on important performance outcomes. In contrast, we focus on the simultaneous pursuit of vertical integration and strategic outsourcing. Our baseline proposition is that balancing vertical integration and strategic outsourcing in the pursuit of taper integration enriches a firm's product portfolio and product success, and in turn contributes to competitive advantage and thus to overall firm performance. We derive a set of detailed hypotheses, and test them on a unique and fine‐grained panel of longitudinal data documenting over 3,500 product introductions in the global microcomputer industry. The results provide strong support for the notion that carefully balancing vertical integration and strategic outsourcing when organizing for innovation helps firms to achieve superior performance. Copyright © 2006 John Wiley & Sons, Ltd.     

Who explores further? Evidence on R&D outsourcing from the survey of research and development

Building off the resource‐based view and the knowledge‐based view, our study aims to examine determinants of firms’ R&D outsourcing, using annually‐conducted firm‐level survey data of Japanese R&D companies from 1984–2012. This survey allows us to measure strategic R&D outsourcing, isolated from those more for cost‐reducing, such as prototyping, testing and inspecting. The results corroborate the argument of complementarity in scale between internal R&D and R&D outsourcing. We also find that firms employing more doctorate holders and diversifying in knowledge spaces tend to make more use of R&D outsourcing. This study sheds light on firms’ absorptive capacity, associated both with higher‐order R&D human capital and diversified knowledge spaces, as determinants of R&D outsourcing.     

Strategic Control of R&D Resource Allocations in Diversified Businesses

Proper allocation of R&D resources across strategic business units is a challenge that has long been faced by executives of diversified business enterprises. Igal Ayal and Robert Rothberg have chosen to address this issue, applying a distinction between effectiveness and efficiency of R&D spending. Most companies seem to overcontrol such allocations in terms of tactical detail or efficiency considerations, and undercontrol in terms of strategic significance or effectiveness. Attention to the effectiveness of allocations requires that management assess the linkage between R&D spending and the attainment of overall corporate goals. The article draws conclusions about the design of appropriate R&D proposal generation and evaluation procedures and project control systems in strategically decentralized companies.     

Contract costing in outsourcing enterprises: Exploring the benefits of discrete-event simulation

Outsourcing is a business strategy that has received much attention. An increase in outsourcing has a direct influence on the complexity of supply chain networks and on the number of contracts required to manage a supply chain. Outsourcing contracts may be entered into relatively quickly without a full understanding of the true cost implications. The research described here aims to develop tools based on discrete-event simulation to aid outsourcing companies when costing contracts. Currently available software for this type of application is reviewed. A field study is presented from the electronics sector, describing companies’ needs with respect to contract costing and how simulation could be used in the contract costing process. Simulation approaches are described for different contract costing scenarios. The paper concludes with a case study of a preliminary simulation model that has been developed to test the concept with a specific outsourcing scenario.     

Outsourcing, performance, and the role of e-commerce: A dynamic perspective

In a highly competitive global environment, many manufacturers respond by setting up outsourcing relations for components and finished products with lower-cost producers on a contractual OEM (original equipment manufacture) basis. In the last decade, we have witnessed a spectacular growth in outsourcing activities led primarily by U.S. and Japanese companies, although their approaches to outsourcing strategy and supplier relations are different. However, outsourcing strategy is not without drawbacks. We offer a dynamic perspective of outsourcing strategy and its performance implications, in which we argue that there is an optimal degree of outsourcing. The outsourcing-performance relationship takes on an inverted-U shape, implying that as firms deviate further from their optimal degree of outsourcing, by either insourcing or outsourcing too much, their performance will suffer disproportionately. We then discuss how e-commerce affects where the optimal point of any particular firm is located, hence explicitly linking developments in e-commerce to changing outsourcing levels. We provide implications for the practice and study of outsourcing and e-commerce.     

Multiple scenario approach and strategic behaviour in European companies

Nowadays, scenarios are a popular subject in management literature. However, information available about how extensively scenarios are used and the possible motives for their use, as well as their effects on strategic behaviour in companies, has hitherto been very limited. Results of a survey among Fortune's top 1000 companies in the U.S.A. in 1977 and 1981 showed a growing corporate interest in scenarios. A survey of the use of scenarios in large Western European companies in 1981 provided evidence of similar interest in Europe. In this article, results of the European survey are presented and the differences between user and non-user attitudes towards the future among European firms analysed and the implications for strategic behaviour outlined.     

Food safety regulation: an overview of contemporary issues

This article discusses a number of issues that are influencing the evolution of food safety regulation in developed and, to a lesser extent, developing countries. Whilst not definitive, it aims to highlight those factors which are considered crucial to an understanding of contemporary food safety controls in both the public and private spheres. These issues include criteria applied to assess the need/justification for food safety regulation, relationships between public and private food safety control systems, alternative forms that public food safety regulation can take, strategic responses to food safety regulation, and the trade implications of national food safety controls. The article serves as an introduction to these issues, which are discussed at greater length in the other papers that make up this special issue of Food Policy.     

The effect of strategic technology alliances on company performance

Strategic technology partnering between firms has become a growing subject of interest to both companies experimenting with this mode of economic organization and researchers from a wide variety of academic disciplines. In this study an effort is made to measure the effect of strategic technology partnering on companies engaged in such joint efforts. A study of the relevant literature on interfirm cooperation generates some basic understanding of this phenomenon, after which the empirical analysis is expanded with linear structural modeling of a number of relevant explanatory variables setting strategic partnering in a more complex environment.     

The current situation and future conceptualization of power in industrial markets

This article offers overview of research on power in industrial and business markets, conducted through the 10 articles in the special issue. These contributions are catalysts for defining the history, context, current situations, and future developments and prospects for power in the business world. Therefore, this article presents a conceptualization and understanding of power, using the special issue as a lens through which to view past antecedents, present understanding, and future directions. In addition to studies that mine past and present academic and practical rationales for power, the empirically based contributions test and explore power. This article identifies and thematically draws out and labels the principal manifestations across these contributions, to link origins with current principal foci and identify the most likely emphases of theory and practice for the future business-to-business arena.     

Evolutionary perspectives on strategy

We advocate studying strategic management from an evolutionary perspective: using dynamic, path-dependent models that allow for possibly random variation and selection within and among organizations. We argue that this perspective directs our attention to some of the most interesting problems in strategic management. The papers in this special issue are summarized, along with some of their implications for the advancement of an evolutionary perspective on strategy. Collectively, the papers draw on various theoretical rationales, illustrating how an evolutionary perspective can help to integrate the diverse and otherwise separate theoretical traditions that meet within the field of strategic management.     

Strategic development of third party logistics providers

The growth of the Third Party Logistics (TPL) business has caused many firms from different industries to enter the field. We are interested in how their different strategies develop over time with a special focus on how they balance between general problem solving capability and the degree of customer adaptation. In the development of their strategy the newly entered firms shown to be highly influenced by existing business and its network. However, at a later stage the case firms were all focused on moving into more advanced and complex services (4pl type of services) without considerations to their traditional business strategy. We have also identified some issues of importance when managing the continued TPL business strategy. One issue is about the organisation of the TPL business and its need for neutrality from traditional business. The next issue is about the internationalisation of the TPL business and the need of a partly different pattern and network. Finally, the issue of coping with strategic alliances, mergers and acquisitions seems vital for understanding and developing the business.