Understanding types of organizational networking behaviors in the UK manufacturing sector

This research is aimed at understanding firms' different types of ‘networking behaviors’, i.e., how and why firms affect their strategic network position by activities/routines/practices aimed not just at their business partners, but beyond such direct relationships. Thus, we adopt a network perspective to examine how firms exploit their webs of direct and indirect business relationships in order to assess and embrace the potential opportunities and constraints in the network. Based on the industrial network approach (INA), this exploratory research specifically focuses on networking behaviors in the UK manufacturing sector. Thirty-one semi-structured interviews with executive managers from fifteen firms were conducted. We identify four types of organizational networking behaviors by the way in which firms utilize their web of relationships to achieve certain goals. By using the concept of networking behaviors based on the INA as well as the strong-and-weak-tie argument in economic sociology, purposeful networking behaviors can be categorized into the following: information acquisition, opportunity enabling, strong-tie resource mobilization and weak-tie resource mobilization. These four ‘types’ of organizational networking behaviors provide a deeper understanding of how firms operating in business-to-business exchanges relate to and exploit their webs of direct and indirect relationships, taking into consideration the embeddedness and interconnectedness of the network context.     

Reconceptualizing the elements of market orientation: A process-based view

Market Orientation (MO) was originally introduced with a reflective second-order scale, but much recent research has conceptualized MO as a formative second-order construct. However, either the reflective or the formative approach to measuring MO may have issues that obscure relationships between both the individual dimensions and their relationships with other variables. Thus, the current research disaggregates the MO construct into three sub-constructs in an effort to explore relationships between the three dimensions of MO and its implementation process within the firm. The proposed Market Intelligence Implementation Process (MIIP) model suggests both a direct path from intelligence generation to responsiveness and an indirect path through a company-wide focus on dissemination. The process model suggests that firms may select two distinctly different paths to responsiveness when applying market intelligence. Explicating this dual process model allows us to understand how firm characteristics impact the process of MO through the individual elements. If the three sub-constructs do not vary in concert with each other, researchers cannot simply conclude that a firm characteristic (i.e., centralization or international experience) positively or negatively impacts MO's relationship to important marketing variables. The results indicate that for centralized and experienced firms, a high level of intelligence dissemination may actually hinder responsiveness. However, in decentralized and inexperienced firms, high levels of dissemination are linked to increased responsiveness. Using conditional process modeling, our study disaggregates the temporally distinct process of MO to reveal internal relationships among its dimensions. The current research also shows that the mediation of intelligence dissemination on the link between intelligence generation and responsiveness depends on the firm's levels of both centralization and international experience.     

Networking capability in business relationships — Concept and scale development

In previous research on inter-organizational marketing and supply chain management the processes through which a focal company deals with the dynamic nature of its business relationships is not fully addressed or understood. To address this gap in the literature, this study proposes the concept of networking capability (NC) as the complex organizational capability oriented towards managing business relationships along all their main development stages. The main proposition is that such a NC capability exists and can be measured, for various types of business partners (especially customers and suppliers), and that NC represents an important aspect that influences firm performance significantly. In order to define the NC concept and develop as test a measurement model, this study uses empirical research and integrates it with the existing literature on business networking-related capabilities. This study distinguishes itself from previous research on networking-related capabilities which not only utilize activities and routines at the company level to measure relational capabilities, but incorporate instead emotions and attitudes of managers towards their exchange partners. Our study, on the other hand, develops and tests a measurement model of NC that is consistent with a grounding in the resource-based view of the firm, specifically the dynamic capability view of the firm. It thereby contributes to the theory and practice of relationship management by proposing a conceptualization and measurement model of NC with regard to all main relationship stages and main types of business partners. Our study adopts a three-stage process of scale development, including qualitative and quantitative research. In summary, our empirical research suggests our NC measurement model as reliable and valid with regard to two main exchange partners: suppliers and business customers. Nomological validity of NC construct is also supported through regression model with company performance as the dependent variable.     

Product Quality as a Formative Index: Evaluating an Alternative Measurement Approach*

Product quality is a critical competitive issue when launching new products. However, the product quality construct has been measured inconsistently in prior research, with researchers often not considering multiple components of quality. Thus, results may not be comparable across studies, and when dimensions of quality are excluded, relationships found between quality and other constructs may be spurious. As a response, we develop a formative measurement approach to product quality. The components of product quality are not interchangeable in measurement as typical reflective approaches assume. These dimensions make up the quality construct, necessitating a formative measurement approach. Here, this approach is developed and tested, compared with the traditional reflective approach, and its relationships with other constructs evaluated in a model of new product performance. Overall, this formative approach is shown both to be theoretically appropriate and to possess strong measurement properties. This approach has clear implications for research concerning product quality and improving its measurement in the future.     

An empirical investigation of network-oriented behaviors in business-to-business markets

This study is concerned with the extent to which network-oriented behaviors directly and/or indirectly affect firm performance. It argues that a firm's interaction behaviors in relation to an embedded network structure are key mechanisms that facilitate the development of important organizational capabilities in dealing with business partners. Such network-oriented behaviors, which are aimed at affecting the position of a company in the network, are consequently important drivers of firm performance, rather than the network structure alone. We develop a conceptual model that captures network-oriented behaviors as a driving force of firm performance in relation to three other key organizational behaviors, i.e., customer-oriented, competitor-oriented and relationship-oriented behaviors. We test the hypothesized model using a dataset of 354 responses collected via an on-line questionnaire from UK managers, whose organizations operate in business-to-business markets in either the manufacturing or services sectors. This study provides four key findings. First, a firm's network-oriented behaviors positively affect the development of customer-oriented and competitor-oriented behaviors. Secondly, they also foster relationship coordination with its important business partners within the network. Thirdly, the effective management of the firm's portfolio of relationships is found to mediate the positive impact of network-oriented behaviors on firm profitability. Lastly, closeness to end-users amplifies the positive effect of network-oriented behaviors on relationship portfolio effectiveness.     

Organizational knowledge networks and local search: The role of intra‐organizational inventor networks

Research summary : While firms tend to build on their own knowledge, we distinguish between depth and breadth of local search to investigate the drivers of these behaviors. Given that inventors in a firm carry out the knowledge creation activities, we strive to identify inventors responsible for these behaviors by employing the notion of an intra‐firm inventor network. A longitudinal examination of 14,575 inventors from four large semiconductor firms using patent data supports our hypotheses that the reach of inventors in the intra‐firm network and their span of structural holes have independent and interactive effects on these two types of local search behaviors. These findings have implications for research on exploitation and exploration, organizational knowledge, knowledge networks, and micro‐foundations. Managerial summary : Large amounts of knowledge may reside within firm boundaries, and managers are interested in understanding who may leverage this knowledge to generate novel ideas. We focus on collaborations among knowledge workers to address this question. Using the collaborations among all knowledge workers in a firm, we show that those who have higher reach to all others and those who form bridges to connect unconnected groups of workers tend to leverage not only more organizational knowledge, but also knowledge that is more dispersed in the organization. Managers could use these insights to shape the use of organizational knowledge by firm inventors, and also to make decisions about granting or withholding access to internal knowledge platforms for knowledge workers. Copyright © 2016 John Wiley & Sons, Ltd.     

Learning orientation, firm innovation capability, and firm performance

Contemporary organizations require a strong learning orientation to gain competitive advantage. Based on in-depth interviews with senior executives and a review of the literature, the present investigation delineates four components of learning orientation: commitment to learning, shared vision, open-mindedness, and intraorganizational knowledge sharing. A framework is tested using data from a broad spectrum of US industries. Learning orientation is conceptualized as a second-order construct. Its effect on firm innovativeness, which in turn affects firm performance, is examined. The results generally support theoretical predictions, and some interesting findings emerge.     

Antecedents and Contingent Effects of Organizational Adaptive Capability on Firm Product Innovativeness

Organizational adaptive capability is a broad term and was studied from different perspectives, such as market, technology, and management system, in the management literature. However, the simultaneous effects of these different perspectives and their related adaptive capability constructs on a firm's product innovativeness have yet to be addressed. Additionally, an empirical study of the influence of informal structural dimensions, such as loose coupling, multiplexity, and redundancy, on the organizational adaptive capability, as antecedents, is also missing in the technology and innovation management (TIM) literature. By studying 153 firms, we found that (1) market‐, technology‐, and management system‐related adaptive capability constructs simultaneously and positively impact firm product innovativeness; (2) under the loose coupling construct, autonomous behaviors of departments positively impact technology and management system adaptive capability, loose management style influences market and management system adaptive capability, and uneven/slow information travel in organizations negatively affects technology and management system adaptive capability; (3) multiplexity positively influences all organizational adaptive capability constructs; and (4) under the redundancy construct, information distribution redundancy has an “∩” shape relationship with technology adaptive capability. We also demonstrated that the impact of informal structural constructs on adaptive capability is contingent upon environmental turbulence, e.g., rapid or unanticipated changes in market and technology. We found that the influence of loose management style on technology adaptive capability decreases with increased rate of market turbulence, and the effect of resource slack, as a part of the redundancy construct, on technology adaptive capability changes quadratically, an “∩” shaped curve, with an increased rate of market turbulence. We further found that the effect of the autonomous behaviors of departments on market adaptive capability increases with an increased level of technology turbulence. The role of resource slack on the market adaptive capability was also found to change quadratically, an “∩” shaped curve, with an increased rate of technology turbulence. Interestingly, the impact of the information distribution redundancy on market adaptive capability changes nonlinearly, a “U” shaped curve, with an increased rate of technology turbulence. Further, we showed that the influence of organizational technology adaptive capability on product innovativeness increases with increased level of technology turbulence. This study concludes with several theoretical and managerial implications.     

Alliance portfolio diversity and firm performance

In this paper, we offer a comprehensive alliance portfolio diversity construct that includes partner, functional, and governance diversity. Grounding our work primarily with the resource‐ and dynamic capabilities‐based views, we argue that increased diversity in partners' industry, organizational, and national background will incur added complexity and coordination costs but will provide broadened resource and learning benefits. Increased functional diversity results in a more balanced portfolio of exploration and exploitation activities that expands the firm's knowledge base while increased governance diversity inhibits learning and routine building. Hypotheses were tested with alliance portfolio and performance data for 138 multinational firms in the global automobile industry during the twenty‐year period from 1985 to 2005. We found alliance portfolios with greater organizational and functional diversity and lower governance diversity were related to higher firm performance while industry diversity had a U‐shaped relationship with firm performance. We suggest firms manage their alliances with a portfolio perspective, seeking to maximize resource and learning benefits by collaborating with a variety of organizations in various value chain activities while minimizing managerial costs through a focused set of governance structures. Copyright © 2010 John Wiley & Sons, Ltd.     

Reconceptualizing entrepreneurial orientation

Entrepreneurial orientation (EO)—a firm's strategic posture towards entrepreneurship—has become the predominant construct of interest in strategic entrepreneurship research. Despite the ever‐increasing volume of nomological research on EO, there remain ongoing conversations regarding its ontology. Drawing from measurement theory, we outline an EO reconceptualization addressing the likely prevalence of Type II nomological error in the EO literature stemming from measurement model misspecification. Focusing on the question of whether EO is an attitudinal construct, a behavioral construct, or both, we propose a formative construction of EO viewing the exhibition of entrepreneurial behaviors and of managerial attitude towards risk as jointly necessary dimensions that collectively form the higher‐order EO construct. We present an empirical illustration of our reconceptualization followed by a discussion of future research opportunities. Copyright © 2014 John Wiley & Sons, Ltd.     

R&D,networking expenses,and firm performance: An integration of the inside-out and outside-in perspectives

Is outside-in networking less influential than inside-out R&D on firm performance? Over the past three decades, the inside-out perspective stands at the core of the marketing literature, whereas there is a subconscious bias toward the outside-in perspective. Building on the outside-in and inside-out perspectives of the firm, this study answers the question of whether outside-in networking is indeed less effective than inside-out R&D for enhancing firm performance. The empirical findings based on multiple archival data sources collected on firms operating in China indicate that the effects of networking expenses on firm performance are not weaker than those of R&D expenses. The findings also indicate that the effects of inside-out R&D and outside-in networking expenses are enhanced when firms operate in regions with stronger consumer protection whereas inside-out R&D expenses become less effective in a corrupt environment.     

Is your industrial marketing work working? Developing a composite index of market change

We define market work as purposeful efforts by a focal actor to perform and transform markets and focus on the connection between market work and market change. To enable an evaluation of the effectiveness of market work, we delineate the domain of market change and provide an operational definition of its elements and develop a composite index of market change. Our research process consisted of four steps: (1) Specification of the elements of market change; (2) Specification of indicators for the identified elements; (3) Reliability and validity assessments; and (4) Validating the market change index. We identified six elements of market change. Markets can be changed by changes in Products & Price, Customers & Use, Channels, Supply-side Network, Representations and Norms. In the qualitative phase of the study we identified at total of 22 facets of these elements, which were later developed into 25 indicators. The overall model was operationalized as a formative first-order, formative second-order model, where first-order elements are formatively measured latent constructs that form a more abstract general (second-order) latent construct - market change. The research process involved testing the reliability and validity of the model and the final market change index.     

Firm performance,rent appropriation,and the strategic resource divestment capability

Dynamic capabilities manifest the organizational capacity to purposefully create or modify the firm's resource base. In this paper, we consider resource divestment an important firm‐level resource management capability that manifests a two‐step organizational change routine. Firms must first be motivated to engage in resource divestment, and then decide which resources should be ‘sold off.’ In exploring this firm‐level capability, we employ factor market theory to consider the ‘seller side’ of the market, and provide a useful framework for conceptualizing how firms generate competitive advantage through resource divestment. We test our model of the resource divestment capability with a dataset of professional baseball franchises during the period 1969–83. Copyright © 2007 John Wiley & Sons, Ltd.     

Industrial dynamics and managerial networking in an emerging market: the case of China

This study examines how industrial conditions influence the level of executives' managerial networking with decision‐makers in other entities such as buyers, suppliers, competitors, distributors, and regulators in an emerging market. Corroborating a view that social capital holds contingent value, we theorize that executives facing different industrial conditions have different levels of commitment to exploiting interpersonal ties for fulfilling organizational needs. We propose that managerial networking is influenced by exogenous industrial attributes such as structural uncertainty, sales growth, regulatory stringency, competitive pressure, and production capacity utilization. Our analysis of executives in 364 firms in China demonstrates that the level of managerial networking increases when uncertainty, regulation, and competition increase and production capacity utilization decreases. For a specific firm, the link between industrial dynamics and managerial networking is moderated by its strategic proactiveness. Copyright © 2003 John Wiley & Sons, Ltd.     

When does incentive compensation motivate managerial behaviors? An experimental investigation of the fit between incentive compensation,executive core self-evaluation,and firm performance

We develop and test an integrative model that examines the fit between compensation schemes, executives' characteristics, and situational factors. We propose that a fit among all three factors is crucial to motivate desirable managerial behaviors. Using a specially designed management simulation, our study demonstrates that the effectiveness of incentive compensation to motivate managerial behaviors depends on executives' core self-evaluation and firm performance. Our results show that, relative to fixed salary compensation, executives with higher core self-evaluation respond to incentive compensation with greater perseverance, competitive strategy focus, ethical behavior, and strategic risk taking during organizational decline. However, these interaction effects are not present during organizational growth. Our theory and empirical evidence provide significant insights into the complex relationships among compensation schemes, executives' characteristics, firm performance, and managerial behaviors. Copyright © 2012 John Wiley & Sons, Ltd.     

Differentiating Major and Incremental New Product Development: The Effects of Functional and Numerical Workforce Flexibility*

This study seeks to explain the differential effects of workforce flexibility on incremental and major new product development (NPD). Drawing on the resource‐based theory of the firm, human resource management research, and innovation management literature, the authors distinguish two types of workforce flexibility, functional and numerical, and hypothesize differential effects on NPD outcomes. A large‐scale sample of 284 Dutch firms across various manufacturing goods and business services industries serves to test these hypotheses. The results suggest that functional flexibility positively influences incremental NPD only, internal numerical flexibility negatively influences incremental NPD only, and external numerical flexibility positively influences major NPD only. Thus, differences between major and incremental NPD are grounded in the human resource flexibility of the firm. This complements research that found that such differences lie in critical development activities, learning processes, and capabilities. It also complements product innovation research on flexibility in NPD processes and on flexibility in organizational structures and routines. It extends the resource‐based theory of the firm suggesting that human resource flexibility is part of the dynamic capabilities that allow firms to reconfigure existing competencies. The conclusions imply that managers of manufacturing and service firms may use training and education and create a functional flexible workforce that can progressively enhance incremental NPD outcomes. They may want to avoid paying overtime, because such internal numerical flexibility hampers incremental NPD, but use fixed‐term contracts to expand external numerical flexibility to enhance major NPD.     

Social Capital as a Microlevel Origin of Organizational Capabilities

The microlevel concept of social capital has received significant attention in management and sociological research but has not yet been empirically associated with the development of organizational capabilities. The major purpose of this paper is to investigate the relationship of social capital with marketing and research and development (R&D) capability and to explore how the environmental context moderates the social capital–organizational capability link. It is suggested that top management's social capital provides a firm with important information and control benefits that facilitate effective access to the knowledge and resources necessary for building superior organizational capabilities. In addition, we identify the role of two important environmental factors influencing the social capital–organizational capability link: technological turbulence and competitive intensity. The strength of the relationship between social capital and organizational capabilities is proposed to vary depending on the level of these two environmental characteristics. This study conceptualizes and operationalizes social capital as a multidimensional construct reflected by the structural dimension of tie strength, the relational dimension of trust, and the cognitive dimension of solidarity. Survey and archival data on 280 firms from various industries are analyzed using structural equation modeling. Empirical support for the proposed three‐dimensional structure of social capital is found. Results further indicate that social capital is a significant antecedent to both marketing and R&D capability, which in turn significantly affect firm performance. While a positive relationship between social capital and organizational capabilities is supported in general, the strength of this relationship depends on the environmental context the firm is embedded in. The positive effect of social capital on marketing capability increases in environments with high technological turbulence and competitive intensity; the opposite holds for R&D capability. This research contributes to the resource‐based view by introducing social capital as an important microlevel factor promoting the development of organizational capabilities. By identifying and evaluating two important environmental contingencies, our study also decreases some of the ambiguity surrounding the effectiveness of antecedents to organizational capabilities. The findings further help practitioners decide under what circumstances investing in top‐managers' social capital provides an effective means for achieving superior performance through enhanced organizational capabilities. This should have an important bearing on issues such as management training and incentives as well as on hiring policies.     

The Impact of Innovative Culture on Individual Employees: The Moderating Role of Market Information Sharing

Current innovation literature provides a very limited understanding of the potential impacts of innovative culture on employees. Building on resource‐based view theory, the authors investigate theoretically and empirically how a perceived innovative culture can be a building block for a firm's competitive resource and advantage by creating superior employee‐level outcomes and how a market information‐sharing process may moderate these effects. The authors identify three distinct types of individual‐level outcomes stemming from an innovative culture. The three outcome variables—job satisfaction, organizational dynamism perception, and firm performance perception—reflect employees’ psychological and cognitive reactions to the process of creating organizational innovation and innovative culture. The authors collect survey data from 3960 individual employees in China. Their findings first show that a perceived innovative culture significantly and positively affects employees’ job satisfaction and perceptions of organizational dynamism and firm performance. Moreover, organizational dynamism perception plays an important mediating role among three employee‐level outcomes by converting job satisfaction into firm performance perception. The authors also find support for the direct, positive effect of a perceived market information‐sharing process on job satisfaction but not on perceptions of organizational dynamism and firm performance. Most importantly, their findings on the significant moderating role of a market information‐sharing system contribute to innovation theory by emphasizing the importance of the innovation/marketing interface: bundling market information sharing and innovative culture together enhances employees’ positive attitudes and perceptions. This result also suggests that examining only the direct effects of innovative culture and market information sharing may lead to incorrect conclusions as to how to manage the cultural infusion process: the market information‐sharing process shows only a weak effect on job satisfaction and no effect on perceptions of organizational dynamism or firm performance. Organizational designs should ensure simultaneous consideration of both variables in the cultural transformation process to enhance employees’ derived benefits in the process of creating an innovative culture. We offer a new insight: a perceived market information‐sharing process may strengthen the effect of an innovative culture on employees’ job satisfaction and organizational dynamism perception, while it may weaken the effect of an innovative culture on firm performance perception. This more nuanced view of market information sharing in the cultural infusion process presents new wisdom and calls for further studies in entrepreneurial innovation.     

Stakeholders,reciprocity, and firm performance

The assumption that economic actors behave in a boundedly self‐interested manner promises fruitful new insights for strategic management. A growing literature spanning multiple disciplines indicates most actors' selfish utility maximizing behaviors are bounded by norms of fairness. Rather than being purely self‐interested, people behave reciprocally by rewarding others whose actions they deem fair and willingly incurring costs to punish those they deem unfair. Economists show that employers who are perceived as distributionally fair by their employees generate comparatively more value due to the positively reciprocal behavior of those employees. The organizational justice literature distinguishes two additional types of fairness assessed by employees. Drawing from both these bodies of work, we employ stakeholder theory to propose how perceptions of fairness result in reciprocity (1) extending to all stakeholders of the firm and (2) affecting firm performance. Copyright © 2008 John Wiley & Sons, Ltd.     

People and process,suits and innovators: the role of individuals in firm performance

Performance differences between firms are generally attributed to organizational factors rather than to differences among the individuals who make up firms. As a result, little is known about the part that individual firm members play in explaining the variance in performance among firms. This paper employs a multiple membership cross‐classified multilevel model to test the degree to which organizational or individual factors explain firm performance. The analysis also examines whether individual differences among middle managers or innovators best explain firm performance variation. The results indicate that variation among individuals matter far more in organizational performance than is generally assumed. Further, variation among middle managers has a particularly large impact on firm performance, much larger than that of those individuals who are assigned innovative roles. Copyright © 2012 John Wiley & Sons, Ltd.