THE BENEFITS OF STRATEGIC HOMOGENEITY AND STRATEGIC HETEROGENEITY: THEORETICAL AND EMPIRICAL EVIDENCE RESOLVING PAST DIFFERENCES

Past research on the relationship between strategic variety and industry profitability has argued for either high homogeneity or high heterogeneity. In this paper, we review the literature on strategic variety and use it to develop hypotheses suggesting that the relationship between strategic variety and average industry profits is curvilinear. Based on our analysis of 61 industries, we find empirical support for our hypotheses, suggesting that very high levels of heterogeneity or homogeneity are more likely associated with industry profitability, while the industries in our sample displaying moderate levels of strategic variety are most likely to suffer from widespread financial losses.     

TOP MANAGEMENT TEAM AGREEMENT ABOUT THE STRATEGIC DECISION PROCESS: A TEST OF SOME OF ITS DETERMINANTS AND CONSEQUENCES

The level of agreement among a firm’s top executives about how things are done in that firm has a variety of important implications. For example, agreement about a firm’s decision-making norms may allow members of the top management team (TMT) to focus on the substance of their most critical decisions and not get bogged down in debates about the process. In the present study, data from 65 firms in two industries were used to identify determinants and consequences of TMT agreement about the comprehensiveness of the strategic decision process. Results for consequences indicate that the level of TMT agreement was positively related to organizational performance. As for the determinants of agreement, organizational size was negatively related to agreement but past performance exhibited no association. Therefore, the results suggest that it is TMT agreement that influences performance, not the reverse. In addition, a surprising result was that firms in an industry with an unstable environment exhibited significantly more agreement about the process than did their counterparts in an industry whose environment was stable. © 1997 by John Wiley & Sons, Ltd.     

THE STRATEGIC USE OF INTEGRATED MANUFACTURING: AN EMPIRICAL EXAMINATION

The increasing importance of advanced manufacturing technology, total quality management, and just-in-time to manufacturing firms raises some basic questions as to the strategic use of these techniques in manufacturing. Does strategic use of these techniques influence performance? How is the impact of these techniques influenced by the competitive environment? Are the techniques actually being used strategically? A study in a large sample of manufacturing organizations confirms that the use of integrated manufacturing techniques—particularly total quality—influences performance, and that these effects are magnified or diminished by both the competitive environment and manufacturing strategy. It also shows that, in some cases, firms are missing opportunities to combine integrated manufacturing and strategy in ways that would substantially impact their performance.     

UNRAVELING THE PROCESS OF CREATIVE DESTRUCTION: COMPLEMENTARY ASSETS AND INCUMBENT SURVIVAL IN THE TYPESETTER INDUSTRY

When radical technological change transforms an industry established firms sometimes fail drastically and are displaced by new entrants, yet other times survive and prosper. Drawing upon an unusually rich data set that covers the technological and competitive history of the typesetter industry from 1886 to 1990, this paper uses a combination of quantitative and qualitative analysis to unravel this process of creative destruction. It argues that the ultimate commercial performance of incumbents vs. new entrants is driven by the balance and interaction of three factors: investment, technical capabilities, and appropriability through specialized complementary assets. In this industry, specialized complementary assets played a crucial role in buffering incumbents from the effects of competence destruction, and an analysis that examined investment or technical capabilities in isolation would have led to misleading results. This work thus highlights the importance of considering multiple perspectives when examining the competitive implications of technological change. © 1997 by John Wiley & Sons, Ltd.     

SIMILARITY JUDGMENTS IN STRATEGY FORMULATION: ROLE,PROCESS AND IMPLICATIONS

Similarity judgments are an important and distinct aspect of strategy formulation. They are manifest in strategic decisions and errors, and in the construction of analytic concepts such as strategic groups and relatedness in diversification. However, existing models of strategy formulation either assume away the process of making similarity judgments or regard it as unproblematic. This paper highlights the role of similarity judgments in strategy formulation, and discusses cognitive findings showing that decision makers’ assessment of similarity is not free from bias. The cognitive findings help construct a new process explanation for a wide range of apparently isolated strategic errors. The process explanation is contrasted and integrated with traditional explanations based on imperfections in decision inputs. Finally, in light of the cognitive findings, the methods and assumptions of existing approaches in strategy formulation research to the construction of analytic concepts are reexamined. © 1997 by John Wiley & Sons, Ltd.     

试论跨世纪我国石油工业的战略调整

从石油的消费需求出发,指出了以下世纪初我国石油工业发展中存在的主要问题,并就今后石油工业发展所面临的机遇和挑战,提出了石油资源优经配置和石油加工战略调整的思路。     

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.     

PROFITABILITY,TRANSACTIONAL ALIGNMENT,AND ORGANIZATIONAL MORTALITY IN THE U.S. TRUCKING INDUSTRY

The winds of creative destruction rarely blow more fiercely than in a newly deregulated environment. Managers simultaneously face a novel focus on operating efficiency and an onslaught of new competitors. What must managers do to enable their firms to survive in such an environment? What factors bear on firms’ survival? This paper presents an analysis of mortality of large motor carriers in the U.S. interstate for-hire trucking industry after deregulation. It examines this phenomenon through a multidisciplinary lens that encompasses organizational ecology, neoclassical economics, and transaction cost economics. The paper posits that carrier mortality is a function of both firm-level and industry-level attributes, which are drawn from both ecological and economic theories. While each of these theories separately informs motor carrier mortality, the inclusion of predictions derived from both disciplines in one model significantly increases explanatory power over either theory evaluated alone. The empirical analysis is among the first to show increased mortality when firms do not adhere to operating policies consistent with transaction cost minimization principles. In sum, managers are well advised to adopt a multidisciplinary approach to strategy to ensure their firms’ survival. © 1997 by John Wiley & Sons, Ltd.     

PUBLICATION RECORDS AND TENURE DECISIONS IN THE FIELD OF STRATEGIC MANAGEMENT

To better define levels of accomplishment for publishing journal articles in strategic management, a bibliometric study was performed on the publication records of 96 doctorates in the field whose first post-degree job was in academics. By examining 20 journals that are outlets for research in strategic management, publication records were developed for each individual for the first 5–10 years following receipt of the doctoral degree. Two factors influenced the publication records of these new faculty. Having publications prior to receiving the doctorate and getting a first job at an institution with a graduate program in management were associated with more frequent publishing after an academic career began. As expected, the number of papers published was related to the likelihood of receiving tenure. However, despite the fact that they had produced more papers during the first 5 years than male faculty members and had higher citation rates, female faculty members were less likely to receive tenure. The findings are discussed in terms of institutional policy for hiring and evaluating new faculty.     

PRICE DISPERSION IN THE SMALL AND IN THE LARGE: EVIDENCE FROM AN INTERNET PRICE COMPARISON SITE

This paper examines four million daily price observations for more than 1,000 consumer electronics products on the price comparison site http://Shopper.com . We find little support for the notion that prices on the Internet are converging to the 'law of one price.' In addition, observed levels of price dispersion vary systematically with the number of firms listing prices. The difference between the two lowest prices (the 'gap') averages 23 per cent when two firms list prices, and falls to 3.5 per cent in markets where 17 firms list prices. These empirical results are an implication of a general 'clearinghouse' model of equilibrium price dispersion.     

OPPORTUNITY AND CONSTRAINT: ORGANIZATIONS’ LEARNING FROM THE OPERATING AND COMPETITIVE EXPERIENCE OF INDUSTRIES

Organizational learning is central to a number of strategic theories. Recent arguments, however, identify risks associated with learning from own experience in the form of overattention to the short term and local conditions. The experience of the industry may offer opportunities for organizational learning that the experience of the organization does not, because industry experience is more varied, and not tied to the path-dependent history of any one organization. We investigate the influence of own experience and of two types of industry experience on the failure rates of U.S. hotel chains. The two types of industry experience are operating experience, which is a discounted sum of the units operated by U.S. hotel chains in the history of the industry, and competitive experience, which is a discounted sum of the number of failures of U.S. hotel chains in the history of the industry. We find that (a) organizations initially benefit from their own experience, but are harmed in the long run, (b) generalist organizations are more weakly affected by their own experience than specialists, (c) organizations benefit from their industry’s operating experience, accumulated both before and after the organization’s entry, and (d) organizations benefit from their industry’s competitive experience, but only after the organization’s entry. © 1997 by John Wiley & Sons, Ltd.     

AN EVOLUTIONARY PERSPECTIVE ON DIVERSIFICATION AND CORPORATE RESTRUCTURING: ENTRY,EXIT, AND ECONOMIC PERFORMANCE DURING 1981–89

This study proposes a theoretical perspective that firms engage in continuous search and selection activities in order to improve their knowledge base and thereby improve their performance. This general framework is applied to the context of corporate evolution. Entry and exit activities are understood as search and selection undertaken by the firm to improve their performance. One of the compelling features of this framework is that firms learn from their past entry experience and approach the next entry in a more focused and directed manner over time. Also, firms acquire additional knowledge from each entry event while applying their existing knowledge base. With a longitudinal (1981–89) data base on entry and exit activities of all publicly traded manufacturing firms in the United States, this study shows that applicability of the firm's knowledge base plays an important role in predicting which businesses a firm enters or exits. Firms sequentially enter businesses of similar human resource profiles and firms are more likely to divest lines of business of different profiles. Corporate-level analysis shows that such well-directed entry and exit contribute to the improvement of a firm's profitability.     

AGENCY CONFLICT AND CORPORATE STRATEGY: THE EFFECT OF DIVESTMENT ON CORPORATE VALUE

Among the various stakeholders of a firm, senior managers are the most likely targets for private and public political pressures. Other stakeholder groups are less visible and may be perceived as less influential in corporate strategy formulation and implementation. In some situations, consequently, senior executives may adopt corporate strategies in response to political pressures even if these strategies may be costly to shareholders. In this study, a special case is examined: the effect of divestment of South African business units on firm value. Using data from 1984 through 1990, we examine the impact that announcements of divestments have upon the stock return behavior of publicly traded firms. Our results indicate that significant and negative excess returns accrue to shares of companies announcing divestments of South African operations. These results are supportive of the premise that noneconomic pressures may influence managerial strategies rather than value-enhancement goals. © 1997 by John Wiley & Sons, Ltd.     

BREAKING THE SILOS: DISTRIBUTED KNOWLEDGE AND STRATEGIC RESPONSES TO VOLATILE EXCHANGE RATES

A model of effective decision-making in a situation of distributed knowledge is developed, drawing on three perspectives: the sociocognitive perspective, which focuses on framing issues; the economic perspective, which focuses on the role played by incentives in the integration of knowledge and decision-making authority; and the process perspective, which stresses the role of integrating mechanisms and of processes that either hinder or foster risk awareness and flexibility. The model is tested on a sample of managers from different functional areas of Fortune500 firms, using strategic responses to exchange-rate volatility as the context. The results show that all three perspectives—framing, incentives and process—are significant in explaining the effectiveness of strategic responses to volatile exchange rates. The findings suggest that simultaneously addressing managerial mindsets, incentives and process may be crucial to generating effective strategic responses across functions.     

EDITOR’S INTRODUCTION TO THE 1997 SUMMER SPECIAL ISSUE: THE INTERACTIONS OF ORGANIZATIONAL AND COMPETITIVE INFLUENCES ON STRATEGY AND PERFORMANCE

The 1997 Summer Special Issue of the Strategic Management Journal is introduced by the Editor-in-Chief, Dan Schendel. The Special Issue deals with what Guest Editors, Rebecca Henderson and Will Mitchell call ‘reciprocal interactions’ among environment, strategy, capabilities and performance. Why study of these reciprocal interactions may be useful to better understanding of performance outcomes is discussed. © 1997 by John Wiley & Sons, Ltd.     

COMPETING IN THE NEW ECONOMY: MANAGING OUT OF BOUNDS

This commentary was distributed at the Mexico City meeting of the Strategic Management Society, and forms the basis for the Call for Papers made for the 1996 SMS meeting to be held in Phoenix, Arizona, USA, November 10–13, 1996 at The Pointe Hilton Resort. The Editors of the SMJ thought it worth drawing to our readers' attention and offer it here as an interesting perspective on our field, the issues it now faces, and by implication, what research and practice must confront over the years ahead.     

PLANNING IN AMBIGUOUS CONTEXTS: THE DILEMMA OF MEETING NEEDS FOR COMMITMENT AND DEMANDS FOR LEGITIMACY

This paper argues that ambiguity of context manifested in pressures for legitimacy and commitment affect planning processes. Ambiguity arises from multiple conflicting constituencies and the lack of direct control over resources. Using nonprofit and entrepreneurial organizations as examples of organizations facing ambiguous contexts, we examine their planning practices to develop an understanding of the relationship between commitment, legitimacy, and planning. From this analysis, we articulate a managerial dilemma: the need to use informality and vagueness to gain commitment from diverse interests, and the need to demonstrate formalization of managerial practices to acquire legitimacy from critical resource suppliers. Using elements of this dilemma, we present a new planning framework for organizations in ambiguous contexts that recognizes planning as a strategy for resource acquisition rather than a strategy for resource allocation.