Informal interorganizational business relationships and customer loyalty: Comparing Guanxi,Yongo, and Wasta

Based on social exchange theory, this research explores if informal interorganizational business relationships in China (guanxi), South Korea (yongo), and Egypt/Jordan (wasta) affect customer loyalty in a business to business context. A conceptual model hypothesizes interrelationships among three underlying dimensions of informal relationships, reciprocity, affect, and trustworthiness, and with customer loyalty. The hypotheses were tested using survey data gathered from manufacturing companies in China, South Korea, Jordan, and Egypt. Structural equation modeling shows that guanxi, yongo, and wasta are positively related to customer loyalty across all four countries. However, there are some differences in the relationships among the three dimensions. Although reciprocity is positively related to affect in guanxi and yongo, this relationship is not statistically significant in wasta. Further, the items measuring the dimensions of trustworthiness and reciprocity are the same in guanxi and yongo, but these differ from wasta. Thus, managers need to be aware of subtle differences in how informal interorganizational relationships are developed and used in international business to business relationships.     

When strategy pales: Lessons from the department store industry

The traditional department store was clearly the center of retail activity in cities and small towns in the United States during the first half of the 20^th century. However, by the late 1970s and beyond, the department store industry began experiencing financial problems, and serious questions were being raised as to whether their demise was eminent. This article traces the evolution of the industry, and explores some of the underlying dynamics for the changes in the retail trade sector, including the emergence of new alternative retail formats, such as discount stores and category killers. This study further explores the major strategies used by the leading traditional stores with reference to new industry life cycle models and a strategic positioning framework. Of particular interest is the discussion regarding: Were the traditional department stores “locked in” to a declining trajectory? How effective were their strategies to counter the decline of the industry? And what were and are the repositioning options available to the traditional department stores?     

Strategic decisions in turbulent times: Lessons from the energy industry

Most of the firms currently in the S&P 500 probably will not be there in 15 years. In times of great uncertainty, managers are called upon to make the right strategic choices, preserve core businesses, and prepare their organizations for the future. How can managers make these choices when the industry is under transformation? In this article, we explore how the popular VUCA framework can help to make sense of turbulent contexts and drive the decision making of managers. We study the case of the energy industry, in which traditional business models eroded quickly and dominant players lost their positions. Based on personal interviews with the CEOs of RWE (Germany) and NRG Energy (U.S.), we analyze how these executives led transformation of their organizations. We get immersed in their decision-making processes and depict how the VUCA framework helps them to identify, map, and prepare their organizations to respond to the volatility, uncertainty, complexity, and ambiguity in their industry. We propose a guide for executive managers to navigate through VUCA contexts, taking into account the necessity to introduce short- and long-term responses that prepare organizations and stakeholders for an uncertain future.     

Robust supplier relationships: Key lessons from the economic downturn

Recent events in the economic and natural environments have tested buyer-supplier relationships like never before. Based on dyadic buyer-supplier case data from a variety of industries that were deeply affected by the 2008–2009 recession, this article explores how long-term relationships responded to an economic downturn. Prior to the downturn, these mutually dependent relationships all appeared to be very similar to each other and were characterized by significant value-added and social capital stores. However, due to varying degrees of bounded rationality, the relationships were affected differently and responded differently to the downturn. Based on the characteristics of the relationship, we develop a framework of three types of close supplier alliances. This framework can be used to assess such relationships and likely responses to adversity to reduce unpleasant surprises for the alliance partners. This article also provides a set of lessons learned for managers.     

Managing the transition to the new agile business and product development model: Lessons from Cisco Systems

Through an in-depth case study of Cisco Systems, this Executive Digest finds that companies face two broad challenges when transitioning to the agile product development model. The first is identifying and helping business units and engineering teams adopt this method; the second is developing new management practices that are compatible with and can sustain the agile development practices. Although extant literature has conducted many analyses on these two challenges, there still exist gaps in the research of the agile development method. Herein, we explore how Cisco Systems addressed these two challenges followed by a discussion of the broad implications of adopting the agile development method. This research deepens our understanding of how to adopt and lead the agile development process.     

COVID-19 and business renewal: Lessons and insights from the global airline industry

The emergence of the COVID-19 pandemic has adversely affected the fortunes of multiple companies around the globe. Accordingly, questions are increasingly being asked about how organizations can revitalize during and after a crisis. Yet, we have limited understanding of how organizations renew themselves during crises over time. We explore this question through the lens and examination of two South-Asian airlines: Pakistan International Airlines and Sri Lankan Airlines. The cases offer important insights into the reasons behind underperformance of state-controlled enterprises and renewal activities. We shed light on strategic renewal (SR) in the wake of increasing liberalization and deregulations in the global airline industry. To this end, we propose a four-stage approach towards renewing such underperforming organizations to respond effectively to black swan events and external shocks.     

Impact of international entry choices on the nature and type of innovation: Evidence from emerging economy firms from the Indian bio-pharmaceutical industry

As emerging economy multinational enterprises (EMNEs) enter foreign countries in search of new markets, seeking to expand their knowledge bases, research on the type and nature of innovation activity is needed to address the impact of EMNEs’ choices related to international expansion. Building on prior literature on entry mode and location choices, as well as on organizational learning, we argue that how and where an EMNE expands internationally will impact the nature of its innovation. We carry out empirical analysis on a sample of 167 Indian bio-pharmaceutical firms for the period from 1997–2017. Our findings suggest that greenfield ventures foster innovation in core technologies, while cross-border mergers and acquisitions (M&As) foster innovation in non-core technologies. In addition, locating subsidiaries in high income countries encourages product innovations, while locating in low income countries encourages process innovations. Our findings contribute to the growing literature on differences in learning outcomes of EMNE internationalization.     

Host country network,industry experience,and international alliance formation: Evidence from the venture capital industry

Integrating resource dependence and social network theories, we investigate how foreign firms’ position in alliance network in host country influences their further allying with firms from the host and home countries. We introduce network centrality as a factor that influences two competing forces in alliance formation: willingness and attractiveness. Furthermore, we argue that foreign firms suffering from a low network centrality may find it easier to enhance their network position if they have industry experience. Our analysis of data on US venture capital firms’ investment in China supports our theoretical framework. Theoretical and managerial implications of our findings are discussed.     

Exploring reverse knowledge transfer and asset augmentation strategy by developed country MNEs: Case study evidence from the Indian pharmaceutical industry

Using an in-depth qualitative longitudinal case study approach, we examine strategic asset and knowledge augmentation strategies of an advanced economy multinational enterprise (MNE). Our study is unique as it is contextualized in the knowledge-intensive pharmaceutical industry within the changing institutional landscape in India. And, in contrast to previous studies, it focuses on RKT from a newly acquired subsidiary where the protocol for knowledge transfer and relationship between MNE headquarters (HQ) and subsidiary does not exist. We contribute to the evolving literature on reverse knowledge transfer (RKT) which assumes that MNEs extract knowledge from their existing subsidiaries to strengthen their competitive advantages. We also reveal that MNEs design an architecture, that is reflected in the mechanism, governance structure, and timing, for efficient transfer and effective absorption of the knowledge and assets acquired. We introduce a novel concept of ‘reverse asset augmentation’ (RAA) to capture the MNE’s behavior of strategic asset seeking from emerging economies. RAA is parallel to and entwined with RKT conceptualization as knowledge is embedded within certain physical assets, other assets, such as brand name/image, may not embody knowledge. Thematic and processual analysis of interview data, collected in three phases, suggests that RAA complements RKT and that both concepts together capture the unconventional strategies of advanced economy MNEs acquiring emerging economy MNEs in search of strategic assets and knowledge.