Resource ambidexterity through alliance portfolios and firm performance

Research summary : Partner resources can be an important alternative to internal firm resources for attaining dual and seemingly incompatible strategic objectives. We extend arguments about managing conflicting objectives typically made at the firm level to the level of a firm's alliance portfolio. Specifically, will a balance between revenue enhancement and cost reduction attained collectively through partner resources accessed via a firm's various alliances be similarly beneficial for firm performance? Additionally, how do strategic attributes of alliance portfolio configuration, specifically alliance portfolio size and partner resource scope, condition the balance‐performance relationship? Based on data from the global airline industry, we find support for the balance‐performance relationship, though such balance is less beneficial for firms in the case of access to a broader resource scope per partner . Managerial summary : Increasing revenue and reducing costs simultaneously can potentially enhance firm competitiveness. We highlight that an alliance strategy can be an important alternative to internal resources for attaining such dual strategic objectives, particularly when partner resources accessed through alliances are treated collectively as portfolios. We examine the importance of balancing product‐market extending and efficiency‐improving partner resources in the global airline industry as well as the impact of two alternate strategies for accessing resources through alliances: fewer partners with more resources per partner or more partners with fewer resources per partner. We find that resource balance at the portfolio level helps airlines improve performance. Our results also suggest that managers should be cautious of accessing too many resources through just a few partners . Copyright © 2015 John Wiley & Sons, Ltd.     

Information diffusion and value redistribution among transaction partners of the IPO firm

This paper examines the diffusion of information around the initial public offering (IPO) process and identifies transaction partners on which IPO firms are dependent. Using a resource payments perspective, we argue that this dependence will lead to greater cumulative abnormal stock returns for transaction partners when this information is revealed in the market (when the initial form S‐1 is filed with the SEC). Moreover, we examine the uniqueness of the resource configuration between the IPO firm and transaction partners and find that greater uniqueness is associated with higher valuation for these transaction partners. We also find that multiple dependencies (by the IPO firm) reduce the valuation effect for transaction partners, indicating that a bargaining effect reduces the potential value that any transaction partner can appropriate. Copyright © 2013 John Wiley & Sons, Ltd.     

Growing with the market: How changing conditions during market growth affect formation and evolution of interfirm ties

Research Summary: Market conditions are known to matter for firm performance and growth. This study explores how changing levels of uncertainty and competition affect interfirm ties of entrepreneurial firms as markets transition from nascent to growth stage. Tracing six entrepreneurial game publishers during the growth stage of the U.S. wireless gaming market, the findings reveal that in a growth stage market, as uncertainty decreases, certain ties of entrepreneurial firms are terminated. First, existing partners may cut ties and become competitors after entering the market directly. This is a “winner's curse” as more successful firms are more likely to entice their partners to enter the market directly. Second, ties may be terminated as prominent firms that are “overwhelmed” with too many partners cut ties with low to mediocre performance, while their remaining partners enter a positive spiral of tie strength and performance. Finally, as uncertainty decreases, new firms may enter the market as competitors to prominent firms. While entrepreneurial firms with high‐ and low‐performing ties to prominent partners may find ties with these new entrants attractive, those with mediocre ties to few prominent partners find this move too risky and wait for a first mover to legitimate it. Overall, the findings show that changing levels of uncertainty and competition in growth stage markets can have different consequences for firms due to heterogeneity in their ties and power relative to partners. The findings provide several contributions to literature regarding the relationship among interfirm ties, firm performance, and market evolution. Managerial Summary: Based on interviews at six entrepreneurial game publishers in the United States and their partners, this study shows how changing levels of uncertainty and competition in growing markets can have different consequences for firms based on the different types of alliances in their portfolio and their power relative to partners. The findings highlight the importance of managing partners differently based on alliance type and goal of the partner. They advocate remaining flexible in alliance management as information asymmetries, intentions and bargaining power of partners can change and lead to abrupt alliance dissolution. They show that alliance portfolio management goes beyond a firm's capability of managing individual alliances, and provide a tool for managers to evaluate their alliance portfolios and take the necessary precautions.     

Do ongoing networks block out new friends? Reconciling the embeddedness constraint dilemma on new alliance partner addition

Research Summary: This study addresses a theoretical dilemma regarding how alliance network constraint (reflected by network cohesion) affects a firm’s alliance formation with new partners. Using a network pluralism approach, we separate a firm’s ego alliance network into two activity‐based networks—an exploratory network and an exploitative network—based on the primary value chain activity involved in each alliance. We argue that the cohesion of exploratory or exploitative networks has an inverted U‐shaped effect on the addition of new partners in the same activity‐based network, and a positive effect on the addition of new partners in the other network. Results based on data from the biotechnology industry largely support our predictions with one exception. Our study contributes to both scholarly understanding of network embeddedness and alliance practice. Managerial Summary: The structure of firms’ ongoing alliance networks may have paradoxical implications for their efforts to search for and form alliance with new partners. That is, when a firm’s alliance partners are tightly connected with each other, the cohesive network tends to both encourage and impede the focal firm to add new partners. We resolve this dilemma by showing that when a firm is deeply entrenched in a cohesive alliance network conducting a certain type of activities (e.g., R&D activities), it may not easily add new R&D alliance partners. However, it may still be able to escape from the cohesive R&D alliance network by seeking new partners conducting other activities (e.g., manufacturing activities).     

The development of entrepreneurship in China

In this paper, we provide an overview of the extant research on the development of entrepreneurship in China. This research focus is a relatively recent phenomenon since China’s market transition started from late 1978. We review the literature over the 26 years from 1980 through 2005, as published in 11 leading English-language academic journals. We identify 68 articles from this review and analyze them based on the research subjects, methods, and firm types. From this review, and integrating with research on market transitions, we propose a three-stage model of market transitions that has important implications for entrepreneurship research in transition economies.

Entrepreneurship,innovation, and political competition: How the public sector helps the sharing economy create value

Research Summary: With the recent growth of the sharing economy, regulators must frequently strike the right balance between private and public interests to maximize value creation. In this article, we argue that political competition is a critical ingredient that explains whether cities accommodate or ban ridesharing platforms and that this relationship is moderated in more populous cities and in cities with higher unemployment rates. We test our arguments using archival data covering ridesharing bans in various U.S. cities during the 2011–2015 period. We supplement these data with semistructured interviews. We find broad support for our arguments while mitigating potential endogeneity concerns. Our study has important implications for nonmarket strategy, entrepreneurship and innovation, and public-private partnership literatures. In addition, our findings inform policy debates on the sharing economy. Managerial Summary: Entrepreneurs and businesses oftentimes face severe regulatory barriers when commercializing innovative products and services even if the innovations are generally beneficial for consumers and the broader society. This research focuses on the political determinants of regulation to provide a better understanding of why some markets are more receptive to innovative products while other markets are more hostile to them. Using the banning of ridesharing companies (e.g., Uber and Lyft) in various U.S. cities during the 2011–2015 period, we find that elected politicians facing less political competition (i.e., not easily replaceable, serving multiple terms, longer tenure in office) were more likely to ban ridesharing companies and favor, potentially displaceable, local taxicab companies. Our research has implications for navigating the political barriers to entry.     

Free‐riding in multi‐party alliances: The role of perceived alliance effectiveness and peers' collaboration in a research consortium

Research summary : Multi‐party alliances rely on partners' willingness to commit and pool their efforts in joint endeavors. However, partners face the dilemma of how much to commit to the alliance. We shed light on this issue by analyzing the relationship between partners' free‐riding—defined as their effort‐withholding—and their perceptions of alliance effectiveness and peers' collaboration. Specifically, we posit a U‐shaped relationship between partners' subjective evaluations of alliance effectiveness and their free‐riding. We also hypothesize a negative relation between partners' perceptions of the collaboration of peer organizations and their free‐riding. Results from a mixed‐method study—combining regression analysis of primary data on a major inter‐organizational research consortium and evidence from two experimental designs—support our hypotheses, bearing implications for the multi‐party alliances literature. Managerial summary : Free‐riding is a major concern in multi‐party alliances such as large research consortia, since the performance of these governance forms hinges on the joint contribution of multiple partners that often operate according to different logics (e.g., universities, firms, and government agencies). We show that, in such alliances, partners' perceptions have relevant implications for their willingness to contribute to the consortium's shared goals. Specifically, we find that partners free‐ride more—that is, contribute less—when they perceive the effectiveness of the overall alliance to be either very low or very high. Partners also gauge their commitment to the alliance on the perception of the effort of their peers—that is, other organizations similar to them. These findings provide managers of multi‐party alliances with additional levers to motivate partners to contribute fairly to such joint endeavor. Copyright © 2015 John Wiley & Sons, Ltd.     

Franco-Chinese Joint-Venture Formation and Shareholder Wealth

The main purpose of this article is to test the stock market reaction to Franco-Chinese joint venture announcements and to determine whether it is correlated with joint venture-specific and partner-specific factors. Certain factors specific either to Franco-Chinese joint ventures' characteristics (such as coastal or inland location of French investors in China, capital ownership of French and Chinese partners in the joint ventures, announcement date, business activity of the Franco-Chinese joint ventures) or to French partners (such as their experience in managing Franco-Chinese joint ventures, their international, European experience, and more particularly their experience of Asia) will be analysed with respect to their shareholder value creation. A research sample was prepared from the publication of information on Franco-Chinese joint venture announcements in the French daily newspapers Les Echos and La Tribune between 1994 and 2000 (seven years were analysed). It is important to stress that the announcements used in this sample corresponded to the sole formation of joint ventures. This research sample was made up of 47 Franco-Chinese joint venture announcements for which the relevant abnormal returns (AAR and CAAR) were evaluated. A negative and significant valuation effect was reported for Franco-Chinese joint venture announcements for a reduced event window spanning 7 days around the day of announcement. Among the eight different variables associated with shareholder value creation, only two of them appear to be statistically significant: announcement date and international experience of French partners. First, two opposite time trends were stated in the stock market reaction (negative reaction from 1994 to 1997 and positive from 1998 to 2000). Second, French companies possessing high international experience benefit from an important and positive stock market reaction.     

Divided we fall: The breakdown of gig worker solidarity in online communities

The ‘gig economy’ presents a contested new work arrangement where freelancers find work on digital platforms. Subsequently, previous research has investigated how gig workers develop solidarity and take collective action against the exploitative practices of the platforms. However, this research is limited by mostly focusing on solidarity in contexts of local gig worker communities. We investigate whether freelancers who work on a global platform, Upwork, which hires people for diverse and complex jobs, can build up solidarity in a global online community. Applying a mixed-methods research design, we analysed how gig workers responded to a policy change by Upwork that affected their working conditions negatively. In doing so, we outline how solidarity breaks down in an online community of gig workers, due to them realising different interests and identities. We contribute to recent discussions on solidarity in the gig economy, and online communities as tools for organising.     

The assignment of call option rights between partners in international joint ventures

We examine call option rights as a contractual clause in international joint ventures (IJVs) and propose that the assignment of the call option right in an IJV is determined by certain ex ante asymmetries between the partners. Results show that between the two partners in an IJV, the firm with greater complementarity with the venture and greater prior IJV experience is more likely to hold the call option right; in addition, the firm's contractual choice on the call option right and its ownership choice on a greater initial equity stake are substitutive. Our focus on explicit call options advances the real options theory of collaborative agreements, and our results also highlight that option rights be considered an important part of alliance design. Copyright © 2013 John Wiley & Sons, Ltd.     

Government corruption and foreign stakes in international joint ventures in emerging economies

This paper analyzes the relationship between government corruption and the changes in the equity stake of foreign partners in international joint ventures (IJVs) formed with local firms in emerging Asian economies. This relationship is defined according to transaction cost theory. This relationship is complemented by the introduction of a moderating variable derived from organizational learning theory: the country experience of foreign partners. This article is based on a sample of 171 European firms, which formed IJVs in emerging Asian economies during the year 1996. Using an event history analysis, the evolution of each European equity stake was followed-up from year 1996 to the end of the period at risk on January 2007. From the empirical results presented in this article, some findings have been drawn on the attitudes of foreign firms toward government corruption in emerging Asian economies. First, we showed that the government corruption is significantly related to the likelihood of foreign partners to terminate the IJV. However, the nature of this relationship is differentiated according to the score used to measure government corruption. The relationship is positive when using the Transparency International score and negative with the Political Risk Services score. Second, we put into evidence that the country experience of foreign partners moderates the relationship between government corruption and the changes in the equity stake of foreign partners in IJVs in emerging Asian economies.

Role of search for domain knowledge and architectural knowledge in alliance partner selection

Research Summary: The literature on technological alliances emphasizes that search for knowledge drives alliance formation. However, in conceptualizing technological knowledge, prior work on alliances has not made a distinction between domain knowledge—knowledge that firms possess in distinct technological domains—and architectural knowledge—knowledge that firms possess about how to combine elements from different technological domains. We argue that firms seek partners that are similar in domain knowledge to deepen their knowledge, and partners that are dissimilar in architectural knowledge to broaden their knowledge. Our results indicate that the likelihood of alliance formation increases when two firms are similar in domain knowledge and dissimilar in architectural knowledge. Further, our results show that these effects are positively moderated by the degree of decomposability of a firm's knowledge base. Managerial Summary: In dynamic environments, companies need to continually deepen and broaden their technological knowledge, and they often look for alliance partners who can provide them that knowledge. For knowledge deepening, companies are more likely to form alliances with those companies that have expertise in similar technological fields. For knowledge broadening, they are more likely to form alliances with those companies that have expertise in the same technological fields, but have different recipes for combining knowledge from those fields. Furthermore, a company with a modular knowledge base is more likely to seek a partner that has expertise in similar technological fields or whose recipes for combining knowledge from different technological fields are different from the recipes it has.     

Determinants of alliance partner choice: Network distance,managerial incentives,and board monitoring

Research Summary: We ask if managerial opportunism is a significant problem in alliance partner choice and examine the role of corporate governance mechanisms in explaining this choice. Using a sample of 313 alliances of U.S. firms from the pharmaceutical and biotechnology industries from 1992 to 2010, we find that managerial incentives lead to managerial preference for relationally risky distant partners over existing and new close partners. Further, board monitoring encourages managers to pursue existing and distant partners over new close ones, choices aligned with shareholder interests. In addition, we find that board monitoring substitutes for managerial incentives in alliance partner choice. We contribute to the literature on alliance partner choice to identify an important, and hitherto, unexplored perspective. Managerial Summary: This article examines whether managers and shareholders view alliance‐related risks differently, and how the divergent interests between managers and shareholders affect alliance partner choice. We argue that managers’ concern about their loss of employment and compensation from alliance failure impedes the choice of relationally risky alliance partners that may increase shareholder value. We also argue that managerial stock ownership and board monitoring mitigate this managerial propensity. Our findings suggest that stock ownership owned by managers and strong board monitoring are effective governance mechanisms to align managers’ interests with those of shareholders. Our study offers a novel perspective to understand alliance partner choice by viewing the firm as an entity comprised of fragmented interests.     

Licensing Foreign Technology and the Moderating Role of Local R&D Collaboration: Extending the Relational View

The relational resource‐based view posits that performance differences among firms can be explained not only by the possession of internal resources but also by maintaining and developing relationships with external partners. However, studies in the extant literature usually address the separated roles of various external relationships of focal firms, but the literature has not addressed how relationships with different sets of knowledge partners are related to each other and influence focal firms' performance. Therefore, to fill this research gap, this study focuses on how technological resources acquired from one set of partners (licensing foreign technologies) may generate subsequent internal and relational rents in terms of technological innovation in the context of collaboration with an entirely different set of knowledge partners (local R&D partners). Specifically, we propose that local R&D collaborations need to be large in scale and broad in scope. The empirics are based on the analysis of a sample of 160 high‐tech Chinese firms observed from 2000 to 2011. Consistent with our predictions, our findings contribute to extending the relational view by addressing the relations among the relationships of focal firms.     

Learning to collaborate through collaboration: How allying with expert firms influences collaborative innovation within novice firms

Research summary : Strategic alliances have been recognized as a means for firms to learn their partners' proprietary knowledge; such alliances are also valuable opportunities for partner firms to learn tacit organizational routines from their counterparts. We consider how relatively novice technology firms can learn intraorganizational collaborative routines from more experienced alliance partners and then deploy them independently for their own innovative pursuits. We examine the alliance relationships between Eli Lilly & Co. (Lilly), a recognized expert in collaborative innovation, and 55 small biotech partner firms. Using three levels of analysis (firm, patent, and inventor dyad), we find that greater social interaction between the partner firm and Lilly subsequently increases internal collaboration among the partner firm's inventors. Managerial summary : Can collaborating externally advance internal collaboration? Yes. Our research found that collaboration among scientists at small, early‐stage biotechnology firms significantly increased after these firms formed highly interactive R&D alliances with a large pharmaceutical company known for its expertise in such collaboration. It is well known that alliances help new firms learn specific new technologies and commercialize innovations. Our study broadens the scope of potential benefits of alliances. New firms can also learn collaboration techniques, deploying them internally to enhance their own abilities in collaborative innovation. Managers should take this additional benefit into consideration in developing their alliance strategies. Pursuing alliance partners with expertise in collaboration and keeping a high level of mutual interactions with partner firm personnel should be important considerations to extract this value. Copyright © 2015 John Wiley & Sons, Ltd.     

Venture capital in China: Past,present, and future

This article reviews the literature on venture capital in China and examines where China’s venture capital industry has been and where it is likely to go in the future. Since the 1980s, venture capital in China has grown steadily alongside the robust national economy. The future is likely to offer even greater opportunities, as entrepreneurs are encouraged and property rights improve. However, there will also be a period of transition as the market continues to mature and as new legal structures and commercial arrangements emerge. Venture capital in China has many interesting differences from that in Western countries. The venture capital industry is shaped by the institutional context and China is no exception to this. This article also examines some specific differences between the system in China and that of the United States. Future prospects for venture capital are also appraised as China continues its transition to a market economy.

Taking a hit to save the world? Employee participation in a corporate social initiative

Research Summary: Companies often justify their corporate social initiatives by citing talent management benefits. We examine the extent of, and the reasons for, employee interest in such an initiative in a global management consulting firm. We find a large fraction of employees to be interested in participation in the initiative even when participation requires a personal sacrifice in the form of a salary cut. However, this interest is driven not just by prosocial motivation: Expectations regarding private benefits, such as improved career prospects from new skills acquired, also play a role. Considerations of social impact and private benefits are equally salient when no salary cut is required, but private considerations become more prominent when participating employees are asked to accept a salary cut. Managerial Summary: Many companies are moving from stand‐alone corporate social responsibility (CSR) projects to social initiatives integrated into strategy. Providing employees with the opportunity to participate in such initiatives is said to help attract, motivate and retain talent. In this study, carried out in collaboration with a management consulting firm, we examine how much and why employees value participation in a corporate social initiative. Based on interviews and survey data, we find that employees are not only interested in, but often even willing to accept, a temporary salary cut for the opportunity. However, altruistic motivation is not the only driver of this interest: Employees also expect and value the possibility that the experience would lead to private benefits, such as developing skills likely to enhance their career prospects.     

Open Innovation in Practice: Goal Complementarity and Closed NPD Networks to Explain Differences in Innovation Performance for SMEs in the Medical Devices Sector

Cooperation with other organizations increases the innovation performance of organization, especially for small and medium‐sized enterprises (SMEs) as they encounter liabilities of “smallness” (e.g., limited financial resources, and manpower). In the medical devices sector, collaboration with external partners for NPD becomes increasingly important due to the complexity of the products and the development process. About 80% of companies in this sector are SMEs. These companies operate in a highly regulated sector, which affects the organization of the external network required for the new product development (NPD) process. SMEs are practicing extensively open innovation activities, but in practice face a number of barriers in trying to apply open innovation. This paper examines multiple network characteristics simultaneously in relation to innovation performance and thereby aligns with and builds further on configuration theory. Configuration theory posits that for each set of network characteristics, there exists an ideal set of organizational characteristics that yields superior performance. In this research, the systems approach to fit is used. Fit is high to the extent that an organization is similar to an ideal profile along multiple dimensions. This ideal profile represents the network profile that the 15% highest performing companies use. It is argued that the smaller the distance between the ideal profile and the network profile that is used, the higher the performance. The objective of this research is (1) to examine the relation between the ideal profile and innovation performance and (2) to examine which organization of the network profile is related to high innovation performance. Quantitative survey data (n = 60, response rate 61.9%) form the core of this research. The quantitative results are clarified and have been triangulated with qualitative interview data (n = 50). Our findings suggest the presence of an “ideal” NPD network profile (in terms of goal complementarity, resource complementarity, fairness trust, reliability trust, and network position strength): the more a company's NPD network profile differs from this ideal profile, the lower the innovation performance. In addition, the results of our study indicate that the NPD network profiles of successful and less successful SMEs in the medical devices sector significantly differ in terms of “goal complementarity,” while this is less the case for trust and resource complementarity labeled distinctive by previous research. Finally, results show that a relatively closed, focused, and consistent “business‐like” NPD networking approach, which is characterized by result orientation and professionalism, is related to high innovation performance. It is recommended that SMEs in the medical devices sector aiming to distinguish themselves from competitors in terms of innovation performance focus on goal complementarity while adopting such a business‐like attitude toward their NPD network partners.     

Sustainably superior versus greenwasher: A scale measure of B2B sustainability positioning

Business-to-business (B2B) buyers are finding it increasingly difficult to judge the true sustainability of supply chain partners (Oruezabala & Rico, 2012). Yet three-quarters of buyers in the OECD report they will dismiss potential supply chain partners who fail to meet sustainability criteria (Pierre, 2008). B2B firms then, cannot afford any confusion over their sustainability practices and positioning. Unfortunately, there are no sustainability positioning measures for firms to assess this, and there is no agreed upon operationalization of a highly sustainable firm vs a weakly sustainable firm. As such, this research creates a B2B sustainability positioning scale and taxonomy. First, interviews with buyers and marketing managers determine perceptions of supplier sustainability practices and defines B2B levels of sustainability. Second, exploratory and confirmatory scale development studies are conducted with 578 experienced industrial buyers. The resulting B2B sustainability positioning scale shows that a sustainably superior positioning for B2B addresses five key factors: (1) sustainability credibility, (2) concern for environmental impact, (3) a careful consideration of stakeholders, (4) resource efficiency, and (5) a holistic philosophy. This scale is intended as a tool to help B2B marketers understand and better leverage their sustainability practices and communications around sustainability.“We're trying to be cleaner and greener: We recycle waste and switch things off. We use paper from responsibly managed forests whenever possible. We ask our printers to actively reduce waste and energy consumption. We check out our suppliers' working conditions...”– The back jacket of books from DK Publishers, 2018.     

‘It's like,instant respect’: Coworking spaces as identity anchoring environments in the new economy

As employment relationships become more tenuous, as work grows increasingly virtual and as professional reputations circulate across online platforms, coworking provides individuals across various work arrangements with shared workspaces oriented towards sociability, visibility and convenience. Our study explores how coworking spaces also enable individuals to shape their professional identities while providing other important attributes of work to help it feel embodied and grounded. Drawing from interviews and surveys of members of a large coworking chain across the United States, we find that coworking spaces serve as identity anchoring environments. We find that many workers use material elements of the space to ground their professional identities in three ways: evidencing professional credibility, enacting a common ethos and energising connections with others. More broadly, we also find that coworking operators package and sell the physical, spatial and symbolic aspects of work to help certain workers signal their professional selves.