Why history matters: Micro-and macro-foundations in a corporate de alio spinoff

Much of the discussion surrounding dynamic capabilities has focused on mature and established corporate enterprises escaping core rigidities. Less understood is the role of dynamic capabilities in corporate spinoffs that represent a category of de alio (“from others”). These firms offer a novel context when investigating dynamic capabilities, as they are technically “new” firms yet demonstrate a level of establishment due to privileged access to resources from a corporate parent. We explore how incubation and attachment to a parent influences tacit and explicit transfer of resources and supports sensing and seizing in the early growth corporate de alio spinoff, promoting opportunities for transformation as the spinoff matures. Through an analysis of a longitudinal, empirical, illustrative case, we integrate Garnsey's Penrosean-inspired Theory of the Early Growth of the Firm with Teece's dynamic capabilities framework to illustrate how micro- and macro-foundations of dynamic capabilities unfold in a corporate de alio spinoff during incubation and following spinoff. This study builds an understanding of how corporate de alio spinoffs can more successfully navigate ambiguity by leveraging dynamic capabilities, the foundations of which emerge in a parent entity.     

Adaptive marketing capabilities,dynamic capabilities,and renewal competences: The “outside vs. inside” and “static vs. dynamic” controversies in strategy

Three streams of strategic thought, (1) the “adaptive marketing capabilities” works, (2) the “dynamic capabilities” view, and (3) resource-advantage (R-A) theory, are converging on the view that, in today's dynamic, hypercompetitive, global economy, strategy must focus on firms' constantly renewing themselves in the marketplace. In turn, these three streams have implications for the controversies over whether strategy's focus should be “outside-in or inside-out” and whether strategy should be static or dynamic. This article addresses the three streams of strategic thought and the two controversies by (1) explicating their nature, (2) showing how strategies related to them have evolved through time, and (3) pointing toward the controversies' resolution. The article argues that all theories of strategy assume a theory of how competition works. In turn, theories of competition are housed within disciplinary research traditions. Therefore, understanding the controversies in contemporary strategy is furthered by understanding both the theories of competition that underlie each strategic approach and their respective research traditions.     

Standards,innovation, and latecomer economic development: Conceptual issues and policy challenges

Little is known about the impact of standards on the economic development of countries which are latecomers to industrial manufacturing and innovation. Standardization is regarded primarily as a technical issue, and hence receives only limited high-level policy support.However, technical standards contribute at least as much as patents to economic growth. As a key mechanism for the diffusion of technological knowledge and due to the dominant leadership by advanced countries in patenting, technical standards have emerged in latecomer countries as an alternative to patenting. However, latecomer countries and their firms have a set of capabilities and constraints that are fundamentally different from that of advanced countries and firms. This paper argues that latecomer countries should adopt assessment criteria that are more fitted with latecomer contexts which emphasize learning effects and building dynamic capabilities. The paper discusses current issues that are essential in understanding the rise of Asian countries in standardization. We also examine the critical role that patents play for standardization and argue that “strategic patenting” to generate rents from de facto industry standards can stifle latecomer economic development.     

Managerial cognitive capabilities and the microfoundations of dynamic capabilities

The microfoundations of dynamic capabilities have assumed greater importance in the search for factors that facilitate strategic change. Here, we focus on microfoundations at the level of the individual manager. We introduce the concept of “managerial cognitive capability,” which highlights the fact that capabilities involve the capacity to perform not only physical but also mental activities. We identify specific types of cognitive capabilities that are likely to underpin dynamic managerial capabilities for sensing, seizing, and reconfiguring, and explain their potential impact on strategic change of organizations. In addition, we discuss how heterogeneity of these cognitive capabilities may produce heterogeneity of dynamic managerial capabilities among top executives, which may contribute to differential performance of organizations under conditions of change. Finally, we propose possible directions for future research. Copyright © 2014 John Wiley & Sons, Ltd.     

Enlightening the dynamic capabilities of design thinking in fostering digital transformation

Digital transformation describes the deep-seated changes in organizational activities, processes, and capabilities induced by the advent of digital technologies. Digital transformation requires sensing, seizing, and reconfiguring the digital technological challenges into opportunities. Academic literature acknowledges the central role of design as a driver of innovation. Furthermore, recent research discloses the value that design, especially design thinking, can have in leading digital transformations. In this understanding, design thinking has been proven to be an approach based on dynamic capabilities. What seems to lack in the current understanding is how the dynamic capabilities of design thinking can facilitate digital transformation. Thus, the paper aims to shed light on how dynamic capabilities of design thinking foster discovering the opportunities digital technologies provide to enact the transformation. This paper investigates four different cases of consulting projects where the adoption of design thinking dynamic capabilities enhance the value of digital technologies towards a more human centric digital transformation. By being a business-to-business market, the consulting environment might inform readers how design thinking dynamic capabilities are salient for digital transformation. Examining them, the paper proposes five design thinking dynamic capabilities that managers should cultivate: extending, debating, cropping, interpreting, and recombining. Concerning academic debate, the paper enriches the understanding of digital transformation by unshadowing the value that design thinking dynamic capabilities might play in it.     

A Structural Empirical Model of R&D,Firm Heterogeneity,and Industry Evolution*

This article develops and estimates an industry equilibrium model of the Korean electric motor industry from 1991 to 1996. Plant-level decisions on R&D, physical capital investment, entry, and exit are integrated in a dynamic setting with knowledge spillovers. We apply the novel approximation of oblivious equilibrium to estimate the R&D cost, magnitude of knowledge spillovers, adjustment costs of physical investment, and plant scrap value distribution. Knowledge spillovers are essential to explaining the firm-level productivity evolution and the equilibrium market configuration. A $15\%$ R&D subsidy maximizes industry output and is broadly consistent with a past policy initiative of the Korean government.     

Concurrent learning: How firms develop multiple dynamic capabilities in parallel

Much is known about the importance of dynamic capabilities. Yet, surprisingly little is known about how multiple dynamic capabilities might be developed in parallel, since most existing work explores a particular dynamic capability in isolation. Using rich quantitative and qualitative data on Dow Chemical's acquisitions, joint ventures, and divestitures over the past 20 years, we seek to address this gap. Besides contributing by adding fresh insights about managing growth and the utility of distributed practice, and by shedding light on positive and negative experience transfer, our core contribution is an emergent theoretical framework that develops the concept of “concurrent learning. ” Copyright © 2014 John Wiley & Sons, Ltd.     

Building a Measurement Model for Market Visioning Competence and Its Proposed Antecedents: Organizational Encouragement of Divergent Thinking,Divergent Thinking Attitudes,and Ideational Behavior

The overall question that this research seeks to answer is the following: Are there individual and/or organizational resources related to “divergent thinking” that enhance or inhibit the firm's market visioning competence in the case of radical innovation? In order to answer this question, in this paper, the key focus is on the realm of potential divergent thinking‐related resources that the firm may possess and access to aid in the creation and development of an effective market visioning competence. In particular, individual‐level factors related to divergent thinking capabilities and, at the organizational level, encouragement of such capabilities, are investigated. Specifically, we propose that two organizational‐level factors related to organizational encouragement of divergent thinking (“encouraging ideas” and “encouraging diversity”), two individual‐level divergent thinking attitudes factors (“openness” and “ability to move from divergent thinking to convergent thinking efficiently and effectively”), one individual‐level ideational behavior factor (“ability to generate new ideas”), and a further individual cognitive factor (“need for cognition”) have direct impacts on market visioning competence. Scales are then developed and tested for measuring these potential antecedents, and they are included in a measurement model with market visioning competence to enable further research.     

Willingness-to-pay for natural,organic, and conventional foods: The effects of information and meaningful labels

Vague food labels and distorted product claims have persisted in the “natural” food industry, while organic claims can be certified by the U.S. Department of Agriculture (USDA). Using experimental methods and a sample of randomly selected subjects, we test food label and information treatment effects on subjects' willingness-to-pay (WTP) for organic, “natural,” and conventional foods. Random nth-price auctions are used to elicit WTP after subjects received one of five randomly assigned information treatments. We find large information effects, including asymmetric cross-market effects for natural and organic foods. Perhaps surprising is that organic premiums increase in response to subjects seeing the “natural” foods industry's perspective on its products. Demographics effects are also important. The results have practical implications for natural and organic food marketing and valuing products where there are vague claims about their attributes.     

Intellectual Property, Architecture, and the Management of Technological Transitions: Evidence from Microsoft Corporation

Many studies highlight the challenges facing incumbent firms in responding effectively to major technological transitions. Though some authors argue that these challenges can be overcome by firms possessing what have been called dynamic capabilities, little work has described in detail the critical resources that these capabilities leverage or the processes through which these resources accumulate and evolve. This paper explores these issues through an in‐depth exploratory case study of one firm that has demonstrated consistently strong performance in an industry that is highly dynamic and uncertain. The focus for the present study is Microsoft, the leading firm in the software industry. The focus on Microsoft is motivated by providing evidence that the firm's product performance has been consistently strong over a period of time in which there have been several major technological transitions—one indicator that a firm possesses dynamic capabilities. This argument is supported by showing that Microsoft's performance when developing new products in response to one of these transitions—the growth of the World Wide Web—was superior to a sample of both incumbents and new entrants. Qualitative data are presented on the roots of Microsoft's dynamic capabilities, focusing on the way that the firm develops, stores, and evolves its intellectual property. Specifically, Microsoft codifies knowledge in the form of software “components,” which can be leveraged across multiple product lines over time and accessed by firms developing complementary products. The present paper argues that the process of componentization, the component “libraries” that result, the architectural frameworks that define how these components interact, and the processes through which these components are evolved to address environmental changes represent critical resources that enable the firm to respond to major technological transitions. These arguments are illustrated by describing Microsoft's response to two major technological transitions.     

Reconfiguration,restructuring and firm performance: Dynamic capabilities and environmental dynamism

Research summary: Reorganization has been proposed as a key dynamic capability. This study compares the performance outcomes of two forms of reorganization, differing in their pervasiveness: organizational restructuring and organizational reconfiguration. Our dynamic panel data analysis of large U.S. corporations between 1985 and 2004 finds contrasting performance outcomes for these two forms of reorganization: in general, the more pervasive restructuring is associated with positive performance outcomes, while the more limited reconfiguration is associated with negative performance outcomes. However, outcomes vary by environment. Consistent with dynamic capabilities theory, we find evidence that in dynamic environments reconfiguration outcomes turn positive, while restructuring outcomes turn negative. We discuss implications for dynamic capabilities theory and managerial policy. Managerial summary: Firms need to reorganize in order to adapt to change. This study compares the financial performance consequences of two forms of reorganization: organizational restructurings and organizational reconfigurations. Restructurings involve fundamental change in organizational principles and are typically irregular; reconfigurations involve incremental change and are frequent. Examining a set of large U.S. corporations, we find these two forms of reorganization have contrasting financial consequences, depending on context. In the general case, fundamental restructurings have positive consequences, while incremental reconfigurations have negative consequences. However, this general result reverses in specifically dynamic environments, where reconfigurations are positive financially, while restructurings are negative. We conclude that the relative frequency of reconfigurations helps adaptation in dynamic environments. Managers should choose forms of reorganization according to the rate of environmental change. Copyright © 2016 John Wiley & Sons, Ltd.     

Co-management of purchasing and marketing: Why,when and how?

This article discusses the theoretical and conceptual foundations for the co-management of purchasing and marketing and thereby provides some answers to the questions, why, when and how purchasing and marketing should be co-managed. It develops a conceptual framework distinguishing between internal and external co-management of purchasing and marketing. Improving value creation and value capture is identified as a necessary “pull factor” driving the co-management of purchasing and marketing. Based on resource dependence theory (RDT), we argue that dependence on critical resources is another important “push factor” for the emergence of external co-management. We present a RDT-based typology of co-management constellations showing that co-management is not a one-size-fits-all approach and summarize our findings in five propositions on the co-management of purchasing and marketing. In sum, we conceptualize co-management of marketing and purchasing as a bridging strategy that allows a focal firm to accommodate dependence on critical upstream and/or downstream resources and improves value creation within the supply chain.     

Timing Assumptions and Efficiency: Empirical Evidence in a Production Function Context

Recent work estimating production functions has often used methodologies proposed in two literatures: (1) “proxy variable” estimation techniques (Olley, S. and Pakes, A., 1996, Econometrica, 64, pp. 1263–1295), and (2) “dynamic panel” estimation techniques. I illustrate how timing and information set assumptions are key to both, and how these assumptions can be strengthened (or weakened) almost continuously. I examinehow, in some common production datasets, strengthening or weakening these assumptions affects the precision of estimates—comparing these impacts to those achieved by imposing alternative assumptions sometimes utilized in these literatures. This illustrates efficiency tradeoffs between different possible assumptions, at least in the production function context.     

Mapping the Topic Landscape of JPIM, 1984–2013: In Search of Hidden Structures and Development Trajectories

During the three decades since its inception in 1984, the JPIM has shaped the evolution of innovation research as a scientific field. It helped create a topic landscape that is not only more diverse and rich in insights, but also more complex and fragmented in structure than ever before. We seek to map this landscape and identify salient development trajectories over time. In contrast to prior citation‐based studies covering the first two decades of JPIM research, we benefit from recent advances in natural language processing and rely on a topic modeling algorithm to extract 57 distinct topics and the corresponding most common words, terms, and phrases from the entire full‐text corpus of 1008 JPIM articles published between 1984 and 2013. Estimating the development trajectory of each topic based on yearly publication counts in JPIM allows us to identify “hot,” “cold,” “revival,” “evergreen,” and “wall‐flower” topics. We map these topics onto the Product Development and Management Association (PDMA) Body of Knowledge categories and discover that these categories differ significantly not only in terms of their internal topic diversity and relative prevalence, but also—and arguably more importantly—in terms of their publication and citation trajectories over time. For instance, the PDMA category “Codevelopment and Alliances” exhibits only moderate topic diversity (7 out of 57 topics) and prevalence in JPIM (161 out of 1008 articles). That said, it is among the most dynamic categories featuring two evergreen topic (“Users and Innovation” and “Tools and Systems for Technology Transfer”) and three hot topics (“Open Innovation,” “Alliances and Cooperation,” and “Networks and Network Structure”) as well as a sharply growing annual number of citations received. Our findings are likely to be of interest to all those who are keen to (re)discover JPIM's topic landscape in search of hidden structures and development trajectories.     

A relational embeddedness perspective on dynamic capabilities: A grounded investigation of buyer-supplier routines

Our study extends the emerging inter-firm-level theorization of dynamic capabilities by articulating how firms can develop and adapt their resource bases through supplier relations. Specifically, we aim to explore how different embedded relational aspects function together or separately to induce various inter-firm routines that presumably underpin the buying firm’s dynamic capabilities. The research design is a multiple case study involving 34 buyer-supplier dyad-level innovation events across six product groups of three multinational buying firms in the Pharmaceuticals, Aerospace, and Fast-Moving Consumer Goods sectors. Our inductive analysis suggests that the social, cognitive, and physical aspects of relational embeddedness play roles, in a cumulatively sequential fashion, in inducing three distinctive routine types—unilateral, quasi-unilateral, and bilateral—in the buyer-supplier dyads that underpin the three clusters of dynamic capabilities—sensing, seizing, and transforming, respectively. Furthermore, our study identifies two contingencies that explain variances in the observations and inferences. We therefore investigate the ‘black box’ of dynamic capabilities in inter-firm contexts, elucidating the roles and association of relational embeddedness and patterned activities (routines) in these relationships.     

Servitization and deservitization: Overview,concepts, and definitions

The topic of servitization has generated a considerable body of research and many conferences, as well as industry engagement. Yet, despite the extensive literature associated with this now-mature discipline, there is no broad-based consensus on the core concepts and definitions deployed by servitization scholars, and both terminology and usage often seem ambiguous. This paper examines challenges related to service growth strategies, as well as strategies involving deservitization or a retreat from service offerings. Showing that these strategies have been pursued for more than fifty years, clarification is sought here by framing the corresponding processes and proposing definitions for four core terms: servitization, service infusion, deservitization and service dilution. It becomes clear that in focusing on the organizational change entailed by these processes, future research must elucidate “softer” issues such as leadership and business logic.     

<Emphasis Type="Italic">GTE Sylvania</Emphasis> and Interbrand Competition as the Primary Concern of Antitrust Law

Footnote 19 of the landmark U.S. antitrust decision in Continental T.V. v. GTE Sylvania, Inc. 433 U.S. 36 (1977) declares that “Interbrand competition … is the primary concern of antitrust law.” We trace the antecedents and influence of this declaration, argue that it is inappropriate, and conclude that it should be abandoned.     

Flexibility, Structuration, and Simultaneity in New Product Development

A large body of research has pointed out the need for a contingent approach in the design of new product development processes, highlighting the risk of simply accepting a normative perspective that leads to the identification and diffusion of decontextualized “best practices.” In the literature there are contrasting views regarding the identification of the characteristics of product innovation processes in extremely uncertain and dynamic conditions. Some studies propose a fascinating dichotomy: the contraposition between flexible processes and Stage‐Gate^® processes. They maintain that Stage‐Gate^® processes are characterized by “early and sharp” product definition and clear separation between concept development and implementation (detail design and production ramp‐up), whereas flexible development models seek to delay the concept freeze point and overlap product development stages going beyond concurrent engineering. Other studies have arrived at seemingly conflicting results; the suitability of the early and sharp product definition approach in turbulent environments is debated without supporting the dichotomy between flexible processes and Stage‐Gate^® processes. Moreover, additional reasons for questioning the contraposition between Stage‐Gate^® and flexible processes come from a series of studies on the management of discontinuous innovation. The aim of the present study was to develop a conceptual framework that can overcome this widely accepted but controversial dichotomy. The framework is based on the recognition of the orthogonality among three analytical dimensions: organizational, informational, and temporal. The organizational dimension refers to the structuration of the process. The informational dimension deals with classifying the development activities and investigating the firm's product definition approach (early and sharp mode vs. late freeze mode). The temporal dimension relates to the execution strategies of development tasks. The three‐dimensional framework enables us to better understand the complex relationships between the degree of structuration in process design (organizational dimension), the degree of intersection between problem‐formulation and problem‐solving in product definition (informational dimension), and different types of execution strategies (temporal dimension).     

The up- and downside of collaboration in core and non-core technologies – Selective,contingent, and orchestrated openness in R&D collaborations

This paper contributes to the current debate about the “knowledge sharing-protecting” tension in R&D collaborations by introducing a new angle for analyzing this paradox. Considering the role of internal knowledge sources of the firm, the paper introduces and empirically analyses the interplay between three knowledge governance mechanisms (selective, contingent, and orchestrated openness) and the different technological fields of the firm (core, related non-core, and distant non-core technologies). Based on a unique first-hand large-scale project-level dataset from a Global 100 firm across a 10-year span, this research finds that R&D collaborations selectively conducted in firm’s related non-core technological fields promise the best innovation performance. Further, by orchestrating its projects across core and non-core technological fields in the same knowledge portfolio, the firm can leverage a network of inter-connected projects when collaborating with external partners. As such, the firm can strategically “distribute” collaboration risks across multiple projects, while optimize its access to external knowledge that it intends to get. Finally, contrary to the common assumption, this study does not find any discriminating factors against market-based partners in their contribution to innovation in both core and non-core technologies.     

The external knowledge sourcing process in multinational corporations

Research summary: We study the processes through which multinational corporations (MNCs) identify and make use of external sources of knowledge. Based on a seven‐year longitudinal study of one MNC's overseas scouting unit, we show how a simple one‐directional “channelling” process gradually gave way to three higher value‐added processes, labelled “translating,” “matchmaking,” and “transforming.” Building on these insights, we develop an integrative framework, defining the conditions under which each of the four processes is likely to transpire, and showing how the stock of social capital held by the scouting unit allows it to perform increasingly high value‐added activities over time. Implications for the MNC, external knowledge sourcing, and boundary‐spanning literatures are discussed. Managerial summary: Over the years, many multinational corporations (MNCs) have created overseas “scouting” units to tap into new ideas and opportunities in leading‐edge markets, but with mixed outcomes. In this study, we describe the development of a European telecom firm's scouting unit in Silicon Valley during the 2000s, focusing on the specific approaches used by the scouting managers to build effective connections between Silicon Valley start‐ups and the firm's business units back in Europe. We identify four distinct approaches for different types of opportunities, and we observe a clear sequencing of effort over time as the scouting managers built the necessary capabilities and credibility. Copyright © 2015 John Wiley & Sons, Ltd.