Scientists' commitment to underperforming research projects: linking past success and the social environment

This article investigates scientists' commitment to underperforming research projects based on the concomitant consideration of their past success and social environments. Based on escalation of commitment and network theory, the model hypothesizes that past success triggers the commitment to underperforming projects but that the strength of this influence varies depending on the characteristics of decision makers' social networks. Results from the analysis of 3,072 scenario assessments nested within 96 scientists show that the positive relationship between past success and continued investment in underperforming projects is more positive when the network is larger, when the ties within the network are stronger, and when feedback from network partners is predominantly positive. Surprisingly and contrary to model predictions, results also show that the relationship between past success and scientists' tendency to commit to underperforming projects becomes stronger with lower communication frequency with network partners. This study extends current research by exploring the boundary conditions of the impact of decision makers' social environment on commitment to failing projects. Further, it adds to literature on the downside of success by emphasizing that decision makers, particularly those in some social environments, are driven to commit additional resources to underperforming – and potentially failing – projects. Decision makers acting in such environments should be aware that they are prone to overinvestment of resources, and the findings of this study can help them increase their awareness. Based on this study's results, decision makers (including scientists) can thus better reflect on and improve their research project evaluations. Finally, the findings of this study open up various opportunities for future research.     

Using actors' perceptions of network roles and positions to understand network dynamics

This article explores network dynamics by analysing how actors make sense of time and space in business networks, and how they act based on these perceptions. The time dimension is understood here as actors' perceptions of past, present and future changes in their network. The space dimension is understood, first, in terms of the network position a company holds in relation to its business partners, and secondly, in terms of the network role it enacts. As such, this study relates three pivotal concepts in industrial marketing: network change, network position, and network role. The link between these three relates to the interdependencies within a network, in that if one company attempts to change its position, this will in turn affect the position of other companies. Moreover, actors' attempts to change their position or role in the network are directed by their subjective sensemaking or perceptions of their surrounding network. In this article we posit that in order to understand network dynamics we must analyse how actors attempt to affect change based on their perceptions of their positions and roles in their network environment. Our analysis suggests that although there are similarities between perceptions by actors holding similar positions in the network, such network positions alone cannot explain their actions. Rather, differences in actors' interpretations and enactments of their network role are necessary to explain their networking activities. We use an extensive case study of the changing distribution structure for seafood in Norway and Japan to exemplify these points.     

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 impact of firm introductory strategies on consumers' perceptions of future product introductions and purchase decisions

In this research, we develop and test a model of the consumer's decision to immediately purchase a technologically advanced product or to delay such a purchase until a future generation of the product is released. We propose that for technologically advancing products, consumers consider both performance lag (how far behind am I now) and expected performance gain (how far ahead will I be if I wait to buy a future expected release) in their purchase decisions. Furthermore, we hypothesize that a firm's past product introductory strategy can significantly influence consumer perceptions of performance lag, performance gain, and the rate at which a product is advancing technologically. We also propose that these perceptions of lag, gain and rate of technological change influence purchase action and ultimately determine whether or not a consumer will delay or immediately purchase a firm's current technological offering. We investigate the above relationships by introducing a model of consumer purchase behavior that incorporates the effects of a firm's frequency and pattern of next generation product introduction, and test the impact of different introductory strategies on performance lag, gain, rate of change perceptions, and purchase action. In our first study we test our model in a monopolistic setting and show that, holding all else fixed, infrequent product upgrades and/or increasing intergenerational release times result in consumers perceiving larger performance lags and gains. We also show that, holding all else fixed, consumers with larger performance lags and/or gains are less likely to delay their purchases of the currently best available product. In our second study we test our model in a competitive setting and show that, holding all else fixed, a firm's past pattern of new product introduction can influence consumers' perceptions of the firm's product's rate of technological change. We also find that consumers are more likely to purchase products which they perceive to have higher rates of technological change. The key insight from this research is that firms have a strategic tool at their disposal that has been overlooked—the pattern of introduction of next generation products. Our findings suggest that a change in the frequency and/or pattern of introduction, in and of themselves, can influence consumers' perceptions of future product introductions, and ultimately influence their purchase actions. Specifically, we demonstrate that by better understanding consumers' purchase timing decisions, firms may be able to induce purchase on the basis of introductory frequency and pattern alone. Additionally, we demonstrate that by strategically managing consumer expectations of future product introductions, firms may be able to decrease the purchase likelihoods of competing products. Implications of our research and its application to the pattern and timing of preannouncements for new products are also explored.     

Leveraging stakeholder networks with outside-in marketing

The theory of Outside-in marketing (OIM) emphasizes the importance of internal and external partners of a firm to drive strategies for value creation. OIM is based on four key tenets: market sensing and responses, segmentation and targeting, innovation, and employee's learning effort. With this commentary, we apply the theory of OIM to network analysis. By doing so, we identify key stakeholder networks as part of a firm's business ecosystem and discuss the value that can be extracted from different stakeholder networks. Most prior network research in marketing has mainly used customer or employee network data while neglecting other important stakeholder groups. We provide information about how network analysis of stakeholder data can fill gaps in the marketing literature and provide firms with essential knowledge, economic value, and influence over external partners, and improve the value generation process. We first describe each tenet and give examples of stakeholder networks that can be investigated within the realm of the tenet definitions. We then discuss different challenges that social network research can pose, and end with future research questions that can be explored for empirical research studies.     

The mediating role of key supplier relationship management practices on supply chain orientation—The organizational buying effectiveness link

The role of key supplier relationships and their link with purchasing performance are poorly recognized in current business-to-business marketing literature. Given the predominance of collaborative supply chain relationships, purchasing must be considered to be providing value, thereby implying its effective nature. This study introduces a conceptual model of the relationship between supply chain orientation (SCO) and key supplier relationship management (KSRM) with organizational buying effectiveness (OBE) as a measure of effective purchasing behavior. To extend the model's nomological network, we link OBE with firm profitability. We find that SCO and KSRM have a strong positive influence on OBE. Furthermore, KSRM is demonstrated to be a significant mediator in the SCO–OBE relationship. Finally, OBE significantly and positively influences firm profitability, suggesting that it adequately addresses the aspects of effective purchasing behavior. We also discuss theoretical and managerial implications as well as future research directions in light of the limitations of this study.     

Networks and the Decision to Persist with Underperforming R&D Projects

Drawing on aspiration level theory and the networks literature, this paper develops a model toward decision makers' persistence with underperforming R&D projects based on the perceived properties of their personal network. The assumption is that positive feedback from network partners motivates persistence, and that this effect is multiplied when the decision makers' network is larger and denser, when network ties are predominantly strong, and when communication frequency within the network is high. The model is tested by a field experiment and conjoint methodology. Analysis of 1632 persistence decisions nested within 51 scientists responsible for R&D projects reveals that more positive feedback enhances persistence of underperforming R&D projects, and that this effect becomes stronger with increasing network size, network density, and communication frequency. These findings extend the project management literature by focusing on the social environment of the decision maker as one so far neglected factor in empirical studies on persistence decisions. Moreover, this study is among the first to investigate contingency relationships between feedback received from network partners and network structure. Finally, while most studies have emphasized that individuals and organizations can profit from their engagements in social networks, this paper suggests a potential dark side of networks by showing that networks can encourage decision makers to persist with their investment in an underperforming—and potentially failing—project. These results can help project managers involved in networking activities to better understand the effects of these activities on their decision policies, and thus draw better and more accurate decisions. Second, this study provides insights into how organizational strategy with respect to dissemination of R&D results and involvement of the organization's R&D managers in the scientific community influences the persistence of underperforming R&D projects, and thereby the organization's R&D expenditures. This can assist top managers to design financial controls and allocate financial resources to managers of underperforming R&D projects in line with the organization's networking strategy.     

Structural homophily or social asymmetry? The formation of alliances by poorly embedded firms

Recent research shows that preexisting network structure constrains the formation of new interorganizational alliances. Firms that are poorly embedded in a network structure are less likely than richly embedded firms to form alliances, because they lack informational and reputational benefits. This study examines the types of ties that poorly embedded firms can form to overcome the constraints that their structural positions impose, in turn helping to explain how firms' actions can transform existing network structures. We argue that poorly embedded firms are more likely to participate in ties characterized by social asymmetry than in ties characterized by structural homophily. We analyze the terms of trade that socially asymmetric partners negotiate for alliance governance and discuss how such alliances influence network dynamics. To test our arguments, we use longitudinal data on the alliance activities of 97 global chemical firms from 1979 to 1991. Copyright © 2009 John Wiley & Sons, Ltd.     

Ties' repeatedness,partners' social value,and alliance portfolio performance in emerging economy: The moderating roles of firm-government linkages

Repeatedly collaborating with previous partners or following peers' decisions are two primary strategies employed by emerging economy firms in selecting their alliance partners. As a result, the alliance portfolios of firms often feature a high level of ties' repeatedness and partners' social value—the extensiveness of a firm's partners being selected by other players in the industry. However, few studies examine whether these two features can result in superior alliance portfolio performance. Leveraging data collected from 566 fund product distribution alliances initiated by 62 fund companies in a 5-year period (2007–2011), we find that ties' repeatedness does not significantly improve alliance portfolio performance. In fact, a high level of social value of the current partners produces a negative effect. However, firms' linkages to governments can change the performance consequences of these two features. As a category of formal government–firm linkages, state ownership improves the positive effect of ties' repeatedness on alliance portfolio performance, while it strengthens the negative effect of partners' social value. As a category of informal linkages, political ties weaken the positive effect of ties' repeatedness on alliance portfolio performance but cannot significantly alleviate the negative effect of the social value of current partners.     

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.     

How does local partners network embeddedness affect international joint venture survival in different subnational contexts?

Do local partners' network attributes affect the survival of high-tech international joint ventures (IJV)? How does the effect of network attributes vary in different subnational institutional environments? While the classic economic explanation for IJV formation and subsequent performance draws from the resource-based view (RBV), we add the relational dimension to explain that IJV survival may be affected by local partners’ relation-specific assets within the local network. We test the effect of the local partners’ network attributes as calculated by UCINET (centrality, network status, and structural hole position) on IJV survival. We additionally assert that this relationship is moderated by subnational institutional heterogeneity. Using our sample of 125 IJV dyadic pairs of US multinational enterprises (MNEs) operating in high-tech industries and their local partners in China, we find partial support for our claims.     

The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis

Do shareholders gain when managers disperse corporate resources through activities classified as corporate social responsibility (CSR)? Strategy scholars have recently developed a theoretical model that links such activities to shareholder value when a firm suffers a negative event; we test key portions of this theory of the ‘insurance‐like’ property of CSR activity. We posit that such activity leads to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms because of this goodwill. We extend the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer insurance‐like protection than other types. We delineate several firm and event specific characteristics that we expect to influence the link between CSR activities and an insurance effect. We then test our model using an event study of 178 negative legal/regulatory actions against firms throughout the 11 years from 1993–2003. We find that participation in institutional CSR activities—those aimed at a firm's secondary stakeholders or society at large—provides an ‘insurance‐like’ benefit, while participation in technical CSRs—those activities targeting a firm's trading partners—yields no such benefits. We conclude by considering the implications of our findings for future theorizing and research into the economic value of CSR engagement. Copyright © 2008 John Wiley & Sons, Ltd.     

The role of supplier relationships in the development of new business ventures

New business ventures have rather limited resources, generally suffer from liabilities of smallness and newness and rely on external business relationships, typically with suppliers, for developing and acquiring necessary resources. Yet, to date, research on how new ventures develop initial relationships with suppliers and how these affect the nascent business has been limited. Taking the business network perspective and relating it to studies of supply chain and supplier involvement in product development, our study contributes to the rather limited body of knowledge on new ventures' supplier relationships. Empirically, we draw on a longitudinal, in-depth single-case study of the first two years of operation of a start-up. Our study shows that the development of the key initial supplier relationships starts from open-ended expectations of mutual future relational benefits and involves a stepwise ‘inter-definition’ of solutions in interaction between the parties. We observe that interdependences arise between the new venture and its key suppliers and these enable but also limit, the development paths of both partners. We argue that the key initial supplier relationships extend a new venture's resource and capability base and are an integral part of a new venture's business model.     

The Formation of Tie Strength in a Strategic Alliance's First New Product Development Project: The Influence of Project and Partners' Characteristics

This paper draws on theories of interorganizational learning, social networks, and transaction cost economics to investigate the formation of tie strength between first‐time alliance partners. It focuses on a strategic alliance's first new product development (NPD) project, which is characterized by a lack of prior experience and insufficient trust between partners and explores how the interaction between (1) interorganizational learning (the “degree” [amount of knowledge shared] and “type” [tacit or explicit nature of the knowledge]); (2) the required communication (“frequency level” and “degree of media‐richness”) to transfer and exchange knowledge; and (3) economic transaction considerations (reducing cost and avoiding opportunism), in highly uncertain and dynamic environments, and, in the absence of an assumption of trust, will determine the future strength of the ties between partners. We argue that the “degree” and “type” of interorganizational learning that are required to efficiently develop an alliance's first NPD project determine the strength of the ties between the partners. Each “degree and type” of learning has a different impact on the frequency and media richness of the partners' communication, and consequently each leads to a different level of social tie strength between the partners. This relationship is moderated by the partners' market overlap. We suggest that the required “degree and type” of interorganizational learning is contingent on the project characteristics (degree of innovation; “radical versus incremental,” and the mode of development; “modular versus integrated”). This relationship, however, is moderated by the partners' technical skills (complementary versus similar).     

The effects of distributor relationship commitment and relationship exploration on opportunism: The moderating roles of exchange uncertainties and network factors

Channel management entails both the evaluating of incumbent business partners and simultaneously seeking potential new partners. In supplier–distributor exchanges, distributors can explore alternative suppliers while still committing to incumbent suppliers. While the current literature has demonstrated the importance of relationship commitment, the consequences of relationship exploration and whether that exploration is harmful to any incumbent relationships remain unclear. Drawing from relational governance and social network theories, this study thus examines how distributor dual relationship strategies of commitment and exploration influence their opportunistic behavior. The findings from a survey of 328 distributor firms indicate that relationship commitment leads to reduced opportunism; yet relationship exploration exerts no significant main effect on opportunism. More interestingly, these effects are subject to two types of uncertainty and two characteristics of distributor network wherein the focal exchange relationship resides. Specifically, behavioral uncertainty—an internal source of uncertainty—aggravates the opportunism that arises from both strategies, whereas, environmental uncertainty—an external source of uncertainty—alleviates both these effects. The distributor's network density weakens the effect of relationship commitment on opportunism, but network centrality strengthens this effect. By contrasting relationship commitment with relationship exploration under multiple moderating conditions, this study advances the extant channel relationship management literature and practice.     

The impact of coercive and non-coercive forms of influence on trust, commitment, and compliance in supply chains

A major premise in managing channel relationships is encouraging cooperation to achieve the aims of the relational partners. This often requires a balancing act between utilization of influence across the supply chain to motivate decisions, while employing tactics that do not damage the future of the relationship. This paper builds and tests a model of how influence strategies affect relational elements, specifically trust and commitment, which both promote strong inter-firm relationships and act as mediators of joint action, specifically cooperation and compliance across channel partners. Results suggest that coercive strategies are counterproductive in encouraging cooperation and compliance either directly or through relational intermediaries, while non-coercive influence produces positive outcomes and effects on intermediaries. Low levels of coercive influence do appear to generate positive outcomes. Managerial implications and future research based on these results conclude the paper.     

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.     

Choosing the right target: Relative preferences for resource similarity and complementarity in acquisition choice

Research summary : Corporate acquisition is a popular strategic option for firms seeking new resources. However, little research exists on the question of why one firm is chosen over another. We develop a model relating characteristics of similarity and complementarity between acquirers' and target firms' key resources, including their products and R&D pipelines, to the likelihood of the acquirers choosing a particular firm. We construct measures of similarity and complementarity between and across products and R&D pipelines, and test their effects using a novel application of the choice model. Findings reveal that acquirers view similarity and complementarity differently, based on the resource they are comparing. When making comparisons to their own R&D pipelines, acquirers prefer similarity over complementarity whereas when making comparisons to their product portfolios, they prefer complementarity over similarity. Managerial summary : Corporate acquisition is a popular way for firms to grow and obtain innovative resources. However, we know little about why acquirers choose one firm over another. We capture the influence of similarity and complementarity between acquirers' and target firms' products (current innovative value) and R&D pipelines (future innovative value) on whether a particular target firm is acquired. Insights from the pharmaceutical industry reveal that acquirers value similarity and complementarity in target firms differently, based on whether the comparison being made is with respect to their products or their R&D pipelines. Regarding their R&D pipelines, acquirers prefer that the target firm has similar, rather than complementary, resources. However, the opposite is true concerning their own products: acquirers prefer that the target firm has complementary, versus similar, resources. Copyright © 2015 John Wiley & Sons, Ltd.     

The influence of lead indicator strength on the use of nonfinancial measures in performance management: Evidence from CEO compensation schemes

Nonfinancial measures (NFMs) are a common feature of strategic performance management frameworks. We examine the role of one widely used NFM: customer satisfaction, in one aspect of strategic performance management: CEO compensation schemes. Drawing on agency theory precepts, we hypothesize that the extent to which firms link CEO compensation to customer satisfaction is influenced by satisfaction's ability to act as a leading indicator of future profitability (lead indicator strength). We further hypothesize that the extent to which customer satisfaction's lead indicator strength influences the weighting of satisfaction in CEO compensation schemes has a positive influence on future shareholder value. Our empirical results offer strong support for both hypotheses and extend research on the use and efficacy of NFMs in CEO compensation schemes. Copyright © 2013 John Wiley & Sons, Ltd.     

Let them go? How losing employees to competitors can enhance firm status

Research summary : Because employees can provide a firm with human capital advantages over competitors, firms invest considerably in employee recruiting and retention. Departing from the retention imperative of strategic human capital management, we propose that certain employee departures can enhance a firm's competitiveness in the labor market. Specifically, increased rates of career‐advancing departures by a firm's employees can signal to potential future employees that the firm offers a prestigious employment experience that enhances external mobility opportunities. Characterizing advancement based on subsequent employers and positions, we analyze data on U.S. law firm hiring and industry surveys of perceived firm status between 2004 and 2013. We find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Managerial summary : Firms often emphasize employee retention. Employee departures, especially as a result of being hired away by competitors, are often viewed as threats to a firm's competitive advantage. We propose, however, that employee retention need not be an unconditional strategic imperative. We argue that certain employee departures can enhance a firm's competitiveness in the market for human capital by signaling to potential employees that the firm offers a prestigious employment experience, which can help them obtain attractive positions with other employers. Analyzing data on U.S. law firm hiring and industry surveys of firm associates between 2004 and 2013, we find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Copyright © 2016 John Wiley & Sons, Ltd.