Coopetition-based business models: The case of Amazon.com

Coopetition (collaboration between competing firms) is a phenomenon that has recently captured a great deal of attention due to its increasing relevance to business practice. However, current research on coopetition is still short on explaining how the potential advantages of coopetition can be realized over time as part of an individual firm's business model. In order to gain insights into this, we conduct a longitudinal, in-depth case study on the coopetition-based business models of Amazon.com. We find evidence of three distinct coopetition-based business models: (1) Amazon Marketplace, (2) Amazon Services and Web Services, and (3) the collaboration between Apple and Amazon on digital text platforms. We conclude by forwarding several propositions on how value can be created and captured by involving competitors in a firm's business model. As a whole, the results contribute to the current understanding of how firms – as well as their stakeholders – can better benefit from coopetition.     

Conceptualizing and measuring capabilities: methodology and empirical application

This paper attempts to operationalize and measure firm‐specific capabilities using an extant conceptualization in the resource‐based view (RBV) literature. Capabilities are conceived as the efficiency with which a firm employs a given set of resources (inputs) at its disposal to achieve certain objectives (outputs). We expand on extant theoretical literature on relative capabilities, by delineating the conditions that have to be met for relative capabilities to be measured non‐tautologically. We then proceed to suggest an estimation methodology, stochastic frontier estimation (SFE), that allows us to infer firm capabilities. We illustrate this technique with a sample of firms in the semiconductor industry. Our findings underscore the heterogeneity in R& D capability across firms in this industry, as well as the persistence in these capabilities over time. We also find that the market rewards high R& D capability firms, in that they show the highest average values of Tobin's q. Copyright © 2004 John Wiley & Sons, Ltd.     

An empirical analysis of sustained advantage in the U.S. pharmaceutical industry: impact of firm resources and capabilities

The authors test a model of the relationships among firm resources, firm capabilities, and sustained competitive advantage between 1971 and 1989. Sustained comparative advantage was captured by two variables: therapeutic differentiation and global NCEs. The results show that R&D and salesforce expenditures have indirect and direct effects, respectively, on sustained competitive advantage. Firm capabilities were differentiated into component and integrative capabilities. Component capabilities were captured by the firm’s internal R&D efforts and therapeutic market focus, while integrative capabilities were concerned with the firm’s ability to obtain FDA approvals and to develop radical new drugs. Findings on each of these four capabilities on therapeutic differentiation and global NCEs are mixed. The direct and indirect effects of these resources and capabilities on therapeutic differentiation and global NCEs suggest important managerial implications in the way firms coordinate and combine their assets so as to achieve sustained competitive advantage. Copyright © 1999 John Wiley & Sons, Ltd.     

Using Bayesian methods in strategy research: an extension of Hansenet al.

Hansen, Perry, and Reese ( 2004 ) recently argued for and demonstrated the utility of Bayesian methods for research associated with the resource‐based view (RBV) of the firm. In this paper, we propose that Bayesian approaches are highly relevant not only for strategy problems based on the RBV, but also to its extensions in the areas of dynamic capabilities and co‐evolution of industries and firms. Further, we argue that Bayesian methods are equally applicable for a wide range of strategy research questions at both the micro‐ and macro‐level. Bayesian techniques are especially useful in addressing specific methodological challenges related to firm‐ and individual‐level effects, firm‐level predictive results, precision with small samples, asymmetric distributions, and the treatment of missing data. Moreover, Bayesian methods readily permit the engineering and updating of more realistic, complex models. We provide a specific illustration of the utility of Bayesian approaches in strategy research on entry order and pioneering advantage to show how they can help to inform research that integrates micro‐ and macro‐phenomena within a dynamic and interactive environment. Copyright © 2006 John Wiley & Sons, Ltd.     

Constraints in acquiring and utilizing directors' experience: An empirical study of new‐market entry in the pharmaceutical industry

In this study we provide evidence that firms considering entering new markets are more likely to appoint directors with experience in those markets; and subsequently, we show that directors' market experience increases the likelihood of new‐market entry. Moreover, we explore the presence of constraints in both, acquiring experienced directors and utilizing their experience. Specifically, we find that experienced directors are less likely to join firms with financial restatements in the recent past as well as firms with a lower status than the firms where they currently serve. In addition, we find that interlocking directors' experience is less likely to lead to new‐market entry for firms that lack new‐product development experience and that exhibit a high level of market overlap with interlocked firms. Copyright © 2013 John Wiley & Sons, Ltd.     

Firm heterogeneity in complex problem solving: A knowledge‐based look at invention

Research summary : The knowledge‐based view suggests that complex problems are best solved under hierarchical (within‐firm) governance. We examined why firms assumed to be in general alignment with this theory might nonetheless produce solutions of varying usefulness. We theorize that a firm's internal knowledge variety (IKV) is associated with its capacity to support cross‐domain knowledge flows during search, and its ability to identify and explore promising areas on the solution landscape. We further theorize that partner knowledge in familiar (unfamiliar) domains can offset specific weaknesses in searching rugged landscapes, inherent with low or high (moderate) IKV. We find support for these ideas in the context of drug discovery, extending KBV's focus on governance alignment to explain variation in problem‐solving effectiveness within hierarchy. Managerial summary : Firms that concentrate their inventive efforts in a few technological domains, but also dabble in several others, have problem‐solving advantages: they can better support knowledge transfer and recombination across domains. Firms that focus too narrowly or spread their inventive efforts thinly across many domains lose these advantages, but might compensate through alliance partnerships. Our study of drug discovery shows that while firms with very low or high knowledge variety tend to produce weaker solutions than firms in the moderate range, their inventive performance improves when alliance partners afford them access to additional knowledge in familiar domains. We explain how the combination of firm and partner knowledge enables firms to better identify, evaluate, and implement alternative solutions to complex problems. Copyright © 2016 John Wiley & Sons, Ltd.     

Firm resources and entry-related advantages: An empirical study in China

The majority of research on order of market entry has focused on market pioneer advantages or the specialized assets that industry incumbents would need to possess. However, relatively little attention has been paid to whether and how certain firm resources or capabilities may provide latecomers with entry-related advantages. This issue is of particular interest when multinational organizations decide to enter emerging markets, such as China, where the transitional economy provides both opportunities and challenges. This study attempts to bridge this gap by discussing the entry-related advantages in terms of pioneer advantages, early follower advantages, and late entrant advantages, and by investigating how each of the entry-related advantages has unique impacts on market performance. In particular, this study examines the relations between innovation management, firm resources, entry-related advantages, and market performance simultaneously with cross-sectional data from 191 firms in China. Our findings reveal that technical resources and skills (R&S), marketing R&S, and market intelligence are associated with different advantages for market pioneers, early followers, and late entrants. Technical R&S is also found to have significant impacts on order of market entry as pioneers. Furthermore, the findings show that remarkable differences exist among the three entrant types (i.e., market pioneers, early followers, and late entrants) in their strategic approaches to attain market performance. We offer implications to foreign firms operating in China or intending to enter China's markets.     

Under the microscope: An experimental look at board transparency and director monitoring behavior

Research Summary: It is well known in corporate governance scholarship that independent directors differ in the vigilance with which they monitor corporate insiders. This difference depends largely on whether independent directors are concerned more with their public reputation or with their prospects in the director labor market. The explanation for this difference depends on an assumption of information asymmetry, however. In the present study, we relax the assumption of information asymmetry to examine how boardroom transparency affects directors’ monitoring behavior. Using a randomized experimental study of actual independent directors, we find that boardroom transparency amplifies the effect of directors’ inclinations toward either active or passive monitoring, with directors inclined toward vigilant monitoring becoming even more vigilant, and directors inclined toward passive monitoring becoming even more passive. Managerial Summary: In most advanced economies, the board's internal decision processes are either undisclosed or disclosed only to a very limited extent. It remains unknown, then, whether directors would behave differently if their behaviors were made public. We find that when their actions are disclosed to the public, directors concerned with their public reputations become more vigilant, whereas those concerned with their prospects for additional board seats become more passive in monitoring corporate insiders. Whereas regulatory bodies and corporate governance watchdogs have recently advocated for greater disclosure of the boardroom decision‐making process, our study suggests that such mandatory disclosure requirements can exacerbate, rather than alleviate, the problem of passive director monitoring.     

Do early birds get the returns? An empirical investigation of early‐mover advantages in acquisitions

We explore whether pioneering advantages exist for early‐mover acquirers in industry acquisition waves by examining both combined (target and acquirer) and acquirer stock returns. Combined abnormal returns are higher for acquisitions that occur at the beginning of acquisition waves. However, for acquirers' returns, only strategic pioneers—those acting in manners consistent with having superior information—capture significant advantages. Specifically, early‐mover acquirers who realize superior stock returns are those that conduct acquisitions in related industries, during industry expansionary phases, and finance their acquisitions as financial theory suggests they should when they possess an informational advantage—with cash. Our findings extend the first‐mover literature to corporate practices and link these practices to acquisition returns. Copyright © 2004 John Wiley & Sons, Ltd.     

An empirical examination of transaction‐ and firm‐level influences on the vertical boundaries of the firm

A large literature has successfully employed transaction cost economic theory to describe how exchange conditions affect the optimal form of organization. However, this approach has historically not accounted for the influence of firm‐specific attributes on the governance decision. This paper develops a model based on insights from transaction cost economics, the resource‐based view, and real options theory to examine how transaction‐level characteristics, firm‐specific capabilities, and product‐market scope influence the governance of production. Empirical evidence derived from analysis of 469 make‐or‐buy decisions involving 117 semiconductor firms indicates that decisions regarding the governance of production activities are strongly influenced by both transaction‐ and firm‐level effects. Copyright © 2003 John Wiley & Sons, Ltd.     

Joint ventures vs. Non-joint ventures: An empirical investigation

This paper describes a longitudinal empirical study comparing joint ventures and non-joint ventures in the petroleum industry as they compete for oil and gas leases. Results indicate that, while enjoying a significant advantage in market power, joint ventures do not perform any better than non-joint ventures at identifying potentially productive leases. Because of the higher payments made for these leases, the overall performance of joint ventures is significantly lower than that of non-joint ventures.     

Why strategic factor markets matter: “New” multinationals' geographic diversification and firm profitability

This study examines firm profitability differences among “new” multinational enterprises (NMNEs) pursuing geographic diversification into two distinct types of geographic locations based on the development of strategic factor markets. Building on strategic factor markets theory, we propose that firm‐specific advantages of NMNEs contribute differentially to firm profitability because they evolve differently given strategic factor market differences in host compared to home countries. Using a sample of Korean manufacturing MNEs during the 1993–2003 period, we find that geographic diversification into resource‐poorer host countries has a positive relationship with firm profitability, whereas geographic diversification into resource‐richer host countries has a U‐shaped relationship with firm profitability. Our study demonstrates why strategic factor markets—an important and often overlooked contextual factor—matter in exploring rationales for geographic diversification. Copyright © 2014 John Wiley & Sons, Ltd.     

Capabilities,business processes,and competitive advantage: choosing the dependent variable in empirical tests of the resource‐based view

A growing body of empirical literature supports key assertions of the resource‐based view. However, most of this work examines the impact of firm‐specific resources on the overall performance of a firm. In this paper it is argued that, in some circumstances, adopting the effectiveness of business processes as a dependent variable may be more appropriate than adopting overall firm performance as a dependent variable. This idea is tested by examining the determinants of the effectiveness of the customer service business process in a sample of North American insurance companies. Results are consistent with resource‐based expectations, and they show that distinctive advantages observable at the process level are not necessarily reflected in firm level performance. The implications of these findings for research and practice are discussed along with a discussion of the relationship between resources and capabilities, on the one hand, and business processes, activities, and routines, on the other. Copyright © 2003 John Wiley & Sons, Ltd.     

Traceability adoption at the farm level: An empirical analysis of the Portuguese pear industry

Traceability is becoming a condition to operate in European food markets. Retailers impose more stringent standards than what is mandatory. An example is EurepGAP, a quality standard for good agricultural practices that imposes traceability as a main obligation. This research investigates the choice of traceability at the farm level in the Portuguese pear industry. Results suggest that in this industry farm-level adoption of EurepGAP traceability is best explained by the choice to sell to the United Kingdom (UK). For farmers selling to the UK, the odds of choosing the EurepGAP traceability level are significantly linked to membership in particular producer organizations, farm productivity, producing products under a protected designation of origin (PDO), and farmer’s age. While retailers and farmer organizations seem to drive traceability, policy adjustments may be required to reduce adoption costs upstream and extend compliance among producers that sell directly to consumers and market independently.     

Productivity enhancement at home via cross‐border acquisitions: The roles of learning and contemporaneous domestic investments

We examine whether ex post domestic productivity gains accrue to firms making cross‐border acquisitions. We argue that cross‐border acquisitions can enhance the acquirers' productivity at home, and we posit that these domestic productivity gains will be greater when there are learning opportunities in the target's host country and when contemporaneous domestic productivity‐enhancing investments are made by the acquirer in conjunction with the acquisition. These predictions are supported by data drawn from a sample of French acquiring and nonacquiring firms. Our results indicate that cross‐border acquisitions and investing in productivity at home are complementary: each makes the other more beneficial to firm productivity. Copyright © 2014 John Wiley & Sons, Ltd.     

Autonomy and dependence of international cooperative ventures: an exploration of the strategic performance of U.S. ventures in Mexico

Researchers have begun to view international cooperative ventures as complex, multiparty organizations in which foreign and local firms and the venture itself all have distinctive roles. This approach has important implications for the venture strategies of foreign firms in emerging economies. This study explores relationships between the resource contributions of parent firms and U.S. managers' assessment of venture performance in a sample of established U.S.–Mexican ventures. The research suggests that mature cooperative ventures are expected to achieve autonomy from parent firms in key areas at the same time that certain forms of strategic dependency also are important to success. Copyright © 2002 John Wiley & Sons, Ltd.