Institutional ownership,capital structure,and firm performance

In most studies of ownership and firm performance, researchers have assumed different forms of ownership do not interact in their effect on firm strategy or performance. Focusing on the role of institutional owners, this study poses two related questions: (1) What are the relationships between outside institutional shareholdings, on the one hand, and a firm's capital structure and performance, on the other? and; (2) Does the size of stockholdings by corporate executives, family owners, and insider-institutions modify those relationships? The data, collected from 40 pairs of manufacturing firms selected from as many industries over a 3-year period, shows that the size of outside institutional stockholdings has a significant effect on the firm's capital structure. We have also found that family and inside institutional owners' shareholdings moderate the relationship between outside institutional shareholdings and capital structure. Likewise, corporate executives' shareholdings supplement the relationship between outside institutional shareholdings and firms' performance. These findings suggest that internal and external coalitions interact with each other to influence the firm's conduct.     

New Product Strategy, Structure, Process, and Performance in the Telecommunications Industry

A continuous flow of new products is the lifeblood for firms that hope to remain competitive in high-technology industries such as telecommunications. Faced with rapidly shrinking product life cycles, these firms must aggressively pursue the quest for more effective new product development (NPD). Ongoing success in such industries is dependent on choosing the right mix of new product strategy, organizational structure, and NPD processes. Rather than considering the interrelationships among these success factors, however, most previous studies of NPD have examined these issues individually. This shortcoming is compounded by the fact that past studies of NPD have typically cut across industry lines. Gloria Barczak addresses these problems by proposing that a firm's choice of new product strategy, structure, and process are interrelated, as are the effects of those choices on NPD performance. Because these choices and their effects also may be dependent on the unique characteristics of the industry in which a firm competes, her study focuses exclusively on firms in a specific, high-technology industry, telecommunications. The study finds that no single NPD strategy, in and of itself, stands out as being better than any other for the telecommunications industry. Instead, it appears that a company's focus should be on ensuring the best possible fit between its chosen NPD strategy and its corporate goals and capabilities. In keeping with the current focus on cross-functional teams, the study results indicate that project teams and R&D teams are the most effective means for organizing NPD efforts in the telecommunications industry. Perhaps not surprisingly, R&D teams are more important for first-to-market firms than they are for fast followers and late entrants. An R&D team provides the technical skills necessary for playing the role of pioneer. Regardless of the firm's NPD strategy and structure, the presence of a product champion is an important element in the success of new product efforts. In an era of rapid, technological advances, idea generation and screening efforts are essential to the success of telecommunications firms. To ensure that they do not fall into the trap of introducing technology for technology's sake, pioneering and fast-follower firms in particular must recognize the importance of staying in touch with their markets. Such market-oriented activities as customer prototype testing and concept definition and testing can help these firms ensure that their technological developments are in line with customer needs and requirements.     

Utilizing the firm's resources: How TMT heterogeneity and resulting faultlines affect TMT tasks

While theory and evidence show that firms' competitive actions mediate the resource‐performance relationship, details of top managements' roles in shaping resource utilization choices have been underemphasized. We address this oversight by integrating top management team heterogeneity and any resulting faultline strength with the resource‐action‐performance model to investigate how TMT composition differentially affects the model's two linkages. Specifically, we argue that TMT heterogeneity positively affects the resource‐action linkage, yet negatively affects the action‐performance linkage. Moreover, when heterogeneity begets strong faultlines, all such positive effect is lost. Supportive evidence from the in‐vitro medical diagnostic substance manufacturing industry allows us to discuss how our findings contribute to upper echelons theory, as well as the emerging stream on resource utilization. Copyright © 2014 John Wiley & Sons, Ltd.     

The genesis of strategy in new ventures: escaping the constraints of founder and team knowledge

Although an entrepreneur's initial strategy choices have a critical effect on a new venture's survival, growth, and long‐term performance, few studies have explored how pre‐founding experience influences these choices. Founders who over rely on their historical industry experiences may simply replicate the strategies of legacy firms. In turn, little is known about how founders can break these experience‐based constraints, if they exist. In an empirical analysis of 120 prospective entrants in air transportation from 1995–2005 we find that a founder's past experience strongly constrains choices, and the effect depends on the form of experience and type of strategy choice. Diversity of experience, at the level of the founder and founding team, lessens these constraints. Our results have valuable implications for research in strategy and entrepreneurship. Copyright © 2011 John Wiley & Sons, Ltd.     

Capabilities,technologies, and firm exit during industry shakeout: Evidence from the global solar photovoltaic industry

Research Summary: Explanations of entrants’ survival in an emerging industry are premised on pre‐entry capabilities or technology entry choices prior to the emergence of the dominant design. We consider how these drivers interact to strengthen or nullify firms’ pre‐entry advantage, and facilitate adaptation as the industry evolves. We also expand the treatment of exit by separating dissolution from acquisition, in which firms’ capabilities continue to be utilized in the industry. Studying a recent shakeout in the global solar photovoltaic industry, we find that pre‐entry capabilities and technology choices act in a complementary manner for some firms, thereby enhancing survival, and as buffers against exit for others. Nearly half of exits were via acquisitions, and technology choice at entry played an important role in determining how firms exited. Managerial Summary: New industries are often characterized by intense technology competition that culminates in a dominant technology followed by industry shakeout. Although prior research underscores the central role of technology choice and firm capabilities to survival, we do not actually know how firms with different capabilities and who have made competing technology choices survive an industry shakeout. In this article, we show how entrants’ capabilities and technology choices can act in a complementary manner for some firms, enhancing their chance of survival, and as buffers against failure for others. Moreover, we explain why some firms that do exit are acquired, when others are dissolved.     

The Relationships between Resource Configurations and Launch Strategies in Taiwan's IC Design Industry: An Exploratory Study

Within the last decade, the link between launch strategies and new product performance has been widely investigated. However, the relationship between resource configurations and launch strategies has received little attention. This study endeavors to fill that void by examining the relationships between resource configurations and launch strategy selections. In addition, this study investigates the moderating effects of market growth and competitiveness on the relationship between resources and launch strategies. Drawing on contingency theory and strategic studies, this study proposes that resource contingencies affect changes in launch strategies. This study also suggests that market characteristics play a contingent role in the relationships between the configurations of resources and launch strategy choices. Based on extensive studies reporting on market characteristics and their links to strategies, this study proposes that two market characteristics—market growth and competitiveness—are relevant for launch strategy decision making. Taiwan's integrated circuit (IC) design industry has been used as the analytical sample, as it has been identified as a promising sector for new product development. Based on the result of investigating 90 firms, four resource configurations are identified: (1) strategic and organizational abilities; (2) technological capabilities; (3) societal assets and goodwill; and (4) physical assets. Furthermore, two different launch strategies—innovative and product advantage and cost oriented—also are discovered. The results from a seemingly unrelated regression model reveal that technological capabilities and societal assets and goodwill contribute to the variation in the firms' choices of launch strategies. This study further conducted the simple slope analysis to observe the effect of the technological capabilities on the innovative and product advantage strategy under different levels of the market growth rate. The results interestingly showed that firms with technological capabilities demonstrated different degree of tendencies in employing this strategy in alignment with various market growth rates. The finding sheds some lights on the moderating role market characteristics play on the relationships between resource configurations and launch strategy selections. Academic implications and suggestions for practitioners also are provided.     

Coordinating and competing in ecosystems: How organizational forms shape new technology investments

We consider firms in the context of their business ecosystems and explore how differences in the ways in which firms are organized with respect to complementary activities affect their decision to invest in new technologies. We argue that, in addition to creating differences in incentives and bureaucratic costs, firm‐complementor organizational form plays an important role in the firm's ability to coordinate accompanying changes in complementary activities so as to shape the benefits from investing early in the new technology. We test our predictions in the U.S. healthcare industry from 1995–2006. The study makes a strong case for viewing firms' competitive strategies in the context of their business ecosystems and for the existence of an important link between firms' coordination choices and their strategic investments. Copyright © 2012 John Wiley & Sons, Ltd.     

Functional importance and company performance: Moderating effects of grand strategy and industry type

The literature suggests that the appropriate combinations of functional importance (i.e., through resource allocations, type of activities) for high levels of company performance are affected by the type of grand strategy pursued by the firm and the firm's industry type. These relationships were examined for 93 industrial firms. Data on functional importance, grand strategy, and industry type were obtained from top executives while financial data were collected from the Compustat data files. The results showed that both grand strategy and industry type moderated the relationship between functional importance and company performance. These relationships were also examined for each grand strategy by industry type cell to provide data for further research.     

Brand innovation and social media: Knowledge acquisition from social media,market orientation,and the moderating role of social media strategic capability

The study examines the relationships between knowledge acquisition from social media, two forms of market orientation (proactive and reactive), social media strategic capability, and brand innovation strategy in the context of China's online technology industry. Analysis of 357 online technology ventures, created during the past 6 years, suggests that brand innovation is affected by both knowledge acquisition from social media and market orientation. Social media strategic capability positively affects brand innovation and acts as a moderator between knowledge acquisition, market orientation, and brand innovation. It further enhances both types of market orientations in achieving brand innovation, suggesting that on social media, customer's needs, both expressed and latent (or unexpressed), can be identified more comprehensively than that of the traditional setting. Hence, the context of social media provides a different set of rules for competition and strategic behavior, in which online technology ventures should note. Implications are useful to improve the current understanding of social media brand innovation strategy, here in China's dynamic social media scene.     

Unravelling the internal and external drivers of digital servitization: A dynamic capabilities and contingency perspective on firm strategy

Despite the increased interest in using digital technologies for servitization purposes, little is known about what drives firms towards a digital servitization strategy. Using a dynamic capabilities lens, we look into the relationships between two organizational mechanisms – exploitation and exploration – and firms' orientation towards digitization, servitization and digital servitization. On top, we examine the influence of two environmental contingencies – technological turbulence and competitive intensity – as potential influencers of these relationships. We collected and analyzed data of 139 Belgian firms through hierarchical regressions. Exploitation and exploration are positively associated with digital servitization, but exploration trumps the effect of exploitation when firms do both. Technological turbulence is positively associated with digitization regardless of the firm's level of exploration or exploitation, and competitive intensity only relates positively with servitization when firms emphasize exploration. Theoretically, we contribute to the literature by unravelling the relationship between firms' dynamic capabilities and their environment. In order to fully understand firms' strategic transition towards digital servitization, both should be considered. As managerial implications, we suggest that firms pay close attention to adapting their strategy to fit an increasingly changing environment.     

Complementarities and competition: Unpacking the drivers of entrants' technology choices in the solar photovoltaic industry

Entrants in new industries pursue distinct technologies in hopes of winning the technology competition and achieving sustainable competitive advantage. We draw on the complementary assets framework to predict entrants' technology choices in an emerging industry. Evidence from the global solar photovoltaic industry supports our arguments that entrants are more likely to choose technologies with higher technical performance and for which key complementary assets are available in the ecosystem. However, diversifying entrants are more likely to trade off superior performance for complementary asset availability whereas start‐up entrants are more likely to trade off complementary asset availability for superior performance. This difference is largely due to diversifying entrants with pre‐entry capabilities related to the industry. The study offers a novel illustration of how complementarities and competition shape entry strategies. Copyright © 2013 John Wiley & Sons, Ltd.     

Product Change Intensity, Product Advantage, and Market Performance: An Empirical Investigation of the PC Industry

Product change decisions, such as the frequency of new product introductions, can impact product performance characteristics, sales, and market share of several generations of products and, therefore, a firm's long‐term survival and growth. The purpose of this study was to explore the impact of a firm's product change frequency, also referred to as product change intensity. A conceptual model linking a firm's product change intensity to its product advantage—and, in turn, to its market performance—with strategic product change orientation and technology competence as moderating effects, was used as a foundation for the study's hypotheses. These were tested using hierarchical and linear regressions, based on survey data collected from 55 U.S. companies in the personal computer (PC) industry. The analysis confirmed that a PC firm's product rate of change is positively associated with its product advantage and that its product advantage, in turn, is positively associated with its market share and growth performance. However, the hypothesized moderating effects were not confirmed. Rather, a firm's product change orientation and its level of technology competence are more likely to have a direct impact on product advantage. The implications of these findings are that, in general, firms that release new products frequently will have them viewed more favorably by the market than products with lower change intensities. Also, firms with higher levels of competence in the product technology domain tend to create products with greater market attraction. Finally, more radical changes to PC product architectures may pay off better than relatively minor changes. These results may not apply to other industries due to the specific design of personal computers and the nature of this fast‐paced market. Neither do the findings necessarily apply to all firms regardless of those firms' specific product and market strategies. More research is necessary to understand how a firm's adopted strategy, and the industry in which it operates, affect the relationships demonstrated in this study.     

The supplier's side of outsourcing: Taking over activities and blurring organizational boundaries

Since most of the literature on outsourcing focuses only to the buying (outsourcing) company, this paper aims to highlight the supplier's side from a relational perspective. The paper stresses the importance of business relationships between suppliers of outsourced activities and their customers. The paper's purpose is specified in two research questions: (1) how is value created within outsourcing and (2) how does the supplier interact with the outsourcing company? Our method relies on an in-depth qualitative case study of Logoplaste, a Portuguese packaging company which supplies large consumer goods manufacturers through complex outsourcing activities. Our analysis identifies three key dimensions of outsourcing relationships: (1) value co-creation via inter-firm coordination (as opposed to unilateral externalization of activities); (2) mutual dependence between supplier and customer due to the supplier's taking over activities; and (3) the blurring of organizational boundaries because of mutual dependence. These dimensions manifest themselves, even though in different degrees, after the initiation of any outsourcing relationship: these variables are new to the literature on outsourcing, which focuses on the ex ante dimensions that influence the customer's pre-relational choices such as “make or buy” and relationship type.     

The Foreclosure–House Price Nexus: A Panel VAR Model for U.S. States, 1981–2009

Despite housing's economic importance, little has been written on how foreclosures and home prices interact in a framework that includes macroeconomic and housing variables such as employment, permits or sales. Panel VAR results for quarterly state‐level data indicate that price–foreclosure linkages run both ways. Foreclosures negatively impact home prices. The negative impact of prices on foreclosures, however, is much larger. These results suggest the low‐frequency association observed between foreclosures and prices is mostly driven by the endogenous adjustment of foreclosures to prices via the strategic choices of homeowners and lenders, rather than through the effects of foreclosures on home prices.     

The contingent effect of product relatedness on B2B firms pricing strategy. Evidence from India

This paper empirically examines the contingent effect of product-related diversification on B2B firms' pricing strategy. Drawing our arguments from the recent advances in corporate strategy (i.e., resource-based view of the firm and product diversification strategy) and industrial marketing literatures, we argue that product-related diversifiers are more capable in adopting a high rather than a low pricing strategy. We also contend that this relationship will be positively moderated by a number of firm-specific factors, namely a firm's ability to establish high barriers to entry in its focal industry, as well as its strategic decision to invest in promotion strategy. We test our hypotheses against primary data collected from India. The data consists of a cross section from 127 domestic firms and subsidiaries of foreign MNEs operating in the chemicals / pharmaceuticals and the electronics industry. The results provide support for all the aforementioned hypotheses.     

Institutional environment and complementary assets: Business strategy in China’s 3G development

This paper develops a framework to assess the influences of institutions and markets on the business strategy of firms in transition economies. We argue that regulatory systems and markets in transition economies are interdependent. Their changing conditions will interact and influence the types of partnerships in new market entry. Using a case study approach based on historical data and interviews, we show how China’s telecommunications industry evolved between 1987 and 2007, and led to the development of a 3G (third generation mobile telecommunications) standard and networks. Our analysis based on the framework explains how regulative elements and market conditions shape the strategic choices of partnerships between domestic and foreign firms when entering China’s 3G market.     

Transactional hazards,institutional change,and capabilities: Integrating the theories of the firm

Using a detailed dataset from the Chilean construction industry, we explore how the predictions of the transaction cost and capabilities theories interact to explain building contractors' decisions to ‘make or buy’ the specialty trade activities needed to complete a construction project. We show that the contractor's productive capabilities strongly mediate the relationship between transaction hazards that originate from either temporal specificity or an exogenous change in the subcontracting law and the vertical integration decision. The inclusion of differential capabilities and its interaction with transactional hazards infuse contractors' boundary choices with systematic patterns of heterogeneity and contribute to the integration of these theoretical perspectives. Our analysis corrects for the endogeneity of the capabilities variable and provides a detailed assessment of the marginal effects in logit models. Copyright © 2013 John Wiley & Sons, Ltd.     

A multilevel framework of firm boundaries: firm characteristics,dyadic differences,and network attributes

Extending prior firm boundary research that tends to focus on economic explanations and rely on atomistic assumptions, we propose a multilevel framework by bridging the resource‐based view and the social network perspective, with their respective emphases on the importance of firms' internal resource endowments and external resource opportunities. Specifically, we argue that firms' boundary choices can be better understood by considering the tension between the need for external resources and the need for risk controls, affected by internal and external resource factors at three important levels: firm characteristics, dyadic differences, and network attributes. We also explore firms' boundary choices under two conditions: whether to initiate external relationships (non‐partnering vs. partnering) and whether to pursue either alliances or acquisitions if external relationships are needed. Our analyses of the United States computer industry over a nine‐year span largely support our theoretical framework and demonstrate the importance of unique factors at and across individual, dyadic, and network levels in understanding firms' boundary choices. Copyright © 2009 John Wiley & Sons, Ltd.