Home country uncertainty and the internationalization-performance relationship: Building an uncertainty management capability

We analyze the impact of home country uncertainty on the internationalization-performance relationship of emerging market firms. Building on organizational learning theory and the institutional approach, we argue that internationalization has a positive impact on the performance of emerging market firms, and that this relationship is strengthened for firms based in emerging countries with higher corruption and political risk. The reason is that by being exposed to high levels of home country uncertainty in the form of political risk and corruption, firms develop an uncertainty management capability at home that helps them face the challenges of internationalization better. We also propose that this uncertainty management capability helps emerging market firms perform better outside of their home region. We test our arguments on a sample of 536 firms from Argentina, Brazil, Chile, and Peru.     

An investigation of the black-box supplier integration in new product development

This research examines black-box supplier integration in new product development (NPD). A model and several hypotheses are proposed to study the relationship between product task characteristics (importance and complexity), supplier integration, and product performance. Data from 136 U.S. high-tech firms were used to test the hypotheses. Results suggest that assessing the importance and complexity of NPD tasks is critical to the implementation of supplier integration innovation strategy. Firms are likely to perform NPD tasks that are related to firms' core competencies in-house. They tend to externalize complex tasks to suppliers in order to utilize suppliers' resources and to increase NPD speed. The black-box supplier integration influences the speed to market. However, it is more effective on speed to market when technology uncertainty is low than when technology uncertainty is high.     

Asymmetric effects of demand uncertainty on intrafirm trade in durable and non‐durable industries

This paper unveils a new empirical regularity regarding the asymmetric patterns of international sourcing modes in the durable and non‐durable industries under uncertainty, and explains the asymmetry based on the traditional lens of the transaction cost economics. Under demand uncertainty, firms face trade‐offs between outsourcing and vertical integration: while outsourcing requires less initial investment and allows easier market entry and exit, vertical integration offers better management and communication systems. In the durable industries, consistent with the transaction cost economics, the relationship between vertical integration and uncertainty is positive. In the nondurable industries, however, such relationship is weaker because inelastic demand and shorter gaps between production and sales mitigate the effect of uncertainty. I show the asymmetric effects of uncertainty based on a simple general equilibrium model and provide consistent empirical evidence using US intrafirm trade and microeconomic uncertainty data.     

How knowledge management mediates the relationship between environment and organizational structure

Literature examining how knowledge management (KM) capability helps organizational structures cope with uncertainty is limited. Thus, this study builds and tests an integrated model to investigate the relationship among environmental uncertainty, KM capability, and organizational structure. Data from 161 firms were collected and analyzed. The results from structural equation model analysis support a mediating KM capability between environmental uncertainty and structural attributes. Environmental uncertainty tends to require firms to increase their KM capability, which in turn manifests itself in structural changes.     

Syndicated investments by venture capital firms: A networking perspective

The networking of 464 venture capital firms is analyzed by examining their joint investments in a sample of 1501 portfolio companies for the period 1966–1982. Some of the factors that influence the amount of networking are the innovativeness, technology, stage, and industry of the portfolio company. Using the resource exchange model, we reason that the relative amount of networking is explained primarily by the degree of uncertainty associated with an investment rather than by the sum of money invested.Among the findings of our study about venture capitalists are the following:The top 61 venture capital firms that managed 57% of the pool of venture capital in 1982 had an extensive network. Three out of four portfolio companies had at least one of the top 61 venture capital firms as an investor. Those top 61 firms network among themselves and with other venture capital firms. Hence they have considerable influence.Sharing of information seems to be more important than spreading of financial risk as a reason for networking. There is no difference in the degree of co-investing of large venture capital firms—those with the deep pockets—and small firms. Furthermore, where there is more uncertainty, there is more co-investing, even though the average amount invested per portfolio company is less. That, we argue, is evidence that the primary reason for co-investing is sharing of knowledge rather than spreading of financial risk. Venture capital firms gain access to the network by having knowledge that other firms need.It is likely that there will be increasing specialization by venture capital firms. Knowledge is an important distinctive competence of venture capital firms. That knowledge includes information such as innovations, technology, and people in specific industry segments. Among the portfolios of the top 61 venture capital firms are ones with a concentration of low innovative companies, others with a concentration of high innovative technology companies, and others with a no particular concentration. As technology changes rapidly and grows more and more complex, we expect that venture capitalists will increasingly specialize according to type of companies in which they invest. Only the largest firms with many venture capitalists will be like “department stores,” which invest in all types of companies. The smaller firms with only a few venture capitalists will tend to be more like “boutiques” which invest in specific types of companies, or in specific geographical regions around the world.We think that the networking of venture capital firms has the following implications for entrepreneurs:Entrepreneurs should seek funds from venture firms that are known to invest in their type of product. It speeds the screening process. If the venture capital firm decides to invest, it can syndicate the investment through its network of similar firms. And after the investment has been made, the venture capital firms can bring substantial expertise to the entrepreneur's company.Entrepreneurs should not hawk their business plans indiscriminately. Through their networks, venture firms become aware of plans that have been rejected by other firms. A plan that gets turned down several times is unlikely to be funded. Thus it is better to approach venture capital firms selectively.The extensive network of the leading venture capital firms probably facilitates the setting of a “market rate” for the funds they invest. The going rate for venture capital is not posted daily. Nevertheless, details of the most recent deals are rapidly disseminated through venture capitalists' networks. Hence, that helps to set an industry-wide rate for the funds being sought by entrepreneurs.Lastly, we give the following advice to strategic planners:Venture capital firms share strategic information that is valuable to others outside their network. Since they often invest in companies with emerging products and services, venture capitalists gather valuable strategic information about future innovations and technological trends. Thus, strategic planners should tap into venture capitalists' networks, and thereby gain access to that information. It is sometimes information of the sort that can revolutionize an industry.     

A Relationship Governance Perspective of Organizational Buyers' Supplier Choice Decisions

Although the transaction cost analysis (TCA) has long been used by marketing and management scholars to study organizational buyers' make-or-buy decisions, it sheds limited light on their choice behavior beyond the make-or-buy trade-off. In the meantime, many organizational purchase decisions are structured around which independent supplier to buy from, rather than a typical make-or-buy decision. This study extends existing research on TCA by applying this theoretical framework to explore why organizational buyers make purchases from among independent suppliers. The article posits that (1) two forms of relationship governance—buyer trust and market (i.e., the relative dependence between the buyer and supplier)—help explain the differences in buyer decision-making uncertainty involving independent suppliers, which further influences the buyers' propensity to purchase; and that (2) trust further influences the buyers' propensity to purchase due to its effect on customer perceived value. The empirical study based on organizational purchasing decisions lends support to the predictions of the relationship governance theory.     

Intellectual Capital and Uncertainty of Knowledge: Control by Design of the Management System

This research, couched in the resource-based view of the firm, investigates the potential for reducing an organization’s decision uncertainty within its intellectual capital (IC) operating environment. Using structural equation modeling, we empirically test if organizational design can reduce the perceived uncertainty related to an IC context, which we refer to as knowledge uncertainty. We found evidence that decentralization and technology infrastructure support a results-based IC management control system which in turn is associated with reduced internal decision uncertainty. Finally, our statistics support a good overall fit for our model. Our findings suggest that if managers structure their organizational control systems appropriately for developing IC capabilities, these systems can lead to reduced internal uncertainty regarding human, structural, and relational capital.     

Age,order of entry,strategic orientation,and organizational performance

This paper proposes an empirical test of several hypotheses linking age, order of entry, and strategic orientations to a firm's performance. Three strategies are defined: cost-leadership strategy, innovative differentiation, and marketing differentiation. The aim is to show that the impact on performance of both age and each of the three strategic orientations may differ according to a firm's order of entry into an industry.Following Lieberman and Montgomery's (1998) evaluation of their major contribution on first mover advantage, we emphasize three points. First, we develop and test hypotheses related to early and late followers' strategic orientations, broadening the scope of traditional studies on pioneers. Second, the model combines the dimensions of a firm's age, order of entry, and strategic orientations, as well as industry conditions (stage of the industry, environmental unpredictability, and technology diffusion), to establish a contingent model of performance analysis. Finally, the empirical study deals chiefly with organizational performance and not market share, which is considered a typical advantage accruing to pioneers.In addition, the scope of the study (582 French manufacturing firms) provides the means to fill a void in empirical studies because it is a broad cross-sectional test on non-U.S. data. The firms are mainly private, small to medium-sized, and single or dominant business firms. Therefore, our assumptions must be understood as particularly applicable to this type of firm.The results reveal important lessons for practitioners. First, we did not find a first-mover advantage in terms of organizational performance. In addition, pioneers' organizational performance is enhanced by the cost leader strategy—contrary to our assumption emphasizing innovative differentiation for these firms. Second, early followers' performance benefits from innovative differentiation and marketing differentiation. Finally, late entrants developing a cost leader strategy have a significantly higher performance. All groups considered, late followers are the firms most sensitive to environmental uncertainty and age effects.Our study clarifies the impact of a firm's age and strategic orientations on its performance depending on the firm's order of entry. The implications of these results are particularly relevant for practitioners and entrepreneurs. First, a cost leadership strategy seems to be a guarantee for a pioneer to increase its organizational performance. New ventures should therefore take into consideration the fact that newness and innovative differentiation might not be the best strategic orientations for high performance in the long run. Second, as a second mover, however, developing a superior product and being able to market it efficiently appear to be the enhancing factors of firm performance. Third, for both pioneers and early followers, age does not significantly reduce their performance. However, the longer a firm waits before entering, the greater is the negative effect of age on its performance. This is due to the difficulty of resisting competitive erosion, because pioneers and early followers drive the changes in the industry. The identification of these effects should help managers and stakeholders to make more effective entry decisions to sustain a firm's advantage, leading to better performance and higher probability of survival.     

Valuation uncertainty,home and host market uncertainty,and cross-border seasoned equity offerings

This study examines how market timing can affect host market reaction to cross-border seasoned equity offerings (SEOs), an event generally viewed unfavorably by investors. We assume that firms engage in market timing in response to valuation uncertainty (VU), home market uncertainty (HMU) and/or host market uncertainty (HSU), and that raising capital abroad faces higher scrutiny costs and familiarity bias from host market investors. We conjecture that timing strategies provide signals that vary in strength to host market investors and that dual-timing strategies may strengthen an existing signal. Our hypotheses are tested on a sample of 190 cross-border SEOs that were issued on the U.S. stock market between 1990 and 2017 by firms from 29 countries. Using event study methodology, we find that market timing based on VU is negatively related to host market valuation and that a dual-timing strategy with HMU or HSU generally produces a stronger signal. Our results have practical relevance for stock markets that suffer from high uncertainty; we estimate that a high VU firm with a $1 billion valuation suffers a drop of $31.3 million in market valuation during a high host market uncertainty (high HSU) compared with low host market uncertainty (low HSU).     

The Development of Organizational Capabilities and Corporate Entrepreneurial Processes: The Case of Chinese Automobile Firms

Corporate entrepreneurship (CE) has contributed to the rapid growth of emerging‐market firms (EMFs), yet little is known about this phenomenon from a process perspective. This article examines how EMFs develop organizational capabilities in pursuit of CE as a strategy to catch up with their global competitors. By adopting a case study method, our in‐depth analysis of two leading Chinese automobile companies identifies specific organizational capabilities that enable firms’ CE activities at different stages—initiation, development, and implementation. Our findings also reveal how different means of developing organizational capabilities lead to different catch‐up strategies, which subsequently influence firms’ entrepreneurial transformation and value creation. © 2014 Wiley Periodicals, Inc.     

Advantage by design: Competing with opportunity-based organizations

Organization design is becoming more and more a cornerstone of competitive advantage in today's increasingly complex companies. Our research on firms that have achieved significant advantage suggests that many did so by creating powerful synergies among their capabilities, among market opportunities, and between the two. But the way they recognized and realized these synergies was through their multidimensional organizational designs. Such designs not only reify and empower the dimensions within or across which synergies can occur (function, product, market segment, customer, etc.), they also define and manage the collaborative interfaces needed to discover, exploit, and renew those synergies.     

Disrupting the consultants: Could the advisers use some advice?

Management consulting is a relatively new profession. Such consulting firms have become revered as thought‐leading think tanks and cutting‐edge research organizations. Yet, as they teach their clients to grow, thrive, and innovate, is it possible that top management consulting firms are being disrupted themselves? Even the most seemingly unassailable businesses fall victim to disruption, while others benefit from it to enjoy tremendous growth. Top consultancies are keenly aware of rising competition from emerging‐market information technology firms. Therefore, many have taken countermeasures such as expanding their operations in emerging markets and designing outsourcing strategies to mitigate cost gaps. Time will tell if these efforts prove successful. This article attempts to illustrate how the business of consulting is—after all—a business itself that is subject to the forces and perils therein. Top consultants would be well advised to confront disruption head on, rather than robotically focusing up‐market or silently hoping themselves immune. © 2010 Wiley Periodicals, Inc.     

Organizational and Interorganizational Determinants of EDI Diffusion and Organizational Performance: A Causal Model

Electronic data interchange (EDI), a specific form of interorganizational systems, has the potential to significantly influence business operations and the exchange of business documents in a number of industries and to provide substantive tangible and intangible benefits to the participating firms. However, successful implementation and diffusion of these systems innovations requires the cooperation and commitment of all participating member firms. A number of interorganizational as well as internal, organization-specific factors can influence both the extent to which EDI is diffused and used and the level of subsequent benefits that accrue to the firms.

Research from sociopolitical process framework in marketing, organizational theory, innovation theory, use of information technology for competitive advantage, and information systems (IS) implementation was used to identify 3 interorganizational variables (customer support, customer expertise, competitive pressure) and 4 organizational variables (internal support, EDI's benefits potential, EDI compatibility, resource intensity). In this study, we develop a multidimensional measure for EDI diffusion to capture both external integration and internal integration. We then examine the influence of these 7 variables on the extent to which EDI adopter firms pursue diffusion and whether more diffusion leads to superior organizational-level outcomes.

Two senior executives (the chief executive officer and a senior manager responsible for the IS function or EDI) from 83 firms in the motor carrier industry participated in a field survey. The results from a structural equation model (SEM), developed using LISREL, provide quite a strong support for the hypothesized relations. All 4 organizational variables and 2 of the 3 interorganizational variables (customer support and competitive pressure) influence EDI diffusion. The results also indicate that external integration dimension of diffusion enables adopter firms to achieve improved operational and market-oriented performance, whereas internal integration contributes only to operational performance.     

Building Capability for Organizational Success: An Emerging Market Perspective

In the world of business, developing the capability to succeed in the marketplace is a sine qua non for most organizations. An examination of studies on firm competitiveness indicates that market orientation, outsourcing, and technology transfer provide firms with the basis for building capability to succeed in the business environment. Nonetheless, in a developing nation context, the comparative influences of market orientation, outsourcing, and technology transfer on organizational success among foreign and local firms when considered together in a combined framework is yet to be investigated empirically. To gain clearer insights, three pathways through which market orientation, outsourcing, and technology transfer improve organizational success in Ghana are postulated. Findings of this study suggest that among foreign and Ghanaian businesses, there are variations in the contributions of market orientation, outsourcing, and technology transfer to developing capability and impacting on organizational success.     

Talent management motives and practices in an emerging market: A comparison between MNEs and local firms

This paper compares the differences in talent management motivations and practices between MNEs and local firms in the emerging market of Turkey. It uses institutional theory and the resource based view of the firm to explain these differences. Examining data from 201 firms the findings show significant differences between the talent management motives of MNEs and local firms, with MNEs having more tactical motivations for their talent management systems. The study also shows significant differences in the talent management practices between MNEs and local firms, with MNEs implementing more robust systems of talent management overall. The findings indicate that the motives for TM and the practices that are pursued by organizations are society-bound. The study of TM motives and practices has to be framed within the context of the institution as this shapes the way in which actors perceive and respond to environmental and organizational stimuli and the extent to which they seek to protect the rules that shape and structure their environments.     

Partial or total integration in a cross‐border merger? Building a Nordic bank culture

The rate of failure for international mergers and acquisitions (M&As) is exceptionally high, since the integration of merging firms does not function well. Using a process perspective, this study aims to analyze the integration process in a cross‐border merger and the development of a common organizational culture. A framework based on premerger cultural and organizational fit, synergy, and resulting organizational culture is developed to study the growth of Nordea, a merger of four Nordic banks. Data include in‐depth interviews and secondary sources. This case study shows how cultural and managerial differences are dealt with and synergies realized. Building a broad organizational culture involving human resource management, decision making, technology, competitiveness, and customer relationships is necessary for merger integration, but it is costly and difficult. We suggest that success in mergers lies in managers creating a new cultural identity with unique values and perspectives.     

The changing boundaries of system companies

While project marketing and systems selling are mainly concerned with market relations of companies organized on a project basis, it is important to conceptualize the interactions between market conditions and long term technology problems of these firms.The paper deals with strategic problems of system companies. By system companies the authors mean those large, multi-technology, multi-business firms that are typically active in systemic industries in most industrialized countries. In these industries market demand has some peculiar features: discontinuity, heterogeneity and customization, long and complex buying process, variable specification capability of customers. On the supply side, system companies produce unique or small series products, on a customized basis, by using a large array of technologies.System integration is the distinctive strategic capability of these companies. It is argued that system integration involves the management of a peculiar kind of uncertainty. The long run strategic objective of system companies is to maintain the global control of the technological dynamics of the system. However, there are many possible changes in the boundaries of product systems that may threat the viability of control. To gain strategic control, system companies have to manipulate simultaneously market and technology leverages. The paper offers a rich conceptual discussion of these problems.     

Big data dreams: A framework for corporate strategy

The phenomenon of big data—large, diverse, complex, and/or longitudinal data sets—is having a stark influence on organizational strategy making. An increase in levels of data and technological capabilities is redefining innovation, competition, and productivity. This article contributes to both practical strategic application and academic research in the strategic management domain by presenting a framework that identifies how big data improves functional capabilities within organizations, shapes entirely new industries, and is a key component of innovative and disruptive strategies used by learning organizations to diversify and break down barriers of traditionally defined industries. This framework provides an appropriate basis for internal corporate strategy discussions that surround big data investments by explaining how firms create value through various approaches. In addition, we offer guidance for how firms might derive their own big data approach through the merits of aligning data strategy aspirations with data strategy authenticity.     

Organizational analysis and information-systems design: A decision-process perspective

Acquiring relevant information, processing it sensibly and acting rationally on the results is central to proper functioning at all management levels of an organization. To improve these capabilities is a major concern of developers of management information systems, yet a growing consensus indicates that it is infeasible to initiate system development by modeling a total organization's information system. Thus, many systems designers— drawn less from the ranks of technologists than of experienced managers—have scaled down aspirations, and are thinking of parts of an organization rather than of the whole. This change of philosophy has emerged most clearly in marketing, where Chambers comments that “attempts to construct large scale models in marketing have generally resulted in failure… the management scientist has now recognized that it is usually better to begin by solving smaller segments of the total problem” [9].Failure of systems designers to adapt their efforts to the structure of the organization and to the people in it also has impeded successful development of information systems. Researchers and managers long have recognized the necessity for such adaptation [25, p/ 483] and also have been concerned by other behavioral problems raised by information systems [25, 3].This study presents a structure for development of “partial” information systems in their organizational context. It utilizes a growing body of empirical knowledge—drawn mainly from marketing—to help analyze organizations in terms of operational guidelines for the development of information systems.     

Partial Assimilation of Technology: Prognosis and Remedial Measures

Prior research mentions that there may be technology assimilation gaps in that a technology may be cumulatively assimilated over a period of time depending on knowledge and experience from initial usage. Thus, stages of partial assimilation are indicated that, if not accounted for, could lead to erroneous understanding of technology adoption and diffusion. However, the phenomenon has not received serious academic attention, and there is still a lack of understanding as to when and why partial assimilation may occur, its consequences to organizations, and remedial steps that could be taken to minimize it. We investigate these issues in the context of assimilation of third-party business-to-business (B2B) e-market by four small firms. Our findings reveal that partial assimilation occurred because of different perceptions of benefit and risk of the two different features of the B2B e-market—the informational (buyer/supplier and product information) and the transactional (auction, request for quote, price negotiation, message archiving, payment systems), arising from different moderating impacts of the organizational (relational norms and the type of business handled) and environmental (perceptions of competitive pressure and institutional norms of technology usage and work practices) contexts of deployment and usage of the two features. The consequences of partial assimilation were mixed; while it was found to be detrimental to firms with low relational norms with their clients, it proved to be gainful for firms with high relational norms. Theoretical and practical implications of the findings are discussed.