The Coevolution of Relationship Dominant Logic and Supply Risk Mitigation Strategies

How and why do risk mitigation strategies evolve? And which resources are needed for engaging in such changes? This paper contributes to the understanding of risk management in supply chains by developing theory about the interplay between supply risk mitigation strategies and the purchasing team's relationship dominant logic (RDL), which we define as the purchasing team's orientation toward and shared cognitive map of the management of its supply chain relationships. Specifically, we propose that RDL and supply risk mitigation strategies are fundamentally intertwined. Following a Straussian approach to grounded theory, this study analyzes data generated from the purchasing teams of Western green‐tech firms trying to mitigate supply risk for technically indispensable rare earth metals from China. Our findings from this context that is heavily shaped by state‐influenced supply chain members show that the firms chose their mitigation strategies in line with their RDL. Human capital, social capital, and financial capital seem to moderate the link between RDL and mitigation strategies. We link our findings with the strategic management literature in deriving theoretical propositions concerning these relationships.     

The Rainmaker in Today's Professional Service Organizations

ABSTRACT

Professional service firms have relied heavily in the past on a small number of rainmakers-people who have influence and bring business into their firms. In today's competitive marketplace, everyone in the organization must be involved in the practice development process. This paper, based on a series of interviews with accounting professionals, identifies the roles and responsibilities for practice development inherent at every stage of the professional accountant's career path. Additionally, the roles and responsibilities of marketing professionals in professional service firms are also considered.     

The changing role of purchasing: reconsidering three strategic issues

The competitive pressures that act upon firms have led to major changes in the way in which purchasing is perceived - from a money-saving activity to a resource-planning function. In this paper the authors discuss some of the changes that purchasing has undergone and identify key concerns for the future, as purchasing moves towwards a new strategic role.     

Purchasing's strategic irrelevance

The resource based perspective (RBP) is an area within strategy theory dealing with the effects of resources and their management on company financial performance. One sub-set of the RBP literature deals with the effects of resources on strategic performance through the generation of competitive advantage. This paper explores the implications of the RBP for purchasing and its potential contribution to sustainable competitive advantage. It is concluded that purchasing typically has no significant strategic role to play, and that the function's activities are operational in nature.     

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.     

Conceptualizing accelerated internationalization in the born global firm: A dynamic capabilities perspective

Existing approaches at explaining accelerated internationalization of born global firms are incomplete as they do not capture the learning that is undertaken by these firms and their founders prior to the firm's legal establishment. Building on the extant literature and drawing on the dynamic capabilities view of competitive strategy, this paper presents a conceptual model of born global firm internationalization. We conjecture that a set of dynamic capabilities that are built and nurtured by internationally-oriented entrepreneurial founders enable these firms to develop cutting-edge knowledge intensive products, paving the way for their accelerated market entry. We develop propositions and offer concluding remarks.     

Facilitators of organizational innovation: The role of life-cycle stage

One of the most serious challenges facing an entrepreneurial company, particularly a high-technology firm, is knowing how to manage innovation as the organization evolves. Macro-level facilitators/inhibitors of innovation—i.e., organizational and environmental conditions of a firm that promote or restrain innovation such as the structure of an organization, its incentive system, resources provided by its environment, or its ways of analyzing firm-external information—and their relationship to the innovativeness of the firm are considered in this study.Two basic arguments have been put forward previously as to why the innovativeness of an organization may change as it evolves. First, it has been suggested that facilitators of innovation change over time and so will firm innovativeness. That is, the relationship between the facilitator and innovation stays unchanged but the facilitator itself is transformed, causing changes in firm innovativeness as it develops. For instance, it has been suggested that mature firms become less innovative because their structure becomes overly formalized to perform other functions more efficiently, which then stifles innovative processes. Second, other researchers have proposed that the relationship between a facilitator and innovation changes as firms evolve; for instance a formal structure may support innovation in a younger firm because it allows the entrepreneur to focus her energy, whereas it may suppress innovation later since it inhibits an innovator's interaction with other environments. The results of our analysis, using data from 326 U.S. firms in different stages of their development and involved in many kinds of high-tech industries, support the second theory.However, the results for the relationships of the individual facilitators to innovation were not always as expected. We found that formally structured young firms were less innovative than informal ones and that in older organizations, formalization had no negative impact on innovation. This finding possibly can be explained with micro-level facilitators of innovation: younger firms may have more entrepreneurial personnel whose ability for innovation is more inhibited through a formal structure than the more “seasoned” employees in older, larger firms. However, this finding implies that the concern for formal structures with respect to firm innovativeness does not necessarily apply as typically assumed.Of similar significance was our finding with respect to the relationship between financial incentives and innovation. It has been suggested that younger rather than older firms use incentives such as equity to encourage an innovative environment. Results of this research, however, show that innovation is associated with stock incentives especially in older firms. This may be an indication for older firms to use differentiated incentives that reflect the individual's contribution to the firm to retain innovative personnel, whereas start-ups might rely on the excitement of working in a new venture as an incentive for innovative behavior.More in line with expectations were the results for how firms process external information. Environmental scanning and data analysis were positively associated with innovation, and this more so in older firms, presumably because they have become more remote from developments outside the organization. This result confirms the notion that much innovation by a firm is initiated externally. However, the results also indicate that the conditions of the environment itself are of lesser importance to firm innovativeness than the firm's active pursuit of information from its environment. An often discussed implication of these findings is that the boundaries of a firm must be permeable, at least from the outside in, and systematic information gathering from customers, competition, research institutions, etc. may be necessary to the success of a firm that depends on its product development. This seems especially important for older firms.As expected, the centralization of power in an organization also affected innovation. Centralization correlated positively with innovation in new ventures and negatively in older firms. This indicates the importance of the entrepreneur and strong leader in a start-up. It also suggests, though, that as the firm matures, this person has to give up some of her control and may have to relinquish the job at the head of the organization to someone else.Finally, there are some more general implications of this work to managers involved with organizational innovation. First, reliance on past experience may be detrimental to future performance. Whereas a firm evolves through different stages, means that have facilitated innovation earlier may be detrimental to it now or tomorrow, and vice versa. Second, copying successful strategies for innovation from other firms may not necessarily work—not because their implementation was worse but because the conditions of the other firm, for instance its evolutionary stage or its micro-level facilitators, were different.Researchers who study innovation should consider including life-cycle stage as a potential moderating variable. Factors that facilitate innovation at some point during an organization's evolution actually hinder it in another. Also, factors that were unimportant to innovation at the inception of a firm may facilitate it in later stages. This study supports the conclusion that the consideration of contingency factors, such as life-cycle stage, may enhance the development of a theory of organizational innovation.     

A study on motivating employees’ learning commitment in the post-downsizing era: Job satisfaction perspective

From the resource-based perspective, organization learning is the foundation of firms creating their special resources and thereby increasing their competitive advantage. Organization learning is indeed derived from individual learning within the organization. However, many firms have adopted downsizing strategies to reduce the redundancy. Nevertheless, it had a great impact both on laid-off employees and remaining ones. The remaining employees lost their trust, loyalty toward the firm and eventually left. The consequence not only affected the firms’ daily operation but also impacted employees’ learning motivation for improving their ability to enhance the firm's competitive advantage. In the post-downsizing era, applying appropriate human resource management practices to motivate employees would be a critical issue. The study began with two psychological constructs: job satisfaction and learning commitment to explore the content of job satisfaction which significantly influenced remaining employees’ learning commitment. The study used both qualitative and quantitative methods to collect and analyze the data. The results revealed that the two criterion in job satisfaction “the relationship with colleagues” and “the relationship with the family” significantly influenced employees’ learning commitment. However, this was clearly different from managers’ subjective expectation. The findings provide important implications for both the research field and practical management of downsizing, employee motivation, cross-culture management and strategic HRM practices.     

Critical elements of supplier development The buying-firm perspective

Supplier development is defined as any effort of a buying firm with its supplier to increase the performance and/or capabilities of the supplier and meet the buying firm's supply needs. From the buying firm's perspective, effective two-way communication, top management involvement, teams, and purchasing a relatively large percentage of the supplier's output are critical to the supplier development effort. This article (1) discusses the importance of supplier development, (2) reviews literature to identify potential critical elements of supplier development, and (3) reports the results of an analysis of survey data from US buying firms that explored these critical elements.     

Purchasing performance evaluation: with data envelopment analysis

Because of supply chain management and other factors, purchasing's performance is considered an important element of corporate performance. Nonetheless, the measurement of purchasing performance, and comparing that performance to other purchasing departments has proven to be very difficult. These difficulties stem from the lack of valid measurement criteria and adequate methodologies to aggregate individual performance measures into a single index of overall performance. Many methodologies are unable to account for the relative importance of performance measures, which varies among firms.This paper examines the application of Data Envelopment Analysis (DEA), which has demonstrated potential as a management tool to overcome the shortcomings of other techniques and to help purchasing executives improve the efficiency of their operations. A DEA model was developed to compare the purchasing efficiency of firms in the petroleum industry. The model introduces one more method by which managers can obtain information to assist in the decision making process.     

Bank Loan Announcements and Borrower Stock Returns: Does Bank Origin Matter?

Banks play a special role as providers of informative signals about the quality and value of their borrowers. Such signals, however, may have a quality of their own as the banks' selection and monitoring abilities may differ. Using an event study methodology, we study the importance of the geographical origin and organization of the banks for the investors' assessments of firms' credit quality and economic worth following loan announcements. Our sample comprises 986 announcements of bank loans to US firms over the period of 1980–2003. We find that investors react positively to such announcements if the loans are made by foreign or local banks, but not if the loans are made by banks that are located outside the firm's headquarters state. Investor reaction is, in fact, the largest when the bank is foreign. Our evidence suggest that investors value relationships with more competitive and skilled banks rather than banks that have easier access to private information about the firms. These results are applicable also to the European markets where regulatory and economic borders do not coincide and bank identities and reputation seem to matter a great deal.     

Uganda's policy reforms,industry competitiveness and regional integration: a comparison with Kenya

The paper reviews, first, Uganda's economic policies affecting the industrial sector and analyses the international competitiveness of Uganda's manufacturing industries, using a sample of 21 firms in 12 industries. It computes indices of comparative advantage, export and domestic competitiveness and compares the Ugandan indicators with those of Kenyan firms. It also identifies the main sources and obstacles to competitiveness using a decomposition method, which breaks the unit cost indices down into their main components. The study is timely as Uganda is re-establishing a free trade zone with Kenya and Tanzania, and also faces liberalized trade with the rest of the world. The numerical results of the study suggest that Ugandan firms, although not generally cost-competitive with Kenyan and other international firms, due to the country's land-locked geography and its de-industrialization under the preceding political regimes, have benefited from a recently established business-friendly environment and are more competitive in several industries than is generally assumed. This means that they may not be able to export internationally, but they are likely to hold their ground against Kenyan imports under regional free trade.     

Digital Systems,Partnership Networks,and Competition: The Co-Evolution of IOS Use and Network Position as Antecedents of Competitive Action

This study examines and tests a holistic model of relationships among interorganizational systems (IOS), partnership networks of firms, and firms' competitiveness. The model integrates concepts from these three areas of study to give a basis for more fully understanding and investigating issues inherent in IOS-intensive coopetition networks. Introducing social network analysis and competitive dynamics research into this study, we test the model using an automotive network comprised of the world's major competing sports car makers and their many value/supply chain partners. We collect and analyze data about these firms' network structures, usage of IOS, and competitive actions. Results support the holistic view that there are systematic associations between IOS use, competitive action, and network structure. Based on this view, we introduce a framework characterizing the roles of IOS in achieving firm competitiveness.     

The interface of market and nonmarket strategies: Political ties and strategic competitive actions

We focus on corporate political connections as a critical nonmarket strategy and propose that political ties can facilitate firms’ strategic competitive actions but may also hurt the outcomes of such actions, depending on whether the ties are associated to central versus local political actors. Studying China's television manufacturers at the onset of deregulation and globalization, we find that central and local political ties have contrasting effects on firms’ competitive actions and their performance outcomes. To further shed light on theoretical mechanisms, we examine the impact of China's WTO accession on firm actions and contrast domestic-based and internationalization competitive actions.     

What determines performance of cross‐border M&As by Chinese companies? An absorptive capacity perspective

Chinese companies are increasingly using cross‐border merger and acquisitions (M&As) as a vehicle to source knowledge or strategic assets, so as to enhance their competitive advantage. However, a critical question is: Can strategic assets be effectively acquired by Chinese firms, thereby leading to superior firm performance? This article addresses this fundamental question from an absorptive capacity perspective. This approach concentrates on how an acquiring firm's absorptive capacity influences its ability to identify, assimilate, integrate, and apply external new knowledge into commercial use. By comparatively examining two high‐profile international M&A deals completed by leading Chinese firms Lenovo and TCL, we argue that the performance of Chinese companies' overseas acquisitions is substantially affected by the acquiring firm's absorptive capacity at multiple dimensions, thus drawing strategic implications for multinationals in other emerging markets. © 2010 Wiley Periodicals, Inc.     

Strategies,technologies, and organizational learning for developing organizational innovativeness in emerging economies

Innovativeness is an important organizational capability for competitive advantage sustainability in the dynamic environment of Asia's emerging economies. Drawing upon dynamic capability theory, this study develops a research model of organizational innovativeness development for firms in emerging economies. The proactive strategic orientations reflected by entrepreneurship and technology oriented strategy provide important visions for organizational innovativeness. Further, the utilization of knowledge management systems and organizational learning are identified as intervention processes that translate these strategic orientations into real innovation capability. A survey involving 114 firms operating in China was conducted for hypothesis testing. The empirical results provide strong support and advance the knowledge of organizational innovativeness development for firms in Asia's emerging economies.     

Measuring the Performance of New Service Development Activities

The aim of this research was to investigate how service firms evaluate their new service development (NSD) activities. A survey of marketing managers in UK service firms was used to elicit information on two subject areas. First, the firm's approach to NSD, its strategy, and the scope of its activity in this area. Second, the firm's approach to measuring performance at both the project and the programme level. It was found that although new services are an important source of revenue for most, firms are still not satisfied with their ability to develop new services. On the whole, service firms employ a limited number of measures of performance, and often these do not reflect the reasons behind development. Significantly, financial measures of performance are most often used by less innovative firms, fast followers employ customer-based measures of performance, and truly innovative firms measure performance along a number of softer internal dimensions. The management implications of these findings are discussed.     

Are entrepreneurs special? Evidence from board appointments

As shown in previous studies, founder-led firms perform better than those run by professional managers. Does this reflect the special relation of founders to their firms or do entrepreneurs possess attributes and experiences that are valuable even at firms not founded by them? Drawing on the resource-based view of the firm, we study this question by evaluating the effect of entrepreneurs who serve as outside directors of other firms. We find that the stock market reacts positively to appointments of outside entrepreneur directors and that firms with these directors have higher long-term value as measured by Tobin's q. Entrepreneur directors are also associated with increased R&D investment and higher sales growth, and their effect on firm value is larger among firms in R&D-intensive and competitive industries. We conclude that outside entrepreneur directors enhance firm value through their propensity to take risk and their ability to anticipate demand patterns and create new markets.