Network resource stocks and flows: how do alliance portfolios affect the value of new alliance formations?

We examine how new network resources accessed through alliance formations interact with network resources present in a firm's alliance portfolio. We test our theoretical model using event study methodology and data from the global air transportation industry. We find that the market rewards firms forming alliances that contribute resources that can be synergistically combined with firms' own resources as well as with network resources accessed through their alliance portfolios. Our results also indicate that the market penalizes firms entering into alliances that create resource combinations that are substitutes to resource combinations deployed by existing alliance partners. Copyright © 2011 John Wiley & Sons, Ltd.     

Licensing Foreign Technology and the Moderating Role of Local R&D Collaboration: Extending the Relational View

The relational resource‐based view posits that performance differences among firms can be explained not only by the possession of internal resources but also by maintaining and developing relationships with external partners. However, studies in the extant literature usually address the separated roles of various external relationships of focal firms, but the literature has not addressed how relationships with different sets of knowledge partners are related to each other and influence focal firms' performance. Therefore, to fill this research gap, this study focuses on how technological resources acquired from one set of partners (licensing foreign technologies) may generate subsequent internal and relational rents in terms of technological innovation in the context of collaboration with an entirely different set of knowledge partners (local R&D partners). Specifically, we propose that local R&D collaborations need to be large in scale and broad in scope. The empirics are based on the analysis of a sample of 160 high‐tech Chinese firms observed from 2000 to 2011. Consistent with our predictions, our findings contribute to extending the relational view by addressing the relations among the relationships of focal firms.     

Developing Sustainable New Products in the Textile and Upholstered Furniture Industries: Role of External Integrative Capabilities

Environmental sustainability has become one of the key issues for strategy, marketing, and innovation. In particular, significant attention is being paid by companies, customers, media, and regulators to development and consumption of green products. It is argued that through the efficient use of resources, low carbon impacts, and risks to the environment, green products can be essential to help society toward the environmental sustainability targets. The number of green product introductions is rapidly increasing, as demonstrated by the growing number of companies obtaining eco‐labels or third party certifications for their environmentally friendly products. Hundreds of companies representing most of the industries, such as Intel, SC Johnson, Clorox, Wal‐Mart, and Hewlett–Packard, have recently introduced new green products, underlining the need to develop products that create both economic and environmental values for the firm and customers. A review of the literature shows that academic research on green product development has grown in interest. However, to date, only a few empirical studies have addressed the challenge of integrating environmental issues into new product development (NPD). Previous empirical works have mainly focused on a set of activities for the green product development process at the project level. After years of paying no or marginal attention to environmental sustainability issues, most of the companies now generally realize that it would require knowledge and competencies to develop green products on a regular basis. These knowledge and competencies can be varied, such as R&D, environmental know‐how, clean technology/manufacturing process, building knowledge on measuring environmental performance of products, etc., that may be developed internally or can be integrated through external networks. Adopting a resource‐based view of the firm, this article aims at (1) investigating the role of capabilities useful for companies to integrate knowledge and competencies from outside of the firm on green product development in terms of both manufacturing process and product design and (2) understanding whether green product development opens new product, market, and technology opportunities, as well as leads to better financial performance of NPD programs. To this end, a survey was conducted in two Italian manufacturing industries in which environmental issues are becoming increasingly important, namely textiles and upholstered furniture. A questionnaire was sent to 700 firms, and 102 useable questionnaires were returned. Results show that (1) companies engage in developing external integrative capabilities through the creation of collaborative networks with actors along the supply chain, the acquisition of technical know‐how, and the creation of external knowledge links with actors outside the supply chain; (2) external knowledge links play a key role in the integration of environmental sustainability issues into the manufacturing process, whereas capabilities such as the acquisition of technical know‐how and the creation of collaborative networks prove to be more important for integrating environmental issues into product design; and (3) the integration of environmental sustainability issues into NPD programs in terms of product design leads to the creation of new opportunities for firms, such as opening new markets, technologies, and product arenas, though not necessarily leading to improved financial performance of the NPD programs.     

Absorbing knowledge in the digital age: the key role of integration mechanisms in the context of crowdsourcing for innovation

The digital age offers unprecedented opportunities for firms to access new knowledge for innovation. Both academics and managers have identified crowdsourcing (CS) as one relevant way to do so. CS for innovation involves outsourcing problem-solving or creative tasks to the crowd. To benefit from CS, absorptive capacity (ACAP) is critical; this can be enhanced by prior knowledge and past experience with a partner. However, in the CS context, firms open themselves up to undefined, anonymous partners through the Internet, hence the development of ACAP becomes more difficult. The literature on ACAP describes how internal integration mechanisms encourage the absorption of knowledge but fails to clearly address the way in which uncommon knowledge is integrated. Although literature has acknowledged the beneficial role of a wider spectrum of influential internal and external mechanisms on uncommon knowledge, few empirical studies have addressed the distinctive effect of these mechanisms on the absorption of anonymous partners’ knowledge. To fill this gap, this study identifies relevant integration mechanisms and how they impact upon different ACAP dimensions in the CS context. Five case studies reveal the distinctive influence of integration mechanisms depending on the nature of the CS activity. Our results extend research on ACAP in the little studied digital open context, investigating the absorption of uncommon knowledge from unidentified partners. From a managerial perspective, this study shows that managers need to pay attention to integration mechanisms in order to support the absorption of knowledge from the crowd. More precisely, our study suggests that the main focus should not be on external mechanisms, but also on internal mechanisms. Finally, we open up a new theoretical debate on how these mechanisms should be combined.     

Resource Dedication and New Product Performance: A Resource‐Based View

Corporate investments in new product development (NPD) initiatives are strategically effective activities that are instrumental in contributing to new product performance. Given that a fundamental nature of product development is the ability to exploit new product opportunities, the authors investigate the firm‐level impact that corporate investments in knowledge workers and financial NPD resources have on new product performance. They track the resource dedication and new product financial performance of 41 firms over a seven‐year period. Our results provide evidence that financial investments have a contemporaneous return on investment while knowledge worker investments provide companies with both contemporaneous and carryover returns. When formulating strategy and making NPD resource allocation decisions, managers must remain cognizant of the time‐dependent nature of resource investments, the need for persistent investment, and the resulting performance impact.     

Does IT alignment between supply chain partners enhance customer value creation? An empirical investigation

In today's hypercompetitive market, a firm's individual efforts, by themselves, are not sufficient to respond to marketplace changes in a timely and effective manner. Rather, the firm must rely on its intermediaries and bundle their respective resources to create responsiveness and added value to customers. In this investigation, the authors draw on the relationship marketing literature and the resource-based perspective to examine how firms can increase their customer value creation by exploring two specific driving forces, i.e., strategic importance of supply chain partners and interfirm integration, and relationship-enabled responsiveness as the dynamic capabilities derived from the driving forces. Using the developed scales for customer value creation, hypotheses are tested on data collected from 184 firms. Results suggest that strategic importance of supply chain partners motivates interfirm integration, i.e., strategic collaboration and information technology alignment, setting the stage for enhanced relationship-enabled responsiveness, and subsequently, customer value creation for the firm.     

Strategic interaction in alliances

Research summary: This article studies strategic interactions between firms that form alliances to exploit synergistic benefits. Firms cooperate to create value, but they can also compete to capture value. Fundamental questions rarely addressed by strategy scholars relate to how the configuration of control over resources influences firms' strategies, the potential for termination, and the emergence of cooperation and trust. The formal results reveal crucial aspects of the interorganizational rent‐generating process and yield testable implications. With greater synergistic benefits, firms invest more, but they also compete more intensively to capture more value. With symmetric control, more value gets created, which limits the potential for termination, but also exacerbates the competition for value; from a relational perspective, this form of control augments the calculative rationale of cooperation and trust . Managerial summary: When forming an alliance to exploit synergies, firms engage in a complicated strategic interaction that is part cooperation and part competition. What happens when partner firms cooperate and invest to create value while competing and using costly adversarial tactics to capture value? The analysis reveals that with greater synergistic benefits, firms invest more in value creation, but the fear of opportunism pushes them to waste more resources on value capture tactics. The balance between value creation and value capture, and the possibility that the alliance is terminated depend on the configuration of control over resources. The analysis further reveals under what conditions there can be trust between the partners, such that they focus on value creation and avoid wasting resources in the competition for value . Copyright © 2016 John Wiley & Sons, Ltd.     

Can entrepreneurial orientation improve R&D alliance performance? An absorptive capacity perspective

Research and Development (R&D) alliance studies maintain that alliance partners’ entrepreneurial interactions that pursue innovation opportunities through collective exploitation and exploration of knowledge resources lead to alliance success. Despite the importance of productive resource exchange and generation through such interactions, performance-by-alliance mechanisms remain under-researched. In this study, we develop a theoretical framework hypothesizing that the entrepreneurial orientation (EO) of alliance firms, which underlies their approach to seeking and utilizing resources productively, has a potential impact on their R&D alliance performance, depending on their absorptive capacity (AC). To specify the value creation and capture mechanism in the alliance, we adopt two performance indicators: technological competitiveness and business performance. Findings from a study of 218 small technology-intensive firms conducting R&D alliance projects show that EO translates into business performance through technological competitiveness and that AC leverages the alliance performance implications of EO. The results suggest that EO–AC complementarity is a strategic stimulant that triggers firms to extract greater benefits from R&D alliances.     

How do dynamic capabilities transform external technologies into firms’ renewed technological resources? – A mediation model

How externally acquired resources may become valuable, rare, hard-to-imitate, and non-substitute resource bundles through the development of dynamic capabilities? This study proposes and tests a mediation model of how firms’ internal technological diversification and R&D, as two distinctive microfoundations of dynamic technological capabilities, mediate the relationship between external technology breadth and firms’ technological innovation performance, based on the resource-based view and dynamic capability view. Using a sample of listed Chinese licensee firms, we find that firms must broadly explore external technologies to ignite the dynamism in internal technological diversity and in-house R&D, which play their crucial roles differently to transform and reconfigure firms’ technological resources.     

Alliance or acquisition? a dyadic perspective on interfirm resource combinations

For firms seeking to strategically combine their resources with those of other firms, two popular alternative governance structures emerge: alliance or acquisition. In this paper, we propose a dyadic perspective to examine how and why configurations of two firms' resources and capabilities affect the costs and benefits associated with each governance structure. More specifically, we posit that factors such as (1) the resource similarity and complementarity between a pair of firms, (2) the combined relational capabilities of a pair of firms, and (3) the partner‐specific knowledge between a pair of firms will affect the likelihood of observing that pair of firms forming an alliance vs. engaging in an acquisition. We test and find support for our hypotheses using extensive longitudinal data from a sample of the largest firms in the United States from 1991 to 2000. Copyright © 2007 John Wiley & Sons, Ltd.     

Firm boundary decisions in solution business: Examining internal vs. external resource integration

This paper examines the drivers that lead manufacturers to choose between an internal versus external resource integration approach as they transition to solution-based business. We emphasize product-based resources and examine drivers for the choice of resource integration approach through four distinct firm boundary conceptions – identity, competence, efficiency, and power. These boundary conceptions are applied to an empirical investigation of two global manufacturers, Wärtsilä and Kone, which have chosen opposite strategies to integrate product-based resources in transitioning to solution business: one opted to internalize the required resources, while the other works with a network of external partners. We develop research propositions to explicate how internal vs. external resource integration approaches in solution business represent distinct paths for manufacturers to grow their underlying product businesses; derive value from integrated resources; manage interdependence between solution components; and position themselves as central integrators of complex solutions. This paper contributes to the existing research by providing a systematic and theoretically inclusive analysis of alternative approaches to organizing solution provision. Previous contributions on these issues are very few and predominantly focus on examining manufacturers’ organization of service provision. This paper provides a complementary view focusing on product-based resources and incorporates a wider range of explanatory theories.     

Alliance portfolios and firm performance: A study of value creation and appropriation in the U.S. software industry

This study reveals the multifaceted contribution of alliance portfolios to firms' market performance. Extending prior research that has stressed the value‐creation effect of network resources, it uncovers how prominent partners may undermine a firm's capacity to appropriate value from its alliance portfolio. Analysis of a comprehensive panel dataset of 367 software firms and their 20,779 alliances suggests that the contribution of network resources to value creation varies with the complementarity of those resources. Furthermore, the relative bargaining power of partners in the alliance portfolio constrains the firm's appropriation capacity, especially when many of these partners compete in the focal firm's industry. In turn, the firm's market performance improves with the intensity of competition among partners in its alliance portfolio. These findings advance network research by highlighting the trade‐offs that alliance portfolios impose on firms that seek to manage and leverage their alliances. Copyright © 2007 John Wiley & Sons, Ltd.     

Managerial Ties and Firm Innovation: Is Knowledge Creation a Missing Link?

Managerial ties, the personal networks of senior managers, have been found to be facilitators of firm performance because of their network benefits. However, social network theory suggests that managerial ties only play a “conduit” role by providing possibilities and opportunities to approach external resources. How can firms turn these possibilities and opportunities into internal knowledge assets and further transform them into firm innovation? Extant research constructs a direct mechanism for the managerial ties–firm innovation link. The research reported here, however, provides and investigates an indirect ties‐innovation argument where organizational knowledge creation processes, including knowledge exchange and knowledge combination, are mediators. And managerial ties are examined through two traditional dimensions, business ties and political ties. This study employs empirical data from 270 firms in China and uses structural equation modeling techniques to reveal interesting findings. First, the results support the key argument that the influence of managerial ties on firm innovation is indirect. Second, knowledge exchange and knowledge combination are different constructs and the former positively influences the latter. More interestingly, business ties can exert a significant direct impact on both knowledge exchange and knowledge combination, while political ties can only influence knowledge exchange directly. Although both knowledge exchange and knowledge combination impact product innovation directly, only knowledge combination can directly influence process innovation. These findings indicate that the role of political ties is declining, but business ties still have substantial influence on firm innovation in transitional China. Different processes of organizational knowledge creation, such as knowledge exchange and knowledge combination, make distinct contributions to firm innovation. Product innovation, as opposed to process innovation, is more externally oriented and needs more organizational level knowledge creation activities. This article extends the understanding of the ties–innovation link, organizational knowledge creation theory, and firm innovation in a transitional economy by providing a more complete understanding of how firms can access and internalize external resources and then transform them into product innovation and process innovation.     

Resource ambidexterity through alliance portfolios and firm performance

Research summary : Partner resources can be an important alternative to internal firm resources for attaining dual and seemingly incompatible strategic objectives. We extend arguments about managing conflicting objectives typically made at the firm level to the level of a firm's alliance portfolio. Specifically, will a balance between revenue enhancement and cost reduction attained collectively through partner resources accessed via a firm's various alliances be similarly beneficial for firm performance? Additionally, how do strategic attributes of alliance portfolio configuration, specifically alliance portfolio size and partner resource scope, condition the balance‐performance relationship? Based on data from the global airline industry, we find support for the balance‐performance relationship, though such balance is less beneficial for firms in the case of access to a broader resource scope per partner . Managerial summary : Increasing revenue and reducing costs simultaneously can potentially enhance firm competitiveness. We highlight that an alliance strategy can be an important alternative to internal resources for attaining such dual strategic objectives, particularly when partner resources accessed through alliances are treated collectively as portfolios. We examine the importance of balancing product‐market extending and efficiency‐improving partner resources in the global airline industry as well as the impact of two alternate strategies for accessing resources through alliances: fewer partners with more resources per partner or more partners with fewer resources per partner. We find that resource balance at the portfolio level helps airlines improve performance. Our results also suggest that managers should be cautious of accessing too many resources through just a few partners . Copyright © 2015 John Wiley & Sons, Ltd.     

The Contribution of In‐house and External Design Activities to Product Market Performance

Design may be seen as one of several key factors contributing to new product development, along with research and development, marketing, manufacturing, purchasing, etc. More and more, creative design comes to the fore, and many companies believe that superior design will be the key to winning customers. It has the ability to create corporate distinctiveness and also possesses the potential to give a product an individual or new look. Furthermore, the model of open innovation suggests that firms can and should use external and internal knowledge flows in order to create valuable ideas, and also internal and external paths to the market. Also, in the design process, a common trend toward external design skills has emerged in recent years. Due to cost and control factors, firms are increasingly outsourcing design activities. By using a sample of Belgian companies, this paper explores the contribution of design activities to product market performance. While there is mounting evidence that design can be seen as a strategic tool to successfully spur sales of new product developments at the firm level, the topic of design innovation has not yet been linked to the open innovation concept. In this paper, it is empirically tested whether design activities conducted in house differ in their contribution to new product sales from externally acquired design. So, do design activities that have been developed only with internal resources lead to a greater success than those that have been carried out with external sources of knowledge? Using a large cross‐section of manufacturing and service firms, the effects on sales of products new to the market and of imitations or significantly improved products of the firm are investigated. At first glance, the findings indicate that externally acquired design is not superior to in‐house design activities: the results show that only design activities that are mainly conducted with internal knowledge sources play a crucial role regarding the product innovation's success with market novelties. Design conducted in collaboration with external partners, however, has no significant influence. This is not the case for imitations, that is, products only new to the firm. Their success is also influenced by design activities developed with external collaborators. This effect is robust for several modifications of the model specification. In contrast to earlier literature on new technological developments, this paper argues that external design may not affect the sales of market novelties as the “market news” may spill over quickly to rivals through common suppliers including external designers.     

Creating superior customer value for B2B firms through supplier firm capabilities

In a dynamic global business-to-business (B2B) environment, innovation and marketing appear crucial to providing supplier firms' positional advantage through the ability to create value for customers. Our examination is grounded in seeking to address the research question: To what extent is the creation of superior performance, relationship, and co-creation value driven by market orientation, product innovation and marketing capabilities in B2B firms? The results of a survey of 155 large B2B firms show product innovation capability and marketing capability partially mediates the relationship between a firms' market orientation and its ability to create value (performance and co-creation), except for the role of marketing capability which we found acted as a full mediator of the relationship between market orientation and relationship value.     

A paradox within the paradox of openness: The knowledge leveraging conundrum in open innovation

Firms’ innovative capabilities and performance increasingly rely on successful search and integration of internal and external knowledge. To this end, firms engage in various open innovation relationships, aiming to create and capture value in multi-actor contexts. This can give rise to a “paradox of openness” due to the contradictory role of knowledge as a key resource that creates value when shared, but also as a source of appropriability challenges. We explore the concept of a “paradox within a paradox;” the knowledge-leveraging paradox embedded within the paradox of openness. We integrate a knowledge-based view with paradox theory and develop a conceptual model to pinpoint core knowledge-related transferability and exposure tensions. We then show how these tensions are inversely moderated by innovation-related knowledge ambiguity. This ambiguity amplifies transferability tensions by making the knowledge more difficult to transfer and integrate across organizational boundaries, while relieving exposure tensions for the same reasons. We discuss potential solutions for resolving these core knowledge-related tensions by identifying separation and restructuring mechanisms that can facilitate simultaneous knowledge transfer and alleviate exposure hazards.     

Resource complementarity and international joint venture performance in Korea

The resource-based view of joint ventures (JVs) posits that JV performance is driven by JV partners’ ability to create synergy by joining complementary resources. We examine the synergy generated from resource complementarity in the context of JVs formed between developed market firms and local Korean firms. Besides the independent effects of both partners’ complementary resources on JV performance, we examined whether a joint effect on JV performance existed. We found that both technology-related resources and local knowledge-related resources affect JV performance independently and simultaneously. The impact of local knowledge-related resources on JV performance increased with the level of technology-related resources, and the impact of technology-related resources on JV performance increased with the level of local knowledge-related resources. Technology- and local knowledge-related resources are thus not simply additive; mutually enhancing synergies exist between the two resources. This finding further suggests that the synergistic effect of both partners’ complementary resources on JV performance can be substantive.     

Firm growth,adaptive capability,and entrepreneurial orientation

Research summary: This paper posits adaptive capability as a mechanism through which a firm's prior growth influences the exhibition of future entrepreneurial action. Defined as the firm's proficiency in altering its understanding of market expectations, increased adaptive capability is a consequence of the new resource combinations that result from expanding organizational boundaries. Increased adaptive capability in turn corresponds to expansion of entrepreneurial activity, as firms increase their entrepreneurial orientation as the strategic mechanism to capitalize on their improved understanding of market conditions. We find support for our research model in a two‐study series conducted in South Korea and the United Kingdom. Managerial summary: Most would agree that entrepreneurially oriented firms—being innovative, entering new markets, and taking risk—grow faster. But how a firm becomes entrepreneurial is a complicated question. In this study, we flipped the growth relationship around and found support for growth contributing to a firm's entrepreneurial orientation. But between growth and being more entrepreneurial is the firm's ability to recognize changes in market expectations. We argue that as a firm grows, it acquires new resources and new knowledge of how to use those resources. These new resource combinations increase its ability to recognize changes in market expectations—its adaptive capability. This capability uncovers new entrepreneurial opportunities for value creation. To capture this potential value, firms expand their entrepreneurial orientation. Copyright © 2016 John Wiley & Sons, Ltd.     

Board reform versus profits: The impact of ratings on the adoption of governance practices

Research summary: External stakeholders frequently attempt to influence organizations' adoption of new practices through the creation of public ratings. Based on the insights of performance feedback theory, we develop the theory of organizational reactions to external ratings to explain how firms' behaviors depend on their rating scores and their profitability. A central issue in our theory is the conflict between established internal goals and goals introduced by public ratings, with public ratings receiving lower priority than established profitability goals. Our theory suggests that, contrary to the expectations of the external stakeholders, firms targeted for criticism by ratings become less likely to adopt corresponding practices when their profitability is below aspirations. These arguments are supported in data on the diffusion of corporate governance practices in Canada. Managerial summary: Firms and their products are rated and ranked by external agencies ranging from Consumer Reports to magazine rankings of admired, environmental, or well‐governed companies. We investigate whether such ratings affect firm behaviors, and especially whether they can incentivize poorly rated firms to improve their ranking when these firms' profitability is also low. Using the leading corporate governance ranking in Canada, we find that rankings could have adverse effects: when firms have both poor governance ranking and poor profitability they are less likely to adopt governance practices, contrary to the ranking creators' intentions. The findings show that there is a hierarchy of firms' goals, where the goal of profitability comes ahead of other goals imposed by external agencies through ratings and rankings. Copyright © 2016 John Wiley & Sons, Ltd.