Financial projections in innovation selection: The role of scenario presentation,expertise, and risk

Innovation project selection is a decision of major relevance to firms. Errors in this decision may have serious consequences for firms, especially as many firms struggle with optimizing innovation project selection decisions. In their pitches to innovation decision-makers, project teams invariably present financial projections on their innovation projects, which often include best- and worst-case scenario presentation. Despite the potential influence the presentation of such financial projections has on firms’ innovation project selection decisions, this topic has not received sufficient attention in the literature. This study examines the role of scenario presentation on financial projections in innovation project selection by conducting two conjoint experiments among 2,425 managers and 11 follow-up interviews with senior executives. First, the findings of this study suggest that firms should help project teams present small- rather than large-range scenarios. This is important for at least the 57% of firms surveyed in this study where project teams are reported to present ‘too wide’ and ‘too extreme’ scenarios. Second, firms seeking to promote transformational innovation in their innovation pipeline should make the presentation of small-range scenarios required for an innovation proposal to be presented to a project selection committee. This is relevant for 79% of surveyed firms that would like to select more transformational than core innovation projects and especially for the half of which that currently do not require scenario presentation. Third, project teams with less expertise should develop scenarios analytically rather than intuitively and convey the project’s strategic merit to decision-makers to help increase innovation project selection likelihood.     

From Supply Chains to Supply Ecosystems: Implications for Strategic Sourcing Research and Practice

Traditionally, sourcing decisions such as what to buy and from whom to buy it were viewed as clerical in nature. Today, however, many executives view sourcing decisions as strategic and these decisions are being made from more prominent positions within firms. Indeed, over time more companies are embracing the concept of strategic sourcing—making acquisition decisions with the intent of creating value and achieving a competitive advantage. In this article, we introduce the Special Topic Forum articles on strategic sourcing and performance. Each offers important implications for strategic sourcing research and practice. An overall implication is that some traditional supply chains appear to be giving way to supply ecosystems, which represent a set of interdependent and coordinated organizations that share common adaptive challenges and that collectively shape the creation and nurturing of a sourcing base that contributes to competitive advantage and superior performance. We offer several theoretical perspectives that hold promise for explaining supply ecosystem functioning and outcomes. In terms of practice, firms need to adapt their strategic sourcing to this evolution or run the risk of being weakened.     

Scenario-based strategy maps

Strategy maps are designed to help execute strategy and bring predictive qualities to key performance indicators by linking them according to perceived cause-and-effect relationships. However, in our experience strategy maps are often extrapolations of past performance and are seldom sufficiently linked to possible future states. In this article, we argue that scenario analysis could play an important role in the design of strategy maps, as it is an effective method to look at the future. Through the development of scenarios, organizations can think creatively about possible discontinuous future states and can prepare themselves for multiple plausible futures, not only the one they expect to happen. Therefore, scenario-based strategy maps could enable organizations to face strategic uncertainty in a more effective way and make them more sustainable in the longer term. This article highlights the strengths and weaknesses of strategy maps and scenario analysis, and outlines a method to develop scenario-based strategy maps both in theory and by presenting a significant example.     

Strategic market planning in a turbulent business environment

This study investigates the relationship between business environment and strategic market-planning procedures. The study results are based on the responses of 149 marketing executives of the Fortune 1000 companies. The results indicate that as the business environment becomes turbulent, the strategic market plans become more complete and more long-term orientated. The companies facing a turbulent environment emphasize decentralization in developing the strategic market plans. These companies use a variety of risk-reduction methods such as the usage of conceptual models, consultants, and computer-mathematical models in their strategic market-planning process.     

The Impact of the Global Financial Crisis on Country Attractiveness

This study assesses the impacts of the recent global financial crisis on the relative attractiveness of 125 countries between 2007 2011. Using a strategic model of international expansion that quantifies incorporates countries’ market potential (population size, gross domestic product [GDP] growth, per capita GDP), market risks (economic, political, legal, regulatory), distance (cultural, geographic), it confirms that some countries have become significantly less attractive (Ireland, Greece, Japan, etc.), while others have become much more attractive (Taiwan, Korea, etc.) as expansion markets for international companies. This study underscores the need for a strategic approach to international expansion decisions. The model can be used by business executives as a risk management tool in international expansion decision making. © 2014 Wiley Periodicals, Inc.     

Marketing and the British chief executive

British chief executives increasingly recognise the need to make their companies more marketing orientated. But boards of directors are still dominated by a financial outlook and most lack a professional approach to strategy and market innovation. Chief executives need to supplement their generally inadequate base with education and development programmes on strategic marketing and to add non‐executive directors with substantial expertise in marketing.     

Taking environmental partnerships seriously

Increasingly, firms are integrating environmental sustainability into their business strategies. Yet, sustainability is a complex topic and many firms need to form environmental partnerships to access additional resources—in the form of investments, technologies, expertise, public image, and/or political influence—to develop competitive advantage. Environmental partnership decisions are difficult, however, because they often need to reconcile multifaceted sustainability issues with multi-level, and potentially divergent, strategic goals. To meet their intended objectives, companies should carefully consider the type of environmental partnerships and partners that can best meet their needs. Based on a review of the literature, interviews with executives responsible for environmental partnerships, and publicly available data, we find firms engage in three main types of environmental partnerships: innovation-seeking, legitimacy-building, and policy-influencing. Each type of partnership benefits from different types of resources and partner choices. Herein, we describe the advantages of each type of environmental partnership and partners that may best support them. Given that many firms develop environmental partnership portfolios, managing multiple environmental partnerships simultaneously, we also discuss the implications of our research for environmental partnership portfolios.     

Fortune 500 list revisited 12 years later: Still an endangered species for academic research?

The study reported here is a replication of a 1974 study published in the Journal of Business Research that sought to determine corporate policies toward responding to academic research, what top corporate executives liked and disliked about such studies, and what factors influenced their decisions on whether to respond. The results of this study indicate that there have been considerable changes in corporate policies, the volume of surveys reaching corporate executives, and the factors they like and dislike about academic mail surveys. The findings suggest that academicians must be more careful in targeting on this set of firms to ensure that the time for completion is minimized and the value of the studies to the firms is maximized.     

Outsourcing government relations: Use of outside lobbyists when in-house capacity exists

To advance their interests by shaping public policies and influencing government decision-making, companies use internal resources, outside lobbyists, or trade associations to lobby. This article examines companies’ use of outside lobbyists even though in-house capacity exists and explores how these resources complement each other. The study aims to offer practical advice to companies and lobbying consultancies regarding the optimal use of internal and external government relations resources. Another aim of the study is to examine how companies monitor the lobbying efforts of the consultancies they hire. Semistructured interviews were conducted with 35 in-house government relations managers and executives to accomplish these goals. The research showed that companies engage with outside lobbyists for two leading reasons: to help with specific issues that have no internal expertise and to provide surge capacity. The interviews identified six ways companies use outside lobbyists: they provide (1) strategic advice, (2) external validation, (3) political intelligence, (4) contact plans, (5) logistical support, and (6) assistance with tough conversations.     

Ethical Attitudes in Small Businesses and Large Corporations: Theory and Empirical Findings from a Tracking Study Spanning Three Decades

This study offers a theoretical framework of ethical behavior and a comparative analysis of ethical perceptions of managers of large, mostly publicly traded corporations (those with 1,000 or more employees) and the owners and managers of smaller companies (those with fewer than 100 employees) across 17 years. The primary research provides basic data on the changing standards of ethics as perceived by leaders of large and small businesses where the cultures frequently fall into sharp contrast. Our findings reveal the extent to which the message of business integrity is gaining or losing ground within large and small companies. It does this by means of respondents’ judgments of acceptable responses to 16 scenarios profiling common business situations with questionable ethical dimensions. Based on responses from over 5,000 managers and employees (from firms of all sizes) to our scenarios at three points in time (1985, 1993, 2001), we tested two research questions. First, for firms of all sizes, have business ethics improved or declined between the years 1985 and 2001? Second, comparing responses of large and small firm executives across the 1985–2001 time frame, is there a discernible difference in their ethical standards? Our results suggest that business leaders are making somewhat more ethical decisions in recent years. We also found that small business owner–managers offered less ethical responses to scenarios in 1993 but that no significant differences existed with large firm managers in 1985 and 2001. Implications of our findings are discussed.     

B2B branding: A financial burden for shareholders?

Is branding an effective tool for generating shareholder wealth for companies that are active in a business-to-business environment? Or, do other factors such as innovation and manufacturing efficiency—or the lack thereof—create or destroy shareholder wealth? Based on an examination of almost 1,700 companies listed either on the United States or European stock exchanges, this study reveals this crucial relationship could be described as a W-shaped curve with five distinctive phases, depending on the strategic branding position of the company. Used strategically, business-to-business (B2B) companies with a balanced corporate brand strategy generally yield a return to their shareholders that is 5%-7% higher. It is therefore vital that key executives, including the board of directors, systematically assess and monitor the strategic branding position of their company and how their branding investments are performing against key competitors. This study reveals that shareholders should insist on systematic performance feedback from the corporation regarding all key items in the balance sheet—including branding. As disclosed herein, very few of the companies analyzed possessed an optimal balance between branding and financial performance.     

The Meanings of Managerial Prerogative: Industrial Relations and the Organisation of Work in British Engineering, 1880–1939

In pre-war Japan, large-scale business enterprises tended to become managerial enterprises, but around 1930 this transformation was still in a stage of transition. Managerial enterprises developed rapidly due to the militarisation of the economy during the Second World War, and, after 1945, following the dissolution of the zaibatsu by the occupying US forces. The purge of businessmen that had co-operated with the military, and tax and land reforms which affected the wealthiest, were other contributory factors. Economic growth after 1950 assisted the development of managerial enterprise, just as managerial enterprise accelerated economic growth by facilitating investment and the expansion of business capability. The majority of post-war Japan's most important executives were promoted from within their companies. They were already acquainted with their workforces, especially their engineers, and fully understood their capabilities. This knowledge and the support they enjoyed amongst their employees were critical to the strategic decision-making that guided the investments that brought rapid growth, and, with these organisational assets, they won the confidence and support of banks, business allies, and government. It was those managerial enterprises controlled by salaried managers promoted from within and the emergence of new entrepreneurial enterprises which led Japan's post-war economic growth.     

Line,line, everywhere a line: Cultural considerations for waiting-line managers

Given the trend of increasing business globalization, management teams of multinational companies have taken steps to better understand consumers, local business partners, and local governments. Local queueing preferences present managers with additional challenges and opportunities in international markets. The world may be ‘flat,’ but it is foolish to believe that all cultures perceive lines and waiting through the same lens. As discussed herein, perceptions regarding waiting and management of queues vary greatly; therefore, managers should adopt different policies and procedures when managing waiting lines across natural and cultural borders. Considering queue management in a global context offers benefits. Thinking globally—and acting locally—can prioritize and clarify important decisions any waiting-line manager has to make.     

Owners and managers: The venture 100 vs the fortune 500

A steady supply of entrepreneurs who will build the growth firms of the future has always been seen as fundamental to the economic health of a country. However, as companies have grown to the point where many have balance sheets larger than many countries, the role of the Top Management Team in managing these corporate giants has also received more prominence. Unfortunately, research into the two groups of current entreprenurs and large corporation managers has been both sparse, and has followed different, though parallel, paths. This research examines their backgrounds and asks the question whether the basic assumption that they are, in fact, different is correct—who are the high flying entrepreneurs, and are they any different from successful corporate leaders?Data was drawn from three sources. A questionnaire was sent to the 167 founders listed in the July 1984 edition of Venture Magazine as the “Venture 100”—“the nation's top entrepreneurs who run the companies they founded in the past ten years”. Sixty-seven useable replies were received from 40% of the founders and 52% of the companies. Comparative data was extracted from the “Korn Ferry's International Executive Profile: A Survey of Corporate Leaders” which surveyed five senior executives from each of the Fortune 500 companies. A response rate of 47% was received from a survey of 3640 executives. Further comparative analysis was extracted from the characteristics of senior executives of all firms in five selected industries (Dairy, Mobile Homes, Tires, Footwear, and Machine Tools) as listed in Duns Reference Book of Corporate Management 1983/1984. Data was collected on personal characteristics (age, family background, and education), previous employment experience, managerial style, and work patterns.The null hypothesis of there being no significant difference between high flying entreprenurs and their counterparts in the largest U.S. corporations was not sustained. Whereas certain characteristics showed similar patterning—previous employment experience, managerial success traits—the remaining variables demonstrated significant differences. The entrepreneurs were younger, better educated, had more international experience, and worked harder than their corporate colleagues. If replicated elsewhere, the results of this study have particuloar implications for the type of educational and employment experience necessary to affect the supply of the entrepreneurs of the future.     

Country matters: Executives weigh in on the causes and counter measures of counterfeit trade

In this article, we present the findings of a study examining the exploding problem of counterfeit trade via the opinions of U.S. executives as compared to their counterparts from Australia, New Zealand, South Africa, and Tahiti. Their responses provide insight as to how companies in different countries are attacking piracy and consumer complicity with counterfeit products. Per our study, executives in Australia, Tahiti, and the U.S. had similar perspectives: they viewed the seller as the main driver of counterfeit trade for reasons of profit. These executives perceived the demand for counterfeits as being driven by desirable product attributes and the ease of obtaining them. Likewise, they cited two anti-counterfeiting actions—site licenses and reduced price/rebates—as being able to reduce the demand for illicit products. In contrast, South African executives observed the main reason for piracy as weak enforcement of intellectual property (IP) and the lure of exorbitant profits, with little value in any anti-counterfeiting actions other than special packaging. These executives put forth that South African consumers are complicit due to limited education and low disposable income, and the ready availability of counterfeits. Executives from New Zealand were the most optimistic, believing that piracy and complicity can be reduced by many anti-counterfeiting actions, including special packaging, reducing price, emphasizing product benefits/warranties, stressing the harmful effects of using fake products, offering site licenses, and listing of authorized sellers.     

Orthorexia Nervosa: Can Healthy Eating Food Trends Impact Food Companies Marketing Strategies?

The purpose of this article is to explore foods companies’ knowledge of food trends and assess how orthorexia nervosa may affect food companies’ marketing decisions. Data was gathered through a multiple case-study approach, and four semi-structured interviews to CEOs/CMOs of food companies from four distinct non-competing sectors of the food industry. The results show that although marketing managers are conscious of the existence of consumer behavior changes regarding food habits, they are not particularly concerned neither interested in micro-segments as they are not profitable. Despite the deficiencies on CMOs’ knowledge of particular food trends they declare to be attentive to the changes in consumer behavior and prepared to respond to competitors moves. This research adds to the existing knowledge on the food industry since it is the first study to explore the impact of food trends on food companies’ management marketing decisions from the company point of view.     

Outsourcing support functions: Identifying and managing the good, the bad, and the ugly

Outsourcing the purchase of components or “hard goods” is not a new phenomenon: it is known as the “buy” portion of a company's common make-or-buy decisions. In the current service-oriented economy, however, make-or-buy decisions are now often do-or-buy decisions that reflect the strategic question of whether outside entities should be hired to perform significant support service activities. Support functions such as information technology and customer service can be outsourced to provide many organizational benefits. Companies frequently point to the cost savings for labor and training, but also cite the benefits of releasing corporate resources for alternative uses and allowing the business to focus on its core competencies. Outsourcing support functions is not simple, though, and companies must manage the related strategic, quantitative, and qualitative risk factors. This article discusses some of the potential risks that must be faced when a company outsources internal support functions, and describes how the Committee of Sponsoring Organizations of the Treadway Commission's Enterprise Risk Management (ERM) model can assist in managing and controlling these risks.     

Managing future uncertainty: Reevaluating the role of scenario planning

The business environment for many firms is changing rapidly and is becoming increasingly uncertain due to the disruption caused by new digital technologies, deregulation, new business models, and the threat of new competitive entrants. This dynamic competitive environment increases the level of uncertainty for senior executives and strategic planning teams who bear responsibility for the strategic development of the firm, particularly in terms of the future direction, scope, and the strategy required to deliver on corporate objectives. This in turn, places increased scrutiny on the strategic planning tools that are used to undertake a rational and comprehensive analysis of the competitive dynamics that inform strategy formulation. This article presents empirical findings and reflections on a scenario-planning project that sought to develop a long-term corporate level strategy. While scenario planning is an established constituent of the strategist’s toolbox, the increasing level of dynamism and uncertainty in many markets has meant that it has seen a resurgence. This article presents empirical findings on how the scenario-planning tool was selected and applied before reflecting on the individual and organizational outcomes of using scenario planning to develop an organizational strategy in uncertain market conditions.     

An Experimental Study of Executive Decision-Making With Implications for Decision Support

Past research in the field of information systems has explored factors and conditions that are relevant to decision-making in many contexts. However, very little is known about how executives consider, weigh, and integrate these factors. One current school of thought holds that intuition and instincts can play a significant role and that when decision-makers use their instincts, they rely on only a relatively small subset of the cues available to them. This has implications for designing and improving decision support systems, which form a major and widespread element of modern organizational computing. We examine the decision-making policies of professional decision-makers. High-level information technology executives were asked to evaluate the likelihood of making a strategic investment in the face of varying environmental scenarios. Using policy-capturing methodology, we find differences between what the executives thought was important to their decision-making and what is revealed as actually being important. In addition, we find that personal characteristics of risk-taking propensity and innovativeness affect the way the decision-makers integrate information. We argue that the idiosyncratic nature of the executive-environment relationship calls for increased emphasis on developing suitably adapted decision support systems (e.g., business intelligence systems) for executive decision-making.     

Strategic changes in purchasing: Two main tracks

Purchasing is going through an extensive process of change, and facing several challenges. In this study two important strategic tracks are identified and the underlying causes analysed. The first track entails an increased degree of purchasing, following from make-or-buy decisions: so-called outsourcing. The second tract entails decentralization of and coordination within the purchasing function. In three case studies, these two tracks have been found to be dominant aspects of change. They can be implemented simultaneously, but their driving forces are different. The companies examined have been chosen to make comparisons between a company within the automobile industry and two prominent companies within other engineering industries. Comparisons show that automobile manufacturers have unique prerequisites for going very far along the outsourcing track, owing to a combination of mass production and an end-product that contains many modules or subsystems. In terms of decentralization of and coordination within the purchasing function, the companies have more similar conditions and changes are more alike.