Strategic (MIS)FIT: The Implementation of TQM in Manufacturing Organizations

This paper explores how fit with the organization's strategic orientation relates to performance following total quality management (TQM) implementation. Conceptualizing the organization as a system of interrelated activities, we propose that TQM is an ‘elaborating element’ that achieves internal fit when the core elements of the activity system are orientated toward a ‘cost leadership’ rather than ‘differentiation’ strategic position. When internal fit occurs, TQM drives tighter interactions among core elements in the activity system, resulting in greater performance. Using longitudinal data from a sample of 780 manufacturing organizations, we find that TQM is positively related to performance for cost leaders, but negatively related to performance for differentiators. Our findings support the contingency perspective whereby internal fit serves as an overarching contextual factor influencing TQM success. Copyright © 2012 John Wiley & Sons, Ltd.     

Stock market undervaluation of resource redeployability

Research Summary : Stock market undervaluation of resources was often assumed to have strategic implications. Such undervaluation lets firms buy resources relatively cheaply, but it can also constrain resource deployment. This article shows that the option to redeploy a firm's resources to a new business can be undervalued in stock markets when investors face ambiguity about that option due to uniqueness of redeployment. The developed formal model derives conditions under which stock markets undervalue resources. Those conditions are summarized with an empirical operationalization that can be tested with a broad range of strategic implications. Besides, the model provides a more complete account of resource redeployability by demonstrating the redeployability paradox. The paradox highlights that some determinants of redeployability enhance undervaluation, while simultaneously increasing objective value of redeployable resources. Managerial Summary : Stock markets can systematically undervalue resources. On the one hand, such undervaluation creates a profitable opportunity for a firm that needs some resources for its growth and compares the option to buy stock in another firm, whose resource are undervalued, with the option to build those resources internally. On the other hand, such undervaluation poses limits to resource deployment strategies of the undervalued firm. When does such undervaluation occur? This study highlights one possible source for undervaluation, ambiguity that is faced by stock market investors about the option to redeploy a firm's resources to a new business. The study specifies conditions under which stock markets are more likely to undervalue resources. The understanding of those conditions can guide managers toward strategic opportunities.     

The influence of desire for control on monitoring decisions and performance outcomes in strategic alliances

Strategic alliances are fraught with risks, such as the uncontrolled disclosure of core knowledge via opportunistic learning. The usefulness of monitoring in policing opportunism notwithstanding, a contrasting view is that monitoring mechanisms can themselves manifest the dark side of strategic alliances. The present study argues that a novel dark personality trait—the focal firm's desire for control—may influence key decisions pertaining to how to monitor strategic alliances, which in turn can negatively impact performance outcomes. Our conceptual model was developed and tested, based on a survey of 404 strategic alliances. The results demonstrate that a focal firm's desire for control is positively associated with process monitoring as well as output monitoring. The firm's use of process monitoring to oversee the counterpart drives its performance outcomes only if there is a low level of information exchange between the alliance partners; as such, information exchange norms substitute for process monitoring. By contrast, the focal firm's use of outcome monitoring is negatively linked to performance unless complemented by a high level of information exchange. Key implications for alliance management and future research are derived from the findings.     

Making the most of what you have: managerial ability as a source of resource value creation

The current study investigates a central premise of the resource‐based view of the firm—that managers are a potential source of value creation for the firm. Using data from professional sports teams, we test theory regarding the effects of managerial ability, human resource stocks, and managers' actions on resource value creation. While results indicate managerial ability affects resource productivity, this effect is less pronounced with increases in the quality of firm resources. Further, we investigate the extent to which managerial actions that synchronize resource bundles account for the influence of managerial ability and resource context on a firm's performance advantage. These results contribute to our understanding of resource management and provide empirical evidence for the importance of managerial ability in the resource‐based view. Copyright © 2008 John Wiley & Sons, Ltd.     

Strategic Suppliers' Technical Contributions to New Product Advantage: Substitution and Configuration Options

Current theory lacks clarity on how different kinds of resources contribute to new product advantage, or how firms can combine different resources to achieve a new product advantage. While several studies have identified different firm‐specific resources that influence new product advantage, comparatively little research has explored the contribution of strategic supplier resources. Combining resource‐based and relational perspectives, this study develops a theoretical model investigating how a strategic supplier's technical capabilities impact focal firm new product advantage and how firms combine different resources to gain this advantage. The model is tested using detailed survey data collected from 153 interorganizational new product development projects in the United Kingdom within which a strategic supplier had been extensively involved. Empirical results support our research hypotheses. First, supplier technical performance is shown to have a significant positive impact on new product advantage. Next, we show that while supplier technical capabilities have a positive influence on supplier technical performance, the a priori nature of the supplier's task moderates the relationship. Finally, our data support our hypotheses related to the positive relationship between relationship‐specific absorptive capacity and new product advantage, and the proposed negative moderation of supplier technical capabilities on this relationship. Based upon these findings, we encourage managers to recognize that strategic suppliers' with greater technical capabilities perform better regardless of the degree of creativity required by their task; but that strategic suppliers with lower technical capabilities may partially compensate (substitute) for their lack of technical capabilities, if they are able to respond to high problem‐solving task requirements. Furthermore, we suggest that the firm's development of relationship‐specific absorptive capacity is much more important when a strategic supplier is less technically capable. A buying firm's relationship‐specific absorptive capacity can, according to our data, substitute for low supplier technical capabilities. On the other hand, where the supplier has strong technical capabilities, investments in relationship‐specific absorptive capacity have no effect on new product advantage. Our findings reinforce recent calls for research on how firms can combine different resources and capabilities to achieve superior performance.     

Strategies for managing a portfolio of alliances

Interorganizational relationships are recognized as an increasingly important source of competitive advantage. Hence, goal‐oriented management of the alliance portfolio—all the alliances of the focal firm—plays a decisive role in company performance. Consequently, the configuration and development of the alliance portfolio become important strategic issues. In light of that, this article develops theoretical propositions that seek to clarify what determines the configuration and evolution of an alliance portfolio, and then presents the results of a longitudinal study to illustrate the developed theoretical framework. Building on contingency theory and a coevolutionary framework, we were able to identify three distinctive types of portfolio strategies at business level and to illustrate how they interact with the development of the business strategy and the business environment. Encompassing all this, the study illustrates and explains developmental paths and patterns in the evolution of an alliance portfolio. The developmental course typically evolves from adapting to shaping and to exploiting (stabilizing), according to the state of strategic uncertainty and the firm's resource endowment. A sudden increase in exogenous strategic uncertainty, however, can lead to a strategic shift back to an exploration or hybrid strategy. Copyright © 2007 John Wiley & Sons, Ltd.     

Relational key account management: Building key account management effectiveness through structural reformations and relationship management skills

Literature has widely recognised the importance of key account management (KAM) in building long-term customer relationships. Although KAM grounds significantly on the relationship marketing theory, most empirical studies focus on the financial impact a KAM programme can produce. Hence, only normative work can advise practitioners on the implications from adopting a relational approach in managing their business with customers who can help the supplier realise a broader set of strategic objectives. Drawing from 304 cases of different suppliers, this article seeks to start filling this gap in the literature and offer empirical evidence regarding the structural and relational implications from a KAM programme. In summary, the findings suggest that adopting a relational perspective through the development of key account management orientation (KAMO) will result in certain, necessary, structural reformation while allowing for specific relational skills to develop. Consequently, supplier's performance also improves. Moreover, this chain of effects remains strong independently of resources available to the supplier, suggesting that KAM can be a significant basis for developing a competitive advantage irrespectively of the supplier's size.     

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

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

Knowledge worth having in ‘excess’: The value of tacit and firm‐specific human resource slack

Whether holding resources in excess of what is needed to sustain routine operations (i.e., having slack) increases or decreases firm performance is a question of ongoing interest to management scholars. We contribute to existing theory by arguing that human resource slack generally decreases a firm's performance but that holding excess numbers of employees who possess important tacit knowledge that is specific to firms may benefit the firm. We find that the value of these excess resources increases as firms face competitive pressures and decreases when firms' operational choices facilitate the standardization of workflows. We obtain initial empirical evidence for our predictions by testing them on a novel dataset comprising six years of data for 4,070 manufacturing plants in Mexico. Copyright © 2013 John Wiley & Sons, Ltd.     

Research notes and communications strategic planning as competitive advantage

Since 1970, over forty empirical studies have examined the performance consequences of formal strategic planning. This line of research has drawn heavy criticism from reviewers on methodological grounds, and has produced confusing, apparently contradictory results. This article reevaluates the planning-performance relationship from a resource perspective, arguing that strategic planning does not satisfy the criteria for sustainable competitive advantage– although it may produce economic value, it is easily imitated and may be substitutable. The article suggests that previous studies produced inconsistent results because they did not account for the dissemination of strategic planning over time, or for industry differences in strategic planning factor markets. An empirical test in two industries finds that formal strategic planning and financial performance are unrelated in a ‘planning equilibrium’ industry, but positively related in an industry with strategic planning factor market imperfections.     

Using Exploratory and Exploitative Market Learning for New Product Development*

While the need for research on the market‐learning efforts of a firm in relation to its new product development is continuously emphasized, the empirical results on this issue reported so far have been mixed. The current study contends that the inconclusive nature of the empirical evidence is mostly due to the existence of different dimensions of organizational market learning—exploratory and exploitative—and to possible different routes by which these learning dimensions are linked to new product performance. More specifically, this study argues that exploratory market learning contributes to the differentiation of the new product because it involves the firm's learning about uncertain and new opportunities through the acquisition of knowledge distant from existing organizational skills and experiences. By contrast, this study posits that exploitative market learning enhances cost efficiency in developing new products as it aims to best use the currently available market information that is closely related to existing organizational experience. This study provides empirical support for this two‐dimensional scheme of organizational market learning and its consequent effects on two components of new product advantage: new product differentiation and cost efficiency. Further, given that the effectiveness of firms' strategic efforts is contingent upon the nature of the market environment, the current study examines the moderating effects of environmental dynamism and market competitiveness for this market learning—new product advantage relationship. This study is based on survey data from 157 manufacturing firms in China that encompass various industries. The empirical findings support the two‐dimensional market learning efforts that increase new product differentiation and cost efficiency, respectively. The study confirms that exploratory market learning becomes more effective under a turbulent market environment and that exploitative market learning is more contributive when competitive intensity is high. It also suggests that because of their differential direct and moderating effects on new product advantage either exploratory or exploitative market learning may not be used exclusively, but the two should be implemented in parallel. Such learning implementations will help to secure both the feature and cost‐based new product advantage components and will consequently lead to the new product success. The current study attempts to contribute to greater clarity and better understanding of how market learning influences new product success as it theoretically identifies and empirically validates the two forms of new product advantage as the conceptual mediator between market learning and new product performance.     

Strategic frameworks for understanding employer participation in school‐to‐work programs

The knowledge and skills inherent in human capital are increasingly recognized as the essence of competitive advantage. Extending the emerging literature on capability building, this paper explores the strategic decision of participating in school‐to‐work programs from the transaction cost and resource‐based view of the firm. Using data from a national sample, we find that both strategic perspectives help to explain decisions to participate in school‐to‐work activities. Our findings indicate that school‐to‐work programs and activities may be understood as interorganizational strategies from a transaction cost view and evidence of a firm's motivation to develop human capital to build competitive advantage from a resource‐based view. Implications for school‐to‐work public policy development in the United States and future research are identified. Copyright © 2005 John Wiley & Sons, Ltd.     

Specificity and opacity as resource-based determinants of capital structure: evidence for Spanish manufacturing firms

In this work we develop an analytical framework to examine the effects of strategic investments on the financial policy of the firm. From the resource-based approach of the firm, nontradable and difficult-to-copy assets are the basis of a sustainable competitive advantage. However, imperfections in the resource markets can also be interpreted as sources of costs and/or restrictions from a financial point of view. Specificity and opacity are the features of strategic resources that enable us to identify the financial implications of the resource-based strategy. We have tested our theoretical framework using a sample of Spanish nonfinancial firms. Our results show that highly specific and opaque resources limit the borrowing capacity of the firm, while other transparent strategic assets affect financial leverage positively. Our findings suggest two main implications for strategy formulation and implementation: (1) there are unobservable financial costs that must be considered for a correct evaluation of a sustainable competitive advantage based on strategic resources; and (2) the financial policy of a ‘resource-driven’ firm is partially determined by the features of its strategic resource bundle. Copyright © 2001 John Wiley & Sons, Ltd.     

Resources and transaction costs: how property rights economics furthers the resource‐based view

Property rights economics furthers the resource‐based view of strategic management in a number of ways. First, resources are conceptualized as being composed of multiple attributes for which property rights may be held. Second, a resource owner's ability to create, appropriate, and sustain value from resources depends on the property rights that he or she holds and on the transaction costs of exchanging, defining, and protecting them. While transaction costs are a major source of value dissipation, reducing such dissipation may create value. Implications for the RBV analysis of sustained competitive advantage are derived. Copyright © 2005 John Wiley & Sons, Ltd.     

Managing strategic change through TQM: learning from failure

This article argues that the study of total quality management (TQM) failure is a valuable vehicle to extend our knowledge of strategic change management. The article reviews the literature on TQM and, after reporting the findings from an in-depth case study concludes by discussing the meaning of 'failure' and the lessons for managing strategic change that can be learnt from the study of TQM decline.     

Who needs experts most? Board industry expertise and strategic change—a contingency perspective

Research summary: We analyze the effects of board industry expertise on corporate strategic change and the moderating role of institutional quality. We suggest that country‐level contingency factors mitigate the effect of experienced boards on strategy formation by providing alternative sources of information and control in strategic matters. We develop institutional quality as institutional information provision and institutional control provision to test our hypotheses on a sample of firms from MSCI Europe and the S&P 500. Our findings confirm that industry expertise is a salient driver of strategic change across countries. The strength of the effect, however, depends on the institutional quality. We submit that weak institutions require greater board industry expertise as an alternative channel of information and control. Management summary: This study provides new empirical evidence that experience in the firms' industries enables directors to increase strategic change. Our findings show that this effect is even stronger in countries with weak regulatory environments. We hereby provide guidance for multiple stakeholders. First, shareholders seeking a more active adjustment of their firms' strategies may want to compose boards that leverage such experienced directors. Second, directors can use their industry experience to control and to challenge managers better to move beyond the status quo. Third, managers lacking access to information on potential strategic change can use such experienced directors for strategic advice and as a source of information. Overall, we add to the understanding of the corporate board's role in shaping strategy and the influence of weak regulations. Copyright © 2016 John Wiley & Sons, Ltd.     

Network development and firm growth: A resource-based study of B2B Born Globals

Using multiple case studies, we explore how Born Global networks develop as the firm's internal resources grow. Building on networks and entrepreneurship research, we develop a theoretical framework and advance five propositions that link resource development and entrepreneurial orientation to network content, structure, centrality, and management. We also explore the benefits that Born Globals gain from this development. Key findings include: resource accumulation and network development have a strong relationship while network content becomes increasingly strategic; strong entrepreneurial orientation coincides with calculative network management; network benefits are not always advantageous to the firms. This study makes empirical contributions to Born Global and Networks research in the context of Business-to-Business firms, and provides practical implications for Entrepreneurs and Born Global managers.     

Strategy,human capital investments,business‐domain capabilities,and performance: a study in the global software services industry

Research summary : In knowledge‐based industries, continuous human capital investments are essential for firms to enhance capabilities and sustain competitive advantage. However, such investments present a dilemma for firms, because human resources are mobile. Using detailed project‐level operational, financial, and human capital data from a leading multinational firm in the global IT services industry, this study finds that deliberate investments in improving general human capital can help firms develop superior capabilities and maintain high profits. This paper identifies two types of capabilities essential for success in this industry—technological and business‐domain capabilities—and provides empirical evidence justifying such investments. Theoretical and practical implications of capability‐seeking general human capital investments are discussed. Managerial summary : The primary managerial implication of this research is that capability‐seeking investments in developing general human capital through strategic learning (training and internal certifications) can enhance firm performance. Although investing in general human capital is risky, the firm considered this a strategic necessity in order to thrive in the fast paced IT services industry. By leveraging general technological skills in combination with business‐domain knowledge to address customer's business problems firms can earn and sustain higher profits. Our study also demonstrates how a developing‐country firm responded to strong competitive challenge from global rivals possessing superior capabilities by upgrading the capabilities of its employees through internal development. In doing so the firm was able to narrow the capability gap vis‐à‐vis its foreign peers and expand its business globally. Copyright © 2016 John Wiley & Sons, Ltd.     

Resources as dual sources of advantage: Implications for valuing entrepreneurial‐firm patents

Why and how do resources provide sources of competitive advantage? This study sheds new light on this central question of resource‐based theory by allowing a single resource—entrepreneurial‐firm patents—to play distinctive roles in different competitive arenas. As rights to exclude others, patents serve a well‐known role as legal safeguards in product markets. As quality signals, patents also could improve access and the terms of trade in factor input markets. Based on the financing activities of 370 venture‐backed semiconductor start‐ups, we provide new evidence that patents confer dual advantages in strategic factor markets, improved access and terms of trade, above and beyond their added product‐market protection. The study has important implications for empirical tests of resource‐based theory and the measurement of resource value. Copyright © 2013 John Wiley & Sons, Ltd.     

CEO compensation: A resource advantage and stakeholder‐bargaining perspective

This paper studies how CEO pay and its composition is shaped by strategic factors related to the firm's capacity to generate rents and value, the uncertainty of its resource advantage, and the competitive interaction between firm stakeholders and top management. This is done using an analytical framework in which the CEO and other firm stakeholders interact over the firm's resource surplus as utility‐maximizing claimants based on their relative bargaining power while providing shareholders their market‐based required return. Results from the model yield a number of cogent strategic insights and predictions on the causal interplay between CEO pay, firm growth and risk characteristics, stakeholder management, corporate strategy (e.g., offshoring production), and behavioral biases such as CEO optimism and overconfidence. Copyright © 2012 John Wiley & Sons, Ltd.