A commentary essay on “Resources prospectively: How actors mobilize resources in business settings”

This commentary essay explores the topic of mobilizing resources and specifically addresses the article “Resources prospectively: How actors mobilize resources in business settings” (Finch et al., in this issue). This article views access to resources as the foundation for interaction between firms and as mediated via developing business relationships. The article by Finch, Wagner and Hynes adds insights into this particular context by investigating the role of the individual in mobilizing resources and initiating a discussion on how resources are created.     

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.     

We need to talk about strategy: How to conduct effective strategic dialogue

As researchers and consultants, we have spent the last few years helping a dozen major public and private organizations understand what went wrong with their strategic planning. We discovered that executives have a hard time with strategy because they are at a loss when the time comes to engage in strategic dialogue. Either their teams debate the organization’s values and goals when such issues should be settled, or they waste time on the details of specific projects that have yet to receive the green light. But whether the conversation is too broad or too narrow, strategy stays out of view. Drawing on recent developments in strategy-as-practice and decision-making literature, we propose a model that executives can follow to take control of strategy meetings and keep their teams on track. We ask them to focus on the right decision purpose, adjust the meeting’s communication style, and cast the right leader for the job. When these three simple rules are followed, the pillars of successful dialogue are aligned, and executives can finally talk about what matters most to them: strategy.     

Franchisor strategy and firm performance: Making the most of strategic resource investments

A key decision for entrepreneurs in many retail and service firms is whether, and how much, to use franchising. If the decision is made to franchise, the actor may assume one of two “identities” or tactics: (1) the “chain builder,” who uses a blend of company and franchised outlets, and (2) the “turnkey,” who sells business opportunities but does not own any outlets. To benefit from their chosen strategy, franchisors must put resources in place to support it. We argue that franchisors use the chain building strategy to strike a balance between standardization and innovation by building resources that foster trust and encourage knowledge sharing with franchisees. In contrast, for turnkeys, a valuable set of operational routines is the critical strategic resource. To better appreciate how franchisors choose between the chain builder and turnkey strategies, we gathered survey information from 263 franchisors. Via this data, and as described herein, we learned that franchisors perform better when they invest in resources that best support their selected strategy.     

Investing for strategic resources and its rationale: The case of outward FDI from Chinese companies

As more Chinese companies become engaged in foreign direct investment (FDI), particularly in industrial countries, a crucially important issue must be addressed: what is the motivation of Chinese outward FDI, and what is its rationale? Based on a detailed analysis of both primary and secondary data sources, this article argues that when investing in advanced economies, Chinese multinational corporations (MNCs) are motivated primarily by the quest for strategic resources and capabilities, and that the underlying rationale for such asset-seeking FDI is strategic needs. The examination of this premise will hopefully prompt business practitioners to think about this important issue in new and innovative ways, thereby identifying an appropriate policy and strategic response.     

Performance and Strategy: Simultaneous Equations Analysis of Long-lived Firms

A simultaneous equations model of performance, strategy and size is tested using fieldwork evidence on long-lived firms in Scotland. Estimation is by I3SLS, with correction for sample selection bias. The contributions of this paper are that it: (a) grounds estimation on fieldwork evidence; (b) calibrates performance and competitive strategy; (c) tests and models endogeneity; and (d) computes robust trade-off elasticities between firm size and performance. It shows how this trade-off provides the entrepreneur with two strong incentives: (i) to seek greater efficiency typically by an increase in the human capital of the ‘core’ workforce; (ii) to achieve higher levels of performance by adopting more diverse competitive strategies.     

Crossing the chasm: Leadership nudges to help transition from strategy formulation to strategy implementation

Top managers tend to focus on strategy formulation and planning but fail to embrace the problem-solving complexity of strategy implementation. This can lead to implementation failures that are reflected in misaligned organizations that seem to know where they want to go but cannot seem to get there. We posit that one reason for the ineffective transition from strategy formulation to strategy implementation is that planning is associated with a different set of thought processes and emotional experiences than is required for strategy implementation. We integrate research from management (strategy implementation and change management) with that from psychology (self-regulation and nudges) to identify the transition from strategic planning to implementation as a roadblock that prevents effective strategy implementation. We then present six leadership nudges that aid this transition. The first set of nudges are willpower-enhancing nudges that rely on increasing willpower to help transition from planning to implementation: Remove the distraction to plan, develop implementation intentions, and use verbal framing. The second set are desire-reducing nudges that work to decrease the desirability of planning and in so doing facilitate the transition to implementation: Highlight the end game, leverage a crisis, and celebrate small wins.     

Global software piracy: Trends and strategic considerations

The design, manufacture, distribution, and sale of software constitutes a rapidly growing and remarkably lucrative global industry. Leaders of most software companies understand that intellectual property rights (IPR) typically are vital to competitive advantage and company success. Theft of intellectual property (IP) in the form of software piracy is brazen, extremely costly, lowers incentives to innovate, and threatens the very existence of some companies. IP theft, therefore, is a daunting challenge for managers of software firms. In this article, we make several contributions that should prove helpful to software designers, managers, responsible users, and broad stakeholders of software innovation and use—that is, almost all of us. In doing so, we provide an overview of international legal, ethical, economic, and systemic considerations, and we share an analysis of the drivers of consumer software piracy. We then discuss strategic considerations and introduce a decision-making typology, which may help legitimate companies to devise strategies and tactics to manage their software IP in the face of widespread piracy.     

Leveraging knowledge-based resources: The role of contracts

Every firm faces the challenge of leveraging valuable resources in the form of the intellectual assets, know-how and expertise of itself and others around it. They can only achieve this through interaction with other idiosyncratically capable firms. But through interaction, resources, activities and actors themselves evolve in relation to each other. In this situation of complex business interaction and uncertainty, the conditions under which the respective knowledge and expertise can be leveraged often need to be expressed and manifested as joint consent between the involved parties. Designing an agreed platform for using knowledge-based resources of others poses a real challenge for many companies because the knowledge that firms need to access is inherently indeterminate and continually evolving. This study addresses this issue by investigating the role of contracts in leveraging knowledge-based resources. The study builds on an interactive view of resource leveraging in general and on ideas on knowledge-based resources in particular (Håkansson et al., 2009). The paper reports on empirical research conducted between 2003 and 2007 that examined real-world contracts in manufacturer-retailer networks. The study draws conclusions on the role of contracts in leveraging knowledge-based resources and more widely on the dialectic nature of resource transformation.     

Concurrent sourcing strategy of multinational firms in China: Drivers and performance implications

Concurrent sourcing is critical to multinational firms’ operations in emerging economies, such as China. Despite its prominence, research is lacking on the underlying conditions and performance implications of this strategy. We investigate the driving factors of multinational firms’ concurrent sourcing strategy and test whether concurrent sourcing outperforms other types of sourcing strategies. Our empirical findings suggest that multinational firms tend to choose concurrent sourcing under high levels of institutional regulations. Furthermore, the results show that concurrent sourcing generates better performance at high levels of uncertainties and the performance deficiency of concurrent sourcing can be mitigated when institutional regulations are high.     

Measuring firm performance: Bayesian estimates with good and bad outputs

Set in the airport industry, this paper measures firm performance using both desirable and bad outputs (i.e. airport delays). We first estimate a model that does not include the bad outputs and then a model that includes bad outputs. The results show important differences in the efficiency and productivity results depending on whether bad outputs are or are not included in the model. The differences reflect the resource cost to society and the potential cost to an airport if such externalities were internalized. Finally, the paper provides measures of shadow prices for the bad output, in our case airport delay, and discusses the results in terms of several interesting trends affecting US airports.     

Performance implications of cognitive complexity: An empirical study of cognitive strategic groups in semiconductor industry

This study extends previous strategic group research by empirically examining the performance effects of group's cognitive complexity in Taiwan semiconductor industry. Through computer-aided content analysis, this study derives themes from letters to shareholders as variables to assess the managerial cognitive complexity and uses thematic variations to find cognitive strategic groups during periods of market downturns, uncertainty and upturns. The study specifies three statistically reliable and accurate themes (operation, customer, and product) and identifies five types of cognitive strategic groups with different degrees of cognitive complexity on perceived strategic dimensions. The results indicate that cognitively complex groups with dual orientations toward customers and products sustain competitive advantages over time, especially during periods of market downturns and uncertainty.     

Roadmapping: (Missed) opportunities to overcome strategic challenges

Firms face various critical challenges when pursuing a coherent course of action that seeks to create value for the long term. They are required to balance myopic and hyperopic behavior. They must ensure coordination, adopt a holistic view of various functional perspectives, and foster commitment among key decision makers. They need to develop a credible and compelling line of reasoning that employees understand and can act on. Adopting the perspective of roadmapping as a strategy tool, this article advances the argument that roadmapping is especially suitable in helping firms to surmount these three critical strategic challenges. This article distills three core features of the roadmap: graphical representation, multi-disciplinary integration, and scaling. It then reviews the three critical strategic challenges and shows how roadmapping can help to overcome each of these. Following this explanation, the article describes ten key principles for effective strategic roadmapping that support firms in obtaining the strategic benefits promised. The article concludes with additional insights for practice with the intent of encouraging further exploitation of roadmapping’s potential.     

Employer branding: strategic implications for staff recruitment

Abstract

In many developed economies, changing demographics and economic conditions have given rise to increasingly competitive labour markets, where competition for good employees is strong. Consequently, strategic investments in attracting suitably qualified and skilled employees are recommended. One such strategy is employer branding. Employer branding in the context of recruitment is the package of psychological, economic, and functional benefits that potential employees associate with employment with a particular company. Knowledge of these perceptions can help organisations to create an attractive and competitive employer brand. Utilising information economics and signalling theory, we examine the nature and consequences of employer branding. Depth interviews reveal that job seekers evaluate: the attractiveness of employers based on any previous direct work experiences with the employer or in the sector; the clarity, credibility, and consistency of the potential employers’ brand signals; perceptions of the employers’ brand investments; and perceptions of the employers’ product or service brand portfolio.     

Setting and vetting strategy: Bridging the chasm between CEOs and boards

One of directors’ key fiduciary duties is to set the firm’s direction and then vet the strategy proposed by the CEO. Despite this, McKinsey reports that the majority of directors feel they do not understand their firm’s strategy, and even if they do understand it, they do not feel they have the desired impact on their firm’s strategy. This article argues that this shortfall stems from a failure to cross the chasm between CEOs and directors. We propose a framework to bridge this gap and assist board members to better understand and vet their firm’s strategy.     

Simultaneous multidimensional unfolding and cluster analysis: An investigation of strategic groups

This paper develops a maximum likelihood based methodology for simultaneously performing multidimensional unfolding and cluster analysis on two-way dominance or profile data. This new procedure utilizes mixtures of multivariate conditional normal distributions to estimate a joint space of stimulus coordinates and K ideal points, one for each cluster or group, in a T-dimensional space. The conditional mixture, maximum likelihood methodology is introduced together with an E-M algorithm utilized for parameter estimation. A marketing strategy application is provided with an analysis of PIMS data for a set of firms drawn from the same competitive industry to determine strategic groups, while simultaneously depicting strategy-performance relationships.INSEAD     

International market exit by firms: Misalignment of strategy with the foreign market risk environment

International market withdrawals by firms continue to persist regardless of geography, industry, firm experience, and national origin. The extant literature argues that a host of factors, such as firm characteristics, organizational capabilities, host country environment, international business risks, strategy and strategic choices are among the likely reasons for firms to prematurely exit the markets they have entered. Drawing from the contingency theory, we contend that underlying most market exit events is the misalignment of firm strategy with the foreign market risk environment. This happens when managers fail to optimize strategy formulation and implementation in view of the foreign market risk environment. Based on an in-depth examination of 62 cases of foreign market exits via pattern coding using NVivo 12, we delineate common patterns accounting for market withdrawals. We then formulate propositions with respect to how misalignment between strategy and risk environment interferes with foreign market exits in accordance with the contingency theory. We conclude with a discussion of theoretical implications, managerial recommendations, and suggestions for future research and limitations.     

Allocation of scarce resources: Insight from the NFL salary cap

We examine the effects of variations in player compensation on NFL franchise performance from 1994 to 2004. Evidence shows that team success depends significantly upon both the actual and perceived fairness of pay distribution. Specifically, proficiency relative to that of competitors is high when compensation inequity across players, whether justified or unjustified, is low. This result suggests that franchises taking a superstar-approach to personnel decisions perform worse on average, most likely because of the dissatisfaction generated among relatively low-paid teammates.     

Performance implications of market orientation,marketing resources,and marketing capabilities

Abstract

Drawing on the competitive capability theory, this paper examines how market orientation, marketing resources, and marketing capabilities contribute to firm performance. The empirical results show that being market oriented influences the level of marketing resources firms possess and the capability to deploy such resources. The findings show marketing resources and marketing capabilities are significant drivers of firm performance, and their impact is greater when they are complementary to each other.