Dynamic managerial capabilities: Configuration and orchestration of top executives' capabilities and the firm's dominant logic

This paper contributes to the understanding of the executive team dynamic managerial capabilities by developing theory about the interplay between the firm's dominant logic and dynamic managerial capabilities (including managerial human capital, social capital, and cognition). We underscore the criticality of the two key CEO‐level functions: configuration and orchestration of senior executive team dynamic capabilities. We develop theory on how these functions create and sculpt the management team's absorptive capacity, which in turn shapes the team's adaptive capacity. We present theory about the distributed nature of efforts for organizational renewal where CEO's dynamic managerial capabilities in concerto with senior executive managerial capabilities will drive top management's ability to revitalize the firm's dominant logic and to achieve evolutionary fit. Copyright © 2012 John Wiley & Sons, Ltd.     

Business groups and institutional upheaval in emerging economies: Corporate venturing in Korea

In this paper we detail the nature of market-oriented institutional upheaval and its implications for business groups in Korea during the late 1990s. Employing case study methodology we identify four projects that were nurtured under corporate venture programs in response to this upheaval: two internal incubating projects and two new venture investment projects. We analyze these cases employing the concepts of resource fit and organizational misfit. Based upon these in-depth case analyses we generate a conceptual framework that managers can rely on for the choice of organizing mode of corporate venture projects. We conclude by discussing managerial implications and future research directions.     

How institutional pressures and systems characteristics shape customer acceptance of smart product-service systems

This research examines how institutional pressures (mimetic, normative, and coercive), which provide shared expectations of and norms for legitimate behavior, and system characteristics influence business-to-business (B2B) customer acceptance of smart product-service systems (PSSs). This is important because many B2B customers are still reluctant to adopt smart PSSs. Drawing from a cross-industry survey with 160 managers of B2B firms and controlling for other major adoption drivers (e.g., privacy risk, organizational innovativeness), we find a non-linear effect of normative pressure on customers' intention to adopt smart PSSs. Furthermore, normative pressure particularly increases adoption intentions when customers perceive a high relative advantage from smart PSSs. Mimetic pressure positively affects adoption of customer input-oriented PSSs, whereas this effect is highly non-linear (U-shaped) for customer output-oriented PSSs. We extend adoption literature by analyzing non-linear effects of institutional pressures as well as its context dependence. From a managerial perspective, these findings show how suppliers can adapt their sales and communication efforts to effectively market smart PSSs.     

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.     

Strategy making as iterated processes of resource allocation

Capitalizing on the Bower-Burgelman process model of strategy making in a large, complex organization, we investigate the multilevel managerial activities that lead firms facing similar new business opportunities to respond with different strategic commitments. Our field-based data provide evidence on (I) the role of ‘corporate contexts’ that reflects top managers' crude strategic intent in shaping strategic initiatives of business-unit managers; (2) the critical influence of early business development results on increasing or decreasing middle managers' enthusiasm to the new businesses and top managers' confidence in these middle managers in a resource allocation; (3) the escalation or deescalation of a firm's strategic commitment to the new businesses as a consequence of iterations of resource allocation. We conclude that it is useful to conceptualize strategy making in a large, complex firm as an iterated process of resource allocation.     

Industrial dynamics and managerial networking in an emerging market: the case of China

This study examines how industrial conditions influence the level of executives' managerial networking with decision‐makers in other entities such as buyers, suppliers, competitors, distributors, and regulators in an emerging market. Corroborating a view that social capital holds contingent value, we theorize that executives facing different industrial conditions have different levels of commitment to exploiting interpersonal ties for fulfilling organizational needs. We propose that managerial networking is influenced by exogenous industrial attributes such as structural uncertainty, sales growth, regulatory stringency, competitive pressure, and production capacity utilization. Our analysis of executives in 364 firms in China demonstrates that the level of managerial networking increases when uncertainty, regulation, and competition increase and production capacity utilization decreases. For a specific firm, the link between industrial dynamics and managerial networking is moderated by its strategic proactiveness. Copyright © 2003 John Wiley & Sons, Ltd.     

When does incentive compensation motivate managerial behaviors? An experimental investigation of the fit between incentive compensation,executive core self-evaluation,and firm performance

We develop and test an integrative model that examines the fit between compensation schemes, executives' characteristics, and situational factors. We propose that a fit among all three factors is crucial to motivate desirable managerial behaviors. Using a specially designed management simulation, our study demonstrates that the effectiveness of incentive compensation to motivate managerial behaviors depends on executives' core self-evaluation and firm performance. Our results show that, relative to fixed salary compensation, executives with higher core self-evaluation respond to incentive compensation with greater perseverance, competitive strategy focus, ethical behavior, and strategic risk taking during organizational decline. However, these interaction effects are not present during organizational growth. Our theory and empirical evidence provide significant insights into the complex relationships among compensation schemes, executives' characteristics, firm performance, and managerial behaviors. Copyright © 2012 John Wiley & Sons, Ltd.     

Difference in degrees: CEO characteristics and firm environmental disclosure

We contribute to the literature on firms' responses to institutional pressures and environmental information disclosure. We hypothesize that CEO characteristics such as education and tenure will influence firms' likelihood to voluntarily disclose environmental information. We test our hypotheses by examining firms' responses to the Carbon Disclosure Project (CDP) and find that firms led by newly appointed CEOs and CEOs with MBA degrees are more likely to respond to the CDP, while those led by lawyers are less likely to respond. Our results have implications for research on strategic responses to institutional pressures and corporate environmental performance. Copyright © 2013 John Wiley & Sons, Ltd.     

Using panel data dea to measure CEOs' focus of attention: An application to the study of cognitive group membership and performance

In this study, we examine the existence and performance of cognitive groups. In accordance with the attention‐based view of managerial cognition, cognitive groups are defined as groups of firms in which the CEOs focus their attention on similar strategic elements when seeking to maximize their firm's competitive advantage. We developed a panel data extension of the original Data Envelopment Analysis to gauge CEOs' focus of attention and then clustered firms into groups. We compared our approach with other approaches that use content analysis of CEOs' letters to shareholders and CEOs' demographic characteristics to measure CEOs' attention. Although the different approaches are related, indicating the existence of a common underlying construct (i.e., mental models), our approach explains a higher proportion of the variation in organizational performance. Copyright © 2014 John Wiley & Sons, Ltd.     

Alliance portfolio diversity and firm performance

In this paper, we offer a comprehensive alliance portfolio diversity construct that includes partner, functional, and governance diversity. Grounding our work primarily with the resource‐ and dynamic capabilities‐based views, we argue that increased diversity in partners' industry, organizational, and national background will incur added complexity and coordination costs but will provide broadened resource and learning benefits. Increased functional diversity results in a more balanced portfolio of exploration and exploitation activities that expands the firm's knowledge base while increased governance diversity inhibits learning and routine building. Hypotheses were tested with alliance portfolio and performance data for 138 multinational firms in the global automobile industry during the twenty‐year period from 1985 to 2005. We found alliance portfolios with greater organizational and functional diversity and lower governance diversity were related to higher firm performance while industry diversity had a U‐shaped relationship with firm performance. We suggest firms manage their alliances with a portfolio perspective, seeking to maximize resource and learning benefits by collaborating with a variety of organizations in various value chain activities while minimizing managerial costs through a focused set of governance structures. Copyright © 2010 John Wiley & Sons, Ltd.     

How do networks and learning drive M&As? An institutional comparison between China and the United States

What drives mergers and acquisitions (M&As) in different institutional environments? This article builds on the resource dependence perspective and argues that networks, learning, and institutions represent three building blocks that can enhance our understanding of the drivers behind M&As. Specifically, we consider firms as learning actors embedded in network relations and influenced by institutional development, and compare and contrast firms' acquisition activities across the United States and China. Our findings show that there are indeed important learning and network factors that lead to M&As. More interestingly, the impact of such learning and network factors varies sharply across countries with different market‐based institutions. Copyright © 2009 John Wiley & Sons, Ltd.     

Globalization and the Renewal of Asian Business Networks

How are Asia's business networks responding to the growing integration of the region into the global economy? To address the question the paper identifies two distinct types of Asian business network originating in two different institutional contexts. It is argued that these original contexts have imprinted upon dominant firms' governance structures and influence their preferred networking mode. Consequently, the renewal of business networks reflects the pressures of globalization and the governance structures of the dominant organizational forms in the networks. Two types of network (global commodity chains and family business groups) are described and the global pressures for change bearing upon them outlined.     

Environmental context,managerial cognition,and strategic action: an integrated view

This study addresses an apparent disconnect between two views of strategic action: the ‘economic view,’ which contends that industry structure is the primary influence on strategic action, and the ‘cognitive view,’ which suggests that managerial cognition drives strategic action. We argue that this disconnect has created artificial boundaries between the two perspectives and has limited our ability to develop holistic explanations of strategic action. In response, we develop an integrated model that answers two questions: 1) Does industry context affect managerial cognition? 2) Does managerial cognition mediate the relationship between industry context and strategic responses to environmental changes? To examine these questions, we study the relationship between industry velocity, the structure of top management's cognitive representation of the environment, and the speed of response to environmental events. We find that industry velocity influences the structure of cognitive representations, which in turn influence the speed of response to environmental events. These results support our contention that both industry and cognition variables are critical in developing explanations of strategic actions. These results have implications for our understanding of the development of top managers' beliefs, the relationship between beliefs and action, and the nature of the complex relationship between industry context, managerial cognition, and strategic action. Copyright © 2008 John Wiley & Sons, Ltd.     

Political capabilities,policy risk,and international investment strategy: evidence from the global electric power generation industry

Whereas conventional wisdom holds that multinational enterprises (MNEs) invest less in host countries that pose greater policy risk—the risk that a government will opportunistically alter policies to expropriate an investing firm's profits or assets—we argue that MNEs vary in their response to host‐country policy risk as a result of differences in organizational capabilities for assessing such risk and managing the policy‐making process. We hypothesize that firms from home countries characterized by weaker institutional constraints on policy makers or greater redistributive pressures associated with political rent seeking will be less sensitive to host‐country policy risk in their international expansion strategies. Moreover, firms from home countries characterized by sufficiently weak institutional constraints or sufficiently strong redistributive pressures will seek out riskier host countries for their international investments to leverage their political capabilities, which permit them to attain and defend attractive positions or industry structures. We find support for our hypotheses in a statistical analysis of the foreign direct investment location choices of MNEs in the electric power generation industry during the period 1990–1999, the industry's first decade of internationalization. Copyright © 2010 John Wiley & Sons, Ltd.     

Institutional life of intuitive insights: Legitimacy of virtuoso intuitive marketing management

Intuitive insights have been recognized as an integral part of marketing and managerial proficiency. In this article, we expand upon this understanding by theorizing the institutional dimension of intuitive expertise. By developing a theoretical framework with supportive propositions we maintain that for intuitive managerial expertise to be effective it requires legitimization in its inter-organizational contexts. Intuitive insights hence have a significant institutional and social existence, irreducible to cognition. This means that institutional logic may support or contradict efficient cognitive strategies, significantly influencing the performance of marketing management. Managerial implications follow to the fields of marketing management and intuitive decision-making.     

Ecological uncertainty,adaptation, and mitigation in the U.S. ski resort industry: Managing resource dependence and institutional pressures

We draw on resource dependence and institutional theories to study how firms manage uncertainty in nature (ecological uncertainty) in the U.S. ski resort industry. Through resource dependence theory, we develop the concept of ecological uncertainty and explain its effects on firms' access to and management of natural resources. We then predict that firms adapt to ecological uncertainty with natural‐resource‐intensive practices, as well as practices that attempt to mitigate its underlying causes. Using institutional theory, we also predict that environmental expectations moderate these responses. Our results indicate that firms did manage ecological uncertainty by adopting natural‐resource‐intensive practices, but not mitigation practices. They also show that stronger environmental expectations constrained firms from adopting natural‐resource‐intensive practices and promoted their adoption of mitigation practices in response to ecological uncertainty. Copyright © 2015 John Wiley & Sons, Ltd.     

Enterprise logic: explaining corporate attention to stakeholders from the ‘inside‐out’

Why are some firms more effective than others at addressing stakeholder concerns? Conventional stakeholder theories focus on variables in the external environment and cannot adequately explain variance across firms operating in the same context. Our matched‐pair study of eight global corporations goes inside the firm and investigates the role of managerial cognition on corporate attention to stakeholders. We find that top management's conceptualization of the firm's relationship with society—which we name enterprise logic—prompts distinct foci of attention and potentially constrains how well a single firm can simultaneously attend to multiple stakeholders. These findings highlight the value of an ‘inside‐out’ perspective, centered on managerial cognition, in explaining why some firms address stakeholder concerns more effectively than their peers. Copyright © 2012 John Wiley & Sons, Ltd.     

How salesperson perceptions of customers' pro-social behaviors help drive salesperson performance

By conceptualizing customers' organizational citizenship behavior as a communication cue, a customer evaluation criterion, and a sales performance facilitator in a relational selling context, the authors empirically demonstrate the effect of salespeople's perceptions of their customers' voluntary, prosocial behavior on three components of sales performance. The authors first hypothesize and confirm that salespeople can perceive their customers to exhibit organizational citizenship behavior, and that this important customer cue can serve as a customer evaluation criterion. The authors then demonstrate how salespeople can respond to their perceptions of customers' organizational citizenship behavior in performance-enhancing ways. Results from a sample of 628 business-to-business salespeople suggest that customer-involved sales performance fully mediates the relationship between customers' organizational citizenship behavior and salesperson behavioral performance, and that salesperson behavioral performance partially mediates the relationship between customer-involved sales performance and salesperson outcome productivity. These findings highlight the important role customer-involved sales performance plays as an antecedent to a salesperson's individual performance. Support for the notion that salespeople's perceptions and interpretations of their customers' organizational citizenship behavior can facilitate personal selling and augment sales performance has implications for sales training, salesperson evaluation, and customer evaluation. The authors discuss these and other implications for B2B researchers and practitioners.