Making sense of a market information system for superior performance: The roles of organizational responsiveness and innovation strategy

This article conceptualizes the relationships among strategic resources, strategic actions, and consequent performance by incorporating the strategic sense-making perspective into the resource-based view. Specifically, the study suggests that the firm can use both market-driven strategic actions such as organizational responsiveness and market-driving strategic actions such as innovation strategy to make sense of strategic resources such as a market information system. The firm can then translate the strategic resources into a competitive marketing advantage, which leads in turn to superior financial performance. The study tests this framework by surveying 180 manufacturing firms in China. The empirical results support the theoretical framework.     

Strategy dynamics: Agency,path dependency,and self‐organized emergence

Analysis of a 42‐year strategic journey at a large multinational firm exposes the dynamics behind its strategic evolution. Grounded on a complexity science paradigm, this article challenges our understanding of the role of agency in strategic timing while adding conceptual and methodological innovations. Based on micro and macro approaches, qualitative interpretations, and econometric studies, the results tend to show that while agency partly produces strategy dynamics and timing of actions, strategic evolution (when not random) is largely emergent and driven by its past. These findings move the understanding of strategic evolution and timing away from a strategic choice perspective and toward a complex combination of agency, causal determinism, and self‐organization. Copyright © 2015 John Wiley & Sons, Ltd.     

Nested identities as cognitive drivers of strategy

Research Summary: Organizations face tensions to conform to industry norms for legitimacy yet differentiate for competitive advantage when implementing strategies. We suggest this tension is due to and resolved through organizations’ cognitive negotiations of multiple levels of identity. Through an inductive study in the recreational vehicle industry, we find that organizations concurrently draw on identities at the organizational, industry, and strategic group levels to formulate and enact specific competitive actions. Specifically, we find that organizational identity relates to decisions on product offerings; industry identity relates to downstream strategy; and strategic group identity relates to upstream strategy, firm boundaries, and expansion mode. Our findings highlight the importance of strategic group identity and inform a grounded model describing how organizations draw upon different levels of identity to influence strategy. Managerial Summary: Many managers experience tensions of differentiating their firms’ competitive actions from rivals, while conforming with industry norms and practices. In this article, we argue that a manager can navigate these tensions by understanding their firm, strategic group, and industry identities and how these identities interrelate. Through a qualitative case study of the U.S. recreational vehicle industry, we show that each level of identity influences different competitive actions, with firm identity connected to product offerings, industry identity related to managing downstream distribution, and strategic group identity related to firm boundary and acquisition strategies. Overall, strategic group identity is the most critical for managers as this level filters how they view competitors and provides the rules of competition.     

Elevating Repositioning Costs: Strategy Dynamics and Competitive Interactions

Research summary: This article proposes an approach for modeling competitive interactions that incorporates the costs to firms of changing strategy. The costs associated with strategy modifications, which we term “repositioning costs,” are particularly relevant to competitive interactions involving major changes to business strategies. Repositioning costs can critically affect competitive dynamics and, consequently, the implications of strategic interaction for strategic choice. While the literature broadly recognizes the importance of such costs, game‐theoretic treatments of major strategic change, with very limited exceptions, have not addressed them meaningfully. We advocate greater recognition of repositioning costs and illustrate with two simple models how repositioning costs may facilitate differentiation and affect the value of a firm's capability to reduce repositioning costs through investments in flexibility. Managerial summary: This article illustrates how the decision to make a strategic change is affected by both the cost to the firm of making the various strategy modifications, as well as the cost to its rivals of changing their strategies in response. These “repositioning costs” are important because they shape the responses each competitor would likely make to a move by the other competitor, and should be anticipated when considering an initial change to one's own strategy. The paper shows how repositioning costs can be used strategically to facilitate differentiation, and to assess the value of potential investments in flexibility. Copyright © 2017 John Wiley & Sons, Ltd.     

Antecedents of M&A success: The role of strategic complementarity,cultural fit,and degree and speed of integration

In this paper, we develop a comprehensive model of M&A success. We integrate fundamental constructs of different schools and discuss their interdependencies with M&A success. Our theoretical framework was tested empirically across a sample of 106 SME transactions in the machinery, electronic, and logistic industries in the German‐speaking part of Central Europe. The results of our study support the demand for an integrative perspective and theory on M&A. M&A success is a function of strategic complementarity, cultural fit, and the degree of integration. Strategic complementarity also positively influences cultural fit and the degree of integration. Cultural fit positively influences M&A success, but surprisingly has a negative impact on the speed and degree of integration. The degree of integration is positively related to speed of integration. Copyright © 2013 John Wiley & Sons, Ltd.     

From autonomous strategic behavior to emergent strategy

This study develops a model of emergent strategy formation at a large telecommunications firm. It integrates prominent traditions in strategy process research—strategy as patterned action, as iterated resource allocation and as practice—to show how emergent strategy originates as a project through autonomous strategic behavior, then subsequently becomes realized as a consequence of mobilizing wider support to provide impetus, manipulating strategic context to legitimate the project by constructing it as consonant with the prevailing concept of strategy, and altering structural context to embed it within organizational units, routines, and objectives. The study theorizes the role of “practices of strategy articulation” in emergent strategy formation, and explains why some autonomous strategic behavior becomes “ephemeral” and disappears rather than enduring to become emergent strategy. Copyright © 2013 John Wiley & Sons, Ltd.     

Communication and attention dynamics: An attention‐based view of strategic change

Research Summary : The attention‐based view (ABV) has highlighted the role of organizational attention in strategic decision making and adaptation. The tendency to view communication channels as “pipes and prisms” for information processing has, however, limited its ability to address strategic change. We propose a broader role for communication as a process by which actors can attend to and engage with organizational and environmental issues and initiatives and argue that such a view can significantly advance understanding of strategic change. On this basis, we offer suggestions for future research on communication practices, vocabularies, rhetorical tactics, and talk and text in shaping organizational attention in strategic change. We also maintain that this enhanced view of the ABV can help advance research on dynamic capabilities, strategy processes, strategy‐as‐practice, and behavioral strategy. Managerial Summary : To further enhance our capabilities to manage strategic change and renewal processes in organizations, we need a better understanding of how to manage organizational attention. In this article, we highlight the importance of understanding the role of communication and discuss the use of different communication practices, vocabularies, rhetorical tactics, and talk and text as possible levers that can be used to dynamically shape organizational attention. We call for further research to advance the understanding of how these levers can be used to influence the ways in which different sets of strategic issues, initiatives, and action alternatives are handled. We believe that such an enhanced view of organizational attention can enable the development of new, improved strategy practices to manage strategic change and renewal processes.     

Performance feedback and middle managers’ divergent strategic behavior: The roles of social comparisons and organizational identification

Research Summary: What drives middle managers to search for new strategic initiatives and champion them to top management? This behavior—labeled divergent strategic behavior—spawns emergent strategies and thereby provides one of the essential ingredients of strategic renewal. We conceptualize divergent strategic behavior as a response to performance feedback. Data from 123 senior middle managers overseeing 21 multi‐country organizations (MCOs) of a Fortune 500 firm point to social performance comparisons rather than historical comparisons in driving divergent strategic behavior. Moreover, managers’ organizational identification affects whether they attend to organizational‐ or individual‐level feedback. These results contribute to research on performance aspirations and strategy process by providing a multilevel, multidimensional framework of performance aspirations in middle management driven strategic renewal. Managerial Summary: Middle managers are essential actors in strategic renewal. Their unique positions offer insights into operations alongside knowledge of strategy. In contrast to typical assessments of managerial performance with reference to a prior year, this research shows that performance comparisons relative to peers and other organizational units better motivate managers’ divergent strategic behavior. Our results also show that managers who identify with the firm are more attentive to organizational rather than individual performance discrepancies. Thus, our study unveils an important approach for organizations aiming to spark strategic renewal.     

SIMILARITY JUDGMENTS IN STRATEGY FORMULATION: ROLE,PROCESS AND IMPLICATIONS

Similarity judgments are an important and distinct aspect of strategy formulation. They are manifest in strategic decisions and errors, and in the construction of analytic concepts such as strategic groups and relatedness in diversification. However, existing models of strategy formulation either assume away the process of making similarity judgments or regard it as unproblematic. This paper highlights the role of similarity judgments in strategy formulation, and discusses cognitive findings showing that decision makers’ assessment of similarity is not free from bias. The cognitive findings help construct a new process explanation for a wide range of apparently isolated strategic errors. The process explanation is contrasted and integrated with traditional explanations based on imperfections in decision inputs. Finally, in light of the cognitive findings, the methods and assumptions of existing approaches in strategy formulation research to the construction of analytic concepts are reexamined. © 1997 by John Wiley & Sons, Ltd.     

Sources of alliance partner trustworthiness: Integrating calculative and relational perspectives

Research on the sources of organizational trustworthiness remains bifurcated. Some scholars have adopted a calculative perspective, stressing the primacy of actors' rational calculations, while others have approached trustworthiness from a relational perspective, focusing on its social underpinnings. We help to reconcile these seemingly disparate views by adopting an integrative approach that allows us to clarify the boundaries of both perspectives. Based on dyadic survey data from 171 strategic alliances, we find that the calculative perspective (represented by contractual safeguards) has higher predictive power when the partner lacks a favorable reputation. In contrast, the relational perspective (represented by organizational culture) predicts trustworthiness more strongly when familiarity with the partner organization is high. Copyright © 2013 John Wiley & Sons, Ltd.     

Organization–stakeholder fit: A dynamic theory of cooperation,compromise, and conflict between an organization and its stakeholders

Research Summary : We advance the concept of organization–stakeholder fit (O–S fit) to explain cooperative behavior between an organization and its stakeholders. O–S fit describes the compatibility that exists between an organization and a stakeholder when their characteristics are well matched. We highlight two dimensions of O–S fit: value congruence, or the supplementary fit of organizational and stakeholder values, and strategic complementarity, or the complementary fit of strategic needs and resources. For each dimension, we detail the unique relational factors—including core elements of trust, predictability, attraction/exchange, and communication—that motivate cooperation. We then explicate the ways in which value congruence and strategic complementarity dynamically interrelate over time. Finally, we consider how organization‐stakeholder misfit may result in alternative relational behaviors, such as conflict or compromise. Managerial Summary : We develop a new way of thinking about the relationship between organizations and stakeholders. Recognizing that positive relationships require a degree of fit or compatibility, we argue that cooperative behavior between an organization and its stakeholders is maximized when relational partners share both core values and strategic priorities. We explain that high fit along these two dimensions increases trust, relational predictability, attraction/exchange, and communication. We also describe how positive relationships might be formed with fit along only one dimension, and how negative relationships might result in the presence of misfit. Ultimately, we suggest that managers who want to foster positive relationships with stakeholders should concentrate on aligning their values and priorities, rather than simply concentrating on one or the other.     

A resource-advantage perspective of product-market strategy performance & strategic capital in high technology firms

Contrary to common misconceptions, firms tend generally to remain constant in their strategic approach to markets and rarely deviate from their prevailing strategic archetype. Consequently, the effectiveness of a firm's product-market strategy is as important as its persistence in achieving overall strategic performance. Adopting a resource-advantage perspective, we examine the extent to which resource bundles differ among firms within a product-market strategy performance typology. Analyzing data generated from high-technology industrial manufacturers, we find that successful strategists are endowed with significantly greater levels of resources-that include ‘strategy championing’, ‘strategy commitment’, ‘implementation support’, ‘implementation effectiveness’, ‘learning’, and ‘memory’-in contrast with unsuccessful strategists, hopeful strategists, and fortunate strategists. Further, important inter-group differences are identified and discussed, along with the implications of this study for researchers and marketing managers.     

Strategic consensus mapping: A new method for testing and visualizing strategic consensus within and between teams

Research on strategic consensus focuses primarily on the extent of agreement among team members regarding organizational strategy. It does not include elements such as the content of the agreement, between‐group consensus, or the significance of differences in consensus (e.g., for evaluating the effectiveness of strategic interventions). We propose a new analytical approach, Strategic Consensus Mapping, that provides a comprehensive analysis of strategic consensus within and between groups and that includes intuitive and easy‐to‐understand visualizations. This approach offers researchers the necessary tools for integrative theory building in strategic consensus, as well as in the broader managerial and organizational cognition domain. Using a case example, we illustrate the proposed methods for a multidimensional, multilevel, and longitudinal analysis of strategic consensus. Copyright © 2013 John Wiley & Sons, Ltd.     

Value creation through stakeholder synergy

Our “stakeholder synergy” perspective identifies new value creation opportunities that are especially effective strategically because a single strategic action (1) increases different types of value for two or more essential stakeholder groups simultaneously, and (2) does not reduce the value already received by any other essential stakeholder group. This result is obtainable because multiple potential sources of value creation exist for each essential stakeholder group. Actions that meet these criteria increase the size of the value “pie” available for essential stakeholder groups, and thereby serve to attract exceptional stakeholders and obtain their increasing effort and commitment. The stakeholder synergy perspective extends stakeholder theory further into the strategy realm, and offers insights for realizing broader value creation that is more likely to produce sustainable competitive advantage. Copyright © 2014 John Wiley & Sons, Ltd.     

BREAKING THE SILOS: DISTRIBUTED KNOWLEDGE AND STRATEGIC RESPONSES TO VOLATILE EXCHANGE RATES

A model of effective decision-making in a situation of distributed knowledge is developed, drawing on three perspectives: the sociocognitive perspective, which focuses on framing issues; the economic perspective, which focuses on the role played by incentives in the integration of knowledge and decision-making authority; and the process perspective, which stresses the role of integrating mechanisms and of processes that either hinder or foster risk awareness and flexibility. The model is tested on a sample of managers from different functional areas of Fortune500 firms, using strategic responses to exchange-rate volatility as the context. The results show that all three perspectives—framing, incentives and process—are significant in explaining the effectiveness of strategic responses to volatile exchange rates. The findings suggest that simultaneously addressing managerial mindsets, incentives and process may be crucial to generating effective strategic responses across functions.     

Social capital,strategic relatedness and the formation of intraorganizational linkages

This paper investigates the evolutionary dynamics of network formation by analyzing how organizational units create new interunit linkages for resource exchange. Using sociometric techniques and event history analysis, this study predicts the rate at which new interunit linkages are created between a newly formed unit and all the existing units in a large multinational organization. Two important constructs: social capital, derived from the literature on social structure and network formation, and strategic relatedness, derived from research on diversification and the resource‐based view of the firm, are used to explain the rate of new linkage creation. Results show that the interaction between social capital and strategic relatedness significantly affects the formation of intraorganizational linkages. Copyright © 2000 John Wiley & Sons, Ltd.     

Does Guanxi Influence Firm Performance?

It is widely acknowledged that guanxi constitutes a key strategic factor affecting firm performance in the greater China area. However, very little empirical research on the issue has been done in the literature. In this study we explore the systematic linkage between guanxi and firm performance from a business strategy perspective. The evidence shows that guanxi-based business variables have a profound and positive impact on firm efficiency and growth.     

On risk and cost in global sourcing

The benefits of global sourcing as part of a firm’s purchasing strategy have been widely discussed in the academic literature, yet so there are few models that provide a comprehensive risk and cost assessment to guide managerial decision-making. In particular, few models capture the dynamic nature of many cost drivers, such as transportation and energy cost, labour cost inflation, or carbon offset costs, in their calculations. In this paper, we define three basic cost elements in global sourcing: static, dynamic and hidden cost, and use this framework to assess the costs and risks inherent in global sourcing scenarios from three different points of view: conceptually, analytically and empirically. We highlight the key learning points from each perspective and propose a total cost model of how to make informed global sourcing decisions, which we test by applying it to three exploratory case studies of global sourcing arrangements.     

An evolutionary framework for service innovation: Insights of complexity theory for service science

There is an increasing need for a theory-based and industry-oriented framework for service innovation in both research and practice. However the study of service innovation has been somewhat limited. This paper applies two models of complexity theory (Kauffman's NK model in biology and organizational ambidexterity in organization science) for service innovation and proposes a novel perspective on service innovation as an evolutionary process, which is interactive, local, unpredictable, and emergent. The paper also proposes a typology of service innovation that includes eight different strategic orientations of service innovation; also included are illustrations from a knowledge-intensive service industry, particularly the IT-based consulting and service industry sector. Drawing from this complexity theory perspective, the paper discusses numerous implications for future conceptualization of service, multidimensionality of service innovation, and service innovation strategies.