Resolving a dilemma of signaling bankrupt‐firm emergence: A dynamic integrative view

Research summary : Predicting the emergence of bankrupt firms relying on firm signals involves a stigma‐related dilemma. On the one hand, bankrupt firms tend to send positive signals through restructuring to decouple themselves from the stigma of bankruptcy. On the other hand, the preexistence of the bankruptcy stigma may reduce the signaling effectiveness of firms' restructuring efforts, making the outcome prediction difficult. We address this dilemma by developing a dynamic integrative view to extend signaling theory, arguing that subsequent signals from key external stakeholders can effectively help evaluate bankrupt firms' quality and reduce the ambiguity in interpreting firms' restructuring signals. Using a sample of U.S. public bankrupt firms under Chapter 11 reorganization, we find evidence supporting the argument. Managerial summary : Applications of signaling theory to predict reorganization outcomes are in their infancy. The dynamic integrative framework developed in this study is useful in identifying different types of signals and predicting outcomes of firms in crisis. The results of this study can be useful for various decision makers to predict the turnaround potential of bankrupt firms. Our results show that an increase in alliance partners, institutional investors, and securities analysts following a bankrupt firm predicts the firm's reorganization outcome. Moreover, firms that are able to gain positive attention from key stakeholders will also gain positive interpretations of their strategic efforts. Signals from alliance partners and institutional investors amplify the signaling effect of a firm's de‐diversification effort in predicting its reorganization outcome. Copyright © 2015 John Wiley & Sons, Ltd.     

Modularity in organizational structure: the reconfiguration of internally developed and acquired business units

This paper explores changes in organizational structure and distinguishes between units' origins. Unit reconfiguration is the addition of units to, deletion of units from, and recombination of units within the firm. This study compares the reconfiguration of internally developed vs. acquired units, explores what forms of unit recombination are common, and observes whether firms pursue recombination before divestiture. Theoretical support is drawn from the dynamic capabilities perspective, research on modular organizational systems, and strategy–structure literature. The findings are that acquired and internally developed units serve different roles in the process of change, and that firms perceive reconfiguration to be beneficial. Copyright © 2006 John Wiley & Sons, Ltd.     

Stepping in and stepping out: Strategic alliance partner reconfiguration and the unplanned termination of complex projects

Research summary : I add to work that emphasizes the stability of strategic alliances by considering the consequences of alliance partner reconfiguration. I offer two contrasting perspectives: (1) alliance partner reconfiguration leads to disruption, hence increases the risk of subsequent project termination; (2) partner reconfiguration leads to adaptation, hence decreases this risk. Data on 1,025 interfirm Australian mining alliances (2002–2011) shows that on average alliance partner reconfiguration increases the risk of project termination. For firm exit from an alliance, the effect is contingent on a firm's resource base, but not for firm entry. Surprisingly, I do not find that alliance partner reconfiguration is beneficial in a dynamic environment. I discuss the implications of these findings for the literature on strategic alliance dynamics and that on strategic alliance outcomes. Managerial summary : This paper studies what happens when over time strategic alliances change their original membership. The research shows that both entry in and exit from an alliance increase the risk of project termination. Hence, weathering difficult times and managing conflict by keeping teams stable should be a prime directive if project survival is the alliance partners' overriding concern. In addition, I find that the exit of a firm with a comparatively large resource base increases the hazard of termination more than if the departing firm has a relatively small resource base. Therefore, one cannot underestimate the importance of trying to keep on board those alliance partners who bring a critical resource to the table. Copyright © 2015 John Wiley & Sons, Ltd.     

Radical Product Innovation Capability: Literature Review,Synthesis, and Illustrative Research Propositions

Product innovation is a key to organizational renewal and success. Relative to other forms of innovation, radical product innovations offer unprecedented customer benefits, substantial cost reductions, or the ability to create new businesses, any of which should lead to superior organizational performance. In other words, a radical product innovation capability is a dynamic capability, one that enables the organization to maintain alignment with rapidly evolving customer needs in high‐velocity environments. Extensive research has been conducted on the antecedents to an incremental/general product innovation capability, and meta‐analyses have been conducted to integrate the results from the various studies. However, whether and how a radical product innovation capability differs from an incremental product innovation capability is also critical. The purpose of this work is to develop a testable model of the antecedents to radical product innovation success. Based on an extensive literature review, a comprehensive set of organizational components that comprise a firm's radical product innovation capability is identified. These organizational components include senior leadership, organizational culture, organizational architecture, the radical product innovation development process, and the product launch strategy. Of course, each of these components has subcomponents that provide even more texture. This review highlights how the components of a radical innovation capability function differently from those for an incremental capability. In addition, this review strongly suggests that the direct effects models that dominate this literature underestimate the complexity of the interplay of components that comprise a radical product innovation capability. Thus, a model to demonstrate this interplay of these organizational components is provided. Illustrative research propositions are offered to provide guidance to researchers. Suggestions for executives and managers who are involved in the product development process and for scholars who seek to advance the state of knowledge in this area are offered in the conclusion.     

Learning how to restructure: absorptive capacity and improvisational views of restructuring actions and performance

This paper examines the role of learning in corporate restructuring. Drawing from two viewpoints of organizational learning, absorptive capacity and organizational improvisation, we examine whether experience with corporate restructuring modes (sell‐offs, spin‐offs) influences subsequent restructuring and financial performance. Consistent with an absorptive capacity view, cumulative and repetitive experience with sell‐offs was related to the adoption of an ensuing sell‐off and to higher performance. Conversely, and consistent with an organizational improvisation view, short‐term and contemporaneous experience with spin‐offs was related to the subsequent use of spin‐offs and to increases in financial performance. The findings contribute to a dynamic explanation of corporate restructuring and its influence on financial performance, illustrate differences between learning in a repetitive situation and learning when repetition is rare, and indicate when absorptive capacity and organizational improvisational views are most profitable. Overall, these findings show that different kinds of restructuring experiences were associated with different modes of restructuring and performance records. Considered collectively, the organizational learning perspective offers insights into why some corporate restructuring strategies appear as intentional and deliberate actions while others resemble more spontaneous and simultaneous responses. Copyright © 2008 John Wiley & Sons, Ltd.     

Organizational Restructuring: Impact on Trust and Work Satisfaction

After the Asian financial crisis, companies are now contending with the current global economic slowdown. Whether it is at the national, industry or organizational levels, restructuring has gained currency as a strategic decision to realign internal structure with changing macro environmental factors. Faced with more competitive markets and greater demands on costs controls, organizations and businesses are taking the fast track to cost-cutting by downsizing, reorganizing their divisions, streamlining their operations, and closing down unprofitable divisions.Changes that are introduced in an organizational restructuring will affect the socio-psychological well-being of organization members given the potential for uncertainty that may accompany such changes. There is a need to better understand the consequences of organizational restructuring and consider some of its potential side effects on the work environment. Employees in a post-restructuring context are understandably wary about the future direction of the organization and their roles within it.This study is an attempt to examine the social-psychological impact of organizational restructuring on trust and work satisfaction. Additionally the inter-relationships between trust and work satisfaction, including their antecedents in the work environment are examined.Trust and work satisfaction levels were tracked before and three months after organizational restructuring for varying types of changes that were initiated during the restructuring. Both trust and satisfaction with working in the organization declined significantly when compared to pre-restructuring levels. Independent t-tests analysis indicated that there was a significant decline in trust for the work group which had a newly hired manager and a change in work processes. Results showed that there was a negative relationship between both work satisfaction and trust with the extent of change required of employees.The findings also showed that there was a positive relationship between trust and work satisfaction and that trust contributed to work satisfaction. Perception of colleagues willingness to help solve job-related problems contributed significantly to strengthening of trust relations among colleagues. Additionally, colleagues and supervisors willingness to listen to employee problems contributed significantly to work satisfaction.Results of the study highlighted the need for strategic decision-makers to consider the social impact of organizational restructuring. Top managers must realize that both trust and work satisfaction are important ingredients for the effective functioning of an organization and to actively ensure that support systems or structures are adequate and available to mitigate the negative impact, particularly if the changes to be implemented are extensive.     

Stock Market Response to Voluntary Liquidations and Reorganizations of Real Estate Corporations

Announcements of voluntary liquidation or reorganization by real estate corporations are analyzed. There is a positive stock price response to announcement of liquidation, and a negative stock price response to announcements of reorganization. Results were the same before and after the 1978 Bankruptcy Reform Act took affect.     

Development and return on execution of product innovation capabilities: The role of organizational structure

This paper conceptualizes and tests an integrated model that combines the dual-core and ambidextrous models of product innovation. The integrated model distinguishes the development and return on execution of radical and incremental product innovation capabilities. The authors argue that organizational structure plays an important dual role as an (a) antecedent to the development of radical and incremental product innovation capabilities and (b) as a moderator in determining the new product performance returns from executing such capabilities. Using a sample of high-tech firms, the study finds that organizational structure is more consistent in predicting the execution of product innovation capabilities into new product performance than in predicting the development of such capabilities. For example, the effect of radical product innovation capability on new product performance is negative but nonsignificant under a formal structure, while the same effect is positive under an informal structure. Conversely, the effect of incremental product innovation capability on new product performance is positive under a formal structure, while the same effect is negative under an informal structure. The implications for managing different types of product innovation capabilities under formal versus informal structures and their effects on new product performance are discussed.     

Flexibility in marketing & sales interfacing processes

Preliminary insights in the marketing literature indicate that flexibility is important in marketing and sales processes and interaction. However, to date, marketing and sales management literature lacks an understanding of what flexibility in marketing-sales interfaces looks like, its potential organizational consequences, and potential boundary conditions. Using data from interviews with marketing and sales managers, this study explores the nature, outcomes and facilitators of flexibility at the marketing-sales interface. This study conceptualizes marketing-sales interface flexibility (MSIF) as a process of flexible cross-functional resource exchange and finds that MSIF has positive organizational outcomes (both in terms of performance and relationship quality), that MSIF is essential for firms when dealing with exigencies in turbulent environments, and that the utility of MSIF is conditioned by the speed with which MSIF is implemented. The research contribution is twofold. At a theoretical level, the study defines the construct for the first time, revealing MSIF's conceptual composition for examination, and develops theory regarding MSIF's direct relationships with key business outcomes, as well as likely contingencies that shape its importance. At a practical level, the study's framework offers a tool that managers can use to help build organizational success through enhanced flexibility in their marketing-sales interfaces.     

Technological capabilities and firm performance: The case of small manufacturing firms in Japan

The purpose of this study is to investigate the relationship between technological capabilities and firm performance. We divide technological capabilities into two types—refinement capability, which involves the improvement of the existing asset portfolio, and reconfiguration capability, which involves the restructuring of the asset portfolio through the integration of new assets. The results of an analysis of a sample of 302 small and medium-sized manufacturing firms in Japan suggest that refinement capability relates more positively to operational efficiency than does reconfiguration capability, and that reconfiguration capability relates more positively to strategic performance than does refinement capability. The results also suggest that firms with superior refinement capability tend to possess superior reconfiguration capability. Our findings show that both external and internal factors, such as technological volatility, inter-firm collaboration, and firm age and size, are significantly associated with the level of refinement and reconfiguration capabilities possessed by a firm.

EQUIVOCAL INFORMATION AND ATTRIBUTION: AN INVESTIGATION OF PATTERNS OF MANAGERIAL SENSEMAKING

Organizational research has revealed ample evidence of self-serving attributional patterns in managerial sensemaking, but has not yet resolved whether actor–observer attributional effects also influence managers’ sensemaking tendencies. The primary purpose of this study was to investigate whether such actor–observer effects can be detected in managers’ interpretation of equivocal information. Results indicate that managers receiving equivocal information about the performance of an organization described as their own credited positive outcomes to organizational strengths and blamed negative outcomes on environmental threats. In contrast, managers receiving equivocal information about an organization described as managed by others associated positive outcomes with environmental opportunities and linked negative outcomes to organizational weaknesses. Both self-serving and actor–observer attributional patterns were thus detected. © 1997 by John Wiley & Sons, Ltd     

How do CEO emotions matter? Impact of CEO affective traits on strategic and performance conformity in the spanish banking industry

Research on how managers influence firm outcomes has generated promising explanations of differences in organizational strategies and performance within a given industry, but has largely ignored the role of emotions in shaping managers' strategic choices. This article analyzes the influence of the affective traits of CEOs—their long‐term tendency to experience positive or negative moods or emotions—on strategy and performance conformity in a sample of Spanish banks and savings banks. Our results show that managers' negative affective traits are related to more conformist strategies and more typical performance, whereas positive affective traits seem to promote outcomes that deviate from the central tendencies of the industry. Results also show that strategic conformity mediates the relationship between CEO negative affective traits and typical performance. Copyright © 2009 John Wiley & Sons, Ltd.     

Downsizing Effects on Survivors: Layoffs,Offshoring, and Outsourcing

In a representative sample of 13,683 U.S. employees, we compared survivors of layoffs, offshoring, outsourcing, and their combinations to a group who experienced no downsizing. Survivors of layoffs perceived lower organizational performance, job security, affective attachment, calculative attachment, and had higher turnover intentions. Offshoring survivors perceived lower performance, fairness, and affective attachment, but outsourcing survivors generally did not have more negative outcomes than the no‐downsizing group. Layoffs generally had more negative outcomes than other downsizing forms.     

From Internal to Network Labor Markets? Insights on New Promotion Processes from the Call Center Industry

Research on network forms of organization suggests that “business units” may be a more useful analytical unit than “firms” in understanding restructuring of internal labor markets. We find evidence for this proposition by analyzing promotion opportunities in 1760 call centers in sixteen countries. We find substantial differences in promotion opportunities internal to the unit versus elsewhere, related to the use of explicit versus tacit knowledge in performance evaluation, distinctions between unit‐specific and general‐firm knowledge, and network‐bridging organizational characteristics.     

THE GOVERNANCE AND CONTROL OF VOLUNTARY CORPORATE SPIN-OFFS

We investigate the role that a voluntary corporate restructuring can play in the design of efficient internal corporate control mechanisms. To this end, we examine the post-restructuring internal control practices in 78 voluntary corporate spin-offs that were completed between 1972 and 1987. We find that the selection of the new CEOs, the design of their compensation contracts, and the staffing of the boards of directors and their compensation committees in the spun-off firms can be seen as ex ante efficient. These governance and control practices, however, are not strongly related to the observed positive market reactions to the spin-off announcements. The results indicate that equity reorganizations facilitate the implementation of efficient internal governance and control practices, but that other factors must influence the share price reactions to the announcement of such voluntary corporate restructurings.     

Clear and present danger: Planning and new venture survival amid political and civil violence

Many entrepreneurs in developing economies face unstable environments due to violence and civil unrest. Yet, we know very little about how environments characterized by high levels of political and civil violence affect new venture processes and survival. Moreover, it is unclear whether standard theories about organizational strategy, such as planning, hold true in such environments. We explore these issues using a sample of 730 new ventures in Colombia from 1997 to 2001. We find that political and civil violence decreases firm survival, increases the benefits of incremental (operational) planning, and decreases the benefits of comprehensive (strategic) planning. Copyright © 2013 John Wiley & Sons, Ltd.     

A dynamic capabilities-based framework of organizational sensemaking through combinative capabilities towards exploratory and exploitative product innovation in turbulent environments

This study develops a dynamic capabilities-based framework of organizational sensemaking through combinative capabilities towards exploratory and exploitative product innovation. Organizational sensemaking helps organizations develop cognitive maps of turbulent environments through its construction of shared interpretations of environmental changes. We argue, however, that successful exploratory and exploitative product innovation are not guaranteed by organizational sensemaking alone, but instead depend on how firms' capabilities synergistically combine and transform knowledge resources. Organizational sensemaking and combinative capabilities are together positioned as important dynamic capabilities. The dynamic capabilities-based framework is applied to explain why and how organizational sensemaking determining superior exploratory and exploitative product innovation in turbulent environments is realized by combinative capabilities. Furthermore, the paper examines the differential effects of combinative capabilities on the firm's exploratory versus exploitative product innovation. Firms can better understand how to leverage different type of combinative capabilities for optimal outcomes.     

The Role of Trustworthiness in Maintaining Employee Commitment During Restructuring in China

The influence of competency- and affect-based attributions of managerial trustworthiness on employee commitment during restructuring is investigated within a large telecommunications firm in greater China. It was found that competency-based attributions are positively related to employees' value commitment, whereas affect-based attributions are positively related to employees' continuance commitment (i.e., the propensity to maintain employment). Attributions of trustworthiness were also found to interact with perceptions of uncertainty associated with restructuring. Although no interaction effects were found for continuance commitment, three moderating effects involving trustworthiness attributions were observed between uncertainty and value commitment. Generally speaking, these moderating influences of trustworthiness tended to attenuate the influences of uncertainties on commitment. Overall, the relationships between uncertainties associated with restructuring and organizational commitment were negative with the exception of uncertainty about the restructuring effort itself, which was positively related to continuance commitment.     

Effects of relational ties paradox on financial and non-financial consequences of servitization: Roles of organizational flexibility and improvisation

Drawing from relational governance and dynamic capabilities literature streams, we develop a conceptual model in which business and political ties are antecedents of organizational flexibility, which in turn are related to organizational improvisation and, ultimately, financial and non-financial firm performance. We test our model using a data collected from 302 Turkish senior managers. We find positive direct and indirect impacts of business ties on organizational improvisation, and negative direct and indirect impacts of political ties on organizational improvisation. We find organizational improvisation significantly related to several indicators of firm performance. Our results provide clarity on relational governance and firm performance. The intermediate variables of organizational flexibility and improvisation shed light on equivocal findings regarding the effects of business and political ties on firm performance.     

Strategic action and customer mobility: Antecedents and consequences of strategic actions in the Korean mobile telecommunication service industry

This paper investigates the sources and consequences of strategic actions in the Korean mobile telecommunication service industry. Based on competitive dynamics research and an organizational learning perspective, it suggests hypotheses and tests them with monthly data on service providers’ competitive and alliance actions, as well as statistics on monthly subscribers during 2002–2007. We show the positive effects of a firm’s own experience, other firms’ strategic actions, and firms’ alliance tendencies on the likelihood of firm-level competitive action and alliance. We also find that negative performance feedback accelerates the mimetic influence of rival firms’ competitive actions and that positive performance feedback strengthens the momentum effect of a firm’s own alliance experience on the likelihood of alliance. Both competitive actions and alliances appear to influence customer mobility across firms in a complex manner. Based on customer mobility data, this study finds that alliances increase market dynamism, that is, customer mobility. It also shows that competitive actions, in general, serve to effectively attract switching customers from rivals. This study partially answers questions regarding the triggers of competitive actions and alliance activities among mobile telecommunication service providers and their performance consequences.