Towards an organic perspective on strategy

The strategy field's core issues—the concept of strategy, causal models relating strategy to other constructs, and models of strategic management and choice—have been previously addressed by two key progressions. The mechanistic perspective based on disciplinary‐based theories, the design model, and a view of strategy as a planned posture, has provided a unified view, but a narrow and increasingly less pertinent one. The advent of organic developments that included strategy process research, evolutionary and process models, and interactive and integrative views, has provided richness and pertinence, but not a unified perspective. These two progressions marked an epistemological shift from mechanistic to organic assumptions: from discrete to incessant time, from directional to interactive flow, and from differentiated to integrated constructs and models. Building on this shift, this paper proposes an organic perspective that combines the insights and coherence of the mechanistic perspective with the more relevant organic ideas. It makes use of the organic assumptions to advance a view of strategy as an adaptive coordination, introduce the Organization–Environment–Strategy–Performance (OESP) integrative theoretical model, and present an organic model of strategic management. The organic perspective provides a basis for an upgraded, more unified, and better‐attuned view on strategy's core issues. Copyright © 2002 John Wiley & Sons, Ltd.     

The cost allocation issue in joint replenishment

Joint replenishment for several products to achieve a lower inventory logistics cost has been a topic of extensive studies. Less attention has been paid to the issue of deciding how the joint replenishment costs should be allocated across the individual products. Ideally, when items are ordered together one would require a stable cost allocation, such that no subset of products subsidizes another subset. When part of each product's ordering cost is product specific and part can be shared with other products (like in a 3PL setting of Anily and Haviv), it has been shown that even when a stable allocation exists, such an allocation might be difficult to compute. In addition, usually the components of ordering costs are partially determined using estimates and accounting discretion. This paper provides two main insights for determining an appropriate cost allocation. It provides the means to test how sensitive a stable cost allocation is to a range of cost parameter values. Then, in a computational study, it is shown how to obtain a stable cost allocation without excessive computation.     

Homogeneity and heterogeneity in stochastic models of brand choice behavior

Heterogeneity of consumers is one of the cornerstones of empirical findings and theories in marketing. It serves, for example, as the foundation for such areas as market segmentation and product differentiation. This paper attempts to trace and clarify the evolution over the last twenty years of the homogeneity assumptions in the area of stochastic models of brand choice behavior. In analyzing individual choice behavior by means of stochastic models, all individuals were often assumed to possess the same set of transition probabilities or follow the same stochastic process. However, empirical studies at the individual level indicate that individuals are actually non-homogeneous in those probabilities and processes. In this article we provide an analytical proof that if the behavior of individuals is specified to be homogeneous when it is not, wrong inferences about the type of stochastic process individuals follow and about the expected behavior of the total population will be drawn. Ways to remedy these problems by allowing for heterogeneity are reviewed. The implications of heterogeneity and our findings in the various application areas which utilize stochastic choice models are examined.     

Partial cross ownership and tacit collusion

We examine the effects that passive investments in rival firms have on the incentives of firms to engage in tacit collusion. In general, these incentives depend in a complex way on the entire partial cross ownership (PCO) structure in the industry. We establish necessary and sufficient conditions for PCO arrangements to facilitate tacit collusion and also examine how tacit collusion is affected when firms' controllers make direct passive investments in rival firms.     

AUDITOR CHANGE ANNOUNCEMENTS AND DISPERSION OF INVESTOR EXPECTATIONS

The effect of auditor change announcements on the dispersion of investor expectations is investigated by using two approaches. First, the consensus effect (Holthausen and Verrecchia, 1990) is measured by examining unanticipated trading volume change. We show that auditor change announcements provide information to the market, and that the consensus effect dominates the informedness effect. Second, the reduction in information asymmetry (Glosten and Milgrom, 1985) due to auditor change announcements is demonstrated by a reduction in proportional bid-ask spread, which is not driven by increased trading volume. Thus, auditor change announcements reduce dispersion of investor beliefs in that they are both information asymmetry-reducing and consensus-increasing. Finally, we show that the type of auditor change (Big-Eight to Non-Big-Eight, Non-Big-Eight to Big-Eight, or Within-Class) has no impact on the dispersion-reducing effect of auditor change announcements.     

Attitudes Toward Ethically Questionable Negotiation Tactics: A Two-Country Study

Current research has identified five discrete US negotiation tactics, a traditional one considered to be ethical, and four considered to be ethically questionable. Scholars have independently used culture to explain how the endorsement of these five negotiation tactics varies across nations. They have also independently used interpersonal trust and ethics propensity to explain antecedents of the endorsement of those five negotiation tactics. This research combines all those variables into one model that investigates the influence of horizontal and vertical individualism–collectivism, ethical idealism, and trust propensity on employees’ attitudes toward ethically questionable negotiation tactics in Israel and Kyrgyzstan. A survey questionnaire was translated from English to Hebrew and Kyrgyz, and 615 responses were collected from employees in various industries in the two countries. We empirically confirmed three types of questionable negotiation tactics discovered in previous one-nation studies, namely, pretending, deceiving, and lying. Vertical individualism was found to be positively, and horizontal collectivism was found to be negatively, related to pretending, deceiving, and lying. Ethical idealism was found to be negatively related to the endorsement of the lying tactics, while trust propensity was negatively related to the pretending tactics. Compared with Israel, employees’ endorsement of ethically questionable negotiation tactics was significantly higher in Kyrgyzstan. Contribution to theory and practice is discussed.     

When marketing and innovation interact: The case of born-global firms

Previous research on born-global firms (BGs) has emphasized their strong dependency on establishing a competitive positioning from the early days of their existence. While many researchers emphasized BGs’ innovativeness as a driver of their competitiveness, the capabilities underlying BGs’ innovativeness are still under-researched, specifically, marketing, and innovation-related capabilities. Based on a preliminary stage of in-depth interviews with senior managers, we identified three capabilities, market intelligence generation, marketing adaptability, and team cohesion, that underscore the interaction between innovation and marketing. We then performed a SEM analysis based on data collected from 127 BGs. Our findings indicate that marketing intelligence and team cohesion directly and positively impact BGs’ innovativeness. Marketing adaptability was found to be moderated by environmental conditions—economic development and technological development. When economic development is high, salesforce adaptability enhances BGs’ innovativeness, while product adaptability or communication adaptability decreases BGs’ innovativeness. When technological development is high, product adaptability enhances BGs’ innovativeness, while salesforce adaptability decreases BGs’ innovativeness.