Knowledge that Transforms

Research Summary We examine a significant yet underappreciated effect of IPR implementation: the dissemination after TRIPS implementation of established scientific knowledge from low‐ and middle‐income countries (LMICs) into the global scientific system of pharmaceutical development. The staggered implementation of the policy allows identification of increased diffusion of pre‐existing LMIC knowledge on global diseases into the global corporate invention pipeline. For neglected diseases, the uptake remains in academic science. Other results demonstrate institutional effects in the scientific communities in LMICs through increases in scientific productivity, cross‐border collaborations, and scientist mobility. These and other results recast TRIPS’ impact as sensitive to the incentives of global corporations and institutionally significant for LMICs. We discuss implications for research on innovation strategy. Managerial Summary The implementation in an LMIC of an intellectual‐property system (e.g., of patents) carries implications for dissemination of pre‐existing scientific knowledge from the implementing country into the global scientific system. Corporate invention more intensively incorporates pre‐existing LMIC knowledge when the subject is global diseases such as cardiovascular conditions and cancer. However, when the subject is neglected diseases such as infectious conditions, the significant uptake remains in academic science. Overall, this research suggests that the implementation of patent and other intellectual‐property protections influences the integration of LMIC science into the global system differentially based on the relevance for global commercialization.

Research Summary What is the most effective way to distribute organizational objectives across managers? While prior work suggests managers should each focus on a single objective, we draw on Barnard's original insights on corporate purpose to identify conditions when managers pursuing the full set of objectives is advantageous. Using a computational model, we find that moderate strategic diversity amongst managers enables practice sharing to generate sufficiently valuable distant search to offset the additional complexity incurred during local search, creating a “common purpose advantage.” The advantage is stronger with fewer objectives, moderate objective correlation, less diversification, and moderate turbulence. Under other conditions, it dissipates or reverses. This work unifies scattered findings on multi‐objective firms, contributes to diversification research, and revives interest in the Managerial Theory of the Firm. Managerial Summary How should a firm distribute its objectives across its managers? Should each manager focus on a single objective, or should all collectively pursue the full set? Our research identifies the conditions for a “common purpose advantage,” where all managers pursuing the full set of objectives is superior. Using a computational model, we demonstrate this advantage arises when moderate strategic diversity amongst managers enables the sharing of valuable practices, which generates performance gains that offset the complexity of handling multiple goals. This advantage is strongest with fewer objectives, moderate environmental turbulence, and in less diversified firms. Under other conditions—such as high turbulence, many objectives, or high diversification—this advantage dissipates or reverses, making each manager focusing on a single objective more effective.

Research Summary We investigate how deskilling technology (map apps) affects the choice of individuals to provide ride‐hail service. In a vignette experiment, technology increased participation in work by 8% and 4% among low‐ and high‐skill drivers respectively. Technology can increase participation by raising productivity or affording an amenity (reducing disutility of work). A field experiment revealed that the technology afforded more amenity to low‐skill drivers and they incurred more stress when driving without technology. Strategically, the amenity is important as it may reduce wage pressures. Managerial Summary Technologies that deskill work may afford an amenity by reducing the disutility of work. In formulating technology strategy, managers must consider how the amenity varies by worker skill and how it affects the supply of labor. In the context of ride‐hail drivers, we show that navigation technology affords an amenity. The amenity is larger and the effect of technology on increasing labor supply is more pronounced among drivers with less skill. Strategically, the amenity is important as it may reduce pressures for higher wages from low‐skilled workers.

Research has established that organizations benefit from “optimal distinctiveness,” that is, being sufficiently similar to and different from competitors. However, we know less about producers' strategic positioning choices to establish optimally distinctive identities. We explore this question through a qualitative study of chef‐owners who started their own restaurants after training with well‐known mentors. We identify two trajectories followed by chefs to establish optimal distinctiveness—legacy and divergent—and their components: interpersonal origins, strategic material and symbolic practices, tensions, and performance outcomes. Our study contributes to research by providing a more complete picture of how creative producers attempt to find an optimal balance between similarity to and difference from mentors, and the constraints they face in their strategic choices, including how these change over time.

Research Summary We investigate why firms imitating the same competitor's strategy in the same environment often replicate different components of that strategy. We argue that such divergence can arise because firms vary in the internal interdependencies that underlie their strategies. When a firm significantly differs from a competitor in how one component of its strategy interacts with other components, the consequences of replicating the competitor's choices about that component are harder to anticipate, making imitation less likely. We discuss how imitators' internal coordination mechanisms may help mitigate barriers to imitation arising from interdependence asymmetries and test our resulting hypotheses in the context of esports, where small teams of professional video‐game players compete in high‐stakes tournaments. Managerial Summary We investigate why firms observing the same competitor often imitate different aspects of that competitor’s strategy. We argue that this variation stems from each firm’s unique internal connections between activities. When a competitor’s practice is closely linked to other parts of their strategy, imitation becomes riskier if similar links do not exist in the focal firm—making imitation less likely. Using data from esports teams, where both strategic choices and coordination are observable, we show that these differences can act as barriers to imitation. However, strong communication or shared experience among decision‐makers helps overcome such barriers. Our results may caution managers against indiscriminately copying “best practices”: the highly competitive teams we studied considered not only what competitors did, but also whether those practices fit their own processes and structures.

Research Summary Prosocial CEOs, characterized by greater concern for their employees, enhance employee motivation but incur higher costs when implementing layoffs. We develop a psychological model of CEO‐firm matching wherein negative industry shocks requiring downsizing asymmetrically erode the match quality for prosocial CEOs. Leveraging increases in Chinese import competition, we show that layoff pressures lead to higher rates of both forced and voluntary turnover among prosocial CEOs. They are succeeded by less prosocial CEOs who are externally recruited, use less employee‐friendly language, lean Republican in political orientation, or are less likely to volunteer at charities. Our study highlights psychological characteristics as a key consideration in the executive labor market and draws attention to the “first‐stage” selection dynamics that shape the types of CEOs who lead firms. Managerial Summary Which firms CEOs choose to join and which CEOs are selected or retained by boards depend not only on their skills but also on the fit between their ‘personality’ and the firm's needs. We show that during industry downturns that require aggressive downsizing, prosocial CEOs are more likely to depart voluntarily, and boards actively replace them with low‐prosocial “wartime” CEOs. This dynamic nature of the CEO‐firm fit provides insights into why and when previously effective leadership may become ineffective and empirical grounds for the common distinction between peacetime and wartime CEOs. A key implication is that increasing Chinese import competition has shaped not only firm economic activities but also the psychological profiles of business leaders.

Research summary We establish a new paradox surrounding technological uniqueness, defined as the degree to which a firm's patented technology portfolio differs from its competitors. On the one hand, technological uniqueness acts as a barrier to incoming technology spillovers and impedes firm performance. On the other hand, technological uniqueness reduces outgoing technology spillovers and contributes to a strategic resource that is more costly to imitate. We empirically examine these competing arguments and find evidence that the strategic resource argument dominates for average firms in the data with more technologically unique firms performing better. At the same time, we show that pursuing technological uniqueness is costly, as unique firms indeed benefit less from incoming technology spillovers, are harder to understand by equity analysts and have higher costs of equity capital. Managerial Summary We establish empirically for a sample of public corporations that being technologically unique pays off‐companies with distinctive patent portfolios outperform their peers on average. This uniqueness creates a competitive moat that is difficult for rivals to overcome. But there is a catch: the same uniqueness that protects a company also isolates it. When technology is so different from conventional wisdom, it becomes difficult for outsiders to understand, then a contrarian company will also struggle to learn from others' breakthroughs. We empirically document a double penalty: contrarian companies benefit less from innovations by peer firms and equity analysts can't easily evaluate the business, driving up the cost of capital.

Research Summary Interim CEO appointments are disruptive and costly to firms. Boards justify them as necessary to find the right permanent successor. But what happens if that successor performs poorly? This paper argues that directors may be reluctant to remove a poorly performing successor to an interim CEO early in their tenure. It posits that this may be owing to directors' concerns for their own reputations or for the firm. Results demonstrate that successors to interim CEOs are considerably less likely than successors to permanent CEOs to experience performance‐related early departures. This appears to be owing to directors' efforts to avoid further harming the firm. Additional analyses suggest these concerns may be justified, as early exits by successors to interim CEOs are associated with post‐succession market declines. Managerial Summary When faced with an unexpected CEO departure, appointing an interim CEO is often viewed as a prudent decision to ensure the selection of the right permanent successor. Yet interim appointments are disruptive and can have lasting consequences. This study finds that when a permanent successor follows an interim CEO, directors appear reluctant to remove them early for poor performance. This reluctance appears to be driven primarily by directors' concerns about causing further harm to the firm rather than their concerns that removing the successor early may damage their reputations as governance professionals. Additional analyses indicate that these concerns for the well‐being of the firm may be justified, as early exits by successors to interim CEOs are associated with post‐succession declines in market performance.

Research Summary Research on inter‐firm cooperation often focuses on long‐term strategic alliances while overlooking the distinct form of arm's‐length resource exchanges. Our study addresses this gap using the National Basketball Association (NBA) data for precise resource exchange measurements. Contrary to strategic alliances, where competitive pressure fosters cooperation, we find that competitive pressure reduces cooperation in arm's‐length exchanges. However, relational capital helps to facilitate resource exchanges. We also found that while resource bundling exacerbates the negative effect of competitive pressure, it amplifies the positive effect of relational capital. Interestingly, relational rivalry intensifies the impact of competitive pressure but does not diminish the effect of relational capital. These insights have important implications for the coopetition and the Strategic Factor Markets (SFM) literature. Managerial Summary In competitive environments, organizations may cooperate to reduce competition, often through long‐term strategic alliances. However, our research reveals different behaviors in arm's‐length resource exchanges. Analyzing NBA player transaction data, we found that competition generally discourages resource exchanges due to opportunism concerns, particularly when multiple resources are involved. Interestingly, organizations are more likely to engage in arm's‐length exchanges when key members have prior cooperative histories, especially in complex scenarios. Historical rivalries also heighten the competitive impact on resource exchanges but do not significantly diminish the benefits of prior cooperation. This study offers valuable insights for managers, helping them navigate resource exchange dynamics among competitors and make more informed strategic decisions.

Research Summary This research investigates how firms attempt to preempt activism before it mobilizes into an active threat. Employing a difference‐in‐differences design, we examine the quasi‐exogenous enactments of laws that prevent Strategic Lawsuits Against Public Participation (anti‐SLAPP laws) in the United States. We find evidence suggesting that in response to the enactment of anti‐SLAPP laws, firms self‐regulate through enhancing their institutional corporate social performance (institutional CSP). This response is more pronounced in firms with greater firm‐specific activism risk, as evidenced by greater media coverage on firms' social irresponsibility. These findings suggest that, in response to activism risk, firms attempt to keep activists from targeting them by preemptively engaging in self‐regulatory improvement in their institutional CSP. The preemptive action we document extends research on stakeholder activism. Managerial Summary By analyzing how US firms respond to the enactment of laws that prevent Strategic Lawsuits Against Public Participation (anti‐SLAPP laws), we find that in anticipation of activist attacks, firms enhance their institutional corporate social performance (institutional CSP). This proactive response is more evident in firms facing a heightened risk of activism, such as those with substantial media exposure for socially irresponsible outcomes. We suggest the looming institutional risk of activism prompts firms to engage in self‐regulatory adaptation in enhancing their institutional CSP, hopefully mitigating the risk of being targeted by stakeholder activists.