This article extends previous research on network industries by analyzing the role that firm strategy plays in markets where network effects are important. The authors postulate that firms can benefit from the existence of network effects through their strategic choices. The main premise of this article is that companies, by influencing expectations, coordination, and compatibility, can leverage network effects and network value. The authors empirically test their hypotheses in the mobile telecommunications industry, a paradigmatic example of a network industry. This study not only seeks to understand the impact of firm strategy on network value but also analyzes the impact of the latter on firm performance.
This study considers how cross-sectional differences and intertemporal variations in interdependencies between productive activities at the industry level moderate the contribution of exploration to long-run organizational performance. We use patent data to measure interdependencies between productive activities at the industry level and computer-assisted content analysis to derive firms’ orientation toward exploration. We also introduce statistical techniques to control bias in estimates induced by potential sources of endogeneity. Our analysis shows that exploration largely contributes positively to long-run organizational performance. This positive effect is stronger in industries with more extensive levels of interdependency or that exhibit more changes in such interdependencies. This study shows the unique and contingent ways in which exploration affects long-run performance. We hope our ideas will influence several areas of future research, not the least of which involves exploration and interdependencies in developing our understanding of organizational success.
This comment is a response to Bandura’s guest editorial (Journal of Management, Vol. 38, no. 1, January 2012) on the functional properties of perceived self-efficacy. The focus of this comment is on the limitations inherent in natural language (i.e., verbal) theories and critiques, which the research regarding self-efficacy has highlighted and Bandura’s editorial underscores. Specifically, it is argued that Bandura’s comment is replete with rhetorical fallacies and theoretical contradictions. Several examples are described to both provide a tutorial on rhetorical sleight of hand and to set the record straight. Computational modeling and logical reasoning are presented as an alternative approach to better scientific theorizing and critique.
Research on strategic momentum considers how experience with innovation affects firms’ subsequent innovativeness. Traditionally the momentum literature has emphasized arguments for an accelerating effect of innovation experience, but recent critiques and contrasting empirical results suggest ambiguity regarding how experience with innovation affects subsequent innovative activity. In this study, we develop arguments for a more expanded view of strategic momentum, examining momentum in the form of temporal consistency of ongoing innovation. This expanded view argues that organizations have incentives for steady-state patterns of innovation in the form of temporal consistency of ongoing innovation. To explore this expanded view of momentum, we examine how experience with innovation facilitates these temporally consistent patterns of innovation, as well as how increasing organizational age may inhibit such consistency. Analyses of generational product innovation in business productivity software highlight the importance of temporal consistency for innovativeness and momentum.
Despite decades of network research, the crucial question, “How do networks evolve?” has not been sufficiently explored. The authors explore this question by analyzing the co-authorship networks in the U.S. biotechnology firms. Building on network management and network inertia perspectives, the authors build a model predicting that the structural changes in the firms’ co-authorship networks are dependent on the specific characteristics of firms’ initial networks, the firm’s age and size. The authors then extend the model by incorporating a measure of the impact of the quality of the knowledge produced by the network ties using the prominence and inertia perspectives, which lead to the incorporation of competing hypotheses and moderating relationships in the model of scientific network evolution. The authors then test the model using longitudinal analysis of 367 U.S. biotechnology firms over a span of 17 years. The authors find that firms’ existing tie-specific characteristics in the form of a firm’s existing network size, tie strength, and the knowledge quality are significant determinants of network evolution, but that this influence is tempered by organizational inertia.
Special Issue Purpose This special issue is focused on how a Bayesian approach to estimation, inference, and reasoning in organizational research might supplement—and in some cases supplant—traditional frequentist approaches. Bayesian methods are well suited to address the increasingly complex phenomena and problems faced by 21st-century researchers and organizations, where very complex data abound and the validity of knowledge and methods are often seen as contextually driven and constructed. Traditional modeling techniques and a frequentist view of probability and method are challenged by this new reality.
In this article, we develop theory regarding one set of mechanisms through which increases in the compensation of directors are transmitted throughout the director labor market. In a longitudinal study using director compensation data from 1996 to 2005, we test hypotheses about how directors’ use of social comparison processes, and reciprocity between CEOs and the board, drive up the compensation level for boards of directors. Specifically, we argue and find that directors’ home firms and interlocked boards serve as salient comparison groups for board members.
With emphasis on a venture’s institutional environment and its stage of development, the authors develop theory to explain how the quality of a nation’s legal system and the level of political hazards affect venture capital (VC) investment strategies in developing countries. The data set consists of 433 VC investment transaction rounds occurring in 13 Latin American countries over the period 1995 to 2003. Different from previous research on the likelihood of investment occurrence, the authors consider the size of an investment transaction as a dependent variable. The authors find a negative relationship between investment size and the political hazards risk and that larger investments are associated with ventures operating in lower quality legal systems. The authors also propose the moderating role of these institutional dimensions in the relationship between a venture’s stage of development and investment size. Findings indicate that in lower quality legal systems, conventional VC-staging strategies are not apparent, where middle and later stage ventures receive the largest investments, but with improvements to the legal system, increasingly larger investments go to early stage ventures. Regarding the stage interaction with political hazards, the authors find that the positive relationship between the venture’s stage of development and investment size weakens as the level of political hazards increases, and when political hazards are high, conventional VC-staging similarly does not occur. In uncovering the unique impact of these institutional dimensions with respect to developing country entrepreneurship, these findings shed light on the acute challenges faced by developing country ventures seeking VC funding at varying stages of development.
The recruitment and selection of human resources represent the most important activities in which organizations of all types engage. However, there is much scholars still need to know about the predictors of recruitment effectiveness. Using a sample of Football Bowl Subdivision (FBS) university football coaches ( N = 175) and their recruiting outcomes, the authors hypothesized that recruiting effectiveness is specifically affected by the individual qualities of the recruiters, in addition to the past performance of the team under the current head coach. The results supported the hypothesis, demonstrating that the interaction of recruiter political skill and head coach performance explained significant variance in recruitment effectiveness. Implications of these results and directions for future research are discussed.
Interpersonal mistreatment is a common and often devastating occurrence in the workplace. Although victim characteristics are an important determinant of who is targeted, research examining the link between target characteristics and interpersonal mistreatment is limited. Researchers have not considered employees’ interpersonal style as an antecedent of the mistreatment they experience from others. Further, very few studies have attempted to understand the mediating processes underlying the relationships between victim characteristics and workplace interpersonal mistreatment. The current study addresses these needs by examining employee popularity as a mediator of the relationship between political skill and two forms of interpersonal mistreatment: workplace interpersonal conflict and workplace ostracism. Results indicate that the political skill–interpersonal mistreatment relationships were mediated by employee popularity.