Knowledge that Transforms

In this paper, we examine a firm's decision to enter new markets as related to the depth and breadth of its experience and the relative distance of those markets. We situate our discussion and analysis in the context of the venture capital (VC) industry, and examine whether and when US VC firms enter five high‐technology investment markets through first‐ or later‐round investments. This setting allows us to observe both the firms that chose to enter a new market and those that did not, and analyse the antecedents of these decisions. We find that VC firms overall are less likely to enter distant markets; those with broader experience are more likely to make first‐round entries. In addition, VC firms with deeper investment experience are more likely to make first‐round entries in proximate markets and less likely to enter distant markets and make later‐round entries. These results offer interesting implications for the literature on organizational learning and entrepreneurship.

Zahra and Newey (2009) argue for the importance of creative theory building in management research and suggest that this is best to be done via interdisciplinary research. We argue that the more management research goes down the road of pursuing interdisciplinary research for generating novel theories, the more likely it will compromise another worthwhile goal, which is to establish the discipline of management as a legitimate academic discipline that is distinguishable from other academic disciplines in its subject matter and its theoretical and methodological approach. We also argue against the implicit premise that the focus of management discipline should be on developing new theories.

The relationship between ownership and family involvement in small businesses is not altogether clear because empirical studies have not distinguished among family ownership, family management, and owner‐management in composing their samples. In the present study, a large sample of small private firms is parsed into sub‐samples with distinctly different types of owners in order to isolate the effects of locus of ownership. The results show that firms with different locus of ownership behave differently with respect to the extent of involvement by the CEO's relatives as employees, key managers, advisors, and board members. Although owner‐managers and sole‐proprietors would seem to have more authority than other CEOs to involve family members in the operations of the business, the findings indicate that these self‐owned firms have significantly less family involvement than firms owned entirely by relatives of the CEO.

This paper discusses the role of security analysts in the dissemination of popular management concepts, drawing on neo‐institutional and management fashion theory. Focusing on the core competence concept, we investigate whether security analysts swing with the popularity of a management concept or serve as a corrective that secures the rationality of managerial actions. Through our analysis, which uses data for US‐based firms spanning the period 1990–2002, we show that during the 1990s analysts systematically overvalued the future earnings of refocusing firms that incorporated principles derived from the core competence concept. Moreover, we present evidence that their valuations were positively influenced by the popularity of the core competence discourse and exhibited a systematic bias. Our results suggest a more nuanced understanding of the dynamics underlying the popularization processes of management concepts. In addition to the classical bandwagon‐effects discussed in neo‐institutional theory, we argue that the mediating role of security analysts and their impact on stock‐market prices promote the diffusion of new management concepts.

In this study I examine the effect of a firm's reputation for product quality on its effort in learning to reduce its product defect rate. Theoretical ideas on the motivation of learning associated with social aspiration levels and the self‐serving bias combined with social categorization suggest that poor quality reputation firms are more likely than their counterparts with a good reputation to attend to potential product defects and consequently reduce their defect rate. However, a stream of research on the motivation of learning stemming from historical aspiration levels and slack search leads to a different argument: a reputation for good quality is more likely to provide firms with a motivation to avoid product defects. I build upon these two competing arguments and hypothesize that stronger motives for learning exist in situations where firms have either a weak or strong reputation for product quality. My study of product recalls in the US automotive industry highlights an inverted U‐shaped relationship, indicating the liability of an intermediate reputation in reducing product defects.

We present a reflexive retrospective account of a UK government research council funded project deploying knowledge management software to support environmental sustainability in the construction industry. This project was set up in a form typical of a Mode 2 research programme involving several academic institutions and industrial partners, and aspiring to fulfil the Mode 2 criteria seen as transdisciplinarity and business relevance. The multidisciplinary nature is analysed through retrospectively reflecting upon the research process and activities we carried out, and is found to be problematic. No real consensus was reached between the partners on the ‘context of application’. Difficulties between industry and academia, within industry and within academia led to diverging agendas and different alignments for participants. The context of application does not (pre‐)exist independently of institutional influences, and in itself cannot drive transdisciplinarity since it is subject to competing claims and negotiations. There were unresolved tensions in terms of private vs. public construction companies and their expectations of ICT‐based knowledge management, and in terms of the sustainable construction agenda. This post hoc reflexive account, enables us to critique our own roles in having developed a managerial technology for technically sophisticated and powerful private industrial actors to the detriment of public sector construction partners, having bypassed sustainability issues, and not reached transdisciplinarity. We argue that this is due to institutional pressures and instrumentalization from academia, industry and government and a restricted notion of business relevance. There exists a politically motivated tendency to oppose Mode 1 academic research to practitioner‐oriented Mode 2 approaches to management research. We argue that valuing the links between co‐existing Mode 1 and 2 research activities would support a more genuine and fuller exploration of the context of application.

Arguments based on labour market theory suggest that there may be CEO behavioural issues related to pay deviations from the labour market rate for CEO pay; however, few studies examine this phenomenon. This study attempts to address such behavioural issues by examining the influence of relative CEO underpayment on reductions in R&D spending, the differences in this relationship between firms in high R&D intensive versus low R&D intensive industries, and the moderating affect of ownership structure on the CEO underpayment and R&D spending relationship. Results suggest that relative CEO underpayment is associated with reductions in R&D spending in low R&D intensive industries and increases in R&D spending in high R&D intensive industries. Also, greater relative CEO underpayment leads to greater reductions in R&D spending in manager‐controlled organizations as compared to owner‐controlled organizations. This study provides evidence that pay deviations may, in fact, affect certain CEO behaviours, specifically relating to innovation.

A basic tenet of research on organizational citizenship behaviour (OCB) is that OCB aggregated across individuals improves organizational performance. Departing from the typical focus on individual‐level OCB, the construct of group‐level OCB (GOCB) recently emerged as a critical group function that affects various group effectiveness measures. Despite the clear link between GOCB and team performance, the existing literature provides a limited understanding with regard to the antecedents of GOCB, mostly focusing on leadership variables. Establishing helping behaviour (a core dimension of OCB) as a collective construct, this study substantially expands the antecedents of group‐level helping, and empirically tests their effects using three different operationalizations of group‐level helping. The results, based on a sample of 96 work units, show that membership diversity in gender and education decreased group‐level helping, whereas diversity in tenure increased it. Group‐level helping was also positively related to leadership characteristics (supportive unit manager, transformational top management) and perceived competence of unit members. In addition, the analysis further indicated that perceived competence is a positive predictor of group‐level helping only when the unit members also believe that others are trustworthy in terms of integrity and benevolent motivation. From a methodological standpoint, the study provides important insights by comparing different ways of operationalizing collective constructs.

Drawing on institutional theory, this study examines the factors that pressured Korean firms to appoint outside directors to their boards. While this practice could be considered to be a management innovation in Korea, in the Anglo‐American corporate governance system it has long been used as one of several mechanisms to mitigate agency costs between management and shareholders. As such, this response by Korean firms, following the 1997–98 currency crisis in Asia, could be seen as an example of corporate governance convergence on the Anglo‐American model, where higher levels of outside director representation on the board are the norm. We examine the antecedents of having a higher proportion of outside directors on Korean boards. Our findings indicate that larger firms that are under stricter control by the government have higher representation of outside directors on the board. We also find a positive and significant relationship between the proportion of outside directors and business group affiliation, poor prior firm performance, higher levels of debt and foreign ownership.

This study analyses the impact of business group affiliation on firm performance during a time when business groups are newly formed, when the economic and institutional environment is changing, and when group survival is uncertain. Based primarily on a transaction cost approach, we develop two hypotheses, concerning profitability and risk sharing (redistribution) respectively. The positive profitability hypothesis proposes that company affiliation with a business group directly and positively affects the profitability of each affiliate. A positive direct effect emerges when each affiliate benefits from access to group resources. The redistribution hypothesis considers the simultaneous possibility that inter‐affiliate transfers of resources through internal markets are designed to redistribute profits among group members. We argue that variance‐reducing redistribution from strong to weak group members is linked to group survival in times of institutional change. Our empirical approach focuses on testing these two linked hypotheses (and their alternatives) using a relatively large, contemporary and time varying database of Russian firms. We also develop a framework that distinguishes among the four possible empirical outcomes associated with the hypotheses. Our results provide unambiguous support for the case where the impact of group membership on profitability is positive and redistribution is variance‐reducing. We term this outcome Business Group Robustness, and contrast it with other possible empirical outcomes.