Knowledge that Transforms

Abstract In this paper we examine middle managers’ struggle over their subject position as strategists in the context of participative strategy processes. Based on a longitudinal case study of a company undertaking an Open Strategy process, we show how the wider inclusion of front‐line employees in developing new strategy undermines the traditional subject position of middle managers. Based on these findings, we develop a process model depicting the recursive dynamics of middle managers’ struggles to maintain their subject positions in the face of employee participation. With these findings we contribute to the literature on middle managers by advancing our understanding of the implications of employee participation for middle managers’ subject position as strategists and their different ways of reclaiming their subject position. We also contribute to the literature on Open Strategy by revealing the implications for traditional strategy actors as well as by explaining the processual dynamics of participation over time.

AbstractPast research shows that during a crisis, managers of publicly‐held firms often adopt a ‘conservative’ approach focused on protecting the existing core of their firms by decreasing investments and hoarding precautionary cash. By doing so, managers decrease firms’ short‐term failure rates. However, the literature says little about how managers of private, Small and Medium‐sized Enterprises (SMEs) (should) act during a crisis. To address this question, we draw on the Conservation of Resources (COR) theory. Empirically, we use longitudinal data from 38,885 Belgian SMEs’ responses to the 2008–09 financial crisis. Consistent with our expectations, we find that an ‘aggressive’ approach focused on resource investment during the crisis decreases SMEs’ failure rates for up to a decade after the crisis. Further, younger SMEs, and especially those in industries with more growth opportunities, adopt aggressive approaches. Overall, the results show that SMEs need to be aggressive during the crisis to ensure their long‐term survival. Moreover, contrary to current depictions of younger SMEs as being vulnerable, and especially so in crises, our evidence highlights that they are surprisingly aggressive when being confronted with a crisis, relative to their older peers.

AbstractGlobal strategy cannot be fully understood without consideration of dynamic capabilities (DCs). This is because the three key constituents of DCs – the sensing and seizing of opportunities and the reconfiguration of the resource base – are essential preconditions for strategy development, within nations and cross‐border. We investigate the aspects of DCs that are most suitable for global strategy and those that need to be revisited and developed. We discuss theory and evidence on DCs and global strategy, present a systematic literature review, compare theory and evidence, and identify gaps between the two as well as opportunities to align them more closely and to develop both. To help guide future research, we develop a novel conceptual framework and provide suggestions for more theory‐congruent empirical research.

AbstractOrganizations often fail to adequately respond to substantive changes in the environment, despite widespread implementation of algorithmic routines designed to enable dynamic adaptation. We develop a theory to explain this phenomenon based on an inductive, historical case study of the credit rating routine of Moody’s, an organization that failed to adapt to substantial changes in its environment leading up to the 2008 financial crisis. Our analysis of changes to the firm’s algorithmic credit rating routine reveals mechanisms whereby organizations dynamically produce inertia by taking actions that fail to produce significant change. Dynamic inertia occurs through bounded retheorization of the algorithmic model, sedimentation of assumptions about inputs to the algorithmic model, simulation of the unknown future, and specialized compartmentalization. We enable a better understanding of organizational inertia as a socio‐material phenomenon by theorizing how – despite using algorithmic routines to improve organizational agility – organizations dynamically produce inertia, with potentially serious adverse consequences.

AbstractParadox literature is emerging as one of the most vital streams in management studies, but it is affected by some growing pains. First, the concept of paradox is still too fuzzy, which impacts empirical research and hinders communication with other literatures. Second, the assumption that paradoxes are always best met with acceptance and search for balance is problematic because it limits the heuristic potential of a paradox lens, because it constrains the range of sustainable responses to contradictions, and because it may induce to appeasement in face of injustice. In this paper we propose to strengthen paradox theory by incorporating the contributions of two alternative perspectives on organizational tensions: trade‐offs and dialectics. We thus present a model which expands organizational paradox theory by: (1) clarifying the concept of organizational paradox; and (2) offering a model that better describes the varied phenomenology, causes and consequences of organizational tensions and paradoxes.

AbstractAs an unknown quantity, new ventures rely on influential intermediaries to endorse them. However, in some areas, like digital entrepreneurship, there is fierce competition for intermediary attention. Failing to garner intermediary support can mean ventures lack the resources needed to prosper. Still, it is unclear how they attract coverage, how intermediaries evaluate those vying for attention, and what influence this has on venture development. We conducted qualitative inductive research on how digital ventures sought coverage from industry analysts. Our process model of intermediary evaluation shows how ventures must perform a ‘valorising pitch’ to move from being an unknown quantity to engaging the intermediary to being valorised. Drawing on valuation studies scholarship, we propose an enhanced model of intermediary evaluation that depicts industry analysts as not just identifying but also ‘creating’ the value of ventures. We offer contributions to the literature on new venture development, intermediaries and digital entrepreneurship.

AbstractWhile most firms do not grow, a small number of firms are able to maintain and accelerate their growth over time. Researchers, practitioners, and policymakers continue to question the factors which increase a firm's chances of growing rapidly and becoming a more powerful economic driver. Using a robust longitudinal data set from the United Kingdom (UK) during the period from 2000 to 2017, we investigate the propensity of firms to accelerate growth in sales, employment, market share, and productivity. We report varying effects of firm characteristics, industry competitive factors, and regional factors as drivers of accelerated growth. This study will help policymakers and firm managers understand the forces behind different types of acceleration, and it provides a foundation for future research on the speed of firm growth.

AbstractEven as research on scaling and high growth firms (HFGs) is gaining momentum, the corpus of accumulated research remains largely fragmented and dispersed, with little in the way of a central conceptual foundation or ‘theoretical true north’ to guide empirical development. This Special Issue provides a forum for works that push the theoretical and empirical frontiers of research on scaling and HGFs. We provide a multi‐dimensional conceptualization that recognizes scaling as a dynamic capability entailing routines and processes for expansion, replication, and synchronization. We also present a typology that specifies the multiple types of HGFs. Inspired by the four studies published in the special issue, we finally outline five priorities for future research.

AbstractThe emergence of platform‐based entrepreneurial firms (PBEFs) and their rapid scaling holds considerable implications for the theory and practice of firm growth in the digital economy. Building on the resource‐based view, we seek deeper insights into the question of how PBEFs orchestrate resources to scale up in the context of platform ecosystems. We conduct an in‐depth longitudinal case study of Tencent, one of the largest PBEFs in the world, and develop an inductive process model based on the logic of ‘dialectic tuning’. We uncover the specific actions and capabilities that PBEFs possess and employ to scale up a platform ecosystem, as manifested in a complementary set of concrete organizational practices enacted at different stages of the growth trajectory. We unveil an important boundary condition that has hitherto remained implicit in the literature on firm growth driven by platform‐based business models. Our findings diverge from the conventional perspective which predominantly associates firm growth with the characteristics of internal resources and capabilities. We argue that the relational properties of interaction and integration between internal and external resources are what gives rise to the capabilities needed to scale up a platform. Thus, we extend and refine the resource‐based view by explaining the evolving patterns of resource orchestration and management of PBEFs in terms of the interplay between the focal platform and its ecosystem partners.

AbstractThis study examines how CEOs' internal attribution tendency – to attribute an observed outcome to internal factors – shapes the extent to which corporate downsizing activities are driven by performance shortfalls. Despite the known effectiveness of downsizing in creating leaner organizations and enhancing firm performance, CEOs often avoid it as it runs counter to their own interests. Applying the awareness‐motivation‐capability (AMC) framework, we argue that CEOs' internal attribution tendency influences their awareness of responsibility for performance shortfalls, and ultimately whether they engage in downsizing actions in response to such shortfalls. This effect becomes more salient when CEOs have the motivation (e.g., scrutiny from financial analysts) or capability (e.g., the existence of an unfavourable external environment) to avoid taking such responsibility. Using a sample of 2424 US firms, we find support for our arguments. Our study highlights the importance of CEO internal attribution tendency in explaining whether firms resort to downsizing actions to address performance shortfalls.