Knowledge that Transforms

In a paper concerned with the effects of layoffs upon survivors, Brockner et al. (1993) suggest that managers may make survivors with low self esteem worried about future layoffs to increase work motivation. This conclusion may be suspect for a number of reasons: (a) only a small percentage of the variance was accounted for by the interaction in a field study; (b) measurements of self‐esteem, worry and motivation were taken either concurrently or very close to each other in the two studies reported; and (c) potential health related consequences may eventually lead to decreased work motivation.

In this issue Daniels critiques a report which appeared in the Strategic Management Journal's Special Issue on Corporate Restructuring. The report described two studies which delineated several determinants of the reactions of layoff survivors (Brockner et al., 1993). Daniels interpreted Brockner et al. to be saying that managers in downsizing organizations should implement layoffs in ways that maximize survivors' organizationally‐relevant reactions. even if doing so imposes personal costs on the survivors. Unfortunately, Daniels failed to perceive our intended message: that layoffs (and other forms of restructuring) should be implemented in ways that optimize outcomes for both the organization and its people.

When faced with the strategic choice of going direct to market versus the option of using intermediaries, a firm is posited to evaluate the benefits to customers from going direct to market, and the transaction costs involved in using intermediaries. In this paper, we discuss how these evaluations might differ depending upon the microcharacteristics of the exchange domain. Based on these theoretical considerations, specific propositions are offered regarding the conditions under which firms might rely more heavily on direct channels. These propositions are tested by conducting a cross'sectional empirical analysis using a large sample of manufacturing firms operating in diverse exchange domains. We also control for the impact of macrolevel environmental characteristics, as well as firm‐level characteristics that may influence the direct to market decision. Our empirical results confirm that customer benefits and transaction costs are important considerations in going direct to market.

Courses on the management of innovation and technology seldom treat government technology policies, and the issues they pose for business management. This is unfortunate. In many fields business has a big stake in government technology policies. They can help business, be a waste of money, or actually hurt business. This essay considers three broad issues in contemporary technology policy, that are of significant consequence to business: government support of applied research, the question of how to deal with the decline in business‐funded basic research, and the complex questions about intellectual property rights.

The relationships between capital structure and corporate strategy in previous U.S. and Australian empirical studies, which use different definitions of capital structure, and hence have different functional relationships, are considered. A model using the U.S. specification with the Australian data is estimated, for which previous conclusions relating to profit are confirmed. The relationship between strategy and capital structure is thus shown to be less than robust. The conclusion that debt/equity ratios of highly diversified firms are more strongly affected by firm‐level variables is supported. An explanation that the capital market rewards focused firms because they are easier to understand and price is offered.

This paper develops and tests an expanded model of relatedness and firm performance, based on Galbraith's (1983) center of gravity concept. Traditional empirical approaches to relatedness have focused primarily on product similarities. This research operationalizes and tests a managerial dimension of relatedness, based on a firm's historical center of gravity, which assumes that businesses in the same vertical stage of the value chain are more similar to manage than those in different stages. Empirical results support Galbraith's hypothesis that this managerial dimension of relatedness may be more important than constrained product relatedness in achieving high performance. This finding suggests that diversified firms should operate in lines of business that are managerially similar in order to minimize complexity and apply core skills appropriately. Interestingly, while managerial relatedness was positively associated with firm performance in two out of three samples, constrained product relatedness was negatively associated with performance in two of the three samples. Taken together, these results suggest that optimal relatedness profiles may be industry specific, and that corporate relatedness may be more important in managing diversity than product relatedness. Future research should seek a better understanding of the specific dimensions which underlie both product and managerial relatedness.