Knowledge that Transforms

The knowledge and skills inherent in human capital are increasingly recognized as the essence of competitive advantage. Extending the emerging literature on capability building, this paper explores the strategic decision of participating in school‐to‐work programs from the transaction cost and resource‐based view of the firm. Using data from a national sample, we find that both strategic perspectives help to explain decisions to participate in school‐to‐work activities. Our findings indicate that school‐to‐work programs and activities may be understood as interorganizational strategies from a transaction cost view and evidence of a firm's motivation to develop human capital to build competitive advantage from a resource‐based view. Implications for school‐to‐work public policy development in the United States and future research are identified.

In the comment on Ruefli and Wiggins (2003), a number of points are made supporting the variance component analysis approach to determining the importance of industry, corporate, and business segment factors on business segment performance. This response addresses in more detail the nature of the methodological and statistical assumptions made by variance components analysis or ANOVA and their implications for the ‘puzzling’ results obtained when these techniques are employed. The response then contrasts the variance‐based methodologies with a non‐parametric approach used in Ruefli and Wiggins (2003) that makes fewer and weaker assumptions and yields more robust and more internally consistent results. The response also examines the limitations of employing an autoregressive approach to measuring persistence of abnormal profits and contrasts it with a non‐parametric methodology presented in the article.

We present and solve a new, more accurate model of behavior within alliance activity. The model is essentially an iterated prisoners' dilemma with an exit option in each stage of the alliance. The proposed solution results in each partner receiving its opportunity cost as its expected average pay‐off in the alliance. Managerial implications include: identification of where to focus efforts to improve alliance cooperation and performance; and an explanation for why more sophisticated partnership strategies than tit‐for‐tat are likely to be superior in this game.

We analyze the determinants of the decision to invest abroad and the choice of spatial configurations of overseas plants for 120 Japanese firms active in 36 well‐defined electronic product markets. We find that key competitive drivers at the firm and industry levels have a critical impact on the choice between alternative international plant configurations. Regional configurations focused on Asia are chosen by firms with weaker competitiveness for products with established manufacturing technologies. Plant configurations focused on the United States and the European Union are chosen by technology‐intensive firms facing competitive threats in foreign markets. Global configurations are chosen by firms with a strong competitive position in the Japanese and world market for their core product businesses and are more common in the case of strong oligopolistic rivalry between Japanese firms.

Managers are increasingly uncertain over the source (home nation or foreign nation) of antitrust holdup for domestic mergers with significant international implications. I propose a conceptual framework that predicts the source of antitrust holdup for domestic mergers. I find an industry's global competitiveness to be the primary driver behind holdup source. Further, I factor institutional conditions to yield more precise predictions tailored to the cross‐national environment for antitrust policy. Exploratory empirical tests based on the merger policies of 27 antitrust jurisdictions over the 1992–2000 period provide support for baseline predictions. Finally, I generate prescriptive propositions that yield implications for effective political strategies.

This research examines the dyadic dynamics of positioning (i.e., determining where to locate relative to rivals) of services by consulting firms. Positioning near to or far from competitors offers both advantages and disadvantages in terms of competition, legitimacy, uncertainty, and spillovers, with recent research suggesting that firms seek balance between these various forces. Using a sample of service mark filings by consulting firms, I examine the effects of similarity, age, size, and prospective services on service positioning. Results indicate that positioning is both dyadic and multidimensional in nature, with firms maximizing the advantages of positioning either near or far, while minimizing the disadvantages.

The Strategic Management Journal has published a series of articles on variation in business‐segment performance. This comment addresses the insights and potential sources of confusion in the decomposition literature, with a particular focus on Ruefli and Wiggins (2003). We review the basic purpose of descriptive decomposition techniques and argue that they offer no information about the drivers of business performance or the mechanisms by which performance is generated. The techniques in the literature do not rely on ceteris paribus assumptions or a mapping between managerial influence and corporate effects. The estimated effects of industry, business segments, and corporate parents need not be independent to be modeled using variance decomposition. The comment also focuses on the distortions in estimates that can arise when the underlying sample of data does not represent the population accurately.

As the field of strategy reaches its 25th anniversary, we examine how far the field has progressed during that time. Both management and strategy research have been characterized as being in an early stage of development. We draw on Kuhn's () paradigm development model, which posits a connection between a field's stage of maturity and research processes and outcomes, to assess the maturity of the strategy field. We conduct two studies. The first is a cross‐discipline comparison of productivity norms for university faculty. The second study examines longitudinal research outcomes for a sample of 945 strategy faculty. Our results indicate that strategy has the attributes of both an early stage and mature field: while overall research norms are low relative to other fields, they are driven far more by merit‐based than non‐merit factors.

Hawawini, Subramanian, and Verdin (2003) examined the relative impact of industry‐ vs. firm‐level factors shaping firm performance. They demonstrated that variance in firm performance attributable to industry‐level factors increases, while variance attributable t to firm‐level factors decreases when ‘exceptionally’ higher‐ and lower‐performing ‘outlier’ firms in each industry are excluded. They concluded that previous research underestimated the relative impact of industry‐level factors for ‘average’ firms that make up the bulk of an industry. We take issue with their methods used to identify and exclude outliers as well as their conclusions drawn from such analyses. Rather than excluding true ‘outlier’ firms, we argue that they incorporated an artificial restriction of within‐industry sample variance that almost deterministically led to lower firm and higher industry variance component estimates. We demonstrate this point with a comparable sample of data to which we apply progressively greater restrictions on within‐industry sample variance leading to similar results. Finally, we show that exclusion of firms from a data sample based on commonly understood standards of outlier identification leads to little change in industry and firm variance component estimates compared to full‐sample estimates.

In this study, we extend the analysis of adaptation in theories of economic organization beyond traditional considerations of incentive conflict (hold‐up). We conceptualize adaptation as coordinated and cooperative response to change, and define the adaptive capacity of a vertical relationship as the ability to generate coordinated and cooperative responses across procurer and supplier to changes in procurement conditions. We draw on the concepts of differentiation and integration to dimensionalize the adaptive capacity of different modes of procurement. Using data on all component classes procured internally and externally by Ford and Chrysler, we show that different procurement modes differ in terms of their adaptive capacity and performance. We also show that performance differences across modes of procurement arise as a function of the match between adaptive capacity and adaptation requirements associated with the exchange, and not only the match between governance form and transaction hazards.