Research Summary Many scholars bemoan the difficulty of learning from individual research reports. Replication is often prescribed as a salve, but few replications are conducted, and even fewer allow the formation of a coherent understanding. In this article, we propose a complement to replication that emphasizes the mapping of epistemic uncertainties. We demonstrate our approach by exploring the results of six related studies on the link between social and financial performance. We show that our method allows the synthesis of seemingly conflicting findings, and we propose that it should be used proactively, prior to replication, to speed the growth of knowledge. Managerial Summary Any single empirical study provides a weak basis for inference. As a result, scholars advocate repeated analysis of important issues, but evidence from replications can be hard to integrate into a coherent understanding. For example, six important studies of the link between corporate social and financial performance have been published in this journal, but their conflicting results have defied integration. We show that a new approach to empirical research allows their reconciliation: all six suggest that across firms, social and financial performance are correlated but that improvements in social performance seldom precede increased financial performance.
Research Summary We examine how the performance of a firm's prior alliances influences its propensity to persist with the alliance mode or switch to independent operations in the context of new product introductions (NPIs). Drawing on the behavioral theory of the firm (BTOF), we argue that a firm's alliance performance has a U‐shaped effect on its likelihood of undertaking the subsequent NPI independently and that competitive intensity strengthens this U‐shaped relationship. We also predict that firms with above‐aspiration alliance performance are more likely to achieve breakthrough performance in the subsequent NPI if they switch to independence than if they continue to ally. Data on NPIs in the global aircraft manufacturing industry (1944–2000) support our hypotheses. Our study extends the alliance literature and contributes to research on how firm performance influences subsequent strategic choices. Managerial Summary The dilemma of whether to continue or exit an alliance or relationship is a common one for individuals, countries, and firms. Our study examines firms' strategic decision to switch to independent operations after having partnered with other firms. Using the aircraft product development context, we show that firms that make such a change in their strategy are the ones that performed either much better or much worse than what they expected. Firms with alliance performance close to their expectations tend to persist with their current strategy. Of the firms that change their strategy, the high performers benefit much more from changing their strategy than low performers. We provide insights regarding when it is preferable for managers to continue to ally or to switch to independence, especially in launching new products.
Research Summary We theorize the strategies that entrepreneurial actors employ to instill their endeavors with culturally resonant meanings and rally the support of key audiences (investors, analysts, or customers). In extant cultural entrepreneurship research, endeavors are assumed to achieve resonance and gain support when actors deploy the culture they share with their targeted audiences. But what if actors and audiences hold cultural repertoires that poorly overlap? We consider actors' efforts to “mobilize” and “enrich” the repertoires of both parties. Specifically, we introduce a typology identifying four strategies: anchoring, retooling, channeling, and seeding. Viewing culture as an engine of stability and change, we contend that each strategy addresses a distinct tension that actors must skillfully balance. We develop propositions to explain how and when actors manage these tensions. Managerial Summary Entrepreneurs must explain their endeavors in terms that audiences (investors, analysts, or customers) will understand and value. We know that entrepreneurs do so by telling stories and performing other symbolic actions, or by revising their stories and actions. However, prior insights assume a preexisting fit between what entrepreneurs and audiences value. How is this fit created? We identify four strategies by which entrepreneurs leverage a preexisting fit, and foster greater fit. We explain how entrepreneurs leverage a preexisting fit by presenting endeavors in familiar terms, and guiding audiences' interpretations. We explain how entrepreneurs foster greater fit by learning what audiences value, and educating audiences about their endeavors' value. Considering the inherent tension that each strategy entails, we explain how and when entrepreneurs use these strategies.
Research summary The role structure of a top management team (TMT)—the roles of TMT members and the relationships among those roles—has important implications for how TMT members work together as a group in directing an organization and shaping its strategy. Although the importance of TMT role structure has long been noted, it has received scant attention until recently when upper‐echelons scholars started examining its formation and influence. To stimulate a concerted effort in studying TMT role structure, we develop a framework elaborating its main themes, draw out key contributions from extant research (see the SMS Collection), and outline promising future directions. In particular, we highlight important dynamics of how formal and informal structures complement or compete with each other in the strategic leadership of an organization. Managerial summary How to structure a TMT is critical for the strategic leadership of an organization. The roles of senior executives and the relationships among these roles shape how executives work together as a group in directing an organization and shaping its strategy. In this article, we develop a framework for understanding how a role structure develops in the senior management team and how it affects strategy and performance of the firm. We synthesize and present key contributions from recent research and discuss important areas that deserve future research. Our article highlights important dynamics of how formal and informal role structures complement or compete with each other in the strategic leadership of an organization.
Research Summary How does an acquisition initiated by a firm's alliance partner affect the value that the firm can create and capture from its alliance with that partner? We conjecture that the similarity between the businesses of the firm and its partner's acquisition target restricts the firm's ability to create and capture value from its alliance, whereas the complementarity between their businesses enhances the firm's gain from its alliance. We further expect relational embeddedness between the firm and its partner to mitigate the competitive tension associated with similarity while reinforcing synergies ascribed to complementarity. Our analysis of 361 firms and their 590 alliances with 91 partners that acquired 164 targets during 2000–2016 supports our predictions about business similarity and complementarity but refutes those concerning relational embeddedness. Managerial Summary When a firm's partner engages in an acquisition, this can impact the value of their alliance. We show that when the acquired target competes with the firm, the value of the alliance declines. In turn, when the target and firm's businesses are complementary, the alliance creates more value. We also find that when the firm and the partner had extensive experience working together, this reinforces the negative effect of business similarity with the target, probably because of perceived betrayal and knowledge leakage. Joint experience also reduces the value of complementarity, likely due to the difficulty of modifying collaborative practices. We encourage managers to scrutinize their partners' corporate initiatives, reduce commitment when the partner acquires a competing target, and leverage new complementarities following the partner's acquisitions.
Research summary Platform ecosystems have spurred new products and services, sparked innovation, and improved economic efficiency in various industries and technology sectors. A distinctive feature of the platform architecture is its modular and interdependent system of core and complementary components bound together by design rules and an overarching value proposition. Accordingly, we conceptualize platforms as meta‐organizations, or “organizations of organizations” that are less formal and less hierarchical structures than firms, and yet more closely coupled than traditional markets. To function successfully, however, platforms require coordination among multiple participants not all of whose interests are aligned. These organizational features of platforms raise many interesting and complex strategic challenges and hold implications for how platforms compete. In this paper, we discuss some of the most salient features of platform ecosystems as meta‐organizations, specifically in terms of the sources of authority or power in the ecosystem, the motivation and incentives a platform creates to attract participants, and its governance and coordination structures. We then consider how papers appearing in this special issue inform us about the effects of these features on platform competition along three distinct dimensions: (a) with traditional incumbents as platforms enter and establish themselves in new markets, (b) with other platforms to secure an advantageous market position, and (c) with the different participants on the platform to share the value that has been created jointly. We close by identifying some promising directions for future research. Managerial summary Platform ecosystems have spurred new products and services, sparked innovation, and improved economic efficiency in various industries and technology sectors. A distinctive feature of the platform architecture is its modular and interdependent system of core and complementary components bound together by design rules and an overarching value proposition. This makes platform ecosystems an organizational form on its own (a “meta‐organization”), neither possessing the hierarchical instruments of a firm, nor the largely uncoordinated decisionmaking of markets. Successful platform ecosystems require coordination among multiple participants with possibly conflicting interests. We discuss some of the most salient features of platform ecosystems as meta‐organizations, specifically in terms of the sources of authority or power in the ecosystem, the motivation and incentives a platform creates to attract participants, and its governance and coordination structures. These features affect how platform ecosystems compete: i) with a traditional incumbent, ii) with other platform ecosystems, and iii) between different participants of the same platform ecosystem. The articles published in this special issue speak to different aspects of platform competition from the perspective of organization design.
Research Summary The optimal distinctiveness literature highlights a fundamental trade‐off in product positioning within market categories: Products should be distinct to minimize competition, but similar to build legitimacy. Most recently, this research has focused on understanding sources of variance in the distinctiveness–performance relationship. We extend this literature with an examination of digital products and argue that the relationship depends on products' revenue models: We theorize the relationship is inverted U‐shaped for paid products but U‐shaped for free products, owing to heightened privacy concerns of free product customers. We further argue that this latter relationship becomes flatter for free products that provide greater monetization transparency by publishing a privacy statement or adopting a freemium revenue approach. Hypotheses are tested using a sample of 250,000‐plus Apple App Store apps. Managerial Summary How should firms in the digital space position their products for optimal performance? We study this question in the Apple App Store, and suggest that the optimal positioning of digital products depends on their revenue model. Paid products should be moderately differentiated from competing products. By contrast, free products benefit most from very low or very high levels of differentiation. We attribute the different performance effects of differentiation to customers' privacy concerns over free products. Firms can partially ameliorate those privacy concerns by providing greater monetization transparency by publishing a privacy statement or by adopting a freemium revenue approach, making moderate levels of differentiation more viable. Our findings help managers align choices of positioning and revenue model, two critical aspects of the firm's business model.
Research Summary Freemium products require widespread diffusion for their success. One way to do this is by incorporating social features (e.g., multiplayer functionality, virtual collaboration, ridesharing), which can generate network effects and result in a product becoming a superstar . However, social features can be a double‐edged sword: When demand potential for freemium products is large, social features can significantly boost a product's appeal resulting in more adoption, more usage, and more in‐app purchases; but when demand potential is constrained, network effects might fall short and users may feel they are missing out on key aspects of the product. We test this dynamic on a sample of 9,700 digital games on Steam. Findings contribute to our understanding of network effects, freemium strategies, and superstar products in platform markets. Managerial Summary Freemium has become a popular business model among firms competing on digital platforms. Freemium products require widespread diffusion because most consumers do not pay for premium upgrades. One way to stimulate a product's diffusion is by incorporating social features (e.g., multiplayer functionality, virtual collaboration, ridesharing). Social features can boost a product's appeal resulting in more adoption, more usage, and more in‐app purchases. Our analysis of 9,700 digital PC games on Steam reveals that the efficacy of incorporating social features importantly depends on the number of users on the platform itself. Social features can help freemium products become a superstar when the platform's installed base is large, but they hinder a freemium product's success when the platform's installed base is small.
Research Summary We examine the effect of face‐to‐face interactions between acquirers and targets before the acquisition announcements on acquisition returns. We argue that frequent interactions increase the target management's trust in the acquirer and benefit the acquirer by mitigating competition in the bidding process. For a sample of U.S. domestic acquisitions, we use smartphone geolocational data to measure the movement of people between merging companies in the months before the announcement. We find that with more frequent interactions, acquirers earn higher stock market returns at the announcement and targets receive fewer later bids from other bidders. Moreover, more frequent interactions are associated with lower returns to public targets vis‐à‐vis their acquirers. The effect of interactions is weaker when shareholder‐manager agency problems in the target are less severe. Managerial Summary Previous research shows that while acquisitions can create synergistic gains, the presence of potentially competing bidders forces acquirers to pay a high price for their targets, which makes acquisitions generally unprofitable for acquirers. We provide evidence suggesting that frequent social interactions between the acquirer's and the target's management in the pre‐acquisition phase increase the target management's trust in the acquirer, making it more willing to cede control to the acquirer and less eager to seek alternative bidders. By mitigating competition in the bidding process, social interactions make acquisitions more profitable for acquirers vis‐à‐vis targets. Social interactions are less effective when the target's management owns a larger share of the target or is better monitored by shareholders (e.g., in companies with concentrated ownership or private companies).
Research Summary The purpose of this introduction to the SMS collection is to take stock of advances in language‐based analyses of strategic processes and practices with an eye on the theoretical and methodological insights and opportunities. After a review of the articles included, we develop a framework that identifies four perspectives ranging from the more micro to the macro: (a) microlevel conceptual basis of strategy discourse, (b) use of language in strategy work processes in their socio‐material and multimodal contexts, (c) use of language and especially narratives in long‐term processes of strategic change, and (d) the rhetorical and discursive reconstruction of organizational strategies in their historical contexts. We then move on to offer a set of research opportunities and questions to form an agenda for future research. Managerial Summary This article takes stock of recent research on the role of language and communication in strategic decision‐making and strategy work. The key argument is that we should not treat language merely as a window into other aspects of strategic phenomena but as a central means through which strategies are shaped and made sense of. The paper underscores that language use is a crucial part of strategy work and strategic change—to be taken seriously in its own right in research as well as practice. Another key point is that we need to develop better understanding of the new communication technologies and media that play a key role in contemporary organizations. The new theoretical ideas and methods may also inspire practitioners to develop their communication practices.