Knowledge that Transforms

Often, signaling research in the strategy and economics literature postulates the existence of an ostensible signal and then empirically tests its veracity, utilizing cross‐sectional data. We argue that this static approach does not allow researchers to fully incorporate the concept of equilibrium in their analysis, thereby potentially violating a key axiom of signaling theory. We propose that a dynamic analysis of signals can address this omission, and then conduct such an analysis. We use empirical data on warranty coverage offered by automobile manufacturers in the U.S . market extending from the first warranty offered by the industry in 1960 through to 2008. Our findings support the notion that signaling behavior differs in periods of equilibrium and disequilibrium, in turn influencing signal accuracy . Copyright © 2013 John Wiley & Sons, Ltd.

The issue of the failure of incumbent firms in the face of radical technical change has been a central question in the technology strategy domain for some time. We add to prior contributions by highlighting the role a firm's existing set of complementary assets have in influencing its investment in alternative technological trajectories. We develop an analytical model that considers firm heterogeneity with respect to both technological trajectories and complementary assets. Complementary assets play a dual role in incumbents' investment behavior toward radical technological change: they are not only resources (pipes) that can buffer firms from technology change, but also prisms through which firms view those changes, influencing both the magnitude of resources that should be invested and the trajectory to which these resources should be directed . Copyright © 2013 John Wiley & Sons, Ltd.

In recent years, many firms have chosen to separate their CEO and board chair positions. Prior research has demonstrated that there are three forms that a CEO –board chair separation can take: apprentice, departure, and demotion. In this paper, we examine the antecedents of these three types. Our results show that the three types of separation each have different profiles in terms of the prior performance of the firm, the independence of the board, and the career horizon of the incumbent CEO . The findings in this paper provide unique insights into the factors that drive boards' structural choices. As questions about board leadership structure become more nuanced and more relevant in both scholarship and practice, a full understanding of these factors will only become more important . Copyright © 2013 John Wiley & Sons, Ltd.

New ventures (companies eight years or younger) face an important choice in attempting to achieve growth: Should they follow “strategic simplicity” by relying on a few similar competitive actions, or emphasize “strategic variety” by implementing multiple different competitive actions? Data from 140 new ventures in S pain suggest that new ventures benefit from pursuing strategic variety, especially when their industries are highly dynamic. Further, although new ventures in general gain from strategic variety in highly dynamic industries, independently owned ventures achieve higher growth rates than their corporate counterparts . Copyright © 2013 John Wiley & Sons, Ltd.

Research on strategic consensus focuses primarily on the extent of agreement among team members regarding organizational strategy. It does not include elements such as the content of the agreement, between‐group consensus, or the significance of differences in consensus (e.g., for evaluating the effectiveness of strategic interventions). We propose a new analytical approach, Strategic Consensus Mapping, that provides a comprehensive analysis of strategic consensus within and between groups and that includes intuitive and easy‐to‐understand visualizations. This approach offers researchers the necessary tools for integrative theory building in strategic consensus, as well as in the broader managerial and organizational cognition domain. Using a case example, we illustrate the proposed methods for a multidimensional, multilevel, and longitudinal analysis of strategic consensus . Copyright © 2013 John Wiley & Sons, Ltd.

This study investigates the impact of non‐competition agreements on the type of R&D activity undertaken by companies. Non‐competition agreements, by reducing outbound mobility and knowledge leakages to competitors, make high‐risk R&D projects relatively more valuable than low‐risk ones. Thus, they induce companies to choose riskier R&D projects, such that corporate inventions are more likely to lie in the tails of the inventions' value distribution (as breakthroughs or failures) and be in novel technological areas. This study uses data about U.S. patent applications from 1990 to 2000 and considers longitudinal variation in the enforcement of non‐compete clauses. The results indicate that in states with stricter enforcement, companies undertake riskier R&D paths than in states that do not enforce non‐compete agreements as strictly . Copyright © 2013 John Wiley & Sons, Ltd.

Research on agglomeration finds that either a higher survival rate of incumbent firms or a higher founding rate of new entrants, or both, can sustain an industry cluster. The conditioning effects of time on the two distinct mechanisms of survival and founding are, however, rarely examined. We argue that the forces driving geographic concentration vary across the industry life cycle. Data from Ontario's winery industry from 1865 to 1974 demonstrates a dynamic model of geographic concentration: agglomeration attracts more new entry in the growth stage only, whereas it contributes to firm survival in the mature stage only. The results not only establish the importance of understanding the temporal dynamics underlying agglomeration externalities, but also provide a possible explanation for the mixed empirical results found in previous studies . Copyright © 2013 John Wiley & Sons, Ltd.

We extend the knowledge‐based view with a new typology and its application to post‐ IPO firm performance. The typology categorizes knowledge development activity along the dimensions of familiarity (whether the firm has experience with the knowledge or it is new) and source (whether the firm creates it independently or with partners). We use this typology to determine direct and interaction effects of knowledge development activity on survival, RoA, and Tobin's q of newly public firms. Using a sample of 1,056 high‐technology manufacturing IPOs in 1990–2005, we find that focused, internal knowledge development correlates with higher performance. We also find a positive interaction effect in combining focused, internal and diversifying, alliance‐based knowledge development, and a negative interaction effect in combining diversifying, internal and alliance‐based knowledge development . Copyright © 2013 John Wiley & Sons, Ltd.

Variance decomposition analysis is often used to examine the degree to which CEO s influence their companies' performance (the so‐called CEO effect). Such studies play an important role in a body of literature that investigates the effect of leadership on organizations. In this paper, I argue that these previous studies have an important underlying flaw. Empirically, these studies wrongly attribute the performance effect of randomness—of chance—to the CEO . I demonstrate how randomness can affect the measured effects in a variance decomposition analysis, and I show that this is especially problematic for the measurement of CEO effects. I demonstrate how this results in a greatly inflated CEO effect and develop an approach to correct for it . Copyright © 2013 John Wiley & Sons, Ltd.