Knowledge that Transforms

This paper examines both conditions that can enable collaborative and combinative knowledge generation within multinational corporations ( MNCs) and benefits that firms can achieve from these types of innovations. I posit that more basic relationships that have been established through manufacturing integration can enable multicountry collaborative innovations and that these innovations will bring together diverse knowledge that is likely to spawn further innovation within firms. Empirical analysis of a panel that includes comprehensive and confidential data on the worldwide operations of U.S. MNCs and their worldwide patents reveals robust support for these arguments. Overall, this paper broadens extant research on knowledge generation within MNCs by exploring both the antecedents and benefits of multicountry collaborative innovations . Copyright © 2013 John Wiley & Sons, Ltd.

Strategic prescriptions drawn from pooled cross‐sectional evidence of firm performance effects are not necessarily warranted. This is because firm characteristics can influence both the mean and variance of firm performance. Strategic inferences are warranted if empirically observed effects reflect increases in mean firm performance. If they reflect increases in firm performance variance, however, such inferences are warranted only if the increased odds of achieving high performance compensate sufficiently for the concomitantly increased risk of realizing poor performance. Our simulation study, which contrasts firm performance effects in pooled cross‐section and within‐firm over time, counsels caution when basing strategic prescriptions on pooled cross‐sectional studies of firm performance in general, and in the case of network effects in particular . Copyright © 2013 John Wiley & Sons, Ltd.

We bridge current streams of innovation research to explore the interplay between R&D , external knowledge, and organizational structure—three elements of a firm's innovation strategy, which we argue should logically be studied together. Using within‐firm patent assignment patterns, we develop a novel measure of structure for a large sample of American firms. We find that centralized firms invest more in research, and patent more per R&D dollar, than decentralized firms. Both types access technology via mergers and acquisitions, but their acquisitions differ in terms of frequency, size, and integration. Consistent with our framework, their sources of value creation differ: while centralized firms derive more value from internal R&D , decentralized firms rely more on external knowledge. We discuss how these findings should stimulate more integrative work on theories of innovation . Copyright © 2013 John Wiley & Sons, Ltd.

Firms with different scope of technologies experience different firm growth. Understanding such heterogeneity requires knowing not only what drives technologies' scope but also why these drivers remain different across firms. I propose inventor specialization as a driver of technologies' scope: firms with more specialized inventors create narrower scope technologies. I also propose that these narrower scope technologies themselves in turn induce these firms' inventors to remain more specialized. I empirically demonstrate this two‐way interrelationship in the U.S. communication equipment industry using policy shocks as natural experiments and a new measure of scope. This interrelationship has important implications for why resources and organization appear isomorphic within a firm but heterogeneous across firms . t © 2013 John Wiley & Sons, Ltd.

Bingham and E isenhardt (2011) highlight the positive role of heuristics in the strategy context. They discuss four mechanisms through which heuristics have positive effects for strategy. The first mechanism—using a heuristic cue as a proxy for complex, correlated information—builds directly on G igerenzer's research on positive heuristics. The second (capturing a window of opportunity) and third (providing some direction while allowing freedom to improvise) mechanisms, combine G igerenzer's ideas with E isenhardt's earlier work. The fourth one relates to coordination. In this commentary, we critically evaluate the applicability of these four mechanisms in the strategy context, which differs fundamentally from G igerenzer's context. Our primary contribution is the explication of central limitations in the ways heuristics can function in the strategy context . Copyright © 2014 John Wiley & Sons, Ltd.

This article suggests that dynamic capabilities can give the firm competitive advantage, but this effect is contingent on the level of dynamism of the firm's external environment. A nonlinear, inverse U ‐shaped moderation is proposed, implying that the relationship between dynamic capabilities and competitive advantage is strongest under intermediate levels of dynamism but comparatively weaker when dynamism is low or high. This proposition is tested using data on alliance management capability and new product development capability, two specific dynamic capabilities widely recognized in prior research. Results based on longitudinal key informant data from 279 firms support the account that these dynamic capabilities are more strongly associated with competitive advantage in moderately dynamic than in stable or highly dynamic environments . Copyright © 2013 John Wiley & Sons, Ltd.

Instrumental stakeholder theory proposes a positive relationship between fairness toward stakeholders and firm performance. Yet, some firms are successful with an arms‐length approach to stakeholder management, based on bargaining power rather than fairness. We address this puzzle by relaxing the assumption that all stakeholders care about fairness. Empirical evidence from behavioral economics and social psychology suggests that firms face a population of potential stakeholders that consists not only of so‐called ‘reciprocators,’ who do care about fairness, but also of self‐regarding stakeholders, who do not. We propose that a fairness approach is more effective in attracting, retaining, and motivating reciprocal stakeholders to create value, while an arms‐length approach is more effective in motivating self‐regarding stakeholders and in attracting and retaining self‐regarding stakeholders with high bargaining power . Copyright © 2013 John Wiley & Sons, Ltd.

In this paper we use simulations to examine how endogeneity biases the results reported by ordinary least squares ( OLS ) regression. In addition, we examine how instrumental variable techniques help to alleviate such bias. Our results demonstrate severe bias even at low levels of endogeneity. Our results also illustrate how instrumental variables produce unbiased coefficient estimates, but instrumental variables are associated with extremely low levels of statistical power. Finally, our simulations highlight how stronger instruments improve statistical power and that endogenous instruments can report results that are inferior to those reported by OLS regression. Based on our results, we provide a series of recommendations for scholars dealing with endogeneity . Copyright © 2013 John Wiley & Sons, Ltd.

We study 892 Italian motorcycle industry projects carried out via 184 different buyer–supplier and supplier‐supplier relationships to provide evidence on the knowledge dynamics occurring in dyads and networks and to understand the underexplored but important (perhaps even dominant) leading role that some firms play in the evolution of networks and interfirm learning processes. We develop a multiphase model which, from a multilevel perspective addressing different relational subsets, suggests how firms can best organize to generate and exchange knowledge efficiently. We argue that extant theoretical perspectives can profitably draw on our findings to strengthen their dynamic components and help them explain the widely diffused ‘exploring through partner’ strategies more effectively . Copyright © 2013 John Wiley & Sons, Ltd.

We examine variation in the rate of divestment by multinational firms from B urma. We argue that in addition to a set of firm‐level characteristics known to impact divestment decisions, firms are also influenced by characteristics of their home country and the divestment patterns of others. Using data on firms operating in B urma during 1996–2002, we model these multiple influences on firms to divest. Our results show that beyond firm‐level concerns, firms divest in response to the political characteristics of their home country, including protest, the level of political freedom, and transparency of institutions. We also find that the centrality of their home country in the network of intergovernmental organizations impacts divestment patterns in interesting ways. Copyright © 2013 John Wiley & Sons, Ltd.