We analyze the genealogical structure of large Japanese firms, with particular emphasis on the relationship between parent firms and spinoff subsidiaries. The wide use of spinoffs and subsidiaries in Japan provides for flexible organizational mutations that appear to facilitate increased competitiveness and offer the opportunity to obtain benefits through a deliberate separation of core competencies. We discuss a conceptual framework for the spinoff arrangement, the results of an exploratory empirical analysis of the relationship between parent and subsidiary organizations, and implications of the use of this organizational structure. We suggest the importance of a consideration of the genealogical aspects of large Japanese firms in strategy research.
This study compares the predictions of institutional theory with those of the contingency perspective of strategic human resource management (SHRM) on the selection of an employment mode. Empirical data were collected from multinational enterprises, including the electronics and garment industries, that operate in China to test the relative importance of the determinants of the selection of an employment mode. The results provide greater support for the SHRM predictions than for the institutional theory predictions. The implications of the findings for researchers and practitioners are discussed.
This paper examines the allocation of inventive effort in complex product systems. I argue that complex product systems, e.g., personal computers (PCs), are distinguished by functional interaction among several components, each guided by a relatively autonomous bundle of technical and economic characteristics. I try to explore whether the dynamics of such interactions between components of complex product systems can help us understand changes in the relative allocation of inventive effort. I advance and empirically test three hypotheses: (1) emergence of component constraints (bottlenecks) in product systems will trigger research and development (R&D) investment to resolve the constraints; (2) slack component firms have a strong incentive to invest in resolving component constraints; and (3) the incentive of slack component firms to invest in resolving component constraints is increasing in their prior sunk R&D investments in slack components. In sum, I argue that interactions between components in a product system conditions the R&D incentives of firms and also that the incentives are increasing in their prior investments or capabilities. Using product reviews from technical journals, I trace the constraint components in the PC from 1981 to 1998 and attempt to predict shifts in the allocation of inventive effort in the subsequent period. The empirical results strongly support all three hypotheses. This study highlights the paradoxical effect of modularity in complex product systems. Modular design architectures, while contributing to accelerating the pace of technical change, also tend to limit the economic benefits of firms' component R&D efforts, especially when different components technologies are progressing at different rates. This often creates an impetus to enlarge the scope of firm R&D activities beyond the component product markets that firms operate in. Other implications for R&D decision making are discussed.
Existing research suggests that in acquisitions of small technology‐based firms by large established firms post‐merger integration both enables and hinders acquirers' efforts to leverage the technology of acquired firms. This apparent paradox can be resolved once we account for the qualitatively distinct ways in which acquirers leverage technology acquisitions. Integration helps acquirers use the acquired firm's existing knowledge as an input to their own innovation processes (leveraging what they know), but hinders their reliance on the acquired firm as an independent source of ongoing innovation (leveraging what they do). We also show that experienced acquirers are better able to mitigate the disruptive consequences of the loss of autonomy entailed by integration, though we find no evidence that they achieve greater coordination benefits from integration.
I examine two dominant processes of organizational interdependence—imitation and resource competition—and develop a theory that integrates predictions about firms' propensity to change market locations based on both. The cornerstone of the model is the argument that both processes operate concurrently and are driven by the departure of peer firms from a shared resource space. I also argue that the imitation effect, which reflects shared perceptions and interpretations among ecologically proximate peers, hinges on the competitive intensity faced by each individual organization in its market location. Analyses of U.S. automobile manufacturers' moves between the industry's three main market segments confirm the predictions of the theory and point to the merits of using an ecological approach to the evolution of market segmentation and the formation of industry structure.
We investigate sourcing decisions related to the back‐office operations of 108 processes used by financial services companies. Guided by the arguments of transaction cost economics and the resource‐based and knowledge‐based view of organizations, we hypothesize that service customization and volume represent two key drivers of a service company's sourcing decisions. The inherent uncertainty of service customization gives rise to the transaction cost risks of opportunism and holdups and thus favors insourcing. Moreover, the competency gained from performing high‐volume back‐office operations aligns with the tenets of the resource‐based view, which also favors insourcing. The empirical results corroborate these theoretical expectations.
Firms that have failed to meet the performance expectations of investors must seek new ways of creating value or face the loss of financial support. Using resource‐based arguments, we find that valuable and difficult‐to‐imitate strategies that recombine the firm's existing stock of resources to create new products, processes, or technologies have a positive effect on organizational recovery as measured by investors' expectations. Similarly, acquiring new resources through mergers or acquisitions also has positive effects on investors' expectations. In contrast, valuable and difficult‐to‐imitate strategies that provide the firm with access to new resources through alliances or joint ventures do not affect investors' expectations of performance. We also find that taking actions that are not valuable and difficult‐to‐imitate either have no effect on performance or may lead to further performance declines. Lastly, our results show that valuable and difficult‐to‐imitate strategic actions that use existing resources in new ways contribute the most to organizational recovery.
The objective of the current study is to provide a preliminary look at the process by which consumers evaluate alliances between service providers. Specifically, the study demonstrates how the service quality of one partner can impact, or ‘spill over’ onto, consumers' evaluations of their transactions with a second partner, and how the performances of partners can have differing effects on customers' intentions to reuse a service partnership. The study tests hypotheses related to the quality, value, and reuse intentions of customers relative to the partnered service through a sample of 334 customers utilizing a seamless service alliance. Our results suggest that spillover effects of service partnerships can either result in beneficial gains for service partners or produce grave consequences when partner providers' service quality is substandard.
We extend understanding of information‐revealing bandwagons by considering a common condition under which adoption of a practice by small organizations, rather than large ones, has a disproportionate influence on future adoption propensities. We hypothesize that when the value of adoption increases with organizational size, smaller adopters have such disproportionate influence because they allow observers better to infer that adoption will be profitable for their own organization. We elaborate the theory by predicting that alternative information sources moderate the influence of smaller adopters. Empirically, we test our theory with longitudinal data on the adoption of the ISO 9000 quality management standard.