In the originally published article by Seo et al. (2015), the affiliation of Cynthia E. Devers should be “Department of Management, Eli Broad College of Business, Michigan State University, East Lansing, Michigan, U.S.A.”
Research summary : Managers' mental representations affect the perceived payoffs and alternatives that managers consider. Thus, mental representations affect how managers search for profitable strategies as well as the quality of strategies they discover. To study how mental representation and search interact, we formally model the dual search over possible representations and over policy choices of a strategy “landscape.” We analyze when it is preferable to emphasize searching for the best policies rather than the best mental representation, and vice versa. We show that, in the long run, a balance between the two search modes not only results in better expected performance, but also reduces the variation in performance. Additionally, the article describes conditions under which increased accuracy of mental representations can actually worsen firm performance . Managerial summary : Managers' mental representations affect the perceived payoffs and alternatives that managers consider. Thus, mental representations affect the quality of strategies managers can discover. We analyze a computer simulation of how managers use mental representations to search for strategies. This sheds light on how managers should deal with the trade‐off between searching for policies and searching for representations; that is, whether managers should think creatively about how to represent a strategy problem or whether they should just stick to the current problem understanding, and try to find ways to improve performance as suggested by the current representation. We provide insight regarding the balance between the two search modes and describe conditions under which increasingly accurate mental representations can worsen firm performance .
We draw on resource dependence and institutional theories to study how firms manage uncertainty in nature (ecological uncertainty) in the U.S. ski resort industry. Through resource dependence theory, we develop the concept of ecological uncertainty and explain its effects on firms' access to and management of natural resources. We then predict that firms adapt to ecological uncertainty with natural‐resource‐intensive practices, as well as practices that attempt to mitigate its underlying causes. Using institutional theory, we also predict that environmental expectations moderate these responses. Our results indicate that firms did manage ecological uncertainty by adopting natural‐resource‐intensive practices, but not mitigation practices. They also show that stronger environmental expectations constrained firms from adopting natural‐resource‐intensive practices and promoted their adoption of mitigation practices in response to ecological uncertainty.
SMJ is committed to publishing high‐quality replications on a regular basis. SMJ 's overriding goal in publishing replications is to provide additional evidence that helps to build a cumulative body of knowledge in strategic management, not to overturn prior results. SMJ is interested in replications that accord with prior findings as well as those that do not.
Strategy research often aims to empirically establish a causal relationship between an independent variable and a dependent variable such as firm performance. For many important strategy research questions, however, traditional empirical techniques are not sufficient to establish causal effects with high confidence. We propose that field experiments have potential to be used more widely in strategy research, leveraging methodological innovations from other disciplines to address persistent puzzles in the literature. We first review the advantages and disadvantages of using field experiments to answer questions in strategy. We define two types of experiments, “strategy field experiments” and “process field experiments,” and present an original example of each variety. The first study explores the liability of foreignness and the second study tests theories regarding corporate culture .
One novel implication of the open innovation paradigm is that inflows and outflows of knowledge are complementary. We argue that engaging simultaneously in buying and selling knowledge should allow firms to increase innovation outcomes. At the same time, we identify some of the relevant costs (cognitive, transaction, and organizational costs) that “open” firms can reduce by combining knowledge inflows and outflows. Empirically, however, we find no evidence for such complementarity in a sample of Belgian manufacturing firms. Firms buying and selling knowledge do increase their sales of new products, but at the same time their R&D costs increase more than proportionally. Our findings, therefore, indicate the need for research into a better understanding of the drivers of actual costs of organizing for open innovation .
Our “stakeholder synergy” perspective identifies new value creation opportunities that are especially effective strategically because a single strategic action (1) increases different types of value for two or more essential stakeholder groups simultaneously, and (2) does not reduce the value already received by any other essential stakeholder group. This result is obtainable because multiple potential sources of value creation exist for each essential stakeholder group. Actions that meet these criteria increase the size of the value “pie” available for essential stakeholder groups, and thereby serve to attract exceptional stakeholders and obtain their increasing effort and commitment. The stakeholder synergy perspective extends stakeholder theory further into the strategy realm, and offers insights for realizing broader value creation that is more likely to produce sustainable competitive advantage .
Research summary: Tournament theory suggests that a large gap in pay between CEOs and top managers can provide incentives to perform, but we argue that it can also elicit negative effort and even motivate the kind of behavior that leads to lawsuits. We posit that this negative effort is greater when firms have high levels of unrelated diversification because there is less operational interdependency, so tournament effects are stronger. We also contend that the influence of tournament incentives on behavior leading to lawsuits is weaker when environmental uncertainty is high. We discuss the consequences of these findings for research on fraud and tournament theory as well as the practical repercussions for firms, investors, and policymakers. Managerial summary : Each year, the press has a field day when companies announce the outsized compensation packages laid out for CEOs . Economists use “tournament theory” to describe how high CEO pay motivates everyone else to work hard to get into the top job. The problem with this approach is that, yes, top managers work harder when the gap between their and the CEO 's pay increases, but as that gap widens, it also incentivizes top managers to cheat or cut corners. As a result, we find that the gap between CEO and top manager compensation predicts the likelihood that shareholders will file a securities class action lawsuit against the company. This gap in pay is an especially good predictor of lawsuits for highly unrelated diversified companies and companies facing a low level of external uncertainty .