Knowledge that Transforms

We test theories of product differentiation and firm capabilities using data from the U.S. automobile industry. We find managers introduce new models close to their existing ones but far from rival models. We also find entrants and foreign manufacturers locate models closer to rival models. These results are consistent with both economic models of product differentiation and theories of firm capabilities

We examine the voluntary disclosure of qualitative information about actions involving governmental agencies and managerial intentions or beliefs in R&D project announcements in The Wall Street Journal. Our analysis indicates that information regarding government approval and managerial intentions/beliefs voluntarily disclosed in R&D project announcements interacts with industry/firm variables to provide significant incremental explanatory power in both the innovation and commercialization stages of R&D projects. Our data also indicate that the biggest impact is from managerial intentions, especially an intent to increase market share when coupled with being a larger firm.

Scholars' calls for an integrating view of the technical, political, and cultural (TPC) aspects of management lead to examining Tichy's TPC framework as the basis of such a view. Tichy's framework is shown to require modification to include the TPC systems of a firm's customers and competitors, and a modified TPC framework is proposed. This framework's usefulness for pattern matching to identify causes of performance is demonstrated in historical case research into a strategic group marketing IBM-compatible mainframes. A result is four testable hypotheses suggesting how firms' success marketing to organizations depends on effective integration between marketing and general management, and a potential cause of variations in performance within strategic groups and during movement between strategic groups. In addition, a method for testing and developing hypotheses by pattern matching on a modified TPC framework is demonstrated.

The dominant paradigm of competitive strategy is now nearly two decades old, but it has proved difficult to assess its adequacy as a descriptive system, or progress its propositions about the performance consequences of different strategic designs. It is argued that this is due to an inability to compare and cumulate empirical work in the field. A meta-analytic procedure is proposed by which the empirical record can be aggregated. Results suggest that, although cost and differentiation do act as high-level discriminators of competitive strategy designs, the paradigm’s descriptions of competitive strategy should be enhanced, and that its theoretical proposition on the performance of designs has yet to be supported. A considerable agenda for further work suggests that competitive strategy research should recover something of its former salience.

Prahalad and Bettis (1986) have proposed that the successful management of highly diversified firms can be attributed to the concept of a corporate “dominant logic” that guides all of its business units. We argue that dominant logic addresses the problem of balancing the needs of business units against those of the corporation as a whole. We also suggest that the presence of a clear and consistent dominant logic must lead to a high degree of consistency in the strategic moves that are undertaken by each of the business units within the diversified firm. Based on a study of the joint ventures initiated by General Electric between 1984 and 1993, we show that the design of these ventures follows a pattern that is consistent with the presence and influence of dominant logic. Finally, we demonstrate that the early failure of joint ventures can generally be linked to a shift away from this dominant logic.

We partition the variances of market shares, which we use as surrogates for competitive position, of the business units of all public manufacturing companies available in the Trinet data base into industry factors, corporate parent-specific factors, and business unit-specific factors. Our results differ somewhat from Rumelt's (1991), which decomposed variances in profitability. We find that corporate parent effects on market share are considerably greater than zero when lines of business are defined more narrowly, when small business units are included, and when firms are medium-sized. Our results suggest that the relative importance of corporate, industry, and business unit effects depends on the types of criteria, such as the level of industry aggregation, whether small business units are included, and firm size, that are used to construct samples.

Firms often lose their competitive advantage when a technological change renders their existing capabilities obsolete. An important question that has received little or no attention is, what happens to these firms’ competitive advantage when the technological change instead renders obsolete the capabilities of their co-opetitors—the suppliers, customers, and complementors whose very success may underpin that of the firm and with whom it must collaborate and compete. This paper explores the effects on a firm of the impact of a technological change on its co-opetitors. It argues that a firm’s post-technological change performance decreases with the extent to which the technological change renders co-opetitors’ capabilities obsolete. It uses detailed data on the adoption of RISC (Reduced Instruction Set Computer) technology by computer workstation makers to demonstrate the need to view resources as residing in a network and not in the firm alone.

Competitive predictions regarding the relationships between: (a) monitoring and agent tenure, and (b) performance-contingent compensation are derived from agency theory and collaborative perspectives. These results are tested in a within-industry (trucking) sample and in a cross-industry sample. The results partially support both perspectives, particularly with respect to monitoring and agent tenure. Implications of the results for theory and practice are discussed.