The author invokes the concept of strategic adaptation to first specify the evolutionary as well as the strategic character of the causal mechanism (“intra-industry exit”), and…
Abstract
Purpose
The author invokes the concept of strategic adaptation to first specify the evolutionary as well as the strategic character of the causal mechanism (“intra-industry exit”), and second to explain its effect on the evolution of firms' within-industry geographic scope. The author reconciles the two competing logics for firm behavior – strategic choice and environmental selection – that underpin alternate explanations for the relationship between intra-industry exit and the evolution of geographic scope. This paper contributes to both theory and empirics concerning the dynamics of firms' competitive scope, in general, and within-industry geographic scope, in particular.
Design/methodology/approach
The US long-distance telecom services industry during the period 1984–1996, which satisfies the empirical requirements of a geographically fragmented industry characterized by demand-side heterogeneity across the submarkets, provides the research setting and panel data to test the empirical hypotheses.
Findings
The author finds that while the firms' overall performance influences their intra-industry exit decisions, it is the firm-in-market performance that influences their decision to exit a specific submarket. The author also finds that intra-industry exit decision, when influenced by firm performance, does lead to reduction in geographic scope.
Research limitations/implications
This context-specific theory, which conceptualizes the dynamics of firms' geographic scope as an evolutionary process, explains the temporal change in the geographic scope of firms during the latter part of the demand growth stage of a geographically fragmented industry.
Originality/value
This analysis of the demand-side dynamics of firms' within-industry geographic scope focuses on the hypothetical causal effect of intra-industry exit, a pervasive business phenomenon. First, the demand-side analysis of the evolution of geographic scope is grounded in a theoretical framework that melds firm dynamics with submarket dynamics and industry dynamics. Second, this analysis explicates the demand-side underpinnings of the strategic adaptive mechanism.
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This paper aims to explain how the dynamic demand environment influences strategic firm behavior along an industry’s evolutionary path. A conceptual gap concerning the influence…
Abstract
Purpose
This paper aims to explain how the dynamic demand environment influences strategic firm behavior along an industry’s evolutionary path. A conceptual gap concerning the influence of demand-side environmental factors (vis-à-vis changes in technology and policy) on firms’ strategic choices motivates the theory developed herein. The paper’s contribution to the literature on “evolutionary perspective in strategy” also addresses an important gap in the emerging literature on “strategy dynamics”.
Design/methodology/approach
The conceptual framework in this paper features a dynamic demand environment that provides the structural context for firms’ strategic choices. It conceptualizes demand-side competence as a mediating firm-specific construct to explain the endogenous relationship between the characteristics of the demand environment and firms’ path dependent demand-side investments.
Findings
A review of the literature on evolutionary perspective in strategy reveals an important conceptual gap concerning the structural determinants of dynamic firm behavior. There is no explanation of the endogenous relationship between dynamic demand structure, firms’ dynamic demand-side competence, and temporally heterogeneous strategic choices.
Originality/value
The demand-side explanation of how idiosyncratic firm behavior is endogenously determined, with both structural characteristics (demand structure) and firm competences (demand-side competence), addresses an important conceptual gap. The novelty of the theory developed herein lies in its explication of the effect of dynamic demand environment on the evolution of idiosyncratic strategic firm behavior – entry, investment and exit – along the evolutionary path of an industry. The theory developed herein not only explains the effect of both determinants of idiosyncratic strategic firm behavior – the external industry environment (dynamic market structure) and internal firm environment (dynamic firm competences) – but also explains how the determinants evolve along the industry’s lifecycle.
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The purpose of this paper is to articulate a customer-centric logic to explain the strategic behavior of multi-product corporations whose portfolio of complementary product…
Abstract
Purpose
The purpose of this paper is to articulate a customer-centric logic to explain the strategic behavior of multi-product corporations whose portfolio of complementary product offerings belong to diverse industries.
Design/methodology/approach
The paper develops a theoretical framework to explain the heterogeneity in multi-product corporations ' motivation and ability to leverage the demand-side strategic assets developed in their home-markets to enter new markets and thereby improve their long-run corporate performance.
Practical implications
The paper includes implications for strategic behavior of multi-product corporations in various industrial sectors such as telecommunications, financial services, consumer discretionary and staples, real estate, and so on.
Originality/value
The profitable applicability of demand-side strategic assets to new contexts should be explained both by the motivation of multi-product consumers (to purchase a portfolio of complementary products from a diversified seller) as well as the motivation of multi-product corporations (to leverage their demand-side strategic assets to enter new markets).
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The extant “supply‐side” frameworks of industry evolution fail to predict the evolutionary patterns in industries based on systemic technologies. This paper aims to describe the…
Abstract
Purpose
The extant “supply‐side” frameworks of industry evolution fail to predict the evolutionary patterns in industries based on systemic technologies. This paper aims to describe the complex demand environment in industries based on systemic technologies and to explain how the continuously evolving demand structure influences the choice and level of firm investments in the above context.
Design/methodology/approach
The paper identifies a conceptual gap in the “technology‐centric” literature on industry evolution by conducting a detailed interpretive survey of the literature that focuses on the demand‐side determinants of firm‐ and industry‐level technological processes underlying industry evolution, and co‐evolution of the technological system underlying an industry and the consumer applications based on the same.
Practical implications
The paper provides a set of empirically verifiable mechanisms to explain competing firms' choice and level of investment under conditions of technological and demand uncertainty in industries based on systemic technologies. On one hand, firms' investments influence the evolution of both the technological system(s) and their constituent components that underlie such industries and, on the other, firms' investments influence the consumption of the array of consumer applications that are generated in these industries.
Originality/value
The theoretical explanation provided herein not only enhances the understanding of the role of demand‐side factors as determinants of rate and direction of technological advances but also lies central to the understanding of the evolution of industries based on systemic technologies. More specifically, the paper explains how the interaction between continuously evolving demand structure in the downstream market(s) for consumer applications and the technological components comprising the technological system influences competing firms' choice and level of investments.
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The thought and rationale of sustainable competitive advantage in strategy are significantly influenced by the Schumpeterian models of dynamic competition in IO and evolutionary…
Abstract
Purpose
The thought and rationale of sustainable competitive advantage in strategy are significantly influenced by the Schumpeterian models of dynamic competition in IO and evolutionary economics. Yet, most analytical accounts of sustainable competitive advantage fail to explain how firms' investment choices influence, and are simultaneously influenced by, the co‐evolution of “external” industry competition and “internal” firm competences. This paper aims to contribute to the development of a theory of endogenous market structure in strategy.
Design/methodology/approach
Two alternative assumptions are developed – concerning temporally heterogeneous firm investment strategy – that lie central to a proposed behavioral theory of endogenous market structure. Additionally, a theoretical description is provided of the endogeneity of the demand‐side determinants of firm investment strategy and industrial market structure. Finally, guidelines are provided for empirical application of [incorporating] the alternative assumptions and theoretical arguments.
Practical implications
It is expected that the theoretical arguments in the paper will influence strategy scholars to develop dynamic models of firm performance that render themselves amenable to sound empirical analyses.
Originality/value
The paper contributes towards developing a theory of endogenous market structure in strategy.
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Why are some organizations more innovative than others? The purpose of this paper is to propose a comprehensive model of innovation to modify Kanter's model of innovation in…
Abstract
Purpose
Why are some organizations more innovative than others? The purpose of this paper is to propose a comprehensive model of innovation to modify Kanter's model of innovation in organizations that rely solely on structural factors – to the exclusion of managerial characteristics – to explain differences in innovations across organizations.
Design/methodology/approach
The proposed model of innovation in organizations uses the cognitive attitudes of managers in an organization as the underlying explanation for the micro‐processes that result in innovation.
Findings
The study identifies some dimensions of managerial cognition that possibly influence the important tasks of innovation identified in Kanter's model.
Research limitations/implications
The model considers five dimensions of managerial mindset – cosmopolitanism, cognitive complexity, entrepreneurship, boundary spanning, and adaptability – as predictors of the different tasks in Kanter's model of innovation. This list is by no means exhaustive and hence there could be many other characteristics that could be included in the model. Testing the model could therefore lead to omitted variable bias.
Practical implications
This paper has huge practical implications for business firms that seek to embrace innovation to grow. Most organizations set up structural processes to foster innovation while ignoring the human dimensions that explain innovation. If the cognitive attitude of employees or citizens explains the level of innovation in an organization or society then organizations and societies can work on measures that will influence the cognitive attitudes of their employees and citizens, respectively.
Originality/value
This paper develops a multi‐dimensional construct termed as “managerial mindset” to provide a new perspective on the innovation process in an organization. The individual/manager in the organization is considered as the focal point for understanding the process of innovation as opposed to the structural features in Kanter's model.