Heechun Kim and Robert E. Hoskisson
Our study proposes a resource environment view (REV) of competitive advantage by unpacking the environmental origins of a firm’s competitive advantage. The key tenet of the REV is…
Abstract
Our study proposes a resource environment view (REV) of competitive advantage by unpacking the environmental origins of a firm’s competitive advantage. The key tenet of the REV is that the heterogeneity and imperfect mobility of strategic factor markets and institutions across countries explain how firms based in different countries would likely both create and sustain a competitive advantage. In particular, our study introduces the notion of “the paradox of environmental embeddedness.” The paradox lies in the fact that the same environmental conditions – in terms of strategic factor markets and institutions – that enable firms to create a competitive advantage can paradoxically also create a situation in which it is more difficult for these firms to sustain an advantage. Another important aspect of our study is that, to enhance our understanding of how firms manage the paradox of environmental embeddedness, our study specifies the resource environmental conditions under which firms’ internal and external resource-oriented strategies – that is, the development of dynamic capabilities and interventions in the country resource environment – are more beneficial when managing the environmental paradox. Overall, our theorizing has important implications for strategic management theory and practice.
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This chapter introduces the reader to the meaning of competitive advantage and posits that a firm’s strategy is defined as the managers’ theory about how to gain and sustain…
Abstract
This chapter introduces the reader to the meaning of competitive advantage and posits that a firm’s strategy is defined as the managers’ theory about how to gain and sustain competitive advantage. The author demonstrates how a firm creates its competitive advantage by creating more economic value than its rivals, and explains that profitability depends upon value, price, and costs. The relationship among these factors is explored in the context of high-technology consumer goods – laptop computers and cars. Next, the chapter explains the SWOT [s(trengths) w(eaknesses) o(pportunities) t(hreats)] analysis. Examining the interplay of firm resources, capabilities, and competencies, the chapter emphasizes that both must be present to possess core competencies essential to gaining and sustaining competitive advantage through strategy. Next, the chapter describes the value chain by which a firm transforms inputs into outputs, adding value at each stage through the primary activities of research, development, production, marketing and sales, and customer service, which in turn rely upon essential support activities that add value indirectly. After describing the PEST [p(olitical) e(conomic) s(ocial) t(echnological)] Model for assessing a firm’s general external environment, the chapter explains Porter’s Five Forces Model. The chapter then describes the strategic group model and illustrates that model by reference to the pharmaceutical industry. The author notes that opportunities and threats to a company differ based upon the strategic group to which that firm belongs within an industry. Finally, the chapter explores the importance of strategy in technology-intensive industries and emphasizes that sustained competitive advantage can be accomplished only through continued innovation.
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Wei Guo, Tieying Yu and Greta Hsu
In this study, we develop understanding of factors that shape the propensity of market incumbents to collaborate in response to the threat posed by new market entrants. We are…
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In this study, we develop understanding of factors that shape the propensity of market incumbents to collaborate in response to the threat posed by new market entrants. We are particularly interested in instances when a market's competitive structure becomes unsettled by new entrants who engage in nonconforming strategic tactics. In such situations, we propose two factors – strategic similarity among competitors and market-share instability – will systematically shape competitors' collaborative response to new entrants. To test our theory, we use data on strategic tactics and collaborative dynamics in the US airline industry from 1989 to 2010. We demonstrate that greater strategic similarity among a market's incumbents increases the likelihood of cooperation in response to the threat of a nonconforming new entrant, while greater market-share instability reduces cooperative response. Through this study, we extend existing understanding of the contextual circumstances under which established competitors recognize their mutual interests and band together.
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The PMI Risk Framework (PRF) is introduced as a guide to classifying and identifying risks which can be the source of post-merger integration (PMI) failure — commonly referred to…
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The PMI Risk Framework (PRF) is introduced as a guide to classifying and identifying risks which can be the source of post-merger integration (PMI) failure — commonly referred to as “culture clash.” To provide managers with actionably insight, PRF dissects PMI risk into specific relationship-oriented phenomena, critical to outcomes and which should be addressed during PMI. This framework is a conceptual and theory-grounded integration of numerous perspectives, such as organizational psychology, group dynamics, social networks, transformational change, and nonlinear dynamics. These concepts are unified and can be acted upon by integration managers. Literary resources for further exploration into the underlying aspects of the framework are provided. The PRF places emphasis on critical facets of PMI, particularly those which are relational in nature, pose an exceptionally high degree of risk, and are recurrent sources of PMI failure. The chapter delves into relationship-oriented points of failure that managers face when overseeing PMI by introducing a relationship-based, PMI risk framework. Managers are often not fully cognizant of these risks, thus fail to manage them judiciously. These risks do not naturally abide by common scholarly classifications and cross disciplinary boundaries; they do not go unrecognized by scholars, but until the introduction of PRF the risks have not been assimilated into a unifying framework. This chapter presents a model of PMI risk by differentiating and specifying numerous types of underlying human-relationship-oriented risks, rather than considering PMI cultural conflict as a monolithic construct.
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Carl Arthur Solberg and François Durrieu
This paper studies the moderating effect of industry structure on strategy-performance relationships in international markets.
Abstract
Purpose
This paper studies the moderating effect of industry structure on strategy-performance relationships in international markets.
Methodology
We have carried out a survey among a sample of German, Norwegian and Singaporean small and medium sized firms, and test – using structural equation modelling (EQS) – four hypotheses founded in industrial organisation,
Findings
We find that industry structure indeed matters. The general picture is that cautious internationalisation strategies are more effective in fragmented industries than in concentrated industries. Also, with somewhat more nuance, global marketing strategies – such as standardisation and integration – seem by and large to be more effective in concentrated industries than in fragmented industries.
Limitations
The operationalisation of industry structure in an international context is challenging and we have deviated from the traditional Herfindahl–Hirschman Index. This may be a limitation but we also consider it a strength, given the weaknesses of this index in an international setting. The study is cross-sectional and should ideally follow each firm over time, again a challenging endeavour.
Originality
Despite a considerable amount of studies on strategy – performance relationships in international markets, there is no general agreement on the topic. We argue that a contingency approach needs to be taken, and that industry structure is one important factor not yet analysed.
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Blake Dunkle, R. Mark Isaac and Philip Solimine
In this chapter, the authors conduct a robustness study for the classic experimental results of Lynch, Miller, Plott, and Porter (1986, 1991). The authors find strong support for…
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In this chapter, the authors conduct a robustness study for the classic experimental results of Lynch, Miller, Plott, and Porter (1986, 1991). The authors find strong support for the original hypotheses in an updated experimental marketplace, consisting of dichotomous product qualities, non-binding signals of product quality, fixed seller identifiers, and an end-point design of deliberate ambiguity. The authors show that fixed identifiers alone are not sufficient devices to support efficient outcomes in these updated market conditions.
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Courses in strategic management should teach future strategists how to react to unexpected strategic events such as the appearance of innovative technologies, proposed mergers…
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Courses in strategic management should teach future strategists how to react to unexpected strategic events such as the appearance of innovative technologies, proposed mergers, drastic changes in production costs, or major actions by competitors or customers. Strategic events often trigger important changes in strategies, and reactions to strategic events make the difference between long-run success and failure. Courses can teach students about the philosophical and psychological difficulties posed by complex environments and uncertain futures and teach some procedures that help to assure that important issues receive consideration. Research may be able to identify some decision-making heuristics that foster success.
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Charn P. McAllister and Gerald R. Ferris
Although the concept of duty has a historic and philosophical foundations dating back to Aristotle, there is very little theory and research in this area of scientific inquiry. In…
Abstract
Although the concept of duty has a historic and philosophical foundations dating back to Aristotle, there is very little theory and research in this area of scientific inquiry. In an effort to address this lack of scholarship, a theoretical foundation and a model are presented that clearly delineate the construct of duty, and the nature of its development within an individual-organization relationship. Using social exchange theory and the three-component model of organizational commitment as the conceptual foundations, the proposed duty development model explains the individual-level antecedents and the phases of commitment that individuals may progress through during their tenure in an organization. The various types of exchanges and transactions inherent in the social exchange theory provide the basis for each phase of commitment individuals experience. It is proposed that certain antecedents make individuals more likely to form a sense of duty toward an organization, but the development of this type of relationship requires an organization to focus on commitment building efforts, such as perceived organizational support and organizational culture. Contributions to theory and research, organizational implications, and directions for future research are discussed.
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Cross-cultural mergers and acquisitions (M&As) can generate the number of negative feelings and emotions among the survivors of the deal. These negative outcomes can range from…
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Cross-cultural mergers and acquisitions (M&As) can generate the number of negative feelings and emotions among the survivors of the deal. These negative outcomes can range from lowered commitment, lack of productivity, and talent loss to the more serious work alienation. Hence, this chapter is an attempt to identify the employees’ level of commitment and their feelings of alienation in the post-M&A integration phase. Also, provided training has proven to be important in building employee commitment and mitigating the feelings of alienation, this studies the relationship of these psychological outcomes with the different kinds of training provided to them during post-M&A situations. The vast literature review studied revealed a significant relationship between employees’ perceived effectiveness of training and their level of commitment with the newly merged firm, while an inverse relationship was found with employees’ feelings of alienation. This chapter has crucial implications for researchers and practitioners.