status in markets this project tests for the effect of social status in a laboratory experimental market we consider a special box design market in which a vertical overlap in supply and demand ensure that there are multiple equilibrium prices we manipulate the relative social status of our subjects by awarding high status to a subset of the group based on one of two procedures in the first a subject s score on a trivia quiz determines his or her status in another subjects are assigned randomly to a higher status or lower status group in both treatments we find that average prices are higher in markets where higher status sellers face lowerstatus buyers and lower when buyers have higher status than sellers across all sessions the higher status side of the market captures a greater share of the surplus earning significantly more than their lower status counterparts

explaining the attacker s advantage technological paradigms organizational dynamics and the value network abstract understanding when entrants might have an advantage over an industry s incumbent firms in developing and adopting new technologies is a question which several scholars have explained in terms of technological capabilities or organizational dynamics this paper proposes that the value network the context within which a firm competes and solves customers problems is an important factor affecting whether incumbent or entrant firms will most successfully innovate in a study of technology development in the disk drive industry the authors found that incumbents led the industry in developing and adopting new technologies of every sort identified by earlier scholars at component and architectural levels competency enhancing and competency destroying incremental and radical as long as the technology addressed customers needs within the value network in which the incumbents competed entrants led in developing and adopting technologies which addressed user needs in different emerging value networks it is in these innovations which disrupted established trajectories of technological progress in established markets that attackers proved to have an advantage the rate of improvement in product performance which technologists provide may exceed the rate of improvement demanded in established markets this mismatch between trajectories enables firms entering emerging value networks subsequently to attack the industry s established markets as well

labor flexibility and innovation in new ventures the study investigates how labor flexibility affects innovation in new ventures more specifically drawing upon a sample of 143 greek ventures less than 8 years old it examines empirically the individual and interactive effects of functional and numerical flexibility on product innovation it also considers how these effects are moderated by the entrepreneur s political skill results suggest that functional flexibility has a positive direct effect on incremental innovation whereas numerical flexibility has a positive direct effect on radical innovation the interactions between numerical and functional flexibility affect both types of innovation the results also suggest that the labor flexibility innovation relationship is positively moderated by the entrepreneur s political skill these findings point toward aspects of knowledge related with flexible labor engagement and entrepreneurial relational capital that affect innovation

measuring the business cycle effects of permanent and transitory shocks in cointegrated time series abstract this paper proposes a statistical framework to evaluate the contribution of permanent and transitory shocks to the cyclical fluctuations of cointegrated variables an empirical application with us macroeconomic data reveals that transitory shocks are responsible for most of the variability at the business cycle frequencies

top managerial prestige and organizational bankruptcy this paper extends earlier work on an alternative view of bankruptcy suggesting that bankruptcy occurs when creditors withdraw then support from a firm s top management team it further proposes that support for the top team depends upon the team s prestige five characteristics measuring the relative status of top teams were tested for their association with bankruptcy three of the characteristics focused on items commonly associated with membership in economic elites elite educational backgrounds board memberships and previous employment as officers in other corporations the fourth and fifth characteristics focused on membership in political and military elites the results indicated that political and board connections were negatively associated with bankruptcy in the year of failure even when financial factors and cooptive board linkages were controlled the results also showed that failing firms attempted to improve their managerial prestige three to four years before they failed they were how

the impact of education experience and inner circle advisors on sme performance insights from a study of public development centers in this study we investigate the effects of entrepreneurial human capital on sme performance using data on 2 713 smes within the european union performance was measured in two ways profitability as roa and productivity as revenue per employee results indicate that both profitability and productivity are positively related to industry specific knowledge possessed by the ceo owner prior to starting up the firm and the general business knowledge acquired once the firm is up and running experience as a result of having previously worked in a firm in the same industry before starting a business was related to productivity but there is no relation with profitability there is a link between performance and inclusion of other ceo owners in the founder s inner circle of advisors this relationship is positive when the advisor s venture has experienced failure and negative when the advisor s venture has been successful we discuss the significance of these findings for research and practice

incumbent entry into new market niches the role of experience and managerial choice in the creation of dynamic capabilities increasingly technological innovation creates markets for new products and services to survive firms must respond to these new markets how do firms develop the capabilities necessary to succeed in such changing conditions some suggest that experience with previous entry builds such capabilities others suggest that capabilities arise from experience producing and selling to existing markets the role of managers is also debated some argue that experience with existing markets causes managers to miss entry opportunities others argue that managers enter new markets when their firm possesses the experience needed to compete effectively in this paper we explore these issues by investigating entry patterns in the disk drive industry we investigate the effect of experience in existing markets and experience with previous market entry we find that experience in previous markets increased the probability that a firm would enter a new market we show that this experience had greater value if the firm entered the new market we infer that managers chose to enter these markets to obtain this increase in value

cultural differences mne learning abilities and the effect of experience on subsidiary mortality in a dissimilar culture evidence from korean mnes in a departure from prior studies presuming a beneficial experience effect in foreign direct investment fdi the present paper examines the conditions under which fdi experience may actually harm subsequent subsidiaries we argue that multinational enterprises mnes may draw erroneous inferences and learn incorrectly from their early expansions when new to a dissimilar culture because their learning abilities are eroded by cultural differences we posit that the characteristics of an mne s international expansion including scope pace rhythm and entry mode moderate this negative experience effect by influencing the mne s learning ability in foreign cultures using a data set of fdis by south korean mnes between 1990 and 2006 we find a positive relationship between subsidiary mortality and experience when an mne has a low level of experience in a dissimilar culture this relationship is weaker if the mne s prior fdi has been dispersed across different cultures is stronger if it expanded internationally at a fast pace and becomes negative once the mne has accumulated a high level of experience in the host culture we conclude that when expanding into dissimilar cultures mnes must establish mechanisms to mitigate incorrect learning and reexamine the correctness of inferences drawn from past experience before applying them

women business owners in traditional and non traditional industries abstract small businesses continue to grow in importance to the national economy according to the small business administration america s 22 million small businesses generate more than half of the nation s gross domestic product and are the principal source of new jobs the national foundation for women business owners reported that between 1987 and 1994 the number of women owned businesses grew by 78 and women owned firms accounted for 36 of all firms although the growth in the number of women owned businesses is encouraging the size of such businesses remains small in terms of both revenues and number of employees especially in comparison to male owned businesses one explanation for this disparity is that female business ownership is concentrated primarily in the retail and service industries where businesses are relatively smaller in terms of employment and revenue as opposed to high technology construction and manufacturing one of the most fruitful streams of research in women s occupational choice has been based on social learning theory specifically self efficacy has been found to relate to both type and number of occupations considered by college men and women and with regard to traditional and non traditional occupations entrepreneurship researchers have also used social learning theory to study entrepreneurial intentions this study builds on that background of women s career development and entrepreneurial intentions to examine differences between traditional and non traditional women business owners we examine 170 women business owners in various traditional and non traditional businesses in utah and illinois questionnaires were the primary method of collecting data in addition to 11 in depth interviews from a sample of the survey respondents using a careers perspective based on social learning theory we hypothesized that women in these two different categories of industries would differ on levels of self efficacy toward entrepreneurship or venture efficacy their career expectations and their perceived social support a second analysis was also done that explored the relationship between the same independent variables and success or performance of the business the results offer support for using this integrative model to understand differences between women in traditional and non traditional industries the first analysis revealed that significant differences exist between the two groups on several of the independent variables traditional business owners had higher venture efficacy for opportunity recognition higher career expectations of life balance and security and they reported that the financial support received from others was more important to them than those in non traditional businesses on the other hand the non traditional owners had higher venture efficacy for planning and higher career expectations for money or wealth than the traditional group the second analysis explored whether success as measured by sales was affected by differences in venture efficacies career expectations or perceived support received by women in traditional businesses as compared to those in non traditional ones this analysis revealed that traditional women business owners might have different factors that contribute to their success than non traditional owners specifically for the traditional owners venture efficacies for opportunity recognition and economic management as well as the career expectation of autonomy and money or wealth were positively related to sales for the same group efficacy toward planning and the need for security were negatively related to sales for the non traditional women venture efficacy toward planning and the career expectation of autonomy were positively related to sales while the expectation of money or wealth was negatively related also for the same group the perceived importance of the emotional and financial support was negatively related to sales in the past most of the entrepreneurial research has used predominantly male samples of entrepreneurs those that include women entrepreneurs generally are comparative between men and women this study s comparison of two groups of women entrepreneurs offers a unique contribution to the field future research is recommended to further understand how venture efficacy and career expectations affect the decision to start a new business in a particular industry it would be particularly beneficial to study venture efficacy and career expectations of prospective women entrepreneurs prior to the start of the business similarly greater attention should be given to understanding how venture efficacy develops in different individuals

know how and asset complementarity and dynamic capability accumulation the case of r d dynamic capabilities enable firms to create new products and processes and respond to changing market conditions this empirical investigation of dynamic r d capabilities deals with the role of complementary know how and other assets in the context of changing conditions in the u s petroleum industry during the 1970s and early 1980s the analysis suggests that in response to rising oil prices firms with larger amounts of complementary technological knowledge and physical assets also undertook larger amounts of r d on coal conversion a synthetic fuels process 1997 by john wiley sons ltd

tobin s q and the importance of focus in firm performance using tobin s q as a measure of performance we seek to estimate the relative importance of industry focus and share effects in determining firm performance our methods are analogous to those of richard schmalensee and like him we find that industry effects account for the majority of the explained variance however we also find that firm effects exist in the form of focus effects that is narrowly diversified firms do better than widely diversified firms we interpret this finding as consistent with profit maximization by firms with different factor endowments

outside in global demand heterogeneity and dynamic capabilities of multinational enterprises we conceptualize the dynamic capabilities of multinational enterprises mnes as learning and adaptation capabilities that address the pressure of global integration and local responsiveness complementing the extant literature on dynamic capabilities which is focused on the supply side our study draws attention to the demand side influences especially in terms of global demand heterogeneity we propose that global demand heterogeneity provides pressures and opportunities for mnes to learn and adapt and thus positively relates to the development of mne dynamic capabilities however external sources per se may be insufficient firm specific advantages particularly human capital at the managerial and employee levels facilitate the internalization of external knowledge and pressure into the development of dynamic capabilities an empirical study of chinese multinational service firms strongly supports these arguments

network location and learning the influence of network resources and firm capabilities on alliance formation this paper presents a dynamic firm level study of the role of network resources in determining alliance formation such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners such resources are an important catalyst for new alliances especially because alliances entail considerable hazards this study also assesses the importance of firms capabilities with alliance formation and material resources as determinants of their alliance decisions i test this dynamic framework and its hypotheses about the role of time varying network resources and firm capabilities with comprehensive longitudinal multi industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989 the results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms decisions to enter into new alliances this study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior copyright 1999 john wiley sons ltd

customer power strategic investment and the failure of leading firms why might firms be regarded as astutely managed at one point yet subsequently lose their positions of industry leadership when faced with technological change we present a model grounded in a study of the world disk drive industry that charts the process through which the demands of a firm s customers shape the allocation of resources in technological innovation a model that links theories of resource dependence and resource allocation we show that established firms led the industry in developing technologies of every sort even radical ones whenever the technologies addressed existing customers needs the same firms failed to develop simpler technologies that initially were only useful in emerging markets because impetus coalesces behind and resources are allocated to programs targeting powerful customers projects targeted at technologies for which no customers yet exist languish for lack of impetus and resources because the rate of technical progress can exceed the performance demanded in a market technologies which initially can only be used in emerging markets later can invade mainstream ones carrying entrant firms to victory over established companies

multiple regimes in u s monetary policy a nonparametric approach we use two different nonparametric methods to determine whether there were multiple regimes in u s monetary policy over the period 1955 2003 we model monetary policy using two different versions of taylor s rule for the nominal interest rate target by contrast with parametric tests for regime changes the nonparametric methods we use allow the data to determine the dimensions on which to split the sample for purposes of estimating the coefficients of the taylor rule we find evidence for a few structural breaks and consistent agreement between our two nonparametric methods on the dating of those breaks

entrepreneurship and the initial size of firms abstract it is clear that entrepreneurs and their firms can vary widely nevertheless most of the research to date on entrepreneurship has examined central tendencies with relatively little attention devoted to entrepreneurial diversity this study examines one of the most distinguishing characteristics of young firms initial size the focus is whether smaller start ups differ from larger ones in the backgrounds of the entrepreneurs their processes of starting or the subsequent patterns of development in this longitudinal study an initial sample of 1903 young firms was examined to determine differences in characteristics of the entrepreneurs and in their processes of starting one year later data were obtained from 742 of these firms permitting analysis of how initial firm size was related to subsequent difficulties encountered and changes made as well as to performance as expected along almost every dimension these starting larger firms had the backgrounds that would seem to be necessary for the assembly of substantial resources they tended to have more education more management experience and goals that were more managerial in nature they also were more likely to have partners women were associated more often with smaller ventures but for this sample there were no differences in the representation of minorities between the smaller and larger start ups those starting larger ventures tended to rely more upon external investors and to start ventures more closely linked to their previous jobs both groups of entrepreneurs sought information from a number of sources but those founding larger ventures utilized professional advisors more whereas those starting smaller ventures utilized informal sources in the year after the first questionnaire differences between the two groups were less marked than expected both groups of surviving firms reported low levels of serious problems with the smaller ventures somewhat surprisingly reporting serious problems less often there were not many differences in changes made except that smaller ventures were more likely to lose partners and larger ventures were more likely to add branches or locations both groups reported high rates of mean growth in sales the smaller ventures with their small initial bases showed larger percentage increases smaller ventures also showed higher percentage increases in employment and surprisingly a greater increase in the absolute number of employees somewhat more of the smaller ventures had discontinued both groups included many firms that grew substantially and others that scaled back demonstrating the fluidity and experimentation characteristic of young firms for entrepreneurs and their advisors for public policy makers and for researchers any progress in understanding entrepreneurial processes should in the long run enhance venture performance the patterns observed here indicate that firms of different initial size tend to be associated with particular entrepreneurial characteristics processes of formation and subsequent patterns of development this diversity should be recognized in the development of assistance programs and university courses as well as in the interpretation of previous research for public policy makers the growth of these firms both small and large indicates the potential of economic contributions from entrepreneur ship further the growth of the smaller start ups suggests that even those ventures that appear to have few resources and modest potential can in the aggregate contribute substantially to the economy

who i am and how i contract the effect of contractors roles on the evolution of contract structure in university industry research agreements in this exploratory study of university industry sponsored research agreements we investigate how organizational roles direct the relational learning of contracting personnel which subsequently influences contract evolution integrating theory with comments from field interviews we posit that as scientists gain contracting experience with an exchange partner their focus of attention on knowledge creation supports the establishment of a relationship based on technical competence behavioral experience and operational routines that cause the enforcement terms of subsequent contracts to become less detailed we also submit that contract administrators because of their focus on knowledge protection mitigating opportunism and enforcement primarily accumulate joint governance experience and establish administrative routines that cause the enforcement terms of subsequent contracts to become more detailed rich content analysis of monitoring and intellectual property terms of sponsored research agreements supports our theoretically grounded hypotheses

decoding the adaptability rigidity puzzle evidence from pharmaceutical incumbents pursuit of gene therapy and monoclonal antibodies the emergence of radical technologies presents a significant challenge to incumbent firms we study firms management of radical technological change by separating their actions into upstream research the r of r d and downstream development the d of r d we introduce two contingencies to explain when incumbents research investments in radical technologies translate into product development and when these upstream investments may get voided by organizational inertia downstream first radical technologies can differ in how they conform to incumbents existing business models impacting the extent to which the movement of research outputs toward development will be subject to inertial pressures second incumbents can invest in a radical technology through a variety of modes internal research external research contracts alliances acquisitions these modes represent unique combinations of who does research and who is involved in the decision for subsequent development and hence differ in the extent to which they are shielded from inertial pressures this difference helps explain why incumbents despite responding to radical technologies may still be unable to adapt as well as what types of investments will be more effective in helping firms navigate technological change evidence from pharmaceutical incumbents pursuit of monoclonal antibodies and gene therapy offers strong support for our arguments

unraveling the process of creative destruction complementary assets and incumbent survival in the typesetter industry when radical technological change transforms an industry established firms sometimes fail drastically and are displaced by new entrants yet other times survive and prosper drawing upon an unusually rich data set that covers the technological and competitive history of the typesetter industry from 1886 to 1990 this paper uses a combination of quantitative and qualitative analysis to unravel this process of creative destruction it argues that the ultimate commercial performance of incumbents vs new entrants is driven by the balance and interaction of three factors investment technical capabilities and appropriability through specialized complementary assets in this industry specialized complementary assets played a crucial role in buffering incumbents from the effects of competence destruction and an analysis that examined investment or technical capabilities in isolation would have led to misleading results this work thus highlights the importance of considering multiple perspectives when examining the competitive implications of technological change 1997 by john wiley sons ltd

on the role of technology shocks as a source of business cycles some new evidence i provide some new evidence that reinforces the conclusion in gal o 1999 that exogenous variations in technology play a very limited role if any as sources of the business cycle first i provide evidence that supports the identie cation of technology shocks proposed in that paper second i show that similar e ndings obtain when the same approach is implemented for the euro area using a newly available data set jel e32 e24

do markets differ much this essay reports the results of a crosssection study of differences in accounting profitability that sheds light on some basic controversies in industrial economics most previous cross section studies in this field have been concerned with testing hypotheses about structural coefficients in models meant to apply to essentially all markets as we have learned more about the difficulties of constructing such general models and of performing tests on their structural parameters properly structural cross section analysis has fallen out of fashion in contrast to most of the cross section literature the analysis reported here is fundamentally descriptive it does not attempt directly to estimate or to test hypotheses about structural parameters i hope to show by example that one can perform illuminating analysis of cross section data without a host of controversial maintained hypotheses cross section data can yield interesting stylized facts to guide both general theorizing and empirical analysis of specific industries even if they cannot easily support full blown structural estimation one can view the sort of search for stylized facts conducted here as either a replacement for or an input to interindustry structural estimation depending on one s feeling about the long run potential of that research approach this study also departs from much of the cross section literature by being fundamentally concerned with the importance of various effects not just with coefficient signs and t statistics in particular this essay provides estimates of the relative importance of firm market and market share differences in the determination of business unit divisional profitability in u s manufacturing using 1975 data from the line of business program of the u s federal trade commission ftc i find support neither for the existence of firm effects nor for the importance of market share effects moreover while industry effects apparently exist and are important they appear to be negatively correlated with seller concentration in these data section i relates firm market and share effects to current issues and controversies in industrial economics and thus supplies the motivation for our empirical analysis the remainder of the essay treats the data and

evaluating innovative processes in french firms methodological proposition for firm innovation capacity evaluation abstract measuring innovation processes is a major concern for academics and firm managers this study proposes an innovation capacity ic measure framework based on a set of 15 innovation management practices every practice is subdivided into multiple criteria which are directly observable phenomena or facts the statistical method of value test and a multi criteria approach are adopted to propose a typology of four groups of innovative firms proactive preactive reactive passive the features observed on these groups of firms allow the determination of the firms innovation capacity and are useful for providing recommendations and practical actions for them with a view to reinforcing it data from a sample group of 39 small and medium sized enterprises smes in the manufacturing industry in lorraine france were collected via a field survey and were fed into the model to determine the innovation capacity of the companies

the relative influence of industry and corporation on business segment performance an alternative estimate rumelt s 1991 widely cited paper presents estimates of the relative influence of industry corporate business unit and other influences on business unit profitability he finds corporations explain almost none of the variability in business unit profitability using a simultaneous equation model we provide alternative estimates of the influence of industry and corporation on business unit performance we find that both corporations and industries influence business unit profitability but corporations have the larger influence copyright 1999 john wiley sons ltd

asset specificity and behavioral uncertainty as moderators of the sales growth employment growth relationship in emerging ventures sales growth and employment growth are the two most widely used growth indicators for new ventures yet sales growth and employment growth are not interchangeable measures of new venture growth rather they are related but somewhat independent constructs that respond differently to a variety of criteria most of the literature treats this as a methodological technicality however sales growth with or without accompanying employment growth has very different implications for managers and policy makers a better understanding of what drives these different growth metrics has the potential to lead to better decision making to improve that understanding we apply transaction cost economics reasoning to predict when sales growth will be or will not be accompanied by employment growth our results indicate that our predictions are borne out consistently in resource constrained contexts but not in resource munificent contexts

towards an attention based view of the firm the central argument is that firm behavior is the result of how firms channel and distribute the attention of their decision makers what decision makers do depends on what issues and answers they focus their attention on what issues and answers they focus on depends on the specific situation and on how the firm s rules resources and relationships distribute various issues answers and decision makers into specific communications and procedures the paper develops these theoretical principles into a model of firm behavior and presents its implications for explaining firm behavior and adaptation 1997 by john wiley sons ltd

meta paradigm change and the theory of the firm many seemingly unrelated debates on the theory of the firm are in fact part of a single deeper transformation of the social sciences as the foundational assumptions of 20th century social science have slowly been shown by science to be false new sub paradigms have emerged which cumulatively drop i theoretical assumptions about markets to explain firms ii epistemological assumptions about knowledge to explain diversity and iii metaphysical assumptions about causality to explain technical change debates occur across each of these levels

technology shocks structural breaks and the effects on the business cycle abstract it is shown that time series of us productivity and hours are apparently affected by a structural break in the late 60s moreover the importance of technology shocks over the business cycle has sharply decreased after the break

adaptation bridging and firm upgrading how non market institutions and mncs facilitate knowledge recombination in emerging markets how do multinational corporation mnc subsidiaries and local institutions help or hinder emerging market suppliers to upgrade their capabilities drawing on insights from economic sociology and comparative capitalism we posit that in these contexts of scarce resources and inferior technologies upgrading depends on the ways in which organizational and institutional networks enable firms to integrate imported advanced knowledge with local applied knowledge using a combination of field work and unique survey data of argentine auto parts suppliers we show that process upgrading improves significantly when suppliers have ties to seemingly resource weak non market institutions that improve access to a variety of experiential knowledge these institutions act as knowledge bridges helping local firms tap into diverse applied knowledge embedded in isolated industrial districts and adapt frontier advanced practices to their local conditions moreover suppliers appear to benefit from ties to mnc subsidiaries only when they simultaneously collaborate with certain non market institutions that help them recombine experiential knowledge with the standards gained from the subsidiaries

businesses without glamour an analysis of resources on performance by size and age in small service and retail firms abstract research on factors influencing performance in new and small companies is extensive earlier work found that strategies e g cost quality differentiation etc affected performance contingent on industry conditions the environment and the entrepreneur s background although this work provides a solid basis for understanding differences in entrepreneurial performance some firms are limited in their choices of strategy due to size age or industry often these firms are in industries where entry barriers are low and competitive advantages are easily imitated small service and retail businesses operate in sectors where these conditions are apparent comprising more than 50 of all small firms they require minimal start up investments but face intense competition lacking the glamour of high innovation high growth firms service and retail companies are at the end of the value chain their fortunes rising and falling as a result of the direct influence of the owner founder hence performance variation may be better explained by the capabilities of the firm or individual competencies of the owner founder that is the resource base and resource combinations rather than strategy the strategic importance of an organization s resources and capabilities is the foundation of resource based theory resources are tangible and intangible assets tied to the firm in a relatively permanent fashion their combinations are heterogeneous and form the basis for product market strategies studies of resources strategies and performance are emerging in the entrepreneurial area research shows that various resources in concert with different strategy types can lead to above average performance over the business life cycle and that combinations of resources are related to survival yet the vast majority of work focuses on high growth high tech or manufacturing businesses less is known about the relationships of resources to performance in less glamorous sectors in these small service and retail businesses we speculate that resources in particular human and organizational resources may play a greater role in explaining performance than strategy further as other authors have suggested it is expected that the combinations of these resources will vary across age and size this study examines the influence of human and organizational resources on performance in a sample of 195 service and retail firms operating in central new jersey using a structured questionnaire all companies utilized a focus strategy either focused cost or focused differentiation and employed a minimum of 3 to a maximum of 100 employees all measures had theoretical and or empirical precedent and were tested statistically for reliability we used factor analysis to reduce the independent variables to two human resource variables owner resources and commitment one organizational resource variable comprised of planning systems and staff skills and one strategy variable focused cost and focused differentiation control variables were business age business size environmental benignness and industry growth the dependent variable performance was measured in two ways net cash flow and log of growth in employees over 3 years the study first examined whether strategy or resources had a greater influence on performance results showed that strategy influenced performance less than human and organizational resources both individually and interactively the influence of owner resources background and attitudes on net cash flow was stronger than on growth where the only significant variable was industry market growth to analyze effects of resources on performance by size we divided the sample by size groupings selecting the smallest maximum five employees and largest quartiles minimum 16 employees which were comprised of 55 and 50 companies respectively these analyses showed that owner resources commitment and organizational resources contributed positively to net cash flow in very small firms however interactive effects of these resource combinations were negative for instance owner resources and organizational resources together and organizational resources and commitment together resulted in less positive cash flow than when analyzed separately this implies that different resource combinations can have negative influences in these very small firms we examined age effects in the same manner as size dividing the sample into age group quartiles and conducting an analysis only for very young fewer than 5 years and very old minimum 19 years groups which comprised 54 and 52 companies respectively these analyses showed that although growth was more rapid among the youngest firms there were no distinctive resource based correlates to growth in either age group substantive increases in formalized systems and procedures were not apparent among the oldest of these companies compared with the youngest contrary to previous work showing the evolution of these over business life cycles results of this study are applicable only in the context of service and retail firms and readers should note this sample was nonrandom and geographically concentrated our purpose was not to predict but describe associations between resources and performance this study shows that for firms in competitive industries at the end of the value chain type of strategy is less important than resource combinations for certain types of performance human and organizational resources are associated with more positive cash flow whereas industry and market factors are related to growth these results imply that firms seeking growth are best served by selecting and entering growth markets and industries on the other hand if strong positive cash flows are the primary objective attention to combinations of resources is more important for instance owner founders having a strong business and managerial background and industry experience will need less formalized systems whereas those owner founders with weaker managerial resources might benefit from more formalized procedures and skilled staff

present at the biotechnological revolution transformation of technological identity for a large incumbent pharmaceutical firm abstract management of successful incumbent firms experience difficulty in recognizing the need for and effecting change in the firm s technological identity after an externally generated shift in the industry s technological trajectory nonetheless some large pharmaceutical firms have transformed their technological identity in drug discovery from a chemical random screening to biological drug design model we report how one of the world s most successful incumbents transformed technically sophisticated senior management championed the transformation it was achieved primarily through hiring many new scientists embodying biotechnology existing personnel acquired the expertise or left continual self transformation is part of the corporate ethos some differences in incumbent and entrant technology remain incumbents use a wider range of techniques consistent with their complementary assets publication and incentive compensation policies are driven by the need to attract and retain the best scientists professor firm collaborations are ubiquitous often non public and best identified in quantitative analyses by co publishing collaborations with new biotechnology firms are used primarily to substitute for developing internal expertise judged of marginal value no drug discovery collaborations exist with other major incumbents we identify another seven or eight incumbents similarly transforming as indicated by top scientific talent and patenting success

complementarities momentum and the evolution of modern manufacturing in the nineteenth century the railroad and telegraph were at the center of a set of technological advances physical investments and managerial innovations that transformed american industry alfred chandler 1977 later the automobile and telephone played a similar role in another transformation today the high tech industries include computers telecommunications and electronics working on our remarkably powerful computers even as they rapidly become obsolete co authoring papers by electronic mail and fax and conversing on our portable cellular telephones we are struck by what appears to be a self supporting and reinforcing dynamic to the technological improvements across the electronics industries an advance almost anywhere in the sector seems to call forth more advances across the sector these advances are occurring contemporaneously with a broad pattern of other changes not only in the electronics industries but in manufacturing more generally and not just in hardware but in methods and organization as well a new paradigm has begun to emerge in contrast to traditional manufacturing firms modern firms frequently 1 make greater use of flexible programmable equipment and of computeraided design and manufacturing technologies 2 have fewer job classifications 3 offer more varieties of their major products and or update their product lines more frequently 4 put more emphasis on speed in order processing production and delivery 5 hold much lower inventories of intermediate and finished goods 6 rely on subcontractors to supply a greater proportion of the total value added and 7 overlap design product and process engineering to speed the introduction of new products these features of modern manufacturing firms encompass technology choices marketing strategies personnel policies supplier relations lines of internal communications and other operational policies in a far reaching and coherent pattern whose existence in the words of michael piore 1986 poses a challenge to economic theory in a recent paper milgrom and roberts 1990 proposed a theory to explain the emergence of this new paradigm arguing that the various characteristics and activities described are mutually complementary and so tend to be adopted together with each making the others more attractive in that theory the falling costs of high speed data communication data processing and flexible multitask equipment lead to increases in the directly affected activities which through a web of complementarities then lead to increases in a set of related activities as well although the costs of flexible machinery and data communication and processing surely have fallen substantially in recent decades an analysis that takes these changes as exogenous does not constitute a full explanation of the pattern of change that we observe one must ask why are these particular costs falling relative to others here we enrich the milgrom roberts analysis by adding a dynamic to it innovations in the manufacture of basic inputs both arise in response to a growing market for those inputs and simultaneously encourage that growth this reflects a fundamental complementarity between the level of any activity and investments that reduce its marginal department of economics milgrom and qian and graduate school of business roberts stanford university stanford ca 94305 we thank avner greif for his helpful comments on an earlier draft financial support from the national science foundation milgrom and roberts and the robert and anne bass faculty fellowship roberts is gratefully acknowledged

discontinuities and senior management assessing the role of recognition in pharmaceutical firm response to biotechnology despite an increasing emphasis on the role of senior management cognition in shaping organizational action there have been few attempts to link top management mental models to strategic choice in the face of discontinuous innovation this paper uses 23 years of data covering 15 major pharmaceutical firms to explore the degree to which each firm s response to the revolution in biotechnology was shaped by the senior team s recognition of biotechnology s importance controlling for a number of important alternative explanations we show that recognition may be an important predictor of action suggesting that cognition at the most senior level can play a critical role in shaping established firms response to discontinuities copyright 2003 oxford university press

patterns of technological competence accumulation a proposition for empirical measurement this article develops a typology that describes and measures different types of technological competence accumulation the notion of accumulation comprises not only the state but also the change in competence and hence it complies with the criticism of the static approaches to competence management the typology of competence accumulation enables a comparison of firm profiles that lead to identification of four groups of firm behavior across the telecommunications industry the relationship between the firm and the industry level is established on the condition that each firm s competence level depends on the firms mutual relationships with other firms in the same industry known as red queen evolution the four groups of firm behaviour are therefore not considered as groups of independent firms that are similar by coincidence but as patterns of behavior within the telecommunications industry which allows for a discussion of more general implications for management of technology copyright 2005 oxford university press

incumbents use of pre entry alliances before expansion into new technical subfields of an industry industry incumbents frequently delay entry into emerging technical subfields fearing product cannibalization and uncertain investment and enter only after technical and market uncertainties have subsided we predict that many incumbents particularly stronger firms will participate in alliances with other firms before their standalone entry the alliances will be used to realize part of the value of specialized assets and to gain information about the emerging products and markets we support the predictions with evidence from the us market of the medical diagnostic imaging industry

unbundling the structure of inertia resource versus routine rigidity i work to unbundle the structure of inertia into two distinct categories resource rigidity failure to change resource investment patterns and routine rigidity failure to change organizational p

institutional change in large law firms a resource dependency and institutional perspective we integrate resource dependency and institutional theory to argue that resource scarcity drives and legitimacy enables institutional change building on a historical account we examine the sources and timing of innovation departing from standard human resource practices using event history analysis of over 200 principal offices of large law firms offices with human resource scarcity innovated to acquire alternative resources highly prestigious offices had the legitimacy to be first or early adopters our findings highlight the value of looking to the resource side and to the notion of legitimacy in building an institutional theory of change

an examination of the substitutability of founders human and financial capital in emerging business ventures abstract undoubtedly access to financial capital and other resources is an important antecedent of new venture performance indeed inadequate financial resources often are cited as a primary reason why emerging businesses fail barren 1989 mcqueen 1989 otterbourg 1989 rujoub cook and hay 1995 yet there is some feeling among scholars that competent founders will find a way of coming up with necessary resources and capital chandler and hanks 1994 timmons 1990 thorne 1989 in this study we seek to better understand and provide insight into the factors that determine the amount of money needed to start a business and the factors that drive the decisions of whether such funding should come from founder savings or from outside sources we explore two questions 1 what factors are associated with the amount of initial capital raised and 2 what factors determine the mix of founder savings versus financial capital from outside sources that create the initial capital structure we seek to answer these questions using a sample of 102 manufacturing and service firms between 3 and 7 years of age these firms were categorized as manufacturing retail wholesale and business services in general the evidence supports our hypotheses the amount of financial capital at start up varies by industry of key importance in this study human and financial capital appear to be substitutable the analysis shows that on average firms with high levels of founder human capital and low levels of initial financial capital perform similarly to firms that have low levels of founder human capital and high levels of financial capital subgroup analysis provides insights into the degree of substitutability this finding suggests that founders with strong background experience may be able to start businesses that survive and thrive with less financial capital than their less experienced counterparts the proportion of initial capital provided by the founder differs significantly across industry types in more capital intensive industries founders provide a smaller proportion of the start up capital interestingly the amount of initial capital provided by the founder does not vary significantly across industry types this suggests that the amount of initial capital provided by the founder may result from contributing all they can give to the business which appears to be similar across business types finally founders perceptions of their ability to recognize and take advantage of opportunity are positively related to the proportion of initial capital provided by the founder this research provides insights into the factors that appear to drive the initial capital intensity and structure to provide better understanding of this phenomenon future research could investigate such practices as bootstrapping asset sharing or other techniques that allow founders to control resources without requiring ownership

a resource based theory of the firm knowledge versus opportunism this paper develops a resource based knowledge based theory of the firm its thesis is that the organizational mode through which individuals cooperate affects the knowledge they apply to business activity we focus on the polar cases of organization within a firm as compared to market contracting there will be a difference in the knowledge that is brought to bear and hence in joint productivity under the two options thus as compared to opportunism based transaction cost theory we advance a separate yet complementary answer to the question why do firms exist our aim is to develop an empirically relevant and complementary theory of why firms are formed a theory based on irreducible knowledge differences between individuals rather than the threat of purposeful cheating or withholding of information we assume limited cognitive abilities on the part of individuals bounded rationality and assume that opportunistic behavior will not occur the latter allows us to determine whether resource based

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

preemptive patenting and the persistence of monopoly this article takes a different tack and inquires whether institutions such as the patent system create opportunities for firms with monopoly power to maintain their monopoly power the results apply to other situations such as brand identification spatial location and capacity expansion which share the characteristic that early or preemptive actions may lower the returns to potential competitors

novice serial and portfolio entrepreneur behaviour and contributions policy makers and practitioners are considering whether to allocate resources towards portfolio and serial entrepreneurs as well as the provision of additional initiatives to increase the pool of novice entrepreneurs to inform this policy debate univariate statistical tests were used to test for differences between 354 firms owned by novice serial and portfolio entrepreneurs in scotland also univariate tests were conducted to compare responses made by pairwise groups of entrepreneurs no significant differences were detected between the three types of entrepreneurs with regard to several entrepreneur and firm demographic characteristics additional analysis revealed that portfolio entrepreneurs have more diverse experiences and more resources than serial or novice entrepreneurs on average portfolio entrepreneurs appear to offer more attractive growth prospects than other entrepreneurs

absorptive capacity coauthoring behavior and the organization of research in drug discovery we examine the interface between for profit and publicly funded research in pharmaceuticals firms access upstream basic research through investments in absorptive capacity in the form of in house basic research and pro publication internal incentives some firms also maintain extensive connections to the wider scientific community which we measure using data on coauthorship of scientific papers between pharmaceutical company scientists and publicly funded researchers connectedness is significantly correlated with firms internal organization as well as their performance in drug discovery the estimated impact of connectedness on private research productivity implies a substantial return to public investments in basic research

legitimizing leveraging and launching developing dynamic capabilities in the mne multinational enterprises mnes face simultaneous pressures for global integration and local responsiveness while the extant literature acknowledges that most mnes are neither entirely geared towards achieving global integration nor local responsiveness scarce attention is given to how mnes develop organizational flexibility to address multiple and shifting strategy pressures over time in this paper we draw on the dynamic capabilities literature to explore how the mne develops the capabilities needed to achieve this flexibility through a qualitative longitudinal case study spanning 12 years we identify three recombination capabilities legitimizing leveraging and launching capabilities through which the mne develops organizational flexibility we find that these recombination capabilities improve the mnes ability to sense and seize new opportunities and enable the mne to overcome organizational impediments to achieve flexibility our study offers a process perspective that shows how the three capabilities together nourish the mnes resilience to continuously balance between global integration and local responsiveness our findings have managerial implications illustrating that launching new strategic initiatives may fail if the mne does not have the capabilities to legitimize the new initiatives and to ensure that existing organizational strengths are properly leveraged to support the new initiatives

don t rest on your laurels reputational change and young technology based ventures abstract we combine resource based theory and social cognition theory to investigate the factors both limiting and related to between period reputational change of young firms in a dynamic technology based industry an analysis of computer graphics chipmakers during the period 1992 2003 provides evidence that operational signals are related to reputational change specifically receiving a product award in the current period is associated with positive change and gaps in product announcements are associated with negative change we find little support for our hypothesis that the reputations of older firms are less likely to change

developing acquired foreign subsidiaries the experience of mnes in transition economies drawing on subsidiary evolution and dynamic capabilities research i test how development and growth of subsidiaries recently acquired in transition economies are affected by multinational enterprise mne and target capabilities these subsidiaries often lack important resources their cross border transfer enhancement and exploitation are problematic however data on 170 acquisitions in central and eastern europe confirmed the importance of the pre acquisition experiences of both target and mne for subsidiary growth although cultural differences moderated the predicted effects notably

closing knowledge gaps in foreign markets knowledge and learning are ascribed pivotal roles in firms internationalization processes perceived market uncertainties namely knowledge gaps related to business environments in foreign markets may curb firms inclinations to commit resources to these markets this study explores whether knowledge gaps tend to increase or decrease with time when operating in the foreign market and it discusses which learning components narrow or widen the perceived knowledge gap a theoretical model is developed based on the internationalization process view and the more recent organizational learning perspective including such concepts as overconfidence and absorptive capacity the theoretical model is tested on a set of primary data covering danish and swedish firms and their foreign market operations the results suggest a more subtle relationship between experience and perceived knowledge gaps than the mechanical relationship portrayed by the internationalization process view a relationship in which absorptive capacity and in particular overconfidence play important roles

thar she blows gender competition and bubbles in experimental asset markets do women and men behave differently in financial asset markets our results from an asset market experiment show a marked gender difference in producing speculative price bubbles mixed markets show intermediate values and a meta analysis of 35 markets from different studies confirms the inverse relationship between the magnitude of price bubbles and the frequency of female traders in the market women s price forecasts also are significantly lower even in the first period implications for financial markets and experimental methodology are discussed jel d14 d81 g01 g11 j16

firm capabilities technological dynamism and the internationalisation of innovation a behavioural approach we develop a behavioural framework of bounded rational decision making under uncertainty to analyse the role of technological dynamism in the firm s environment for its decision to internationalise innovation applying prospect theory we argue that technological uncertainty in the firm s environment affects its risk preferences differently depending on its technological capabilities a key prediction is that firms with low capabilities will internationalise innovation when faced by technological uncertainty while firms with high capabilities will concentrate their innovation at the home base we also argue that our behavioural approach based on prospect theory is not a stand alone programme but benefits from the integration with traditional concepts in ib in particular we make a case that organisational measures fostering absorptive capacity such as intensive personnel exchange between headquarters and subsidiaries can help to attenuate the high capability firms tendency to concentrate innovation at the home base when faced by high uncertainty we corroborate the predictions of our framework based on data from the german part of the community innovation survey

is it a car or a truck managerial beliefs the choice of product architecture and the emergence of the minivan market segment new markets segments are a common setting for studies in technology strategy these studies generally assume that new segments already exist or have formed following the introduction of a product innovation by an entering firm thus theory on the role of established firms in the emergence of new market segments is underdeveloped this study informs current research by explaining the product innovation decisions of established firms during the emergence of a new market segment the results of a case study on the development and commercialization of the minivan at chrysler ford and general motors between 1970 and 1985 indicate that existing theories based on managerial cognition firm capabilities economic incentives and organizational structure are insufficient to explain the decisions this article develops theory based on the interrelationship of these four mechanisms

the introduction of a non traditional and aggressive approach to banking the risks of hubris this study integrates institutional theory and social cognitive theory to describe how peripheral organizations can accidentally bring about radical change even in highly institutionalized and change resistant fields the empirical context is the field of banking in ireland 1995 2001 where a peripheral bank triggered a shift away from traditionally conservative and risk averse banking values toward aggressive values of entrepreneurial risk taking the introduction of a new approach to banking was attributed to three factors 1 a benevolent environment which made this innovation feasible and timely 2 the state of the field which had gaps that could be addressed through specialization and 3 prior successes which created hubris in the senior managers thereby increasing the pace and scope of adoption of this approach eventually what started as a specialized and entrepreneurial approach led to the spread of a risky approach to banking across the entire field the study highlights the risks of hubris in that media praise and early successes can increase the pace of adoption of innovations which offer short term gains but are detrimental in the long term

inertia and incentives bridging organizational economics and organizational theory organizational theorists have long acknowledged the importance of the formal and informal incentives facing a firm s employees stressing that the political economy of a firm plays a major role in shaping organizational life and firm behavior yet the detailed study of incentive systems has traditionally been left in the hands of organizational economists with most organizational theorists focusing their attention on critical problems in culture network structure framing and so on in essence the social context in which economics and incentive systems are embedded we argue that this separation of domains is problematic the economics literature for example is unable to explain why organizations should find it difficult to change incentive structures in the face of environmental change while the organizational literature focuses heavily on the role of inertia as sources of organizational rigidity drawing on recent research on incentives in organizational economics and on cognition in organizational theory we build a framework for the analysis of incentives that highlights the ways in which incentives and cognition while being analytically distinct concepts are phenomenologically deeply intertwined we suggest that incentives and cognition coevolve so that organizational competencies or routines are as much about building knowledge of what should be rewarded as they are about what should be done we argue that this recognition has important implications for our understanding of organizational inertia in the face of environmental change and that it opens up important new areas for further research

the future of stakeholder management theory a temporal perspective we propose adding a temporal dimension to stakeholder management theory and assess the implications thereof for firm level competitive advantage we argue that a firm s competitive advantage fundamentally depends on its capacity for stakeholder management related transformational adaptation over time our new temporal stakeholder management approach builds upon insights from both the resource based view rbv in strategic management and institutional theory stakeholder agendas and their relative salience to the firm evolve over time a phenomenon well understood in the literature and requiring what we call level 1 adaptation however the dominant direction of stakeholder pressures can also change namely from supporting resource heterogeneity at the firm level to fostering industry homogeneity and vice versa when dominant stakeholder pressures shift from supporting heterogeneity towards stimulating homogeneity in industry the firm must engage in level 2 or transformational adaptation stakeholders typically provide valuable resources to the firm in an early stage without these resources which foster heterogeneity in line with rbv thinking the firm would not exist at a later stage stakeholders also contribute to inter firm homogeneity via isomorphism pressures in line with institutional theory thinking adding a temporal dimension to stakeholder management theory has far reaching implications for this theory s practical relevance to senior level management in business

measuring innovation in tourism from the schumpeterian and the dynamic capabilities perspectives this paper offers a diagnosis of the state of the issue regarding the measurement of innovation in the tourism industry at the company level and some recommendations for overcoming identified problems the study addresses two central issues how existing secondary databases of innovative activity define the boundaries of the tourism industry and the degree to which these databases reflect the particular characteristics of this economic activity it is concluded that these analyses present serious biases and anomalies hindering the understanding of the situation at the micro level and complicating the issue of international comparability and the analyses do not capture the internal heterogeneity of innovative behavior of tourism companies from specific intra sectoral activities the problems concern inappropriate indicators and the need for survey methods to complement the development of innovation scoreboards in secondary sources the study concludes by detailing a set of proposals that should be considered in the context of a scoreboard to provide a comprehensive view of a tourism firm s technological and organizational innovations as well as its innovative capabilities combining schumpeterian theory and the dynamic capabilities based approach and also making cross national comparisons feasible

corporate structure indirect bankruptcy costs and the advantage of de novo firms the case of gene therapy research current literature demonstrates that at least initially incumbents invest less in the in house development of a new technology than do entrants whether diversifying or de novo this is because for incumbents new technology challenges managers mental models through changes in capabilities revenue models or product features what has not been explored despite its significance for strategic action is whether and if so why incumbent diversifying and de novo firms might invest differently across variants of a new technology through a discontinuity this paper uses unique quantitative archival and interview data on the investment choices of incumbent diversifying and de novo firms around three variants of biotechnology small molecule large molecule and gene therapy drugs to show there are differences in investment choices across groups of firms and to suggest that these can be explained through differences in volatility of outcomes across variants when volatility in product performance generates volatility in firm level outcomes de novo firms can cap negative consequences through bankruptcy an alternative that is extremely costly for established firms whether incumbent or diversifying given their complex corporate structure by keeping indirect bankruptcy costs low de novo firms simple corporate structure allows them to extract option value from volatility making established versus de novo firms the key groups for analysis of investment choices not incumbent versus entrant firms this article thus identifies the interaction between a technological investment s volatility and de novo firms simple corporate structure as the explanatory variable for the observed investment differences i discuss implications for technology strategy and the competitive analysis of discontinuities

selective attention and the initiation of the global knowledge sourcing process in multinational corporations multinational corporations mncs frequently use their foreign subsidiaries to identify new opportunities to access external knowledge this article builds on the attention based view to examine how selective attention the focus on certain issues or answers at the exclusion of others works in the global knowledge sourcing process in mncs the results reveal an intriguing paradox while mncs may establish foreign subsidiaries far from headquarters to identify diverse novel knowledge and overcome local search headquarters decision makers tend to favor opportunities that are market proven and simply confirm what the mnc already knows subsidiary managers pre selling and selling efforts however can play a pivotal role in overcoming that bias this study combines detailed qualitative data with access to a proprietary database on 137 external knowledge sourcing opportunities in one of the world s largest mncs in the telecommunications sector

product innovation product market competition and persistent profitability in the u s pharmaceutical industry increasingly strategy scholars are exploring the relationships between innovation competition and the persistence of superior profits sustained high profitability may result when a firm repeatedly introduces valuable innovations that service previously unmet consumer demands while the returns to the firm from each innovation may erode over time innovation ensures that overall the firm maintains a high performance position at the same time sustained high profitability may also accrue to firms that innovate less often but effectively avoid the competition that otherwise erodes high returns this paper elaborates these relationships before presenting an empirical analysis of the effects of differential innovative propensities and differential rates of competition on pharmaceutical firms abilities to sustain profit outcomes that are above those earned by competing firms the analysis which is situated within the u s pharmaceutical industry finds support for the expected relationship between high innovative propensity and sustained superior profitability but no support for a link between persistence and the ability to avoid competition copyright 1999 john wiley sons ltd

ceo hubris and firm risk taking in china the moderating role of managerial discretion this study linked ceo hubris to firm risk taking and examined the moderating role of managerial discretion in this relationship drawing on upper echelons theory and behavioral decision theory we

the dynamic effects of neutral and investment specific technology shocks the neoclassical growth model is used to identify the short run effects of neutral technology shocks which affect the production of all goods homogeneously and investment specific shocks which affect only investment goods the real equipment price crucial for identifying the investment shocks experiences an abrupt increase in its average rate of decline in 1982 so the analysis is based on a split sample on the basis of the preferred specification the two technology shocks account for 73 percent of hours and 44 percent of output s business cycle variation before 1982 and 38 percent and 80 percent afterward the shocks also account for more than 40 percent of hours and 58 percent of output s forecast errors over a three to eight year horizon in both samples the majority of these effects are driven by the investment shocks

making sense in hypercompetitive environments a cognitive explanation for the persistence of high velocity competition this paper explores the cognitive aspects underlying industries in hypercompetitive environments hypercompetition represents a state of competition with rapidly escalating levels of competition and reduced periods of competitive advantage for firms in hypercompetitive industries member firms act boldly and aggressively to create a state of competitive disequilibrium in this paper we explore the particular conditions that managers encounter in making sense of hypercompetitive industries and argue that the nature of these conditions is such that conventional sensemaking frameworks will not work we then describe the adaptive sensemaking practices established in the literature for dealing with temporary turbulence and suggest that in hypercompetition those processes continue indefinitely we argue that these processes can become institutionalized as standard operating procedures within firms and as shared recipes within industries which in turn perpetuates hyperturbulent conditions

new evidence in the pursuit of locating new businesses abstract finding good generalizable samples has long been an achilles heel for those interested in entrepreneurship related phenomena practitioners policy makers and researchers frequently desire to take the pulse of entrepreneurial activity but struggle in doing so for example friedman 1995 reported that california overestimated job loss by 2 4 times because of failure to account for newer more robust firms with the goal of being able to better identify new businesses this research addresses the following questions 1 which sample sources best identify new businesses 2 are the characteristics of a sample drawn from one source similar to those drawn from a different source 3 how accurate are the different sample sources in the information they report and 4 how practical and cost effective are the different sample sources we pursued answers to these questions by examining the state sales tax file and comparing it with the previously examined sources of the state unemployment insurance file es202 and dun bradstreet s dun s market indicator file dmi birley 1984 aldrich et al 1989 the phonebook was also used to examine its overlap with the three primary sources in making these comparisons we evaluate generalizability issues accuracy of founding date cost practicality and other auxiliary information sales tax file our findings suggest that the sales tax file is a rich source for identifying generalizable samples the accuracy of the founding data was correct over 70 of the time and it appears to identify businesses very early in the start up phase the data also are available in machine readable format give some helpful auxiliary information and the cost of obtaining the file was negligible another advantage of the sales tax file is its ability to identify new businesses that do not have visible on street locations thus the sales tax file appears to be a very credible source for identifying firms early in the start up process es202 file dmi file and phone book our study affirms earlier studies that found major limitations with both the es202 and dmi files more specifically this study found that both sources have substantial limitations in identifying new start up firms and they both appear to be slow in removing firms from their records once they have moved or gone out of business as for the phonebook as it is only issued annually it takes some time for new businesses to be listed in the directory furthermore because so many of the new businesses identified by the sales tax file initially operate out of the entrepreneur s home 58 in our survey sample the enumeration phonebook method would miss many new businesses unless they had a business phone listing and a business sign on their residential property thus we do not consider the enumeration phonebook method to be very practical nor the best method for identifying new firms in sum these findings give renewed hope in locating generalizable samples of new businesses although the sales tax file is not a perfect source it represents a very attractive alternative for those interested in identifying entrepreneurial firms early in the start up phase these findings should assist practitioners policy makers and researchers in making better sample selections which should lead to more accurate indicators of new business start ups fewer sample biases and ultimately to a better understanding of the determinants of new venture failure and success

antecedents and consequences of marketing dynamic capabilities in international joint ventures the influence of firms dynamic capabilities on performance has been well articulated in the strategy literature yet conceptualization and operationalization of dynamic capabilities in marketing function have not been attempted and empirical evidence substantiating the effect of dynamic capabilities is scarce this research develops a conceptualization of marketing dynamic capabilities mdcs investigates their development in international joint ventures ijvs and explores their effect on ijvs performance and competitive advantage using a dyadic dataset collected from top managers of ijvs in china as well as objective performance data collected separately the study found empirical support for the effect of mdcs on ijvs competitive advantage and performance in addition mdcs are found to be influenced by ijv resource magnitude resource complementarity organizational culture and organizational structure the theoretical implications of our findings and future research directions are also discussed

ceo characteristics and firm r d spending over the past fifteen years a number of studies have examined the determinants of firm r d spending these studies however almost invariably focus on the role of firm or external ownership characteristics in predicting r d spending while overlooking the attributes of the top managers involved in allocating corporate resources in this study we change that focus by empirically examining how r d spending as compared to industry competitors varies at firms based on the characteristics of their ceos using a sample of publicly traded firms we find that ceo characteristics explain a significant proportion of the sample variance in firm r d spending even when corporate strategy ownership structure and other firm level attributes are controlled in terms of individual ceo characteristics we find that r d spending is greater at firms where ceos are younger have greater wealth invested in firm stock and signifacant career experience in marketing and or engineering r d in contrast to existing theory we find that the amount of a ceo s formal education had no significant association with r d spending once a ceo has attained a college degree however significant r d spending increases are found at firms where ceos have advanced science related degrees from subgroup analyses we further find that ceo effects on relative r d spending increase with longer ceo tenure implying that ceos over time may mold r d spending to suit their own preferences from these results we make implications for both research on determinants of r d spending and managerial practice

strategy research governance and competence perspectives business strategy is a complex subject and is usefully examined from several perspectives this paper applies the lenses of governance and competence to the study of strategy both the governance and the competence perspectives have had the benefit of distinguished antecedents they have also had to deal with tautological reputations i begin with the governance perspective with emphasis on the six key moves through which it has been operationalized i then examine the competence perspective in these same six respects governance challenges the competence perspective to apply itself more assiduously to operationalization including the need to choose and give definition to one or more units of analysis of which the routine is a promising candidate the research challenges posed by competence to which governance can and should respond include dynamic transaction costs learning and the need to push beyond generic governance to address strategy issues faced by particular firms with their distinctive strengths and disabilities a lively research future for these two perspectives individually and in combination is projected copyright 1999 john wiley sons ltd business strategy is an expansive enterprise not only do all of the functional areas in the business school relate but strategy is by nature interdisciplinary all of the social sciences especially economics and organization theory plus contract law are implicated indeed in the high technology arena where some of the most difficult strategy issues reside engineering and the law on intellectual property rights also have a bearing of the various approaches to the study of strategy this paper focuses on the governance and competence perspectives both perspectives combine economic reasoning with organization theory as between these two the governance

the founder s self assessed competence and venture performance abstract a large body of recent research seeks to understand organizational founding and the performance of emerging businesses although much of this research has focused on the characteristics of the business founder there is only mixed support for relationships between founders characteristics and venture performance begley and boyd 1987 gartner 1988 low and macmillan 1988 sexton and bowman 1984 this study is based on research that identifies the entrepreneurial managerial and technical functional functions as three roles that founders must competently enact in order to be successful hofer and sandberg 1987 mintzberg and waters 1982 pavett and lau 1983 schein 1987 effective performance in the entrepreneurial role requires the founder to have the ability to recognize business opportunities and the drive to see firm creation through to fruition hofer and sandberg 1987 timmons et al 1987 effective execution of the managerial role requires conceptual interpersonal and political competence pavett and lau 1983 to be competent in the technical functional role founders must be able to use the tools or procedures required in their specialized field pavett and lau 1983 to measure the competencies necessary for effectiveness in the entrepreneurial managerial and technical functional roles we developed a questionnaire to allow founders to provide self evaluations of their competencies the results provide strong evidence for the reliability of measurement and the validity of the constructs the relationships revealed in this study suggest some preliminary recommendations for potential entrepreneurs career counselors and educators the number of businesses previously initiated and the years spent as an owner manager do not appear to be strongly related to the performance of the venture however the most successful entrepreneurs are strongly convinced of their ability to recognize business opportunity they believe that they have the drive to see the venture through to fruition and report that they subjugate outside interests to the demands of their businesses thus although self assessed proficiency in the entrepreneurial function does not appear to be contingent on the length of previous experience as a founder it does appear to be a necessary component in the development of high performance companies founders of the most successful firms also gave themselves high ratings on the abilities associated with effective performance in the managerial role they had high self evaluation scores on the items measuring organizational and interpersonal skills competence in the managerial role appears to be enhanced by business education and the years of general managerial experience the founders of highly successful firms also evaluated their technical skills highly they believed they were experts in their fields and could use the specialized tools and procedures to produce high quality products and services thus the results indicate that the most successful founders those whose firms show higher levels of growth and earnings rate themselves as competent in the entrepreneurial managerial and technical functional roles they see themselves as competent generalists and in a result that is most gratifying for those in higher education it appears that a business education and experience in general managerial positions lays the ground work for a successful entrepreneurial career

the effects of absorptive and joint learning on the instability of international joint ventures in emerging economies the objective of this study is to advance a theoretical framework pertaining to how interpartner learning in international joint ventures ijv may affect ijv instability in emerging economies the proposed framework expands the interpartner learning theory of ijv instability in the current literature which is focused on absorptive learning of ijv partners by incorporating ijv partners joint learning using longitudinal dyadic data from ijvs in china we found that local and foreign ijv parties absorptive learning capacity decreases one party s dependence on the other while joint learning capacity in ijv increases both parties dependence on each other in addition an ijv partner s absorptive learning capacity positively moderates the effect of joint learning capacity on its dependence on another partner these findings lend support to the expanded interpartner learning perspective of ijv instability and have important theoretical and managerial implications for ijvs in emerging economies the results underscore the importance of the ijv actively developing organizational rules procedures and structures to create and embed new knowledge in order to maintain the stability of the ijv finally we found that ijv partners dependence asymmetry increases ijv instability whereas their total dependence decreases ijv instability

is tourism firm competitiveness driven by different internal or external specific factors new empirical evidence from spain abstract the quest to understand the multilevel antecedents of competitiveness has led to a separation of approaches on one side of the question are the environment theories that analyze the structural characteristics of the general and competitive environment on the other side are the resource based view and its extensions that highlight firm specific resources and capabilities as the main basis of firms competitiveness however in recent years the nature of competition and shifting economic conditions have given rise to new theoretical approaches that complement the assumptions underlying both environmental and firm theories specifically this study contributes by examining the regional environment effect the district effect and the strategic group effect through a study of 364 spanish tourism firms this research explores the relative importance of distinct external forces such as the general environment or country effect the regional effect the competitive environment or industry effect the district effect and internal factors such as the firm s tangible resources capabilities and strategy selection the results demonstrate that firms capabilities are more important than environment effects and tangible resources

unpacking the uncertainty construct implications for entrepreneurial action abstract uncertainty is central to entrepreneurship however robust and generalizable findings that explain the conditions in which uncertainty may impede or promote entrepreneurial action remain elusive we operationalize uncertainty as a multi dimensional construct composed of state effect and response types of uncertainty milliken 1987 to investigate the relationship between uncertainty and entrepreneurial action we decompose more than 2800 exploitation decision policies nested within a sample of new product decision makers working in entrepreneurial software firms we focus on the primary decision maker s willingness to exploit a given opportunity in the face of varying combinations and manifestations of uncertainty and find that the type of uncertainty experienced influences the willingness to engage in entrepreneurial action differently further we find that differences in how each type of uncertainty is manifested in the environment the scale of exploitation i e large vs small and the entrepreneur s expertise serve to moderate the relationship between uncertainty and action in counter intuitive ways we discuss the implications for both theory and practice

markets vs management what drives profitability this study addresses the issue of the relative degree of variance in roa accounted for by industry corporate and sbu effects while controlling for the business cycle and the interaction between the business cycle and industry two key articles schmalensee 1985 and rumelt 1991 are discussed in detail research results on a recent data base compustat using variance components analysis varcomp are presented that not only confirm most of the rumelt 1991 findings but also suggest the existence of a corporate effect heretofore undetected

technology shocks and monetary policy assessing the fed s performance abstract the purpose of the present paper is twofold first we characterize the fed s systematic response to technology shocks and its implications for u s output hours and inflation second we evaluate the extent to which those responses can be accounted for by a simple monetary policy rule including the optimal one in the context of a standard business cycle model with sticky prices our main results can be described as follows first we detect significant differences across periods in the response of the economy as well as the fed s to a technology shock second the fed s response to a technology shock in the volcker greenspan period is consistent with an optimal monetary policy rule third in the pre volcker period the fed s policy tended to overstabilize output at the cost of generating excessive inflation volatility our evidence reinforces recent results in the literature suggesting an improvement in the fed s performance

internet start ups access to the bank loan market evidence from italy the analysis of the bank sector s ability to efficiently fuel the birth of new italian business ventures in internet related services is studied in particular through the specification and the estimate of a series of econometric models this paper aims at investigating which characteristics of a large sample of internet start ups and their relative founders facilitate access to the loan market more precisely the role played by founders human capital as a possible significant signal used by banks to evaluate investment projects is addressed estimation results suggest that highly qualified human resources possessed by internet founders do not represent an important driver for gaining access to bank credit and they do not affect the amount of the incurred debt

doing more with less innovation input and output in family firms family firms are often portrayed as an important yet conservative form of organization that is reluctant to invest in innovation however simultaneously evidence has shown that family firms are flourishing and in fact constitute many of the world s most innovative firms our study contributes to disentangling this puzzling effect we argue that family firms owing to the family s high level of control over the firm wealth concentration and importance of nonfinancial goals invest less in innovation but have an increased conversion rate of innovation input into output and ultimately a higher innovation output than nonfamily firms empirical evidence from a meta analysis based on 108 primary studies from 42 countries supports our hypotheses we further argue and empirically show that the observed effects are even stronger when the ceo of the family firm is a later generation family member however when the ceo of the family firm is the firm s founder innovation input is higher and contrary to our initial expectations innovation output is lower than that in other firms we further show that the family firm innovation input output relationships depend on country level factors namely the level of minority shareholder protection and the education level of the workforce in the country

market attractiveness resource based capabilities venture strategies and venture performance abstract this research seeks to identify variables that should be related to venture performance it is hypothesized that both market attractiveness and resource based capabilities are directly related to new venture performance in addition specific resource based capabilities are hypothesized to be directly related to the competitive strategies chosen by a firm finally the fit between strategies and resource based capabilities is hypothesized to be related to venture performance the sample consisted of all manufacturing businesses sic codes 20 39 started or reorganized in the corporate form between 1980 and 1991 in nine counties in northwestern pennsylvania as identified by a major marketing research service of the 800 companies surveyed completed questionnaires were returned for 155 representing a 19 response rate the 155 responding companies had a median age of 5 years with a median of 15 employees the major products of companies in the sample included flour lumber household and office furniture plastic containers tools and dies ready mixed concrete pipe fittings measuring devices paint and varnish machine tools electroplate carbon and graphite composite products plastic laminated products circuit boards electronic components and parts for internal combustion engines in general the results confirm the validity of the measures of environmental and organizational characteristics as we have adapted them for new ventures as hypothesized perceived market attractiveness and the overall abundance of resource based capabilities were significantly related to venture performance also in two of three cases the evidence suggests that specific resource based capabilities are related to the firm s stated competitive strategies finally although the relationship between fit and performance is not supported in all cases the performance of the emerging manufacturing ventures included in this sample appears to be enhanced when resource based capabilities are supportive of a cost leadership strategy and when firms seeking to differentiate based on product and service quality have the resource based capabilities to support that strategy the results of this emerging research stream will make an important contribution to our understanding of the factors that impact firm performance for scholars the results provide additional information needed to develop comprehensive new venture performance models a clear understanding of the factors that have a strong influence on venture performance will enable practitioners to better identify viable business opportunities and academicians to provide potential business founders with tools to help them recognize opportunity in addition the identification of appropriate levels of abstraction will provide building blocks for future research that seeks to integrate environmental and firm level constructs

top management s attention to discontinuous technological change corporate venture capital as an alert mechanism technological discontinuities pose serious challenges to top managers attention these discontinuities which often occur at the fringes of an industry are usually driven by innovative and often venture capital backed start ups creating new products and transforming existing industries in ways that are difficult for incumbent managers to understand against the backdrop of their existing cognitive schemata however failing to appreciate and embrace successful technological discontinuities might endanger incumbents very existence extending the attention based view we explore whether and how interorganizational relationships guide top managers attention either to or away from technological discontinuities we propose that homophilous relationships e g alliances with industry peers should exhibit a negative relationship with incumbents timely attention to technological discontinuities whereas heterophilous relationships e g with venture capitalists as a result of coinvestments should exhibit a positive relationship furthermore we hypothesize that the status of the partners strengthens the effect of homophilous and heterophilous relationships with the timely attention of top managers to technological discontinuities based on a longitudinal study of the incumbents in four information and communications technology industry sectors we find that heterophilous ties through corporate venture capital cvc coinvesting with high status venture capital firms exhibit a strong positive relationship with timely attention cvc when it connects senior management to high status venture capitalists through coinvestments has a special role in directing top managers attention to technological discontinuities and ensuing business opportunities implications for the understanding of the role of interorganizational ties as structural determinants of top managers attention are discussed

cognition capabilities and incentives assessing firm response to the fiber optic revolution this study examines how ceo cognition organizational capabilities and organizational incentives interacted to shape firm strategy during the fiber optic revolution i tested for these factors as

leviathan as an inventor an extended agency model of state owned versus private firm invention in emerging and developed economies we examine the relative merits of state soe and private poe ownership on firm invention output in emerging as well as developed economies firm soe affords a vehicle by which governments throughout the world encourage risky investment in new technological paths yet from a traditional agency theoretical standpoint soes are plagued by low powered incentives and dysfunctional involvement e g wasteful budgets and political meddling which reduces soe performance relative to poes to examine this paradox we build an extended agency model which rather than overlooking agency cost drivers entertains a more balanced view in which these so called agency liabilities in fact benefit soes particularly in the sphere of inventions we argue that given relatively higher levels of managerial autonomy soes may outperform poes in some types of inventive output we further propose that key boundary conditions operate to modify this base effect in that contexts lacking political constraints a condition found in most emerging economies increase the risk of political meddling reducing managerial autonomy so that any soe inventive advantages wane significantly we also hypothesize that this negative effect of weak institutions is attenuated in high invention productivity sectors empirically we track the frequency pioneerism and impact of patent inventions of 521 soes and matched poes for 16 years across 43 countries and 22 industries we find empirical support for our hypotheses based on a robust set of fixed effects regression analyses aided by a battery of checks to assess self selection and omitted variable bias

thar she blows can bubbles be rekindled with experienced subjects we report 28 new experiment sessions consisting of up to three experience levels to examine the robustness of learning and error elimination among participants in a laboratory asset market and its effect on price bubbles our answer to the title question is yes we impose a large increase in liquidity and dividend uncertainty to shock the environment of experienced subjects who have converged to equilibrium and this treatment rekindles a bubble however in replications of that same challenging environment across three experience levels we discover that the environment yields a rare residual tendency to bubble even in the third experience session therefore a caveat must be placed on the effect of twice experienced subjects in asset markets in order for price bubbles to be extinguished the environment in which the participants engage in exchange must be stationary and bounded by a range of parameters experience including possible error elimination is not robust to major new environment changes in determining the characteristics of a price bubble jel c91 d83

capabilities structure agency and evolution this paper examines conceptual issues and reviews empirical results bearing on the relationship between research approaches emphasizing organizational capabilities and those based in transaction cost economics tce or in organizational economics more generally following a review of conceptual fundamentals what capability is and why organizations differ in capability it assesses recent progress toward an integration of the capabilities and transaction cost approaches primarily in the context of the analysis of vertical structure and related phenomena this review suggests that progress has been substantial and that the key elements of a promising dynamic synthesis have been identified the paper then considers issues that call for attention if further progress is to be achieved the first of these is the role of agency which must be seen in expansive terms relative to standard economic rationality if its evolutionary significance is to be fully appreciated the second is the role of structure or more specifically industry architecture which affects capability development by way of its effect on the feedback that firms receive after drawing on the recent financial crisis for an illustration of these ideas this paper considers the rise of interest in business models as a useful field of application and it concludes with a discussion of the role of organizational economics beyond tce we argue that whatever the theoretical perspective at the level of the firm analyses must reach beyond that level to grasp the important causal forces affecting capability development firm boundaries and structural features more generally