Latest Articles Include:
- Strategic Renewal of Organizations
- Organization Science 20(2):281-293 (2009)
Strategic renewal, although critical for the sustained success of organizations, has received relatively little attention as distinct from the more general phenomenon of strategic change. Like all strategic issues, strategic renewal presents both opportunities and challenges for organizations. In this article, we first define the term "strategic renewal" and elaborate on important characteristics of this phenomenon. We also bring to bear evidence that suggests that strategic renewal has a critical impact not only on individual firms and industries but also on entire economies. We then provide an in-depth example of a company that has successfully renewed itself more than once, namely, IBM. Finally, we examine several different avenues for strategic renewal, involving both content and process, and identify common themes among them.
- Selection Capability: How Capability Gaps and Internal Social Frictions Affect Internal and External Strategic Renewal
- Organization Science 20(2):294-312 (2009)
The dynamic capabilities literature suggests that firms need to use both internal development and external sourcing to thrive over time, but we have a limited understanding of the conditions that best suit different sourcing choices. This study examines how constraints that arise from firms' existing stocks of capabilities and from their internal social contexts shape their choices of capability-sourcing modes and, in turn, their ability to obtain new capabilities. Thus, the research focuses on an underemphasized form of dynamic capability: the ability to select appropriate modes of capability sourcing. We test the arguments with a survey and longitudinal survival study of the international telecommunications industry. We find intriguing variations in the way that firms' selection capability influences their ability to renew their capabilities and, ultimately, to survive.
- Integrating Acquired Capabilities: When Structural Integration Is (Un)necessary
- Organization Science 20(2):313-328 (2009)
Acquirers who buy small technology-based firms for their technological capabilities often discover that postmerger integration can destroy the very innovative capabilities that made the acquired organization attractive in the first place. Viewing structural integration as a mechanism to achieve coordination between acquirer and target organizations helps explain why structural integration may be necessary in technology acquisitions despite the costs of disruption this imposes, as well as the conditions under which it becomes less (or un-) necessary. We show that interdependence motivates structural integration but that preexisting common ground offers acquirers an alternate path to achieving coordination, which may be less disruptive than structural integration.
- Corporate Venture Capital as a Window on New Technologies: Implications for the Performance of Corporate Investors When Acquiring Startups
- Organization Science 20(2):329-351 (2009)
Gaining a "window" on new technologies is a prominent motive for corporate venture capital (CVC) investing. Recent studies suggest that information gained through CVC-related activities can improve the internal R&D productivity of established firms. This study investigates an alternative means by which information gained through CVC investing could improve firm performance--by increasing the returns to corporate investors when acquiring startups. We provide new insights based on an event study of the returns to 34 corporate investors from acquiring 242 technology startups. Consistent with predictions drawn from the absorptive capacity literature, we find that the effect of CVC investing on acquisition performance hinges critically on the strength of the acquirer's internal knowledge base: as CVC investments increase relative to an acquirer's total R&D expenditures, acquisition performance improves at a diminishing rate. We also find that firms consistently engaged in v! enture financing earn greater returns when acquiring startups than do firms with more sporadic patterns of investing, even controlling for firm profitability, size, and acquisition experience. These findings suggest that corporate investors systematically differ in their abilities to derive added benefits from external venturing as acquirers of entrepreneurial firms.
- Firm R&D Behavior and Evolving Technology in Established Industries
- Organization Science 20(2):352-367 (2009)
One of the key mechanisms of firms' strategic renewal is R&D, and a key driver of the intensity of R&D is industry context. A number of theories develop propositions linking industry factors to firm R&D behavior, but these theories lack consensus. To date, empirical tests have been unable to resolve the competing predictions because of lack of time-varying measures of technology. We create new measures for technology and then conduct a test of the competing theories. Our results indicate that the data best match a model of innovative behavior in which firms invest in R&D principally to regain eroded advantage rather than to pursue the new frontier.
- Innovation and Strategic Renewal in Mature Markets: A Study of the Tennis Racket Industry
- Organization Science 20(2):368-383 (2009)
This paper presents a study of successive new product introductions in the mature tennis racket industry. The inquiry examines novel design's important role in strategic renewal, under the assumption that innovation includes not only the development, production, and launch of new products, but also communication between firms and market. We explore this industry's transformation through the strategic actions of innovative firms and subsequent competitive contagion. A tennis racket innovation triggers competitors' imitative reactions and sways the market toward a new de facto standard when the new product launch includes marketing such as product endorsement by high-profile professional players and advertising. Our results indicate that innovators should actively manage various industry participants as an integral part of their strategic renewal efforts, especially when facing rivalry with "me-too" peers. We suggest the interface between firms and consumers as a next fo! cus for research on strategic renewal.
- Capabilities Unveiled: The Role of Ordinary Activities in the Evolution of Product Development Processes
- Organization Science 20(2):384-409 (2009)
In contrast to the prevailing interpretation of capabilities as collectives, this inductive study of product development in a leading design firm highlights the centrality of the myriad ordinary activities that may shape the evolution of capabilities. A detailed comparison of 90 diverse product development processes over a 15-year period shows, first, that mindful microactivities carried out by individuals in and around the organization and at all levels of the organizational hierarchy are central in shaping the content of the product development capability and its dynamic adaptation. Understanding organizational renewal and competitive advantage may hence require a partial shift in focus from capabilities as aggregate entities, to the practical realities of core organizational processes. Second, this more fine-grained perspective leads to a set of insights on how organizational renewal may be partially shaped by timely managerial interventions aimed at encoding succes! sful experiments into higher-level organizational capabilities. Third, higher-level capabilities resulting from the conversion of heterogeneous experiences display higher process homogeneity and a permanent increase in performance, because of stabilization of managerial attention. My findings contribute to unveiling the concept of capabilities, extending prior research on dynamic capabilities and organizational renewal and providing a lens for research on the microfoundations of capability evolution and organizational advantage.
- Dynamic Capabilities and the Role of Managers in Business Strategy and Economic Performance
- Organization Science 20(2):410-421 (2009)
This paper discusses some developments in the theory of the organizational capabilities of the business enterprise. Antecedents are recognized, and some promising new developments and areas for future research are identified. The role of managers in the economic system is highlighted and discussed within the context of economic and organizational research. Suggestions for future developments of dynamic capability research involve employment of evolutionary and behavioral theories.
- Renewal Through Reorganization: The Value of Inconsistencies Between Formal and Informal Organization
- Organization Science 20(2):422-440 (2009)
We develop a theoretical perspective on how inconsistencies between formal and informal organization arising from reorganization can help create ambidextrous organizations. We argue that under some conditions, the informal organization can compensate for the formal organization by motivating a distinct but valuable form of employee behavior that the formal organization does not emphasize, and vice versa--an effect we label compensatory fit. We illustrate the concept of compensatory fit by drawing on qualitative data from a reorganization at Cisco Systems. We also derive formal boundary conditions for compensatory fit using a simple game theoretic representation. We show that compensatory fit can only work when there is a powerful informal organization already in existence, and when the gains from ambidexterity are substantial. Further, depending on the strength of the informal organization, breakdown in the conditions necessary for compensatory fit may lead to performa! nce declines and further reorganizations.
- Technology, Identity, and Inertia Through the Lens of "The Digital Photography Company"
- Organization Science 20(2):441-460 (2009)
Organizations often experience difficulty when pursuing new technology. Large bodies of research have examined the behavioral, social, and cognitive forces that underlie this phenomenon; however, the role of an organization's identity remains relatively unexplored. Identity comprises insider and outsider perceptions of what is core about an organization. An identity has associated with it a set of norms that represent shared beliefs about legitimate behavior for an organization with that identity. In this paper, technologies that deviate from the expectations associated with an organization's identity are labeled identity-challenging technologies. Based on a comprehensive field-based case study of the entire life history of a company, identity-challenging technologies are found to be difficult to capitalize on for two reasons. First, identity serves as a filter, such that organizational members notice and interpret external stimuli in a manner consistent with the ident! ity. As a result, identity-challenging technological opportunities may be missed. Second, because identity becomes intertwined in the routines, procedures, and beliefs of both organizational and external constituents, explicit efforts to shift identity in order to accommodate identity-challenging technology are difficult. Given the disruptive nature of identity shifts, understanding whether technology is identity challenging is a critical consideration for managers pursuing new technology.
- Cognition and Renewal: Comparing CEO and Organizational Effects on Incumbent Adaptation to Technical Change
- Organization Science 20(2):461-477 (2009)
We investigate the conditions under which managerial cognition affects the timing of incumbent entry into a radical new technological market. We address this question using a longitudinal study of communications technology firms entering the fiber-optics product market. Using a hazard rate model, we investigate the relevance of cognition based on the direction of CEO attention. We find that attention toward the emerging technology and the affected industry is associated with faster entry, and attention to existing technologies is associated with slower progress. Second, we assess the extent to which the effect of cognition is dependent upon the levels of relevant organizational factors and find that CEO attention to the emerging technology may amplify the effects of industry orientation. Managerial cognition is important in understanding organizational outcomes, and considering both the direction of cognition and its interaction with organizational factors provides a m! ore nuanced view of entry behavior. These results contribute to the literatures on incumbent response to technical change and new product development by suggesting that context-specific managerial cognition has a separate and important influence on the degree and direction of strategic renewal. We argue that managerial cognition is therefore a dynamic managerial capability that can shape adaptation by established firms.
- About Authors
- Organization Science 20(2):478-480 (2009)
No abstract available.