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The main purpose of this paper is to introduce a comprehensive model explaining what affects the scope of the firm and also to find out its impact on firm performance.
Abstract
Purpose
The main purpose of this paper is to introduce a comprehensive model explaining what affects the scope of the firm and also to find out its impact on firm performance.
Design/methodology/approach
This paper is based on an empirical analysis of a sample of 312 hardware manufacturing companies in Taiwan.
Findings
The research findings indicate that capability exploitation and upgrading will exert a positive influence on corporate diversification. In addition, corporate diversification will exhibit a curvilinear effect on firm performance.
Practical implications
Under the logic of capability‐based growth, managers should manage portfolios of capability upgrading and capability exploitation; and then, managers have to conduct econometric analyses to find out a firm's optimal level of corporate diversification for performance maximization.
Originality/value
This study attempts to propose a dynamic capabilities perspective, which suggests that the successful growth of a firm hinges on a strategic logic of capability‐based growth management containing both capability exploitation and capability upgrading, for exploring the antecedents and consequences of corporate diversification.
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Yi‐Chia Chiu and Yi‐Ching Liaw
The purpose of this paper is to attempt to reconcile previous views of the relationship between organizational slack and performance by examining the influences of heterogeneous…
Abstract
Purpose
The purpose of this paper is to attempt to reconcile previous views of the relationship between organizational slack and performance by examining the influences of heterogeneous corporate strategy and different slack resources. Differences in performance resulting from variations in slack can also be moderated by strategy.
Design/methodology/approach
The proposed model was tested by examining operating and financial information from 529 Taiwan high‐tech companies during the period 1997‐2005. Owing to the study, data were both cross‐sectional (across firms) and time series (over years), a panel data approach were applied for hypothesis testing.
Findings
The results broadly demonstrate that relationships differ based on strategy and organizational slack. Additionally, this study is the first to empirically identify a U‐shaped relationship between slack and performance, indicating that, in certain circumstances, either more or less slack is better for performance.
Originality/value
The results support a dynamic perspective regarding the slack‐performance relationship was proposed for different strategy and different types of slack resources. Moreover, the authors argue that not only resource heterogeneity, but also firm strategic orientation, should be considered when performing change activities. Restated, the authors believe the best interest for a firm aspiring to conduct organizational change behaviors is to maintain the “fitness” among the environment, strategy orientation, and slack resources will induce higher performance. This study, thus demonstrates how organizational change behaviors are influenced by slack resources and strategy heterogeneity.
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The article examines the firm from the perspective of transaction costs and property rights analysis. It is concluded that in the absence of transaction costs, indivisibilities…
Abstract
The article examines the firm from the perspective of transaction costs and property rights analysis. It is concluded that in the absence of transaction costs, indivisibilities and diseconomies can be dealt with through market transactions, and size of firm is independent of technological considerations. In such circumstances, size of firm is indeterminate in neoclassical theory irrespective of initial assumptions regarding market structure. It is argued that Neoclassical theory is self‐contradictory in its assumptions and that an institutionalist approach to the theory of the firm is required to resolve problems of this nature.
Ohad Ref and Itzhak Gnizy
The relationship between multinationality and firm performance is a central issue in the international marketing and business literatures. Predominantly, this body of research has…
Abstract
Purpose
The relationship between multinationality and firm performance is a central issue in the international marketing and business literatures. Predominantly, this body of research has tried to identify a single, generalized pattern for this relationship. However, despite the vast number of studies, results have been characterized as mixed or inconsistent. In this study, we take a fresh look at this relationship.
Design/methodology/approach
We focus on a key inducement to expand firm multinationality – the search for a more efficient way to exploit firm resources, and also on a specific operationalization of multinationality – firm geographic scope. We use a formal analytical model analyzing the trade-off between benefits and costs arising from expanding firm geographic scope and emphasizing the role of lumpy costs emanating from resource indivisibility.
Findings
The relationship between geographic scope and performance cannot be confined to a single pattern, but instead, may have any one of a set of patterns: negatively monotonic shape, inverted U-shape, S-shape, M-shape or, multiple-wave inverted U-shape.
Practical implications
The current study offers managers some guidelines to identify which of the above patterns fits their firm's specific case, and to identify the optimal level of geographic scope for their firm.
Originality/value
We conclude that the search for a single, generalized pattern for multinationality-performance is largely futile, whereas the focus on specific inducements and operationalizations for multinationality allows us to explain when and why specific patterns are more likely to occur.
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Purpose – To define the links between cognition and entrepreneurial behavior by highlighting the problem of complexity in the difficult trade-off between discovery of new…
Abstract
Purpose – To define the links between cognition and entrepreneurial behavior by highlighting the problem of complexity in the difficult trade-off between discovery of new opportunities and exploitation of current opportunities.
Methodology/approach – To interrelate Austrian tools (Hayek, Kirzner, Lachmann) with lessons from experimental economics.
Research limitations and implications – This contribution enters the world of entrepreneurship to show where the mental rigidities opposing discoveries lie.
Originality/value of paper – To use experimental economics to widen our understanding of entrepreneurship and invite the Austrian scholars to imagine other protocols that might deepen the analysis.
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Peter G. Klein and Lasse B. Lien
Ronald Coase's landmark 1937 article, “The Nature of the Firm,” framed the study of organizational economics for decades. Coase asked three fundamental questions: Why do firms…
Abstract
Ronald Coase's landmark 1937 article, “The Nature of the Firm,” framed the study of organizational economics for decades. Coase asked three fundamental questions: Why do firms exist? What determines their boundaries? How should firms be organized internally? To answer the first question, Coase famously appealed to “the costs of using the price mechanism,” what we now call transaction costs or contracting costs, a concept that blossomed in the 1970s and 1980s into an elaborate theory of why firms exist (Alchian & Demsetz, 1972; Williamson, 1975, 1979, 1985; Klein, Crawford, & Alchian, 1978; Grossman & Hart, 1986). The second question has generated a huge literature in industrial economics, strategy, corporate finance, and organization theory. “Why,” as Coase (1937, pp. 393–394) put it, “does the entrepreneur not organize one less transaction or one more?” In Williamson's (1996, p. 150) words, “Why can't a large firm do everything that a collection of small firms can do and more?” As Coase recognized in 1937, the transaction-cost advantages of internal organization are not unlimited, and firms have a finite “optimum” size and shape. Describing these limits in detail has proved challenging, however.1
Lasse B. Lien and Peter G. Klein
While the strategic management literature suggests that related diversification is superior to unrelated diversification, there is little evidence that acquirers benefit from…
Abstract
While the strategic management literature suggests that related diversification is superior to unrelated diversification, there is little evidence that acquirers benefit from pursuing related targets. We argue that the empirical literature is plagued by poor measures of relatedness. Moreover, many empirical studies do not control adequately for the characteristics of the market for corporate control. We argue that not only value creation, but also value appropriation, depend on the relatedness of acquirer and target. Using an improved measure of relatedness, we provide empirical evidence that acquirer returns are positively and significantly correlated with relatedness.
Mainstream economics views the workplace from the perspective ofproperty rights, maximum efficiency, and profit maximization. Economicresources, including human beings, are…
Abstract
Mainstream economics views the workplace from the perspective of property rights, maximum efficiency, and profit maximization. Economic resources, including human beings, are represented as instrumentalities. Social economics affirms the problem of unmet human material need and the inadequacy of the “invisible hand” solution but does not provide a single paradigm as to how the workplace is reconstructed to meet that need. The key to workplace reconstruction is to shift attention from property rights and personal rights to human material need by recognizing that rights derive from need and that rights are means to the end of meeting need. Describes the seven workplace regimes in which human material need is more salient than property rights, personal rights or organizational types such as sole proprietorship or corporation, and the characteristics of the industrial commons, drawing on Ronald Oakerson′s framework for analysing the natural resource commons.
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This paper introduces a hitherto unpublished 1970 paper written by Lauchlin Currie (1902–1993) on Paul Rosenstein Rodan’s famous 1943 paper on the “Big Push” which led to the…
Abstract
This paper introduces a hitherto unpublished 1970 paper written by Lauchlin Currie (1902–1993) on Paul Rosenstein Rodan’s famous 1943 paper on the “Big Push” which led to the balanced-unbalanced growth debate to which Albert Hirschman (1915–2012) was an important contributor. Both Currie and Hirschman had been key economic advisers to the Colombian government, and their respective views on development planning are contrasted. In particular, it is shown how Currie’s 1970 paper illuminates the theory behind the 1971–1974 national plan for Colombia that he prepared and helped deliver; and how the related institutional innovations have had an enduring impact on Colombia’s recent economic history.
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Nils J. Peters, Joerg S. Hofstetter and Volker H. Hoffmann
The purpose of this paper is to address the implementation of proactive interorganizational sustainable supply chain strategies by empirically exploring the relationship between…
Abstract
Purpose
The purpose of this paper is to address the implementation of proactive interorganizational sustainable supply chain strategies by empirically exploring the relationship between key (inter‐)organizational resources of the initiating company and the establishment of widely accepted voluntary sustainability initiatives.
Design/methodology/approach
The study is built on comparative case studies as well as literature on institutional entrepreneurship and the resource‐based view.
Findings
The authors identify capabilities that enable the creation and establishment of company‐driven voluntary sustainability initiatives – namely external stakeholder integration, cross‐functional integration, the management of loosely coupled business units, supply chain implementation, process improvement and cultural framing.
Originality/value
With this study, the authors introduce institutional entrepreneurship theory to supply chain management literature and show that institutional entrepreneurship theory may contribute to the question of how organizations implement their interorganizational sustainable supply chain strategies. Specifically, the study derives propositions for key resources enabling the establishment of voluntary sustainability initiatives widely accepted by participants as well as initiative‐external stakeholders.
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