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Article
Publication date: 22 August 2022

Ihssan Samara and Ibrahim Yousef

This study aims to investigate the joint effect of foreign directors (FDs) and firm performance on the corporate strategic change.

Abstract

Purpose

This study aims to investigate the joint effect of foreign directors (FDs) and firm performance on the corporate strategic change.

Design/methodology/approach

A theoretical framework linking foreign directors, firm performance and strategic change is proposed and tested. This study uses a sample of longitudinal data from 958 US listed firms over the period 2010–2018. The basic model of study first tests whether there is a direct relationship between FDs and level of strategic change. It then incorporates firm performance as a moderating variable, testing its effect on the relationship between foreign director and strategic change.

Findings

Consistent with the study’s expectations, the empirical findings indicate that FDs rich in appropriate experience are associated with superior strategic change, measured both in terms of variation in firm strategy over time and deviation from industry norms. The findings confirm that FDs are a salient driver of strategic change. The strength of the effect, however, depends on the firm performance.

Research limitations/implications

This paper has implications for effective global leadership development based on international appointments. First, directors can benefit from being assigned to work in foreign countries so that they are exposed to a wide range of experiences and can learn to overcome culture shock. Second, posting directors to foreign countries can improve their international knowledge and enhance various competencies related to creativity, leadership and problem-solving. By demonstrating that the board’s characteristics can play a role in corporate strategy development, the current study thus has implications for both study and practice with regard to board composition. The number of seats on any given board is finite, and each individual director is thus expected to not only monitor top management but also to apply their knowledge and relevant experience in service to the company’s ambitions. Except in cases where high firm performance leads to strategic persistence, the results suggest that greater levels of FDs correlate positively with strategic change.

Practical implications

The practical implications of this paper pertain to director recruitment and selection. First, the findings echo support for the inclusion of members with greater levels of international experience on boards and top management teams. It seems that, despite the importance of this characteristic, directors at US companies often lack substantial experience abroad (Carpenter and Westphal, 2001). A possible reason for this could be that internationally experienced employees otherwise lack the social capital necessary for promotion to directorships because of time spent stationed away from the firm’s headquarters. It is thus essential for companies to create networking opportunities for directors assigned to foreign offices.

Originality/value

Although previous research has provided some insight into how chief executive officer international experience can manifest in strategic change, this understanding remains far from complete for the members of board of directors. Furthermore, the topic of firm performance as a potential moderating influence remains underexplored. The aim of this study, therefore, is to assess the impact of FDs among directors on corporate strategic change while taking into account the possible confounding role of firm performance in this relationship.

Details

Review of International Business and Strategy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2059-6014

Keywords

Article
Publication date: 28 January 2020

Daniel Wolf and Brooke Felger

The purpose of this paper is to examine the nature of change readiness and resolve as a principal feature of strategic teams. Change leadership and management in the…

Abstract

Purpose

The purpose of this paper is to examine the nature of change readiness and resolve as a principal feature of strategic teams. Change leadership and management in the context of strategy, talent and culture provide the organization with the capacity for navigating change at the process, category and business levels. This paper provides a practical look at the cultivation of strategic teams as agents for making change strategy happen.

Design/methodology/approach

The authors have examined a series of variables that inform the strategic agenda, talent blocks and beams, and the cultural agenda for organizations large and small. They have built a general framework for mapping and engaging what serves as a strong mind-set of change readiness and resolve, along with specific team-building elements for learning and development.

Findings

Strategic teams that are part of the structure and culture of the organization serve as development grounds for change competence and capacity at the group and individual levels. Further, because there are several types of strategic teams with diverse roles and functions, the change readiness and resolve mechanics are subject to experimentation and adaptation. This results in a strong mind-set for change leadership and management and the ability to deploy effectively across a range of situations, needs and challenges.

Originality/value

This work offers a practical set of views on change and adaptive capacity, and the development pathways that afford an organization the ongoing preparation of individuals and groups for changes in process and policy, programs and categories and business models through the most demanding transformation journeys.

Details

Strategic HR Review, vol. 19 no. 1
Type: Research Article
ISSN: 1475-4398

Keywords

Book part
Publication date: 19 July 2005

Bert Flier, Frans A.J. van den Bosch, Henk W. Volberda and Charles Baden-Fuller

How do large well-established firms renew themselves in an increasing turbulent environment? Is there a generic pattern of change or is each change journey rather…

Abstract

How do large well-established firms renew themselves in an increasing turbulent environment? Is there a generic pattern of change or is each change journey rather idiosyncratic? We posed five questions about the nature of renewal patterns. First, how do firms combine external versus internal initiatives in a trajectory of strategic renewal? Second, how does the balance of competence building and competence leveraging evolve in a trajectory of strategic renewal? Third, what are the sequences of action in a strategic renewal process? Fourth, do firms differ regarding speed of their renewal processes? Finally, do different strategic renewal trajectories give rise to different or similar outcomes? Using a simple framework and new metrics we described and analyzed the strategic renewal journeys of the five largest financial service firms in the Netherlands during the period 1990–1997. We found equifinality in viable trajectories of strategic renewal. In four out of five firms, they result in similar outcomes due to mimetic behavior. Nonetheless, one firm showed deviant strategic behavior.

Details

Competence Perspectives on Resources, Stakeholders and Renewal
Type: Book
ISBN: 978-0-76231-170-5

Book part
Publication date: 23 December 2005

Jerayr Haleblian and Nandini Rajagopalan

In our framework, we examine the influence of both reactive and proactive cognitive variables on strategic change. Reactive sources that impact strategic change are…

Abstract

In our framework, we examine the influence of both reactive and proactive cognitive variables on strategic change. Reactive sources that impact strategic change are perceptions and attributions – cognitions that determine the “what” and the “why” of performance. Perceptions are first-order cognitions that assess what is the performance feedback: positive or negative? After performance feedback is perceived, attributions are second-order cognitions that attempt to establish why the performance is positive or negative.

Details

Strategy Process
Type: Book
ISBN: 978-1-84950-340-2

Book part
Publication date: 24 October 2015

Amonrat Thoumrungroje

Owing to the inconclusive results of prior studies on the strategic change–firm performance relationship, this paper extends the marketing strategy literature by…

Abstract

Purpose

Owing to the inconclusive results of prior studies on the strategic change–firm performance relationship, this paper extends the marketing strategy literature by postulating an “inverted U-shaped” relationship and the moderating roles of “organizational learning” (OGL) and “strategic flexibility” (STF).

Methodology/approach

A self-administered survey was employed to collect data from different strategic business units of 550 firms operating in Thailand. The data collection yielded a response rate of 17.27%. Confirmatory factor analysis was used to validate the scales, and path analysis was employed to test the hypotheses in this study.

Findings

Although no significant curvilinear relationship was found, the directions of the path coefficients are consistent with the hypothesis. Both OGL and STF serve as significant moderators in the marketing strategic change (MSC)–business performance relationships. While STF strengthens the relationship, the generative OGL tends to weaken it.

Practical implications

Managers need to understand the type of learning that fits different types of strategic changes in order to enhance business performance. Generative OGL may seem harmful for changes that are less proactive. Furthermore, firms should incorporate flexibility in managing political, economic, and financial risks in their strategies by emphasizing investments and cost sharing, flexible human capital allocation, and spontaneous and impromptu actions.

Originality/value

This study extends international marketing strategy literature by empirically testing the hypotheses in an emerging Asian economy. The research proposes a nonlinear relationship between MSC and business performance as well as introduces the moderating roles of OGL and STF.

Details

International Marketing in the Fast Changing World
Type: Book
ISBN: 978-1-78560-233-7

Keywords

Book part
Publication date: 17 September 2012

Ron Sanchez

In this paper we extend established concepts of product and process architectures to propose a concept of organization architecture that defines the essential features of…

Abstract

In this paper we extend established concepts of product and process architectures to propose a concept of organization architecture that defines the essential features of the system design of an organization needed to achieve an effective strategic alignment of an organization with its competitive and/or cooperative environment. Adopting a work process view of organization, we draw on concepts of product and process architectures to elaborate fundamental elements in the design of an organization architecture. We suggest that organization architectures may be designed to support four basic types of change in organization resources, capabilities, and coordination, which we characterize as convergence, reconfiguration, absorptive integration, and architectural transformation. We also suggest the kinds of strategic flexibilities that an organization must have to create and implement each type of organization architecture. We identify four basic types of strategic environments and consider the kinds of changes in resources, capabilities, and coordination that need to be designed into an organization's architecture to maintain effective strategic alignment with its type of environment. We then propose a typology that identifies four basic ways in which organizational architectures may be effectively aligned with strategic environments. Extending the reasoning underlying the proposed alignments of organization architectures with strategic environments, we propose a strategic principle of architectural isomorphism, which holds that maintaining effective strategic alignment of an organization with its environment requires achieving isomorphism across a firm's product, process, and organization architectures. We conclude by considering some implications of the analyses undertaken here for competence theory, general and mid-range strategy theory, and organization theory.

Details

A Focused Issue on Competence Perspectives on New Industry Dynamics
Type: Book
ISBN: 978-1-78052-882-3

Keywords

Book part
Publication date: 27 October 2014

Alain Guiette and Koen Vandenbempt

This paper seeks to develop a mid-range theory of how change recipient sensemaking processes affect the realization of strategic flexibility during simultaneous change in…

Abstract

Purpose

This paper seeks to develop a mid-range theory of how change recipient sensemaking processes affect the realization of strategic flexibility during simultaneous change in professional service firms.

Methodology/approach

The research presented is based on an exploratory embedded case study adopting a qualitative interpretive methodology, conducted at a professional service organization. A sensemaking lens was adopted in order to study organizational change processes. Data was collected through semi-structured open-ended in-depth interviews, and analyzed using first and second order analysis, inspired by the methodology used by Corley and Gioia (2004).

Findings

We identified four determinants of change recipient sensemaking: professional identification, dominant organizational discourse, equivocality of expectations, and cross-understanding between thought worlds. Case findings indicate that cognitive and affective dimensions of change recipient sensemaking are strongly interwoven in their effect on realizing strategic flexibility.

Research implications

We contribute to the competence-based strategic management literature by introducing the concept of change recipient sensemaking in understanding the realization of strategic flexibility; by identifying four major determinants in a context of simultaneous change in a professional service organization; and by highlighting the interwoven and mutually reinforcing cognitive and affective dimensions of professional’s process of constructing meaning.

Details

A Focused Issue on Building New Competences in Dynamic Environments
Type: Book
ISBN: 978-1-78441-274-6

Keywords

Book part
Publication date: 8 April 2010

Raffaele Fiorentino

Although strategic changes and management control systems are relevant, there is the need for an evolution in the tools of performance measurement, analysis and control to…

Abstract

Although strategic changes and management control systems are relevant, there is the need for an evolution in the tools of performance measurement, analysis and control to understand the ability of the firms, at first, to face environmental variability and, then, to achieve objectives through the strategic change management. This study was dedicated to the issue of what measures are relevant during the strategic change process. It also proposes a multidimensional control system for strategic changes. The framework is based on: the literature review and analysis about strategic change, change management and performance measurement; a two-stage empirical research. Overall, the proposed control system can help firms in managing strategic changes.

Details

Performance Measurement and Management Control: Innovative Concepts and Practices
Type: Book
ISBN: 978-1-84950-725-7

Book part
Publication date: 25 July 2008

Julie M. Hite

Dyadic multi-dimensionality informs the variation that exists within and between network ties and suggests that ties are not all the same and not all equally strategic

Abstract

Dyadic multi-dimensionality informs the variation that exists within and between network ties and suggests that ties are not all the same and not all equally strategic. This chapter presents a model of dyadic evolution grounded in dyadic multi-dimensionality and framed within actor-level, dyadic-level, endogenous, and exogenous contexts. These contexts generate both strategic catalysts that motivate network action and bounded agency that may constrain such network action. Assuming the need to navigate within bounded agency, the model highlights three strategic processes that demonstrate how dyadic multi-dimensionality underlies the evolution of strategic network ties.

Details

Network Strategy
Type: Book
ISBN: 978-0-7623-1442-3

Book part
Publication date: 11 February 2019

Julian Hess and Tessa Flatten

The flexibility of corporations to adapt their strategy to a fast-changing environment can be a major source for competitive advantage and survival. While research mainly…

Abstract

The flexibility of corporations to adapt their strategy to a fast-changing environment can be a major source for competitive advantage and survival. While research mainly focuses on outcomes of this ability, little is known of how to foster it in organizations. Thus, by building on the upper echelons theory, the authors assume that the strategic flexibility of the company depends on the willingness and permission to change of the chief executive officer (CEO). To support the hypotheses, the authors apply the dimensions of commitment to change and work autonomy to the CEO and test for moderation under conditions of technological turbulence. The authors’ results based on medium-sized organizations in Germany show significant effects of both dimensions on strategic flexibility. In particular, under conditions of high technological turbulence, commitment based on loyalty and not on pressure together with autonomy on control and evaluation criteria is best suited to increase strategic flexibility. These insights extend the research literature and provide guidelines for CEOs and their supervisors alike.

Details

Strategic Responsiveness and Adaptive Organizations: New Research Frontiers in International Strategic Management
Type: Book
ISBN: 978-1-78973-011-1

Keywords

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