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Article
Publication date: 26 October 2012

Caroline Hussler, Julien Pénin, Michael Dietrich and Thierry Burger‐Helmchen

The purpose of this paper is to argue for the need to reconcile managerial and economic approaches of the firm. Strategic management seems to be the perfect playground for this.

Abstract

Purpose

The purpose of this paper is to argue for the need to reconcile managerial and economic approaches of the firm. Strategic management seems to be the perfect playground for this.

Design/methodology/approach

The paper shows many divergences between the economic and managerial approach of the firm but also highlights many topics where both approaches come in handy.

Findings

The authors underline the topics and theories in strategic management with the greatest benefits of mixing economics and management can be expected and they echo the papers in this special issue.

Practical implications

The paper comes as a warning for those using only managerial perspective without listening to the caveats and ideas put forward by the economic approach of the firm.

Originality/value

The paper offers an agenda of how economics and management could be reunited, and shows the relevance of doing so to both theory and practice.

Details

Journal of Strategy and Management, vol. 5 no. 4
Type: Research Article
ISSN: 1755-425X

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Article
Publication date: 1 June 1993

Michael Dietrich

Examines the implications for the economics of the firm of thedevelopment of total quality control and just‐in‐time management whichare becoming increasingly important for…

Abstract

Examines the implications for the economics of the firm of the development of total quality control and just‐in‐time management which are becoming increasingly important for intrafirm resource allocation. Shows the Alchian and Demsetz and transaction cost perspectives on the firm and work organization to be theories of a particular management style rather than a general economics of the firm. Develops an alternative and more general framework on the basis of the firm as a strategic framework, defined in terms of the knowledge base of an organization, rather than a single strategic orientation. This framework constrains and directs organizationally lower level proactive activity. Emphasis is placed on the importance of participative management, in core firms, and an economic rather than legal definition of the firm.

Details

Journal of Economic Studies, vol. 20 no. 6
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 10 August 2018

Nicolai J. Foss and Peter G. Klein

We argue that the stakeholder and CSR literature can benefit from more systematic thinking about ownership. We discuss general notions of ownership in the economics and…

Abstract

We argue that the stakeholder and CSR literature can benefit from more systematic thinking about ownership. We discuss general notions of ownership in the economics and legal literature and the entrepreneurial notion of ownership we have developed in prior work. On this basis, we argue that stakeholder theory needs to deal more systematically with ownership as an economic function that can be exercised with greater or lesser ability, may be complementary to other economic functions, and works better when assigned to homogeneous groups. Some stakeholder groups are likely to lack what we call “ownership competence,” even if they have made relationship-specific investments, in part because of a diversity of interests. We also discuss CSR from the perspective of ownership and support Friedman’s original position, but with a twist. The point of Friedman’s paper is not that firms “should” maximize profits, but that managerial pursuit of “socially responsible” activities in a discretionary way imposes costs on owners. We suggest this problem is exacerbated with entrepreneurial managers who can devise new ways to prop up their self-interested actions with new creative CSR initiatives.

Details

Sustainability, Stakeholder Governance, and Corporate Social Responsibility
Type: Book
ISBN: 978-1-78756-316-2

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Book part
Publication date: 6 August 2018

Christian Belzil, Michael Bognanno and François Poinas

This chapter estimates a dynamic reduced-form model of intra-firm promotions using an employer–employee panel of over 300 of the largest corporations in the United States…

Abstract

This chapter estimates a dynamic reduced-form model of intra-firm promotions using an employer–employee panel of over 300 of the largest corporations in the United States in the period from 1981 to 1988. The estimation conditions on unobserved individual heterogeneity and allows for both an endogenous initial condition and sample attrition linked to individual heterogeneity in demonstrating the relative importance of variables that influence promotion. The role of the executive’s functional area in promotion is considered along with the existence and source of promotion fast tracks. We find that while the principal determinant of promotions is unobserved individual heterogeneity, functional area has a high explanatory power, resulting in promotion probabilities that differ by functional area for executives at the same reporting level and firm. No evidence is found that an executive’s recent speed of advancement in pay grade has a positive causal impact on in-sample promotions after conditioning on the executive’s career speed of advancement, except for the lowest level executives the data. Fast tracks appear to largely result from heterogeneity in persistent individual characteristics, not from an inherent benefit in recent advancement itself.

Details

Transitions through the Labor Market
Type: Book
ISBN: 978-1-78756-462-6

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Article
Publication date: 6 February 2017

Yu Gao, Yao Li, Maoyong Cheng and Genfu Feng

This paper aims to investigate the curvilinear effects of firms’ market learning on radical innovation and the moderation effects of the focal firms’ horizontal ties and…

Abstract

Purpose

This paper aims to investigate the curvilinear effects of firms’ market learning on radical innovation and the moderation effects of the focal firms’ horizontal ties and vertical ties.

Design/methodology/approach

This study uses regression analysis with the survey data from 303 Chinese firms.

Findings

Explorative/exploitative market learning has an inverted U-shaped/U-shaped effect on radical innovation. The effects of explorative market learning on radical innovation increase when firms have strong horizontal ties, but decrease when firms have strong vertical ties. The opposite is true for the effects of exploitative market learning.

Research limitations/implications

This study uses unilateral data to examine the moderation effects of the focal firms’ vertical and horizontal ties on the market learning-radical innovation links. Future research that conducted in the dyadic-paradigm would be preferable to test the generalizability of this research and address the potential changes.

Originality/value

The value of the current study centers on its integrated framework that incorporates organizational learning theory and the social network perspective to account for radical innovation. The integrative view helps us to interpret the curvilinear effects of market learning on radical innovation and outlines the moderation mechanisms of horizontal ties and vertical ties.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 1
Type: Research Article
ISSN: 0885-8624

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Book part
Publication date: 22 September 2009

Nils Stieglitz and Nicolai J. Foss

Entrepreneurs in a competitive economy face three fundamental problems. They need to search for and discover a business opportunity (Kirzner, 1973), evaluate it (Knight

Abstract

Entrepreneurs in a competitive economy face three fundamental problems. They need to search for and discover a business opportunity (Kirzner, 1973), evaluate it (Knight, 1921), and then seize the opportunity to reap entrepreneurial profits (Schumpeter, 1911) (Langlois, 2007). The problem that we address is how the ability to exploit business opportunities is influenced by entrepreneurial search and the economic organization of entrepreneurship (Arrow, 1962; Lippman & Rumelt, 2003b; Aghion et al., 2005; Foss, Foss, & Klein, 2007). In many cases, the discovery for a new business opportunity needs to be motivated by expected gains, since the search and evaluation of business opportunities is a costly, resource-consuming process (Denrell, Fang, & Winter, 2003; Nickerson & Zenger, 2004; Foss & Klein, 2005; Teece, 2007; Foss & Foss, 2008).1 We show the critical role of expectations for understanding of the economic organization of entrepreneurship, and argue that transaction cost economics, with its insistence on bounded rationality, but farsighted contracting offers useful insights and presents rich opportunities for further theoretical and empirical research (cf. also Furubotn, 2002).

Details

Economic Institutions of Strategy
Type: Book
ISBN: 978-1-84855-487-0

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Book part
Publication date: 19 August 2015

Diego Stea, Stefan Linder and Nicolai J. Foss†

The attention-based view (ABV) of the firm highlights the role of decision makers’ attention in firm behavior. The ABV vastly improves our understanding of decision…

Abstract

The attention-based view (ABV) of the firm highlights the role of decision makers’ attention in firm behavior. The ABV vastly improves our understanding of decision makers’ focus of attention; how that focus is situated in an organization’s procedural and communication channels; and how the distribution of the focus of attention among decision makers participating in those procedural and communication channels affects their understanding of a situation, their motivation to act, and, ultimately, their behavior. Significant progress has been made in recent years in refining and extending the ABV. However, the role of individual differences in the capacity to read other people’s desires, intentions, knowledge, and beliefs – that is, the theory of mind (ToM) – has remained on the sidelines. The ToM is a natural complement to the ABV. In this study, we explore how the ToM allows for an understanding of the advantage that organizations have over markets within the ABV.

Details

Cognition and Strategy
Type: Book
ISBN: 978-1-78441-946-2

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Abstract

Details

The Theory and Practice of Directors’ Remuneration
Type: Book
ISBN: 978-1-78560-683-0

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Article
Publication date: 10 April 2007

John McGee and Howard Thomas

The purpose of this paper is to demonstrate how to incorporate knowledge concepts into analytical models of strategy formulation and the strategic theory of the firm.

Abstract

Purpose

The purpose of this paper is to demonstrate how to incorporate knowledge concepts into analytical models of strategy formulation and the strategic theory of the firm.

Design/methodology/approach

The paper examines four different perspectives of the elusive concept of “knowledge”, namely, “knowledge as assets”, “knowledge through innovation”, “knowledge embedded in routines” and “knowledge through learning”. The study attempts to specify and interrelate the concepts of a knowledge‐based strategic theory of the firm.

Findings

The “knowledge web” is seen as a partial framework, capturing from a strategic perspective how both specific and organisational knowledge build the competences necessary for the value‐creating activities of the firm.

Practical implications

The paper provides frameworks for understanding how knowledge can reinforce the strategic core competences of the firm.

Originality/value

The paper addresses knowledge as a key element in the development of an enhanced strategic theory of the firm, incorporating the knowledge‐based viewpoint.

Details

Management Decision, vol. 45 no. 3
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 6 March 2017

Grazia Ietto-Gillies

This paper aims to analyse the organizational and geographical (by nation-states) boundaries of the firm and their impact on labour and to develop a theoretical framework…

Abstract

Purpose

This paper aims to analyse the organizational and geographical (by nation-states) boundaries of the firm and their impact on labour and to develop a theoretical framework in which firms’ boundaries are analysed from the point of view of labour as a main stakeholder in the firm.

Design/methodology/approach

The paper considers the boundaries in terms of: perspectives (legal/proprietary, responsibility and control); stakeholders (shareholders and managers as well as labour, governments and suppliers) and dimensions (organization of production, geographical/by nation-state and sectoral). The paper analyses various organizational forms of production in terms of control (over labour process and brand), responsibility for labour employed across the value chain and labour bargaining power. The firm is seen in the context of labour as main stakeholder and of strategic control versus the property rights view of the firm. The paper contains references to some real-life cases which support the arguments developed at the theoretical level.

Findings

In terms of organizational boundaries, the paper analyses hybrid forms of firm organization and their implications for the position of labour. In the context of geographical boundaries, conclusions are drawn on the impact of transnational corporations (TNCs)’ direct activities on labour. Changes in organizational and geographical boundaries are seen as strategic moves that lead to the fragmentation of labour and to the weakening of its bargaining position. There is an analysis of the role of nation-state regulatory regimes in creating opportunities for TNCs’ advantages towards labour. The basic pillars of this theoretical approach are emphasis on labour as a main stakeholder as well as one of the main actors towards whom firms develop strategies and who, in turn, develops countervailing strategies; and the assignation of responsibility for labour over that part of the value chain – which could be the whole of it – over which the firm exercises strategic control.

Research limitations/implications

More case study work would further support the arguments in the paper and lead to refinements of the theory.

Social implications

For labour, cross-country strategies are developed, and it is argued that the principal firm should take responsibility for the labour force on the basis of the “control” perspective rather than the “legal/proprietary” one. At the macro level, it could be argued for policies that lead to more homogeneous regulatory regimes across countries and in particular within the EU. There are implications for the strategies of trade unions within and across countries. There is also a call for overcoming academic disciplinary boundaries in research specifically those between economics, business strategy and sociology of labour and industrial relations.

Originality/value

The work puts labour at the forefront of analysis in the boundaries of the firm. It develops a theoretical framework for this analysis and for its policy implications including policies by trade unions.

Details

critical perspectives on international business, vol. 13 no. 1
Type: Research Article
ISSN: 1742-2043

Keywords

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