You-Ta Chuang, David H. Weng, Chia-Hung Wu, K. Thomson
Past studies of multipoint competition have mainly focused on the effect of multipoint contact in product markets on firm competitive behaviors in those markets only. Our study advances this literature by examining how multipoint contact in product markets affects a firm’s expansion into a rival’s technological areas. We further investigate the factors that moderate the proposed effect. Our analyses suggest that the degree of multipoint contact between a firm and a rival in product markets has an inverted U-shaped relationship with the degree of the firm’s expansion into the rival’s technological areas (patent classes). Furthermore, the firm’s capacity (market share) and capability (status in terms of technological development) relative to the rival’s have different moderating effects on the relationship between multipoint contact in product markets and the firm’s expansion into the rival’s technological areas. Our findings contribute to the literatures on multipoint contact, competitive dynamics, and firm technology strategies.
{"title":"See You in Your Backyard: Multipoint Contact, Firm’s Capacity and Capability, and Technological Expansion","authors":"You-Ta Chuang, David H. Weng, Chia-Hung Wu, K. Thomson","doi":"10.1287/stsc.2022.0174","DOIUrl":"https://doi.org/10.1287/stsc.2022.0174","url":null,"abstract":"Past studies of multipoint competition have mainly focused on the effect of multipoint contact in product markets on firm competitive behaviors in those markets only. Our study advances this literature by examining how multipoint contact in product markets affects a firm’s expansion into a rival’s technological areas. We further investigate the factors that moderate the proposed effect. Our analyses suggest that the degree of multipoint contact between a firm and a rival in product markets has an inverted U-shaped relationship with the degree of the firm’s expansion into the rival’s technological areas (patent classes). Furthermore, the firm’s capacity (market share) and capability (status in terms of technological development) relative to the rival’s have different moderating effects on the relationship between multipoint contact in product markets and the firm’s expansion into the rival’s technological areas. Our findings contribute to the literatures on multipoint contact, competitive dynamics, and firm technology strategies.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42203793","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Establishing causality beyond association, influence, or correlation is key to informed managerial decisions and interventions. What-if questions such as “What will happen to firm performance if managers intervene by doing this?” and “What if managers had not done this?” can now be formulated and answered by using the tools of structural causal modeling (SCM). SCM tools contribute a systematic methodology for designing and evaluating managerial interventions. Powered by SCM, researchers can increase the precision in theorizing mechanisms and develop the research designs that facilitate causal identification. As a demonstration of how to apply SCM for advancing theory and research design in strategic management, we study why and how the effect of governance mode on firm performance is transmitted through a reduction in the deviation of managerial decision from theory-based prescription. For example, managers may switch to a governance mode that is consistent with the governance mode prescribed according to transaction cost economics (TCE). The insights arising from SCM inform whether switching governance mode for the purpose of aligning with TCE prescription will improve performance, and, if yes, by how much. Beyond TCE, we point to theory-based prescriptions in strategic management that could benefit from using SCM to probe what-if questions.
{"title":"Structural Causal Modeling of Managerial Interventions: What If Managers Had Not Intervened by Doing This?","authors":"Gwendolyn K. Lee, R. Bettis","doi":"10.1287/stsc.2022.0169","DOIUrl":"https://doi.org/10.1287/stsc.2022.0169","url":null,"abstract":"Establishing causality beyond association, influence, or correlation is key to informed managerial decisions and interventions. What-if questions such as “What will happen to firm performance if managers intervene by doing this?” and “What if managers had not done this?” can now be formulated and answered by using the tools of structural causal modeling (SCM). SCM tools contribute a systematic methodology for designing and evaluating managerial interventions. Powered by SCM, researchers can increase the precision in theorizing mechanisms and develop the research designs that facilitate causal identification. As a demonstration of how to apply SCM for advancing theory and research design in strategic management, we study why and how the effect of governance mode on firm performance is transmitted through a reduction in the deviation of managerial decision from theory-based prescription. For example, managers may switch to a governance mode that is consistent with the governance mode prescribed according to transaction cost economics (TCE). The insights arising from SCM inform whether switching governance mode for the purpose of aligning with TCE prescription will improve performance, and, if yes, by how much. Beyond TCE, we point to theory-based prescriptions in strategic management that could benefit from using SCM to probe what-if questions.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44363820","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ekaterina V. Karniouchina, Stephen J. Carson, W. L. Moore, Kumar R. Sarangee, Can Uslay
This study examines whether the benefits of diversification vary across different value chain activities. The returns to diversification in product development and distribution activities are analyzed using a framework grounded in the intraindustry diversification literature and the resource-based view (RBV) of the firm. The study uses data from cocreation arrangements in the motion picture industry in which value chain activities are nearly decomposable—that is, split across producers and distributors—as a natural field study. Results based on 779 movies linked to 57 different production studios and distributed via 30 unaffiliated distributors or vertically integrated distribution branches show that greater focus in film production has a positive effect on profitability, whereas the level of focus/diversification in distribution is unrelated to profitability. This result holds regardless of whether the two functions are carried out within an integrated organization or across independent firms. Moreover, there is significant heterogeneity in the extent to which production studios benefit from increased focus which is tied to the composition of their product portfolios.
{"title":"The Varying Returns to Diversification Along the Value Chain","authors":"Ekaterina V. Karniouchina, Stephen J. Carson, W. L. Moore, Kumar R. Sarangee, Can Uslay","doi":"10.1287/stsc.2022.0171","DOIUrl":"https://doi.org/10.1287/stsc.2022.0171","url":null,"abstract":"This study examines whether the benefits of diversification vary across different value chain activities. The returns to diversification in product development and distribution activities are analyzed using a framework grounded in the intraindustry diversification literature and the resource-based view (RBV) of the firm. The study uses data from cocreation arrangements in the motion picture industry in which value chain activities are nearly decomposable—that is, split across producers and distributors—as a natural field study. Results based on 779 movies linked to 57 different production studios and distributed via 30 unaffiliated distributors or vertically integrated distribution branches show that greater focus in film production has a positive effect on profitability, whereas the level of focus/diversification in distribution is unrelated to profitability. This result holds regardless of whether the two functions are carried out within an integrated organization or across independent firms. Moreover, there is significant heterogeneity in the extent to which production studios benefit from increased focus which is tied to the composition of their product portfolios.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-07-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48792841","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Pankaj Ghemawat’s Commitment and the New Stakeholder Theory","authors":"A. McGahan","doi":"10.1287/stsc.2022.0161","DOIUrl":"https://doi.org/10.1287/stsc.2022.0161","url":null,"abstract":"","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49381303","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Boards of Directors and Corporate Strategy: Some Reflections on Pankaj Ghemawat’s Contributions","authors":"Jordi Canals","doi":"10.1287/stsc.2022.0165","DOIUrl":"https://doi.org/10.1287/stsc.2022.0165","url":null,"abstract":"","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42012193","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Commitment and Competitive Advantage in a Digital World","authors":"B. Cassiman, J. Ricart, G. Valentini","doi":"10.1287/stsc.2022.0164","DOIUrl":"https://doi.org/10.1287/stsc.2022.0164","url":null,"abstract":"","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43713296","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Pankaj Ghemawat’s Commitment and the Job of the Strategist","authors":"Giovanni Gavetti, J. Porac","doi":"10.1287/stsc.2022.0168","DOIUrl":"https://doi.org/10.1287/stsc.2022.0168","url":null,"abstract":"","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49273934","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Professor Ghemawat argues that commitment is key to gaining a competitive advantage, but can leave a firm vulnerable to rapid and disruptive changes. He and other leading strategy scholars explore the intricacies of developing and sustaining a dynamic competitive advantage. Yet, economists argues that most firms eventually fail to maintain competitiveness. Functionally efficient financial markets, by capitalizing innovative entrants and culling uncompetitive firms, sustain economy-level prosperity. Ghemawat (1991) highlights this tension: firm-level competitiveness can give investors high returns for years, while returns regress towards the mean. Applying this insight to well-documented historical episodes of rapid innovation in various industries, we show that leading U.S. firms in 1920s acquired durable competitive advantages, as did many in the 1960s, but that later entrants often felled early leaders in the 1990s IT boom, consistent with intensified creative destruction. Still, even these shorter-term winners paid well above average cumulative returns. Strategy research that could predict the durability of leading firms’ competitive advantages through an era of rapid innovation would have tremendous value to practitioners in finance.
{"title":"Investors Meet Dynamic Strategy","authors":"R. Morck, B. Yeung, Luoxing Zhang","doi":"10.1287/stsc.2022.0163","DOIUrl":"https://doi.org/10.1287/stsc.2022.0163","url":null,"abstract":"Professor Ghemawat argues that commitment is key to gaining a competitive advantage, but can leave a firm vulnerable to rapid and disruptive changes. He and other leading strategy scholars explore the intricacies of developing and sustaining a dynamic competitive advantage. Yet, economists argues that most firms eventually fail to maintain competitiveness. Functionally efficient financial markets, by capitalizing innovative entrants and culling uncompetitive firms, sustain economy-level prosperity. Ghemawat (1991) highlights this tension: firm-level competitiveness can give investors high returns for years, while returns regress towards the mean. Applying this insight to well-documented historical episodes of rapid innovation in various industries, we show that leading U.S. firms in 1920s acquired durable competitive advantages, as did many in the 1960s, but that later entrants often felled early leaders in the 1990s IT boom, consistent with intensified creative destruction. Still, even these shorter-term winners paid well above average cumulative returns. Strategy research that could predict the durability of leading firms’ competitive advantages through an era of rapid innovation would have tremendous value to practitioners in finance.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43777119","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Strategy Through a Ghemawat Lens: Honoring and Building on the Contributions of Pankaj Ghemawat","authors":"B. Cassiman, Tarun Khanna, Daniel A. Levinthal","doi":"10.1287/stsc.2022.0166","DOIUrl":"https://doi.org/10.1287/stsc.2022.0166","url":null,"abstract":"","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49525989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ghemawat’s work in international business strategy demonstrates that Multinational Enterprises (MNEs) create value both by overcoming and by exploiting the price differences that exist at country borders. This paper evaluates the investment strategies of MNEs with subsidiaries in the 10 Central and Eastern Europe countries (CEEs) that had joined the European Union by 2007 through the lens of this insight. The data show that subsidiaries’ activities vary with the parent MNE’s home location. The CEE subsidiaries of Western European MNEs are more likely to be producing output that can be traded across country borders, particularly when their output differs from the main product of their parent company. The findings suggest Western European MNEs tend to invest in CEE countries to fragment value chains across the region, exploiting factor cost arbitrage opportunity in a semiglobalized world.
{"title":"Local Value Chains in European MNEs","authors":"Catherine Thomas","doi":"10.1287/stsc.2022.0167","DOIUrl":"https://doi.org/10.1287/stsc.2022.0167","url":null,"abstract":"Ghemawat’s work in international business strategy demonstrates that Multinational Enterprises (MNEs) create value both by overcoming and by exploiting the price differences that exist at country borders. This paper evaluates the investment strategies of MNEs with subsidiaries in the 10 Central and Eastern Europe countries (CEEs) that had joined the European Union by 2007 through the lens of this insight. The data show that subsidiaries’ activities vary with the parent MNE’s home location. The CEE subsidiaries of Western European MNEs are more likely to be producing output that can be traded across country borders, particularly when their output differs from the main product of their parent company. The findings suggest Western European MNEs tend to invest in CEE countries to fragment value chains across the region, exploiting factor cost arbitrage opportunity in a semiglobalized world.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47488469","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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