The ecology of management concepts

How does the popularity of a concept depend on how it contrasts with and complements existing concepts? We argue that being similar to existing concepts, being located in a popular domain, and being combined with similar existing concepts are important for gaining attention early on but less important and even negative for sustaining popularity. To examine this question, we focus on the rise and fall of management concepts. We analyze data on the rise and fall of keywords in the Harvard Business Review between 1922 and 2010. Multiple tests confirm our hypotheses. The implication is that lessons learned from studies of popular concepts can be misleading as guides for how to make novel concepts popular

The Economics of Strategic Opportunity

As emphasized by Barney (1986), any explanation of superior profitability must account for why the resources supporting such profitability could have been acquired for a price below their rent generating capacity. Building upon the literature in economics on coordination failures and incomplete markets, we suggest a framework for analyzing such strategic factor market inefficiencies. Our point of departure is that a strategic opportunity exists whenever prices fail to reflect the value of a resource's best use. This paper examines the challenges of imputing a resource's value in the absence of explicit price guidance and suggests the likely characteristics of strategic opportunities. Our framework also suggests that the discovery of strategic opportunity is often a matter of serendipity and access to relevant idiosyncratic resources. This latter observation provides prescriptive advice, although the analysis also explains why more detailed guidance has to be firm specific.

When more selection is worse

We demonstrate a paradox of selection: the average level of skill among the survivors of selection may initially increase but eventually decrease. This result occurs in a simple model in which performance is not frequency dependent, there are no delayed effects, and skill is unrelated to risk-taking. The performance of an agent in any given period equals a skill component plus a noise term. We show that the average skill of survivors eventually decreases when the noise terms in consecutive periods are dependent and drawn from a distribution with a “long” tail—a sub-class of heavy-tailed distributions. This result occurs because only agents with extremely high level of performance survive many periods, and extreme performance is not diagnostic of high skill when the noise term is drawn from a long-tailed distribution

Strategizing with biases : engineering choice contexts for better decisions using the Mindspace approach

We introduce strategists to the Mindspace framework and explore its applications in strategic contexts. This framework consists of nine effective behavioral interventions which are grounded in the public policy applications, and focuses on how changing the context can be more effective than attempts to de-bias decision-makers. Behavioral changes are likely when we follow rather than fight human nature. Better decisions can be achieved by engineering choice contexts to “engage a bias” to overcome a more damaging bias. We illustrate how to engineer strategic contexts through two case studies and outline directions and challenges when applying Mindspace to strategic decisions

The Effects of Culture and Structure on Strategic Flexibility During Business Model Innovation

This study uses responses from 107 multinational firms to reveal CEO perceptions of the drivers of strategic flexibility during business model innovation. While the positive effect of creative culture is confirmed, partner reliance reduces strategic flexibility during business model innovation. Further, structural change is disaggregated into efforts that either focus managerial attention on core activities or reconfigure existing activities. CEOs perceive that structural flexibility requires structural simplification while retaining control of non-core functions. We find that the relative magnitude of business model innovation effort moderates the effect of reconfiguration on strategic flexibility. The implications for theories of organizational design and dynamic capabilities are discussed

Absolute, average-based, and rank-based aspirations

Research SummaryA key strategic challenge is balancing exploration and exploitation. When individuals' exploration activity is guided by problemistic search, should managers encourage high aspirations? Past work has shown that optimal aspiration (the aspiration level that leads to the highest level of performance in the long run) is lower in more turbulent environments. This past work assumes that aspirations are specified as absolute performance, but search is often triggered by performance shortfalls relative to others. Using a simple and analytically tractable model, we show that in such cases, the optimal aspiration may instead increase with turbulence (with rank-based aspirations) or stay constant (with average-based aspirations). Our analyses have interesting implications for target setting and for understanding how aspiration specification impacts exploration in organizations.Managerial SummaryPerformance targets (aspirations) drive improvement efforts, and thus it is important to understand optimal target levels. Although optimal targets are well known to depend on the uncertainty of the environment, our paper shows that this relationship depends on whether the targets are set in absolute, average-based, or rank-based terms. In more uncertain environments, performance targets specified in absolute terms should be lower, while those specified in rank-based terms (such as aiming to outperform a certain number of competitors) should be higher. The optimal performance target specified relative to average outcomes is always the same: do better than average. We show that these contrasting results are due to the spillover effects of one's own improvements on others. Our paper highlights the implications for how targets should be set in different contexts

From customer-oriented strategy to perceived organizational financial performance: the role of human resource management and customer-linking capability

Drawing on the organizational capabilities literature, we developed and tested a model of how supportive human resource management (HRM) improved firms’ financial performance perceived by marketing managers through fostering the implementation of a customer-oriented strategy. Customer-linking capability, which is the capability in managing close customer relationships, indicated the implementation of the customer-oriented strategy. Data collected from two emerging economies–China and Hungary–established that supportive HRM partially mediated the relationship between customer-oriented strategy and customer-linking capability. Customer-linking capability further explained how supportive HRM contributed to perceived financial performance. This study explicates the implication of customer-oriented strategy for HRM and reveals the importance of HRM in strategy implementation. It also sheds some light on the “black-box” between HRM and performance. While making important contributions to the field of strategy, HRM and marketing, this study also offers useful practical implications

Exploring and yet failing less: learning from past and current exploration in R&D

Exploration is both an important part of a firm’s innovation strategy and an activity that involves a high degree of uncertainty. This article investigates a duality in the exploratory component of R&D activity with regard to innovation failure: while exploration is likely to increase firms’ exposure to failure, it might also provide learning opportunities to reduce failure. Our study contributes to the innovation management and organizational learning literatures by demonstrating the value of exploratory R&D for enabling two types of learning mechanisms. The first, experience-based learning, is based on the learning opportunities derived from accumulated experience in exploratory R&D: it involves improvements to procedures associated with experimentation and provides guidance for current exploration and to navigate the search space. The second, inferential-based learning, is based on the learning opportunities derived from current exploratory R&D efforts, which are associated with improved interpretation of ill-defined problems and timely responses to unstructured information. We draw on a longitudinal data set of 2226 Spanish manufacturing companies and show that, when past experience is associated with current exploration, innovation failure in the conception phase is reduced. We also find an inverted U-shaped relation between current exploratory R&D and innovation failure, in both the conception and implementation phases of innovation activities, showing that increasing levels of investment in current exploration activities attenuate the initial positive association between exploratory R&D and failure

Predicting new venture survival and growth: does the fog lift?

This paper investigates whether new venture performance becomes easier to predict as the venture ages: does the fog lift? To address this question we primarily draw upon a theoretical framework, initially formulated in a managerial context by Levinthal (Adm Sci Q 36(3):397–420, 1991) that sees new venture sales as a random walk but survival being determined by the stock of available resources (proxied by size). We derive theoretical predictions that are tested with a 10-year cohort of 6579 UK new ventures in the UK. We observe that our ability to predict firm growth deteriorates in the years after entry—in terms of the selection environment, the ‘fog’ seems to thicken. However, our survival predictions improve with time—implying that the ‘fog’ does lift