Research summary: We study the processes through which multinational corporations (MNCs) identify and make use of external sources of knowledge. Based on a seven-year longitudinal study of one MNC's ...overseas scouting unit, we show how a simple one-directional "channelling" process gradually gave way to three higher value-added processes, labelled "translating," "matchmaking," and "transforming." Building on these insights, we develop an integrative framework, defining the conditions under which each of the four processes is likely to transpire, and showing how the stock of social capital held by the scouting unit allows it to perform increasingly high value-added activities over time. Implications for the MNC, external knowledge sourcing, and boundary-spanning literatures are discussed. Managerial summary: Over the years, many multinational corporations (MNCs) have created overseas "scouting" units to tap into new ideas and opportunities in leading-edge markets, but with mixed outcomes. In this study, we describe the development of a European telecom firm's scouting unit in Silicon Valley during the 2000s, focusing on the specific approaches used by the scouting managers to build effective connections between Silicon Valley start-ups and the firm's business units back in Europe. We identify four distinct approaches for different types of opportunities, and we observe a clear sequencing of effort over time as the scouting managers built the necessary capabilities and credibility.
Most ambidexterity theories deal with managing exploration–exploitation trade-offs among business units within firms or between alliance partners, but these theories remain yet to be extended to the ...buyer-supplier relationship level. Through an in-depth case study of the Toyota Motor Corporation, we illustrate how buying firms can simultaneously achieve short-term and long-term benefits with their long-standing suppliers. Taking two inherently different activities as a starting point—mass production with its focus on exploitation and product development with its focus on exploration—we show that the deliberate use of ambiguity and explicitness can function as a countervailing mechanism against overemphasizing either exploration or exploitation. We also show that structural separation and structural integration are two organizational systems that can be used by buying firms to help suppliers realize ambidexterity in their operations. Finally, we argue that “requisite security” can help to motivate suppliers to address the paradoxical tensions deliberately created by buying firms.
Building on decades of research on the proactivity of individual performers, this study integrates research on goal setting and trust in leadership to examine manager proactivity and business unit ...sales performance in one of the largest sales organizations in the United States. Results of a moderated-mediation model suggest that proactive senior managers establish more challenging goals for their business units (N = 50), which in turn are associated with higher sales performance. We further found that employees' trust in the manager is a critical contingency variable that facilitates the relationship between challenging sales goals and subsequent sales performance. This research contributes to growing literatures on trust in leadership and proactivity by studying their joint effects at a district-unit level of analysis while identifying district managers' tendency to set challenging goals as a process variable that helps translate their proactivity into the collective performance of their units.
This article distinguishes between a firm’s corporate business model and business models of its various business units. Our aim is to provide new insights into how executives’ cognitive processes can ...influence corporate business model transformation decisions. We focus especially on top managers’ recognition of inter-organizational cognitions, that is, such cognitions about the firm and its businesses that are shared by the top managers and stakeholders of the firm in the industries and communities where it operates. We support our theoretical work with an historical case study of Nokia’s corporate business model transformation between 1990 and 1996, which proved highly successful. We find that its transformation involved using the current reputational rankings of Nokia’s businesses as selection criteria for which businesses to retain and which ones to divest – as well as the elimination of businesses which embodied business model elements which were attributed as factors in past business failures.
Drawing on theories of behavioral decision making and situational strength, we developed and tested a multilevel model that explains how the performance outcomes of personal initiative tendency ...depend on the extent of alignment between organizational control mechanisms and proactive individuals' risk propensities. Results from a sample of 383 middle managers operating in 34 business units of a large multinational corporation indicated that risk propensity weakens the positive relationship between personal initiative tendency and job performance. This negative moderating effect was further amplified when middle managers receive high job autonomy but was attenuated in business units with a strong performance management context. We discuss the implications of these findings for research on proactivity, risk taking, and organizational control.
New drug introductions are key to growth for pharmaceutical firms. However, not all innovations are the same and they may have differential effects that vary by firm size. We use quarterly sales data ...on UK pharmaceuticals in a dynamic panel model to estimate the impact of product (new drugs) and marketing (additional pack varieties) innovations within a therapeutic class on a firm’s business unit growth. We find that product innovations lead to substantial growth in both the short and long run, whereas a new pack variety only produces short-term effects. The strategies are substitutes but the marginal effects are larger for product innovations relative to additional packs, and the effects are larger for smaller business units. Nonetheless, pack introductions offer a viable short-term growth strategy, especially for small- and medium-sized businesses.
Research summary
This article investigates how diversified firms reallocate internal non‐scale free resources when one of their product business units (BUs) experiences increased exposure to ...international competition driven by a sharp decrease in trade tariffs. On average, firms tend to fight, by reallocating resources toward the BU affected by the trade shock and away from other BUs within the same firm. Two variables moderate this first‐order effect with opposite signs. The level of sunk costs of the assets allocated to the BU affected by the shock is a positive moderator of resource reallocation to it. The presence of technological synergies between the BU affected and the rest of BUs instead moderates the relationship negatively. This negative moderation seems to only take place when competition increases the value of technology as a competitive resource.
Managerial summary
An important question in the strategic decision‐making process of diversified firms is how to react to competitive threats that affect one business unit but not the others. Should managers allocate more resources to the affected business or should they instead reduce their commitment and use the same resources in the remaining operating sectors? In this article, we examine firms’ reallocation decisions following increases in foreign competition due to import tariff cuts. Our results show that firms tend to allocate more resources to the business affected by the tariff cut and less to the businesses unaffected. Furthermore, we find evidence that this behavior is positively associated with performance.
Regulation of the Minister of Villages, Development of Disadvantaged Areas, and Transmigration of the Republic of Indonesia Number 4/2015 states that Village-Owned Enterprises (BUMDes) are business ...entities whose entire or most of the capital is owned by the village through direct participation from separated village assets to manage assets, services, and other businesses for as much as possible the welfare of the village community. The research aims to assess the performance of BUMDes in Lumajang Regency. The focus of research on BUMDes Arya Wiraraja is on a financial perspective, a customer perspective, internal business process, a growth and learning perspective, and inhibiting and supporting factors for BUMDes development. The research data consisted of primary data and secondary data. The data analysis used descriptive analysis, financial performance analysis, and Force Field Analysis (FFA). The results from the financial perspective fall into the reasonably good category, because the level of acceptance, net income, ROI, ROE, and NPM has fluctuated. The customer perspective is in a good category because customers are satisfied with BUMDes services, but employee productivity is in the good enough categories, because employee performance fluctuates. The supporting factors for BUMDes consist of various business units such as the trade system unit, savings and loan units, service units, livestock farming business units, and tourism units. In contrast, the inhibiting factor for BUMDes is the formation of Standard Operating Procedures (SOP) in each business unit. The conclusion of the study shows that the overall performance of BUMDes is quite good.
Questions about whether candidate perceptions of recruitment and selection practices “matter” have been raised for decades. This study tackles such questions by developing a new theoretical framework ...to understand the business unit-level emergence and consequences of the collective candidate experience, defined as “Applicants’ aggregate overall cognitive and affective perceptions based on multiple interactions with a business unit over the course of the entire recruitment and selection process.” A theoretical framework is introduced that integrates signaling theory with research from marketing, recruitment, and applicant reactions to propose that the collective candidate experience construct emerges from interactions in unit-specific social, structural, and physical contexts. The construct is further expected to influence new hire outcomes and business unit outcomes. We then test the theorized consequences of the collective candidate experience in a multi-unit quick service restaurant organization. The collective candidate experience is positively associated with collective new hire engagement, which in turn is associated with collective new hire turnover intentions, collective turnover, and collective customer satisfaction. Additional supporting evidence and preliminary measures are provided in online appendices. Overall, this study complements and extends prior research and directs new research by offering a theoretical framework.
Intergroup knowledge integration, that is the acquisition, processing, and utilization of knowledge across group boundaries, is a critical source of competitive advantage in modern organizations. ...Prior research has highlighted the important role of boundary spanning knowledge exchange for intergroup knowledge integration, neglecting, however, the question of what makes individual boundary spanners more effective in fostering intergroup knowledge integration. Integrating boundary spanning literature with theories of group information processing, we hypothesize that the effect of individual boundary spanning ties on intergroup knowledge integration depends on the boundary spanners’ levels of metaknowledge, i.e., knowledge of who knows what in their respective groups, and proactivity. We find general support for our predictions in a study of 457 engineering consultants nested in 22 interdependent business units within an organization. Additional criterion analyses confirm the material importance of intergroup knowledge integration for group performance. Our findings have implications for literatures on intergroup effectiveness, team cognition, and proactivity.
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