The impact of the Levers of Control (LOC) framework on the accounting literature is undeniably large. The framework, however, has also been criticized for being vague and ambiguous. One of the ...central, but unclear, concepts in the LOC framework is the notion of balance. That is, the framework holds that control systems must be in balance in order to manage competing tensions such as that found between predictable goal achievement on the one hand and innovation on the other. The goal of our study is to examine the concept of balance and to provide empirically informed insights on different balancing arrangements that exist in a cross-section of business units. We develop a survey and administer it in person to a convenience sample of business unit managers. Using responses from 217 managers, cluster analysis reveals a stable solution with four distinct patterns of balance, which we interpret using configurational thinking. We label the clusters strategic vigilance, strategic exploitation, strategic responsiveness, and strategic stability respectively, and examine organizational and contextual factors that validate and help explain the observed patterns of balance. By identifying empirical manifestations of balance, our study sheds light on one of the key concepts in the LOC framework, providing an empirically informed starting point for future theoretical analysis and interpretation.
This paper examines how structural recombination of business units within a firm impacts subsequent firm innovation. We argue that structural recombination is both a means for firms to unlock the ...potential for intraorganizational knowledge recombination and a source of disruption to the firm’s existing knowledge resources, so that the overall effect of structural recombination on innovation will depend on the balance between these two effects. Structural recombination will have a positive effect on innovation where there are substantial intraorganizational knowledge synergies, where path dependence is low, and where knowledge resources are of high quality, limiting disruption. Results from a 20-year panel of 71 firms operating in the U.S. medical sector confirm these arguments. The study thus provides a contingent view of the effects of structural recombination on firm innovation while highlighting the role of structural recombination in realizing untapped knowledge synergies within the firm.
Many organisations view talent management (TM) as perhaps the most critical challenge of this century. Consequently, it would seem vital that multinational corporations essayed to employ talent pools ...(TPs) to identify and manage talent more strategically. This paper examines critically the use of TPs as a core TM practice in multinational corporations. Through a multilevel case study of three organisations, we draw on 73 in-depth interviews with human resources and operational leaders at corporate and business unit levels to ascertain how TPs contribute to TM effectiveness. Findings show that TPs can provide a platform for the development of a strong internal talent pipeline if an appropriate TM framework is in place. The results imply that TPs need to be actively managed and underpinned by a rigorous and strategic decision-making process to establish the necessary depth and breadth of talent within TPs, which, in turn, will ensure the overall effectiveness of the TM process. This research responds to the call for much needed empirical evidence on TP practices and suggests a more nuanced view on TP management. Furthermore, this paper offers a model that conceptualises a systematic approach to TP management.
The value of flexibility in multi‐business firms Dickler, Teresa A.; Folta, Timothy B.; Giarratana, Marco S. ...
Strategic management journal,
December 2022, Letnik:
43, Številka:
12
Journal Article
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Research Summary
Whether diversified firms have advantages over their single‐business counterparts is the focus of much research in strategic management. Indeed, there is sparse evidence that ...corporate advantage exists, on average. We explore one potential driver of corporate advantage—that multi‐business firms have more flexibility than single‐business firms to cope with uncertainty, because they can internally redeploy resources across businesses. Using Compustat data, we show that uncertainty increases the relative advantage of multi‐business firms, a finding robust to controls for endogeneity. Consequently, the paper provides important insight and evidence around when corporate advantage might obtain. Moreover, we find that growth option value is accentuated in the presence of switching flexibility. Finally, multi‐business firms with redeployment experience and businesses with more inversely correlated returns benefit more from uncertainty.
Managerial Summary
Multi‐business firms have a flexibility advantage over single‐business firms as they can reallocate firm resources from one business unit to another depending on inducements. What is the impact of this flexibility on firm value? In this paper, we test whether such a flexibility advantage translates into greater economic returns in more volatile markets. We expect that resource redeployment creates value if it amplifies business‐specific positive shocks while alleviating business‐specific downturns. Consistent with this argument, we find empirical evidence that with increasing stock market volatility, multi‐business firms benefit significantly more in terms of firm value than their single‐business counterparts. In particular, in highly volatile stock markets, monthly adjusted returns are 2.3 times higher for multi‐business firms than for single‐business firms.
Understanding how organizations respond to failure is important to management research, yet prior studies have offered contrasting findings for whether, in a multiunit hierarchical organization, a ...corporate office improves business unit search following product failure. To better understand how a corporate office affects business unit search, we focus on the role of corporate proximity (hierarchical, geographic, and cognitive) between the corporate office and constituent units. We argue that corporate proximity improves a business unit's local search process through two mechanisms-vertical linkages and corporate attention-that positively condition the likelihood of persisting; that is, reentering a product market after having experienced a prior product failure in that market. We find support for our theory using data on reentry in the U.S. medical device industry following exit from the market due to product failure. We also explore how age of the product market and characteristics of the failure-cause and severity-further moderate corporate proximity's role in business unit reentry. Overall, our study offers a better understanding of how complex organizations respond to failure, thereby contributing to literatures on search, corporate headquarters, and product entry.
Competition can help predict sales Fortsch, Sima M.; Choi, Jeong Hoon; Khapalova, Elena A.
Journal of forecasting,
March 2022, Letnik:
41, Številka:
2
Journal Article
Recenzirano
This paper develops linear and nonlinear forecasting models to propose a sophisticated and accurate forecasting method in a fiercely competitive environment, such as the U.S. auto industry. Our ...results indicate that companies could operate successfully in a highly competitive market by using the competitors' sales to accurately predict their sales and plan for raw material, production, and finished goods inventories. Our suggested methodology is beneficial when the competitors are within similar strategic groups. The data for this study are obtained from the “U.S. Automotive News” data services, which contain time series records for inventory and sales for multiple automakers. To keep the analysis straightforward, we have chosen data for four major automotive companies known for their high‐level competition: the General Motors Company, the Ford Company, the Toyota Corporation, and the Honda Company because of intense rivalry due to competing within the same strategic business units. The results show a benefit is achieved by including the total sales for at least one competitor in the linear or the nonlinear forecasting models to predict domestic sales for the desired company.
Shophouses, a common building type in Singapore, host small business units typically cooled by non-mechanically ventilated strategies. Activities in these spaces include cooking food and handling ...nail and hair products, which emit volatile organic compounds (VOCs), carbon monoxide (CO), and other airborne contaminants that could compromise indoor air quality (IAQ). This study assessed potential IAQ risk by quantifying total VOCs (TVOC), formaldehyde, carbon dioxide (CO2), and CO levels in 100 air-conditioned small business units in Singapore's shophouses. The median (maximum) concentrations across all units were TVOC:179 (54,880 ppb), formaldehyde:0 (1.0 ppm), CO2:586 (2750 ppm) and CO:0 (0.5 ppm). The majority (90%) of the units did not have mechanical ventilation provision, and TVOC and formaldehyde levels correlated significantly with corresponding CO2 levels (p ≤ 0.05). The highest levels of TVOC and formaldehyde were measured at nail salons (TVOC: 54,880 ppb, formaldehyde: 1.0 ppm). Improving ventilation combined with use of alternative low-emission products could improve IAQ in small business units.
•Snapshot IAQ measurements were conducted in 100 air-conditioned small business units located in shophouses.•90% of the surveyed units did not have mechanical ventilation provision.•The highest levels of total volatile organic compounds (TVOC) and formaldehyde were measured at nail salons.•TVOC and formaldehyde levels correlated significantly with corresponding CO2 levels (p ≤ 0.05).•Adequate ventilation and using alternative low-emission products could mitigate indoor airborne contaminant exposures.
In this study, we examine the entrepreneurial orientation (EO), political behavior, and discretion of leaders within an organization’s strategic business unit (SBU) customer portfolio teams to ...determine whether and how an SBU team’s political environment affects its performance. Building upon EO as theory of new value creation, we argue that politically charged SBU teams are less capable of translating EO into improved performance. However, we observe the harmful influence of SBU team politics on the EO-performance relationship is partially alleviated when SBU team leaders have greater discretion over their units’ actions. We examine our theoretical model using robust data collected from 320 SBU team leaders and 1181 reporting SBU project managers within a large multi-national information technology firm headquartered in India. Implications for theory and practice are discussed.
The current economic crisis has brought to the fore the need for firms to deal with ambiguity and complexity. Hence, firms need a specific balance between exploration and exploitation in order to ...keep pace with varying and changing environmental conditions. Hitherto, there is limited research that has examined the nexus of HR architectures, ambidexterity, and environmental dynamics. In this conceptual paper we ask: How do HR architectures serve as a means of balancing exploitative and exploratory learning in different dynamic environments? We explain how exploratory, exploitative, and ambidextrous HR architectures with their embedded HRM systems on the business unit level enable organizations to meet different environmental requirements. Thus, firms in which heterogeneous demands for flexibility and for innovation co-exist need to develop internally differentiated HR architectures. In particular, we elucidate how critical the organization's ability is to connect different HRM systems to create an ambidextrous HR architecture to find an appropriate balance between exploration and exploitation.
Although universally recognized as an important consideration in building product development (PD) competency, the effect of a firm's ability to vary its PD practices to develop winning products has ...been given scant attention in large‐scale, multiorganizational, quantitative studies. This research explores differences in formal new PD practices among three project types—incremental, more innovative, and radical. Using a sample of 380 business units, this research investigates how development practices differ across these three classes of innovation with respect to the formal PD process, project organization, PD strategy, organizational culture, and senior management commitment. Our results diverge from several commonly held beliefs about formal PD processes and the management of radical versus incremental innovations. Our results indicate that radical projects are managed less flexibly than incremental projects. Instead of being an offshoot of less strategic planning, radical projects are just as strategically aligned as incremental projects. Instead of being informally introduced entrepreneurial adventures, radical projects are often the result of more formal ideation methods. While these results may be counterintuitive to suppositional models of how to radical innovation happens, it is the central theme of this research to show how radical innovation actually happens. Our findings also provide a foundation for reexamining the role of control in the management of innovation. As the level of innovativeness increased, so too did the amount of controls imposed—e.g., less flexibility in the development process, more professional, full‐time project leadership, centralized executive oversight for new products, and formal financial assessments of expected NP performance.
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