The pressure cooker: When crisis stimulates explorative business model change intentions

How do firms respond to critical threats, such as regulatory turmoils or disruptive innovations? After more than three decades of contradicting theoretical arguments and inconsistent empirical results, this question remains unresolved. One view argues for and finds evidence for amplified propensity to engage in change when organization members perceive critical threat. The other view supports the threat-rigidity phenomenon, reinforcing resistance to change through a focus on habitual practices and routines. To resolve this puzzle, we draw on the multi-dimensional framework of ‘crisis’ strategic issues processing, supplemented with the behavioral decision making perspective. In particular, we investigate the conditions of emergence of radical (explorative) business model change intentions within organizations in response to major threats. The resulting model suggests that cognitive moderators – perceived predictability and time pressure – lead to highly divergent results of critical threat perception, such that low predictability and high time pressure attenuate the threat-induced explorative business model change intentions. The model is tested in two empirical contexts, real estate brokerage and higher education, finding strong empirical support.     

Strategic Influences of Technological Innovation in Greece

This exploratory paper analyses the ‘importance’ and ‘awareness’ of a set of established ‘strategic’ influences of technological innovation in the context of a European newly‐industrialized country. The author interviewed 105 Greek manufacturing firms (mainly SMEs) and measured their perceived innovation rate as well as 17 ‘strategic’ factors regarding top‐management practices and characteristics. Using correlation and regression analysis the initial group of factors was reduced to a subset of five ‘major importance’ influences of innovation, namely: incorporation of technology plans in the business strategy, managerial attitude towards risk, perceived intensity of competition and rate of change of customer needs, and finally status of the CEO (owner‐CEOs were associated with higher innovation rate than appointed CEOs). The ‘statistical’ results are exploratory and have to be treated with caution, as they are highly dependent on the accuracy of the respondents' perception of their company's innovation rate and top‐management practices and characteristics. The ‘statistical’ results were then compared with the managers' perception on the important factors determining innovation (also measured during the interviews). Overall the perceptual analysis confirmed the significance of the statistically important variables, with the exception of a disagreement in the direction of association between the status of the CEO and the rate of innovation. In general, top‐management characteristics proved more important ‘strategic’ influences of innovation for the Greek SMEs than corporate practices. The study also indicated that the important influences of innovation were generally scarce in the Greek institutional context. The highly innovative companies were the ones to overcome country‐specific innovation barriers such as the low supply of technology, the low level of competition and the risk‐averse national culture.     

Evidence‐based Management in Practice: Opening up the Decision Process,Decision‐maker and Context

Evidence‐based management (EBM) has been subject to a number of persuasive critiques in recent years. Concerns have been raised that: EBM over‐privileges rationality as a basis for decision‐making; ‘scientific’ evidence is insufficient and incomplete as a basis for management practice; understanding of how EBM actually plays out in practice is limited; and, although ideas were originally taken from evidence‐based medicine, individual‐situated expertise has been forgotten in the transfer. To address these concerns, the authors adopted an approach of ‘opening up’ the decision process, the decision‐maker and the context (Langley et al. ( 1995 ). ‘Opening up decision making: the view from the black stool’, Organization Science, 6, pp. 260–279). The empirical investigation focuses on an EBM decision process involving an operations management problem in a hospital emergency department in Australia. Based on interview and archival research, it describes how an EBM decision process was enacted by a physician manager. It identifies the role of ‘fit’ between the decision‐maker and the organizational context in enabling an evidence‐based process and develops insights for EBM theory and practice.     

Does market share lead to profitability?

For a number of years the findings of the well-known PIMS study have played a predominant role in strategic thinking which holds that the market share of a business enterprise is ‘the key to profitability’. One criticism raised against this proposition consist in showing, through empirical evidence, that the maxim ‘the bigger, the better’ does not always hold, without, however, going into any analysis of the relationships involved and without presenting a total model. As a result, even today it is still not clear when, how, and why market share is in some way related to return on investment. It is intended, in this article, to formulate a general model, which will describe and explain these relationships. This model may be helpful in formulating strategies.     

A Multi‐level Dialectical–Paradox Lens for Top Management Team Strategic Decision‐Making in a Corporate Venture

This paper aims to critique the process of corporate‐owned, high‐tech start‐up strategizing through an inductive, longitudinal, case study of ‘UK‐Research‐Tech’. Insights are given through the combined ‘dialectical–paradox’ concept, thereby focusing on where ‘dialectic’ and ‘paradox’ theorizing overlap. This linked iterative, ‘dialogical–dialectic’ research approach also reflects chief executive officer/top management team (CEO/TMT) start‐up dynamics over time. These foci fill important gaps that impede better understanding of dialectical, dialogical and paradoxical forces within strategic decision‐making. As an interpretative tool, they illuminate CEO/TMT strategizing and changing interrelationships affected by broader, volatile, techno‐economic contexts and parent‐company influences on ventures. In this case study, it was found that the CEO's relatively autocratic, parent‐framed approach combined with TMT members' contradictory reactions to create ‘dialectical–paradox’ oppositional forces, eventually only resolved through ‘eleventh hour’ business strategy changes to rescue the venture. This research contributes to more nuanced understandings of corporate‐constrained ventures during early business development from start‐up strategic decisions at parent‐company level to subsequent conditions of more independent dynamic equilibrium. The ‘dialectical–paradox’ conceptual lens contributes an innovative critique of processes affecting strategic decision‐making dynamics. Another important contribution is the empirically inspired conceptual model, developed for use both to guide subsequent case‐study research analyses and as a reflective tool for CEO/TMT strategic decision‐making, especially within corporate‐inspired start‐ups.     

Patterns of Strategic Change in Health Care: District Health Authorities Respond to AIDS*

The literature on strategic change is based mostly on research in the private sector. This paper suggests that change in public sector organizations is equally worthy of study and can offer novel insights. Findings from research into the development of services for HIV/AIDS in NHS health districts are used to illustrate six generic themes in strategic change processes. The first theme concerns the role of context in potentiating change, and in promoting a diverse response in different localities despite unifying government guidelines. A second theme introduces the initiators of change, the ‘product champions’, a less homogeneous group than is sometimes suggested. Although personal status, energy and pro-activity were shared characteristics, individuals differed in style and methods used to attain goals. Theme three highlights social movements as mediators of change. Consumerism has affected both private and public sector industry, but for HIV/AIDS the process has been particularly visible. The mobilising role of crisis comes next. A three phase model is suggested, linking ‘crisis-as-threat’ and ‘crisis-as-opportunity’ theories. A fifth theme concerns changes in organizational culture provoked by HIV/AIDS, and the role played by symbolism - often unpredictable and not easily manipulated by management. The last theme is organizational learning; how learning about HIV/AIDS diffused through the districts, and how well learning generalizes to other issues. In conclusion, it is argued that the study of processes of change in a public sector organization can contribute to general models of strategic change and help to develop organizational theory.     

Testing for Smooth Structural Changes in Time Series Models via Nonparametric Regression

Checking parameter stability of econometric models is a long‐standing problem. Almost all existing structural change tests in econometrics are designed to detect abrupt breaks. Little attention has been paid to smooth structural changes, which may be more realistic in economics. We propose a consistent test for smooth structural changes as well as abrupt structural breaks with known or unknown change points. The idea is to estimate smooth time‐varying parameters by local smoothing and compare the fitted values of the restricted constant parameter model and the unrestricted time‐varying parameter model. The test is asymptotically pivotal and does not require prior information about the alternative. A simulation study highlights the merits of the proposed test relative to a variety of popular tests for structural changes. In an application, we strongly reject the stability of univariate and multivariate stock return prediction models in the postwar and post‐oil‐shocks periods.     

A framework for the strategic management of future tyre technology

Strategically managing technology faces one major problem: technology planners and managers who mistake ‘R & D management’ for ‘strategic technology management’. In globally competitive markets, survival and growth of tyre companies will increasingly depend upon the ability to manage technological resources strategically. This article proposes a process model which views the strategic management of technology as ‘techno-business management’, where technology and business strategy, planning and implementation can be facilitated by the use of portfolio frameworks and technology forecasting techniques in analysing and addressing the key strategic management areas of techno-business strategy development and strategy implementation.     

A Study of the Promotion to Partner Process in a Professional Services Firm: How Women are Disadvantaged

Increasing numbers of women are attracted to careers in the professional services. However, when their progress is considered to partner positions, it is found that they are not advancing to the levels anticipated. When the literature in relation to the partnership promotion process is explored, we find explanatory models are rare, and rarer yet is work that considers the impact of sex bias on the process. The article adds to the limited work available by presenting findings from a behavioural process perspective through an empirical study with male and female management consultants in a professional services firm which indicates that the promotion to partner process is indeed sex biased. Two areas of disadvantage for women are identified: the presence of a self-managed career advancement process necessitating a proactive approach to demonstrating individual contribution; and the need to ‘fit’ a prevailing model of success within the firm which is a masculine model and is more problematic for women. The article calls for a differentiated treatment of the glass ceiling phenomenon, capable of capturing disadvantage accruing from societally based factors and sector-based factors. The implications of the findings for future research and professional service firms are discussed.     

Empirical Analysis of Farmers' Drought Risk Perception: Objective Factors,Personal Circumstances,and Social Influence

Drought‐induced water shortage and salinization are a global threat to agricultural production. With climate change, drought risk is expected to increase as drought events are assumed to occur more frequently and to become more severe. The agricultural sector's adaptive capacity largely depends on farmers’ drought risk perceptions. Understanding the formation of farmers’ drought risk perceptions is a prerequisite to designing effective and efficient public drought risk management strategies. Various strands of literature point at different factors shaping individual risk perceptions. Economic theory points at objective risk variables, whereas psychology and sociology identify subjective risk variables. This study investigates and compares the contribution of objective and subjective factors in explaining farmers’ drought risk perception by means of survey data analysis. Data on risk perceptions, farm characteristics, and various other personality traits were collected from farmers located in the southwest Netherlands. From comparing the explanatory power of objective and subjective risk factors in separate models and a full model of risk perception, it can be concluded that farmers’ risk perceptions are shaped by both rational and emotional factors. In a full risk perception model, being located in an area with external water supply, owning fields with salinization issues, cultivating drought‐/salt‐sensitive crops, farm revenue, drought risk experience, and perceived control are significant explanatory variables of farmers’ drought risk perceptions.     

Total Board Compensation,Governance and Performance of Spanish Listed Companies

In this paper we present empirical evidence on the relationship between board remuneration of a sample of large Spanish companies and a set of explanatory variables such as performance and size of the company. The objective is to provide additional empirical evidence based on the agency theory for the Spanish institutional context, which differs from most ‘Anglo–Saxon’ model studies. We focus on the impact of a company's governance structure on the relationship between pay and performance. Specifically, we consider ownership concentration and firm leverage as key determinants of the board–shareholders relationship. Our results confirm the positive relationship between board remuneration and company performance, which is stronger for book values than for stock market measures. Industry performance also explains the remuneration and provides useful information for evaluating board behaviour. Company size is also related to board remuneration and affects the pay–performance relationship, although it is not relevant when we use an elasticity approach. Finally, the governance structure of companies is relevant when explaining the power of the compensation–performance relationship, and differences between the impact of ownership concentration and firm leverage on this relationship are found.     

Off to Plan or Out to Lunch? Relationships between Design Characteristics and Outcomes of Strategy Workshops

Strategy workshops, also known as away days, strategy retreats and strategic ‘off‐sites’, have become widespread in organizations. However, there is a shortage of theory and evidence concerning the outcomes of these events and the factors that contribute to their effectiveness. Adopting a design science approach, in this paper we propose and test a multidimensional model that differentiates the effects of strategy workshops in terms of organizational, interpersonal and cognitive outcomes. Analysing survey data on over 650 workshops, we demonstrate that varying combinations of four basic design characteristics – clarity of goals and purpose, routinization, stakeholder involvement and cognitive effort – predict differentially these three distinct types of outcomes. Calling into question conventional wisdom on the design of workshops, we discuss the implications of our findings for integrating further the strategy process, strategy‐as‐practice and strategic cognition literatures, to enrich understanding of the factors that shape the nature and influence of contemporary strategic planning activities more generally.     

PIMS: A tool for developing competitive strategy

PIMS (Profit Improvement of Market Strategy) is a programme of the Strategic Planning Institute designed to provide a factual and scientific tool for strategic planning. Its great strength lies in the data base of comprehensive data, covering market, competitive and production structure, on over 2000 businesses spanning a period of at least 5 years. It reflects strategic experience of a wide range of industries, in a wide range of competitive environments.Research is carried out on the data base, focusing on those structural and operational characteristics which determine longer term performance, to discover the empirical ‘laws’ of business strategy. These are incorporated in a series of profit and cash flow predicting models encapsulating the strategic experience in the data base. The models are used to analyse members' businesses to highlight current strengths, weaknesses and strategic potential as well as to indicate and evaluate strategic options, all on the basis of real business experience.     

Downsizing and alcohol use: A cross-lagged longitudinal examination of the spillover hypothesis

An area of concern for investigators and practitioners is the possible linkage between stressful workplace events and alcohol use and abuse; however, work in this area, specifically testing a “spillover hypothesis,” offers inconclusive evidence of a relationship between many work-based stressors and alcohol use. Using a three-wave panel sample (N=455) from a large US industrial firm that has undergone numerous downsizing events in the last decade, four alternative causal hypotheses using fully cross-lagged three-wave mediational latent factor models were compared via structural equation modelling. Separate models were analysed for layoff experience and job security perceptions; a motivational factor, escape reasons for drinking, was included in each model. We found large autoregressive effects for problem alcohol use in the stability models. One reason for weak support for spillover models may be that problem alcohol use is more stable over time than previously theorized. All alternative causal models fit the data well; however, the only model comparisons showing significant improvement over the stability models were those including reverse paths. Reverse causal models should be explicitly considered when examining the link between alcohol problems and the workplace. We suggest that, for some workers, problematic alcohol use may be antecedent to, rather than a consequence of, stressful workplace experiences.     

On the versatility of Little’s Law in operations management: a review and classification using vignettes

Abstract

Despite Little’s Law being considered as one of the ‘laws’ of operations management, evidence of its application in an empirical context is diverse and diffuse. Hence, this paper aims to identify, classify and consolidate published empirical applications of Little’s Law in a systematic manner to better understand its versatility. This paper undertakes a systematic literature review of the databases of the five main publishers of operations management journals and snowball sampling for additional papers. A final sample of 128 empirical journal articles is identified and categorized. Tactical, medium-term decisions relating to capacity dynamics and operations re-engineering are the most popular categories. To give further insights into versatility, vignettes for each category are developed. The review and vignettes confirm Little’s Law as a highly relevant paradigm to operations management decisions due to its empirical versatility across levels, sectors and time domains. The paper suggests four factors to underline the empirical versatility of Little’s Law in operations management: applicability, utility, simplicity and visibility.     

CEO satisfaction and intended strategic changes: The moderating role of performance cues

How do CEOs react to attainment discrepancies in their organizations' performance? Scholars have generally argued that (only) when performance falls below a certain aspiration level do CEOs intend to change the organization's strategy. However, empirical evidence on this issue is ambiguous and inconclusive. We address this puzzle directly by studying how CEOs' cognitive interpretations of performance (their satisfaction with the firm's performance) affect the magnitude of intended strategic changes, and we explore the moderating effect of the context (performance compared to the industry) on this relationship. Using a sample of medium-sized organizations, we find that CEOs' satisfaction with performance is negatively related to intended strategic changes, as expected, but only in contexts of poor performance compared to the industry. The negative relationship becomes less pronounced when performance compared to the industry reaches a certain threshold and even appears to reverse when the latter is extremely high. Moreover, exploratory post hoc analyses tentatively suggest the existence of two alternative intended change trajectories: contractive as a reaction to dissatisfaction and poor performance, and expansive as a response to satisfaction and high performance. These findings help to contextualize the effects of attainment discrepancies in light of conventional performance feedback theory and alternative theoretical perspectives.     

Modeling Strategic Behavior in The Competitive Newsvendor Problem: An Experimental Investigation

This study experimentally investigates ordering behavior in the competitive newsvendor problem. We consider a duopoly market setting with two identical newsvendors selling the same perishable goods in a common market. Our experimental results show that average observed orders systematically deviate from the Nash equilibrium, and exhibit a similar pull‐to‐center pattern as in the classic non‐competitive newsvendor experiments: average orders fall below the Nash equilibrium in the high‐margin condition, and above the Nash equilibrium in the low‐margin condition. More importantly, the observed orders in the duopoly market are significantly higher than that in the non‐competitive newsvendor market, even in situations where standard inventory models predict no difference. We explain the ordering behavior using a strategic experience‐weighted attraction (EWA) model, which captures players' propensities for strategic thinking in game settings. Our empirical analysis suggests that the strategic EWA model generates more accurate predictions of future ordering behavior than an existing linear adaptive model without concerning strategic thinking. Further analysis shows that individuals are heterogeneous in their propensities to be a strategic player. Our research indicates the importance of modeling strategic behavior when analyzing behavioral decisions in competitive (game) environments.     

‘Female Heroes’: Celebrity Executives as Postfeminist Role Models

This paper explores the significance of contemporary celebrity businesswomen as role models for women aspiring to leadership in business. We explore the kind of gendered ideals they model and promote to women through their autobiographical narratives, and analyse how these ideals map against a contemporary postfeminist sensibility to further understand the potential of these role models to redress the under‐representation of women in management and leadership. Our findings show that celebrity businesswomen present a role model that we call the ‘female hero’, a figure characterized by 3Cs: confidence to jump over gendered barriers; control in managing these barriers; and courage to push through them. We argue that the ‘female hero’ role model is deeply embedded in the contemporary postfeminist sensibility; it offers exclusively individualized solutions to inequality by calling on women to change themselves to succeed, and therefore has limited capacity to challenge the current gendered status quo in management and leadership. The paper contributes to current literature on role models by generating a more differentiated and socially situated understanding of distant female role models in business and extending our understanding of their potential to generate sustainable and long‐term change in advancing gendered change in management and leadership.     

Innovation in Small,Project‐Based Construction Firms*

Relevant literature is synthesized to provide a holistic picture of our current knowledge of innovation in small, project‐based firms, highlighting significant gaps in the broad areas of ‘focus and outcome’, ‘organizational capabilities’, ‘context’ and ‘process’. Research findings from fieldwork focused on the construction industry are offered to address these gaps. In particular, a consensus model is given of the organizational factors dynamically at play. It is shown that typically the innovations of small, project‐based firms are closely tied to their operational activities and are pushed forward by owners who utilize very scarce resources to make progress in the interstices of normal business. This leads to an emphasis on taking up established technologies through ‘learning on the job’. Growth per se is not an important target. The motivation to act is generally to get past a survival mode of operating and to achieve stability by satisfying clients. These characteristics contrast with large organizations, especially in terms of the role of the owner, the close focus on niche markets and the lack of slack resources to innovate in parallel with normal business. It is hoped that these results will be of interest to other sectors where small, project‐based firms operate.