Customer complementarity in the digital space: Exploring Amazon’s business model diversification

In spite of the striking evidence that many firms run multiple business models, scholars and practitioners still lack a comprehensive understanding about business model portfolio dynamics, particularly when this happens in the digital space. Prior research on business model diversification tends to focus on supply-side complementarities, such as a firm's synergies among resources and capabilities. Yet, the demand-side with its customer complementarities remains theoretically and empirically underexplored, despite offering interesting opportunities for firms' competitive advantage. By developing a qualitative, longitudinal (1995–2018) analysis of the various business models developed by Amazon.com, we identify and map how customer complementarities—network effects and one-stop shop effects—can support firm growth and competitive advantage, particularly in the digital space. We identify what we term the ‘integrative business model,’ defined as the business model in a portfolio exhibiting the most (predominantly positive) customer complementarities with other business models. We propose mechanisms for the integrative business model to contribute to sustainable competitive advantage via a causal loop diagram and discuss implications for theory and practice.     

CEO characteristics and firm valuation: a quantile regression analysis

This study investigates the effects of three highly-visible CEO characteristics on firm valuation. Using a sample of 2702 observations for Australian firms over the period 2001–2011, we find that CEO age is uniformly associated with lower firm valuation. CEO tenure is also associated with lower valuation, but more significantly so in the higher quantiles of firm valuation, that is for firms with high-growth opportunities. In contrast, CEO duality is found to be beneficial only for firms with high-growth opportunities. Overall, the study highlights the contingent relationship between CEO characteristics and firm valuation.     

The Bind that Ties: Socioemotional Wealth Preservation in Family Firms

A growing body of research shows that family firms are different from other organizations in significant ways. In this paper we review this literature by examining how family firms differ from nonfamily firms along five broad categories of managerial decisions. These categories encompass a set of key organizational choices concerning management processes, firm strategies, corporate governance, stakeholder relations and business venturing. We argue that socioemotional wealth or affective endowment of family owners explain many of these choices. We also examine some contingency factors (namely family stage, firm size, firm hazard, and the presence of nonfamily shareholders) that moderate the influence of socioemotional wealth preservation as a point of reference when making managerial decisions in family firms. Lastly, we explore the firm performance consequences of family ownership.     

Digital orientation: Conceptualization and operationalization of a new strategic orientation

Although there is ample evidence that digital technologies are strategically important for value creation, extant literature lacks holistic concepts that capture an organization’s strategic orientation concerning digital innovation and transformation initiatives. This study integrates recent digitalization themes with IT business alignment research to conceptualize a new strategic orientation construct: digital orientation. The construct is manifested in four dimensions which we operationalize for computer-aided text analysis. We validate the construct based on 6498 shareholder letters from large US firms over 16 years. Building upon the resource-based view, we validate the digital orientation construct by linking it to firm performance. Our findings advance the literature on strategic orientations and bring the domains of strategy and information systems closer together. The novel digital orientation construct and the validated measurement instrument lead to many new research opportunities.     

The dark side of business model innovation

Existing literature has tended to focus on the positive benefits and outcomes of business model innovation (BMI), despite emerging evidence that BMI can also have a dark side, with negative consequences. We systematically review the existing BMI literature, articulating it around three clusters of negative consequences: those affecting the firm as an entity; those affecting the firm's stakeholders; and those that are specific or context-dependent. In a similar fashion, we identify the driving factors and circumstances leading to these negative consequences and group them into four clusters: (1) managerial choices and processes, and three underpinning circumstances that influence such choices or processes; (2) trade-offs between the new and current business models; (3) managers’ ability to manage BMI; and (4) context within which BMI is situated. The paper provides the first attempt to gather prior research on the phenomenon and thereby develop a conceptual understanding of the dark side of BMI. Furthermore, by proposing a model that explains how the dark side of BMI may occur, we inform ongoing debates on the theorization of the consequences that may derive from BMI and how these can be managed to support firms’ innovative growth, arguing how the disruptive innovation literature can only partially explain the phenomenon. Second, our model provides important foundations to further distil the complex link between BMI and performance. Finally, we suggest a number of future research avenues, accounting for different dimensions of the phenomenon.     

Market Orientation,Ownership Type,and E‐Business Assimilation: Evidence from Chinese Firms

While more and more firms have implemented e‐business in business operations, a better understanding of the factors that successfully drive the assimilation of e‐business will provide insights for firm executives and practitioners to develop effective strategies for e‐business. Different from previous studies that focus on individual‐level factors related to business executives and top management teams, this study examines how firm‐level strategic and cultural factors shape e‐business assimilation. Based on the strategy and marketing literature on market orientation and firm ownership, we developed a research model to describe how a firm's market orientation impacts e‐business assimilation. The model also describes the moderating effect of firm ownership type on the relationship between market orientation and e‐business assimilation. Based on data from 301 Chinese international trade firms, we found that two dimensions of market orientation (i.e., customer orientation, competitor orientation) had significant effects on e‐business assimilation. However, the third dimension, interfunctional coordination, was only partially significant. In addition, ownership type was a significant moderator of the effects of customer orientation and competitor orientation on e‐business assimilation, although ownership type was not a moderator of interfunctional coordination. Being one of the first studies of the impact of market orientation and firm ownership type on e‐business assimilation, we conclude with a discussion of the implications for future research and practice.     

Business planning in successful small firms

Strategic planning has been widely publicized during the last decade, but what has been accomplished by this management activity in smaller, high-growth firms? Business plans have been widely recommended for start-up funding, but we have noted additional uses for business plans in pratice. This article reports methods and results of strategic planning and written business plans in high-growth ‘INC. 500’ firms. In spite of a variety of obstacles, over half of the firms conduct strategic planning on a regular basis. Results of this study show that fast-growth firms develop written business plans as a product of strategic planning, mainly by five key management personnel. Written business plans are used more for internal management purposes than for start-up funding. Finally, the completion of strategic planning is positively associated with a firm's profitability. Based on survey and interview data, this article describes a four-phase model to help ensure effective integration of strategic planning processes and the resulting written business plans.     

Technological alliance portfolio configuration and firm performance

Firms pursuing technological alliances to gain competitive advantages have become a ubiquitous phenomenon in today’s business environment. This article examines which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective. To assess technological alliance portfolio effects on Korean pharmaceutical and biotechnology firms, we adopted three explanatory variables—number of alliances, number of partners, and spanning structural holes. The growth rate of revenue and the growth rate of profit are used as dependent variables. We identify two characteristics of technological alliance portfolios from the two-step generalized method of moments estimates. First, we find that between two firms with the same number of alliances, the firm with the larger number of partners would have a better performance. This result is unlike those in previous studies because it distinguishes between the number of alliances and number of partners based on the network theory. Second, we find that spanning structural holes affects firm performance rather like a double-edge sword—it positively affects the growth rate of profit but negatively affects the growth rate of revenue of firms. In short, spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth. This result differs from those of earlier studies because it shows that a firm spanning structural holes among alliance partners produces either a positive or a negative effect, suggesting that a firm should vary its strategy depending on whether it prioritizes profitability or growth.     

International Diversification,Business Group Affiliation and Firm Performance: Empirical Evidence from India*

We investigate the impact of business group affiliation on the relationship between international diversification and firm performance for emerging economy firms. We develop the theoretical arguments based on an integration of the literature on international diversification with the institutional theory perspective. We argue for a U‐shaped relationship between international diversification and firm performance, and suggest that a firm's affiliation to a business group moderates the relationship between international diversification and firm performance. Based on a sample of Indian firms, we find that firm performance is positively related to the degree of internationalization, while business group affiliation reduces the positive effect of internationalization on firm performance.     

Biotechnology collaborations: does business model matter?

This study investigates how a biotechnology firm??s collaboration incidence is affected by the business model it adopts. Specifically, we compare interfirm collaboration conducted by biopharmaceutical firms adopting the hybrid business model with those using the product-focused business model. The analysis based on 1,820 collaborations conducted by 87 dedicated biopharmaceutical firms suggests that firms adopting the hybrid business model generally engage in more collaboration. They also establish a greater proportion of exploration collaboration. These findings have implications for firm??s positioning using business models.     

Liability of ecosystem integration and internationalisation of digital firms

The widespread emergence of digital firms has important implications for international business theory. In this paper, we argue that because of systematic cross-industry differences in the local ecosystems digital firms need to develop in foreign markets, they will face differential costs and challenges of what we term liability of ecosystem integration (LoEI). The nature of the LoEI differs from both traditional concepts of the liability of foreignness (LoF) and the liability of outsidership (LoO). Rather than reflecting the need to overcome economic or psychic distance by learning about the host country (as with LoF) or investing in relationship-specific knowledge (as with LoO), overcoming LoEI requires investments in catalysing the co-development of a local ecosystem involving users, complementors and institutional actors specific to each business. We show how the level of LoEI a firm faces depends on the characteristics of its industry and its business model along three dimensions: the level of integration with local users, complementors, and institutions. These characteristics impact both firm's success in internationalisation and the level of concentration in the global market.     

Strategizing in an Unpredictable Climate: Exploring Corporate Strategies to Cope with Regulatory Uncertainty

Government regulation of business activities is increasing rapidly, exposing firms to considerable uncertainty and requiring managers to decide on appropriate strategic postures. To help managers make informed decisions, this study compiles a comprehensive overview of strategies to cope with regulatory uncertainty and illustrates their interdependencies and how they can be combined into overall coping postures, as well as offering management guidelines on deciding which to adopt. A literature review identifies a considerable variety of coping strategies, and we apply unique data from a worldwide cross-industry survey to categorize each into one of three types - offensive, defensive or passive. We find that firms aiming to cope with the uncertainty associated with post-Kyoto regulation typically adopt one of four strategic postures, each characterized by a specific combination of these types: ‘daredevils’ rely solely on offensive strategies; ‘coordinators’ combine them with defensive ones, ‘hedgers’ pursue strategies from all three categories while ‘gamblers’ choose not to specifically cope with uncertainty at all. We exemplify the strategies characteristic of each posture, and illustrate their interdependencies by means of case studies in the European airline industry. We identify two main factors managers should consider particularly when deciding on their firm’s strategic posture: the level of regulatory uncertainty they perceive and the firm’s exposure to future regulations, and find that the higher the level of uncertainty, the broader the range of strategies applied, and the more future regulation seems likely to affect a firm, the more actively it seeks to cope with the associated uncertainty.     

Understanding platform business models: A mixed methods study of marketplaces

Recent technological advances have enabled the emergence of novel business models based on digital platforms. Marketplace like Airbnb or Uber offer such digital platforms to connect previously unmatched demand-side and supply-side participants through innovative forms of value creation, delivery and capture. While countless firms claim to offer the next ‘Airbnb for X’ or ‘Uber for Y’, we lack knowledge about the defining business model characteristics of these marketplaces. To close the gap, this paper provides a conceptually and empirically grounded taxonomy of their business models. Applying a mixed methods approach, it first develops an integrative framework of marketplace business models. Guided by the framework, the research systematically analyzes 100 randomly selected marketplaces with content analysis and binary coding. The gathered data is analyzed with cluster analysis techniques to develop a taxonomy for marketplace business models. The clustering process reveals six clearly distinguishable types of marketplace business models and thus shows that there is no one-size-fits-all approach to creating, delivering, and capturing value with marketplaces and platforms in general. We characterize these distinctive types on basis of the qualitative and quantitative findings. Among others, we find that two of these types are highly aligned with business model characteristics associated with the so-called sharing economy. The findings are discussed against platform, marketplace, and sharing economy literature to contribute to a higher integration of different literature streams that are concerned with similar organizational types and phenomena.     

Economies of Scope through Multi‐unit Skill Systems: The Organization of Large Design Firms

From a study of three large design firms in Italy, the UK and the USA, we derive a distinct model of how large knowledge‐intensive business services (KIBS) firms organize to manage growth and realize economies in ways that differ from the organizational techniques that are familiar from scale and scope studies of large manufacturing enterprises. Case studies were compiled from interviews conducted at the three firms. Large design firms were selected as a contrasting context to Chandlerian manufacturing firms. Design firms were expected to differ from manufacturing firms in terms of strategy, organization and the overall possibilities of achieving economies of scale and scope. Our results show that competitive advantage of these large KIBS design firms derives from a particular multi‐unit skill system that enables the firms to exploit economies of scope. There are four distinctive organizational features of such KIBS firms. First, multiple business units within the firm play a dual role. These are able both to engage in inter‐unit coordination and resource sharing and to attract business independently, often with heterogeneous business models among units. Second, these firms develop formal organizational routines for involving multiple business units in client projects, thus facilitating the migration of clients' business from one unit to another. Third, there is an important role for cross‐unit strategic ‘insight’ agents. Fourth, these firms expand through the founding of specialized, even idiosyncratic, new business units (often with the important role of mastering new technological skills).     

Exploring the Impact of Cross-side Network Interaction on Digital Platforms on Internationalization of Manufacturing Firms

This study aims to explore how manufacturing firms utilize the benefits of network externalities on digital platforms and how they co-create value with foreign customers to expand internationally through their interactions with customers across the sides of the platform-mediated network. Building on the demand-side perspectives, we develop and empirically test a theoretical model explaining the effect of cross-side network interaction on digital platforms upon manufacturing firms' international intensity, as well as adding critical boundary conditions of industry structure and firm size. Based on a sample of 4197 Chinese manufacturing firms, our empirical findings indicate that manufacturing firms' cross-side network interaction on digital platforms could improve international intensity. We also find that industry growth at home country and larger firm size negatively moderate the relationship between cross-side network interaction and international intensity, while regional industry agglomeration has no significant moderating effect. This study contributes to research on firms' international intensity in the digital age and also extends the demand-side perspectives literature in an IB context.     

Service diversification and growth of professional service firms

This study investigates the impact of service diversification on the rate and mode of firm growth in professional service firms (PSFs). Drawing on the extant PSF literature, we identify differing views regarding the growth impact of service diversification. Specifically, some scholars suggest that the external client benefits associated with service diversification should allow PSFs to expand revenues at a rapid pace and pursue less merger and acquisition activity, whereas others imply that increased diversification can cause internal challenges with respect to learning costs, coordination and innovation that can limit the rate of revenue growth and encourage more mergers and acquisitions. We test these competing views using longitudinal data on 137 accounting firms and cross-sectional data on 125 law firms and find that service diversification is negatively associated with the rate of firm revenue growth and positively associated with the use of mergers and acquisitions.     

Temporary Employment in France: A Decade Statement

One of the more important aspects of French labour market changes since the mid-1970s is the growth of temporary work; fixed-term contracts and interim contracts. With a survey of French literature since the early 1980s, this article analyses explanatory factors of temporary work: macroeconomic factors: institutional framework, workforce supply to user firms, economic fluctuations; microeconomic factors: firm/ plant characteristics, economic and social firm strategies. Models of firms supplying temporary jobs are presented.     

Research on global strategy

This paper reviews the extant literature on global strategy. We argue that the literature has developed along three major directions, namely: (1) the literature identifying the emergence of a global village; (2) the literature identifying the advantages to a firm following a global strategy; and (3) the literature addressing the management challenges and the implementation issues faced by an international firm. We find that the literature has arrived at a number of important conclusions, namely: (1) the global environment places conflicting demands on participating firms; (2) there is no one strategy called global strategy, firms adopt different strategies to compete in the global arena; (3) the benefits accruing from a global strategy are contingent on the industry environment; (4) it is imperative to have multidimensional capabilities in the global arena; (5) matrix structures are becoming increasingly vital in implementing global strategies; and, finally, (6) the actual benefits of adopting matrix structures are contingent on the adoption of appropriate management processes. We identify the trends in the literature and suggest some directions for further research on the topic.     

Brainstorming Revisited: A Question of Context

This paper reviews the extant literature on global strategy. We argue that the literature has developed along three major directions, namely: (1) the literature identifying the emergence of a global village; (2) the literature identifying the advantages to a firm following a global strategy; and (3) the literature addressing the management challenges and the implementation issues faced by an international firm. We find that the literature has arrived at a number of important conclusions, namely: (1) the global environment places conflicting demands on participating firms; (2) there is no one strategy called global strategy, firms adopt different strategies to compete in the global arena; (3) the benefits accruing from a global strategy are contingent on the industry environment; (4) it is imperative to have multidimensional capabilities in the global arena; (5) matrix structures are becoming increasingly vital in implementing global strategies; and, finally, (6) the actual benefits of adopting matrix structures are contingent on the adoption of appropriate management processes. We identify the trends in the literature and suggest some directions for further research on the topic.     

Who performs a stronger response to whom? Detecting individual competitive actions and reactions

This study analyzes the degree of competition through individual actions and reactions. Empirical support for this analysis has derived mainly from structural econometric models describing the nature of competition. This analysis extends the existing literature by empirically considering a direct measurement of competition through the analysis of the competitive actions and responses, and describing how firms compete within and between strategic groups. We estimate the firms’ conduct in the Spanish deposits market with 146 firms and 18,888 observations. This is a specially compelling context for the banking industry, in which a deregulation process gives rise to the adoption of aggressive strategies seeking to increase the market shares of deposit accounts; thus, producing a turbulent situation of increasing rivalry. Our results offer a deeper understanding of the firms’ competitive behavior, since we identify different patterns of actions and reactions depending upon the strategic group the firm belongs to.