Interactive profit-planning systems and market turbulence: A dynamic capabilities perspective

This article describes, theorizes and empirically investigates the concept of interactive profit-planning systems (PPS) through the lens of the dynamic capabilities logic. With this conceptualization: interactive PPS capabilities comprise budgeting, forecasting and results-reporting routines, in which top and middle managers interact to create knowledge for sensing, seizing, and business model reconfiguring (to manage strategic business change). Survey data from 331 Australian firms is analyzed employing partial least squares structural equation modeling. The data provides support for two hypotheses: (1) greater market turbulence strengthens the positive effect of interactive PPS capabilities on business unit performance; and (2) greater market turbulence strengthens the positive effect of flexibility values (of organizational culture) on interactive PPS capabilities. Our findings show that interactive PPS capabilities function according to the salient tenets of the dynamic capabilities logic, and clarify the beneficial roles of formal cybernetic control systems and the intertwined involvement of top and middle managers in using dynamic capabilities.     

Uncovering the factors behind new ventures’ international performance: Capabilities,alertness and technological turbulence

This research is based on the perception that the explanation of International New Ventures' (INVs) performance demands a process view, going deeper than the standard approach, in empirical papers, of testing a direct relationship between company-level antecedents and performance. A three-tier model was developed to investigate the process leading to INVs international performance, emphasizing the role of entrepreneurial alertness. Based on the dynamic capabilities framework, entrepreneurial alertness was envisaged as the mediating element between firms' capabilities and their international performance. Empirical research confirmed the hypothesized model. Firms' capabilities (entrepreneurial orientation, foreign market knowledge, and absorptive capacity) significantly influence the level of entrepreneurial alertness, which impacts on the levels of self-reported satisfaction with the company's international performance. The paper makes four contributions to International Entrepreneurship literature. First, it highlights the key role played by entrepreneurial alertness in explaining INVs' international performance. This is convergent with the dynamic capabilities view on firms' ability to sense and seize specific international business opportunities. Second, this study considers entrepreneurial alertness as a capability that is not limited to the entrepreneur, but it is an organizational capability. Third, it shows that entrepreneurial alertness does not exist in the vacuum, is based on a set of base capabilities, namely entrepreneurial orientation, foreign market knowledge, and absorptive capacity, that simultaneously leverage the INVs to sense possible opportunities and constrain the focus of opportunities to international markets, as a key element to foster INVs' higher performance. Fourth, it underlines the role of technological turbulence as a moderator of the relationship between entrepreneurial alertness and INVs' international performance.     

The Evolving Firm: How Dynamic and Operating Capabilities Interact to Enable Entrepreneurship

In this study, we expand our understanding of firm evolution by focusing on how operating and dynamic capabilities interact through endogenously led changes. The focus on endogenous change complements the current emphasis in the literature on how dynamic capabilities help firms cope with the risk of core rigidities following an exogenous shock. Our comparison of two collaborating firms shows that, at the operating capability level, firms build absorptive capacity in value networks during their product development experiences and this learning needs to be captured at the product portfolio planning level. When this learning is captured and transformed, product portfolio planning acts as a dynamic capability reconfiguring operating capabilities based on beliefs about follow-on entrepreneurial opportunities. Under conditions of endogenous change, dynamic capabilities are guided by a proactive entrepreneurial logic, complementing the need for reactive adaptive responses in circumstances of exogenous change. A key implication is that dynamic capabilities have a more expansive and critical role in the adaptation of firms than previously considered. Our theorizing shows how interactions between dynamic and operating capabilities build the adaptive capacity of the organization.     

SME manager development in virtual learning communities and the role of trust: A conceptual study

Small and medium-sized enterprises (SMEs) are seen as vital to economic development. However, managers in these organizations generally have fewer opportunities for training and development than their counterparts in larger organizations. In this paper, the authors argue the need for development opportunities based around ‘virtual’ learning and develop a conceptual framework. The increasing penetration of broadband technologies offers the opportunity to create learning communities to engage SME managers with peers facing similar challenges. For a meaningful experience to be achieved in a virtual community, the role of the facilitator is established as important; however, an area largely overlooked in prior research into networked learning is that of the role of trust and how facilitators can generate it. In order to develop the framework for this paper, the authors review prior research into trust, learning, facilitation and virtual learning communities – the main aim being the identification of those aspects of the facilitator intervention that are most likely to engender trust and participation. Finally, areas for further research are identified.     

The relationship between supply chain manager capabilities and performance: empirical evidence

This study seeks to answer the question how supply chain managers’ capabilities impact individual and firm performance. Organisations have begun to recognise the importance of their supply chain and the necessity for qualified supply chain managers. Therefore, there is a need for further research on the impact of these capabilities on individual and firm performance. Sustained performance of a firm depends on dynamic capabilities and it allows firms to align and adapt strategies according to the volatile external environment. Using dynamic capabilities theory, the supply chain manager capabilities model was developed as a way for supply chain managers to effectively use their skills and past experiences to improve their own and firm’s performance. Primary data was collected through a survey distributed to supply chain management professionals. The results strongly support the relationship between technology and soft skills with supply chain manager capabilities. Interestingly, our study identifies sequential relationship amongst the three constructs such as capabilities, individual and firm performance. Capabilities are related with individual performance whereas individual performance is related with the firm performance. However, our findings revealed that there is no direct relationship between supply chain manager capabilities and firm performance.     

Cultural Intelligence and Institutional Success: The Mediating Role of Relationship Quality

As managerial rationality is always bounded, managers utilise their cognitive abilities and social relations to manage their operational environmental uncertainties. We posit that relationship quality (RQ) mediates the association between cultural intelligence (CQ) and success in managing challenges arising out of differences in the institutional environments i.e. institutional success. Our CQ measure comprises cognitive, metacognitive, motivational and behavioural CQs. We included the interactive effects of two inter-related mental capabilities, namely cognitive and metacognitive CQs, and motivational and behavioural CQs while examining the mediating role of RQ between CQ and institutional success. Based on data from 186 Indian senior managers doing business with New Zealand, we find mixed support for our hypotheses. We find indirect-only mediation effects for interactive effects of cognitive and metacognitive CQs, and complementary mediation effects for motivational CQ. Contrary to expectations, we find negative direct-only non-mediation effects of behavioural CQ.     

The Effect of Absorptive Capacity on Innovativeness: Context and Information Systems Capability as Catalysts

The purpose of this study is to examine the relationship between absorptive capacity and company innovativeness and to identify potential contexts and capabilities that can act as catalysts for these relationships. We also examine the relationship between absorptive capacity and the existence and enhancement of innovativeness. These relationships are examined through an empirical investigation of 286 large Spanish companies. Our results show that absorptive capacity is an important dynamic determinant for developing a company's innovativeness. Moreover, this relationship is best explained by two related constructs. First, the company's unlearning context is a crucial determinant for both potential capacity and realized absorptive capacity. Second, the results also indicate a tangible means for managers to enhance their absorptive capacity through information systems capabilities.     

Trust in Islamic Business-to-Business Relationships: Evidence from Indonesia

We examine the role of trust within Islamic culture in business-to-business relationships by exploring the link between credit officers’ trust in business customers and their financing decisions. In line with our framework, which is based on the fact that Islamic culture is characterized by a collectivistic approach and clan-based social structure, we find that value-based trust is more important than competence-based trust in explaining business relationships. The results support the argument that Islamic culture business relationships are grounded more on the principles, values and norms that a partner brings to the relationship than on business skills. Our results are robust to endogeneity and multilevel issues.     

What innovation managers really do: a multiple-case investigation into the informal role profiles of innovation managers

Over the last fifteen years companies tended to formalise their innovation management activities and to establish formal jobs like the innovation officer, the network manager or the innovation manager. Knowledge of the informal role profiles of these formal roles is still rare. HR and R&D Managers do not know which informal role profile might suit them best, thus having difficulties to assign the best candidates for jobs in innovation management. Researchers cannot help to resolve the problem. Our research answers the question what innovation managers really do, by analysing their tasks, skills and traits, theoretically based on informal role theories. Furthermore, we will analyse how these characteristics change with company size. To provide answers to our research questions we choose a multiple-case study approach. We found, among others, that innovation managers fulfil the role of the relationship and process promotor or a combination of both with the champion, but we also found, that the innovation manager’s roles profile becomes fuzzier with shrinking company size. Our results have practical implications for top management and also HR and R&D managers, enabling them to better select and steer employees in innovation management. Researchers will be able to build on our results because we offer a comprehensive understanding of the informal role profiles of innovation managers based on informal role theories.     

An interaction orientation approach to SME-Intermediaries relationships

Small and medium-sized enterprises (SMEs) engaging in foreign operations have drawn significant research attention in recent years. One of the aspects linked to such operations is SMEs’ expansion to foreign markets, often relying on local intermediaries. These intermediaries provide the firms with valuable resources such as market knowledge and recognition and reduce foreign operations’ costs. Hence, they are often considered as strategic partners. The current study aims to expand the existing knowledge regarding the relationships between business to business SMEs and their intermediaries by exploring interaction orientation as an organizational cultural aspect and its linkage to the trust-conflicts balance. Based on a survey of 165 international venture managers, complemented by in-depth interviews with 16 senior export managers, we found that by incorporating interaction-orientation constructs into the relationship management, SMEs can enhance affective trust while mitigating conflicts. We also reveal that the impact of emotional and task conflicts on SMEs’ performance is mediated through calculative trust, indicating the benefits of balancing between relational and formal governance.     

Cooperation in the Face of Conflict: Effects of Top Managers’ Trust Beliefs in their Firms’ Major Suppliers

As with any relationships, those between buying firms and their major suppliers are likely to experience situations of conflict. When facing such situations, top managers tend to approach conflict either cooperatively or competitively. However, when and why top managers tend towards cooperation or competition is far from clear. This study proposes a novel link between the theory of cooperation and competition and the discounting principle of attribution theory to argue that it is top managers’ trust beliefs in their firms’ major suppliers that influences their intended approach to conflict. Using survey data from 140 C‐level managers and business owners, the authors develop and test a model that differentiates between two attributional dimensions of trust (competence and goodwill) and the specific relational conditions that influence how these attributions operate. The results indicate that top managers’ trust in their suppliers’ competence and goodwill is, in fact, decisive in determining how they intend to approach conflict. Further, the authors demonstrate that a top manager's trust belief in the supplier's goodwill is of particular relevance in driving the top manager to cooperate in the face of conflict. However, this link seems to be contingent on the specific conditions of the buyer–supplier relationship in question.     

Managing Employee Compliance with Information Security Policies: The Critical Role of Top Management and Organizational Culture*

We develop an individual behavioral model that integrates the role of top management and organizational culture into the theory of planned behavior in an attempt to better understand how top management can influence security compliance behavior of employees. Using survey data and structural equation modeling, we test hypotheses on the relationships among top management participation, organizational culture, and key determinants of employee compliance with information security policies. We find that top management participation in information security initiatives has significant direct and indirect influences on employees’ attitudes towards, subjective norm of, and perceived behavioral control over compliance with information security policies. We also find that the top management participation strongly influences organizational culture which in turn impacts employees’ attitudes towards and perceived behavioral control over compliance with information security policies. Furthermore, we find that the effects of top management participation and organizational culture on employee behavioral intentions are fully mediated by employee cognitive beliefs about compliance with information security policies. Our findings extend information security research literature by showing how top management can play a proactive role in shaping employee compliance behavior in addition to the deterrence oriented remedies advocated in the extant literature. Our findings also refine the theories about the role of organizational culture in shaping employee compliance behavior. Significant theoretical and practical implications of these findings are discussed.     

The Role of Leader Influence Tactics and Safety Climate in Engaging Employees'' Safety Participation

This study examines the effect of leader influence tactics on employee safety participation in a U.K.-based manufacturing organization, examining the role of safety climate as a mediator. Structural equation modeling showed that leader influence tactics associated with a transformational leadership style had significant relationships with safety participation that were partially mediated by the safety climate (consultation) or fully mediated by the safety climate (inspirational appeals). In addition, leader influence tactics associated with a transactional leadership style had significant relationships with safety participation: rational persuasion (partially mediated by safety climate) and coalition tactics (direct effect). Thus, leaders may encourage safety participation using a combination of influence tactics, based on rational arguments, involvement in decision making, and generating enthusiasm for safety. The influence of building trust in managers is discussed as an underlying mechanism in this relationship. Practical implications are highlighted, including the design of leadership development programs, which may be particularly suited to high-reliability organizations.     

Leveraging psychological contracts as an HR strategy: The case of software developers

This article studies the management of software developers through the lens of the psychological contract and from the perspectives of employees and employers. Data were gathered through interviews with software developers and their human resources (HR) and/or direct managers in French high-tech companies. Our findings show the crucial role of HR and direct managers who shape a balanced professional psychological contract with developers as a specific HR strategy in order to respond to their job specificities and values. Specific HR practices (nature of the processes, involvement of developers in these processes, credibility of HR/direct managers and career development opportunities) and the working environment contribute to the development of trust and fairness, which form part of the content of the balanced contract.     

Transformational leadership climate: Performance linkages, mechanisms, and boundary conditions at the organizational level

Transformational leadership (TFL) climate describes the degree to which leaders throughout an organization engage in TFL behaviors. In this study, we investigate performance linkages, mechanisms, and boundary conditions of TFL climate at the organizational level of analysis. In a sample of 158 independent organizations, 18,094 employees provided data on TFL climate, positive affective climate, trust climate, and employees' task performance behavior and organizational citizenship behavior. In addition, human resource managers rated overall employee productivity. Study results yielded a pattern of moderated mediation for overall employee productivity and employees' aggregate task performance behavior, in that an organization's TFL climate was indirectly (through positive affective climate) related with these outcome variables under conditions of high trust climate, but not under conditions of low trust climate. Further, we found an organization's TFL climate to indirectly relate with employees' aggregate organizational citizenship behavior through positive affective climate, largely independent of the level of trust climate.     

The Essence of Dynamic Capabilities and their Measurement

The growing popularity of explaining firm performance through dynamic capabilities has motivated plenty of conceptual development in the field. However, empirical approaches to measuring dynamic capabilities have so far not been under comprehensive scrutiny. The authors; purpose is to assess the extent to which different ways of measuring dynamic capabilities in quantitative studies correspond to the theoretical essence of the concept, and develop recommendations for future research. They find that four types of operationalizations have been used: (1) managers’ evaluations; (2) financial data; (3) company's experience, actions and performance; and (4) managers’ or employees’ experience, actions and performance. Based on their analysis, the authors provide eight recommendations for future research that relate to identifying ordinary and dynamic capabilities, avoiding common method bias, taking into account the quality and fitness rather than the quantity of dynamic capabilities, and acknowledging the cumulativeness of dynamic capabilities through the use of longitudinal data. They conclude that refining the dynamic capability operationalizations would help to formulate competing hypotheses and to increase the theoretical precision of the field.     

Can you catch two birds with one stone? The impacts of nominating committee composition on board monitoring and resource provision

While it has long been recognized that boards of directors perform two primary functions – monitoring and resource provision – little research has systematically examined the relationship between these two functions in public corporations. Given the growing external emphasis on the monitoring function by investors and advocates of corporate governance reforms, it is important to understand how such an emphasis impacts the resource provision function. In addition to identifying the composition of the nominating committee as a key to understanding the relationship, we propose two mechanisms through which the formation of an independent nominating committee in response to the external emphasis on monitoring leads to a decline in board resource provision. One mechanism is through a decline in information sharing between top managers and the nominating committee in new director selection, which results in a divergence between board capital and the firm's specific resource needs. The other is through decreased trust between the CEO and the board, which results in a less collaborative CEO-board relationship. To alleviate this negative impact that an external emphasis on monitoring has on resource provision, we propose that boards can bring non-CEO executives back onto nominating committees as inside directors. Our theoretical analysis contributes to the understanding of how the composition of the nominating committee influences board monitoring and resource provision, and has important implications for corporate governance research and practices.     

Exploring the role of supervisor trust in the associations between multiple sources of relationship conflict and organizational citizenship behavior

We develop and test a model that builds directly on social exchange theory to predict different roles for supervisor trust in the relationships between organizational citizenship behavior and relationship conflict occurring between supervisors and subordinates and between peers. Specifically, we posit that the association between citizenship behavior and relationship conflict between employees and supervisors is mediated by supervisor trust, while the association between citizenship behaviors and relationship conflict occurring between peers is moderated by supervisor trust. We test our dual role for supervisor trust in a field study of 160 supervisor–employee dyads. Results support the different roles played by supervisor trust. We close by discussing the implications of our results for theory and practice in the relationship conflict and citizenship domains.     

Innovative Projects Between MNE Subsidiaries and Local Partners in China: Exploring Locations and Inter-organizational Trust

We explore innovative projects carried out by MNE subsidiaries with local partners in China, focusing on the roles played by different components of inter-organizational trust with the local partners as well as features of the business environment in the specific location of the subsidiary. From a sample of 44 managers in MNE subsidiaries that we interviewed in three locations: Beijing, Shanghai and Guangzhou, we identify 33 cases of innovative projects with prominent local partner involvement. Using a qualitative, thematic analysis of the data, we gain new insights that explain innovative outcomes for the subsidiaries. Firstly, we find a tendency towards a sociological component of trust with local partners in Beijing in contrast to higher levels of an economic component of trust in Shanghai and Guangzhou. Secondly, we find that a successful outcome was noted by informants where the sociological component of trust was utilized in Beijing and the economic component of trust in Shanghai and Guangzhou. The findings highlight the interaction between business context and the nature of trust with local partners in determining innovative outcomes in an emerging economy. We discuss implications for managers and policy makers.     

Competitive and Cooperative Positioning in Supply Chain Logistics Relationships*

Cooperative logistics relationships require the sharing of information, which must be enabled by the integration of disparate information systems across partners. In this article, we theorize business‐to‐business logistics relationships should be managed using cooperative and competitive postures. Based on data from 91 dyadic relationships using interorganizational information technology (IT), we find that performance gains accrue when parties share strategic information and customize IT; mutual trust enables IT customization and strategic‐information flows and equitable relationship‐specific investments positively impact IT customization, mutual trust, and performance. Among other scholarly and practical implications discussed, partners should compete on resources for IT customization and cooperate to share strategic information. Managers tend to think of relationships with firms as polar opposites and view them as entirely cooperative or entirely competitive. Our results support active balancing and understanding of both competitive and cooperative stances. Such an approach enables conditions for participation symmetry that yields greater performance gains.