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Turning social capital into business? A study of Swedish biotech firms' international expansion
... Similarly, there is no clear picture concerning choice of methodology. The articles relating to opportunity range from conceptual (Stumpf et al., 2002;Rosenbaum and Madsen, 2012) and literature reviews (Lommelen and Matthyssen, 2005;Brock, 2012) over case-based (Post et al., 1998;Lindstrand et al., 2006), to classical quantitative, statistical Hackett, 1977, 1978;. When looking at the articles that do not include reference to opportunity we see the same variation. ...
The article focuses on the relationship between internationalisation and opportunities of firms within the professional services industry. The key question explored is whether internationalisation of PSFs is a passive strategy driven by clients' internationalisation or if it is a deliberate search for opportunities that drives the internationalisation processes. This is being analysed by scrutinising the literature to check if this perspective can be understood and explained from an opportunity angle. The paper shows that there is no apparent pattern among the various PSF articles that relates to opportunities. Instead, it seems to be a very scattered landscape. However, the analysis reveals that there seems to be a focus on sub-industries or businesses rather than looking on PSF as a whole. In addition, the analysis indicates that opportunities are dealt with as an underlying issue closely related to the particular take on internationalisation for the individual article and therefore shows the same variation.
... Similarly, there is no clear picture concerning choice of methodology. The articles relating to opportunity range from conceptual (Stumpf et al., 2002;Rosenbaum and Madsen, 2012) and literature reviews (Lommelen and Matthyssen, 2005;Brock, 2012) over case-based (Post et al., 1998;Lindstrand et al., 2006), to classical quantitative, statistical Hackett, 1977, 1978;. When looking at the articles that do not include reference to opportunity we see the same variation. ...
The article focuses on the relationship between internationalisation and opportunities of firms within the professional services industry. The key question explored is whether internationalisation of PSFs is a passive strategy driven by clients' internationalisation or if it is a deliberate search for opportunities that drives the internationalisation processes. This is being analysed by scrutinising the literature to check if this perspective can be understood and explained from an opportunity angle. The paper shows that there is no apparent pattern among the various PSF articles that relates to opportunities. Instead, it seems to be a very scattered landscape. However, the analysis reveals that there seems to be a focus on sub-industries or businesses rather than looking on PSF as a whole. In addition, the analysis indicates that opportunities are dealt with as an underlying issue closely related to the particular take on internationalisation for the individual article and therefore shows the same variation.
The paper revisits the socioeconomic theory of the Austrian School economist Ludwig M. Lachmann. By showing that the common claim that Lachmann’s idiosyncratic (read: eclectic and multidisciplinary) approach to economics entails nihilism is unfounded, it reaches the following conclusions. (1) Lachmann held a sophisticated institutional position to economics that anticipated developments in contemporary new institutional economics. (2) Lachmann’s sociological and economic reading of institutions offers insights for the problem of coordination. (3) Lachmann extends contemporary new institutional theory without simultaneously denying the policy approach of comparative institutional analysis.
Knowledge governance is characterised as a distinctive research subject, the understanding of which cuts across diverse fields in management. In particular, it represents an intersection of knowledge management, strategic management, and theories of the firm. Knowledge governance considers how deployment of governance mechanisms influences knowledge processes: sharing, retaining and creating knowledge. We survey the papers in this volume of the special issue, and discuss the remaining research challenges.
This article maintains that the consistent application of subjectivism helps reconcile contemporary entrepreneurship theory with the strategic management literature, particularly the resource-based view of the fi rm. The article synthesizes theoretical insights from Austrian economics, Penrose's (1959) resources approach, and modern resource-based theory, focus-ing on the essential subjectivity of the entrepreneurial process. This new synthesis describes entrepreneurship as a creative team act in which heterogeneous managerial mental models interact to create and arrange resources to produce a collective output that is creatively superior to individual output.
Question/Issue: Institutional and transaction costs theories highlight the idea that group affiliated firms outperform unaffiliated firms in emerging economies. The persistence of superior performance for group affiliated firms is, however, questioned by the fast and recent development of markets and institutions in these countries. In this article, we explore this link between firm performance and the evolution of institutional environment. Research Findings/Insights: The setting of the empirical investigation is India in the post-reform era (post 1990). We test for effects of business group affiliation on firm performance over a 17 year time period from 1990 to 2006. Our findings show that (i) the performance benefits of group affiliation erode with the evolution of the institutional environment; (ii) older affiliated firms are better able to cope with institutional transition than younger affiliated firms; (iii) service-sector affiliated firms are better able to cope with institutional transition than manufacturing-sector affiliated firms. Theoretical/Academic Implications: Our findings both support the institution - and transaction costs-based theory of business groups, and extends it by incorporating a dynamic and longitudinal component. They also demonstrate - in line with recent works - that the benefits of group membership differ for different types of member firms. Practitioner/Policy Implications: The article has implications for both managers and policy makers. Managers of business groups should timely adapt their strategy to the evolution of the institutional environment. Policy makers should, instead, devote attention to the consequences of their policies because they may undermine the efficiency of large national companies.
An enduring characteristic of extant literature on foreign operation modes is its discrete choice approach, where companies are assumed to choose one among a small number of distinctive alternatives.
In this paper, detailed information about the operations of six Norwegian companies in three key markets (China, UK and USA) is used as the basis for an exploration of the extent to which, and how and why, companies combine clearly different foreign operation modes. We examine their use of foreign operation mode combinations within given value activities as well as within given countries.
The study reveals that companies tend to combine modes of operation; thereby producing unique foreign operation mode “packages” for given activities and/or countries, and that the packages are liable to be modified over time—providing a potentially important optional path for international expansion.
The data show considerable variation across cases; ranging from extensive use of mode combinations to a singular focus on a specific mode of operation. The study contributes to a refinement of our understanding of the path of internationalisation, and throws up a number of awkward theoretical questions about the process.
Agency theory studies the problems and solutions linked to delegation of tasks from principals to agents in the context of conflicting interests between the parties. Beginning from clear assumptions about rationality, contracting and informational conditions, the theory addresses problems of ex ante (“hidden characteristics”) as well as ex post information asymmetry (“hidden action”), and examines conditions under which various kinds of incentive instruments and monitoring arrangements can be deployed to minimize the welfare loss. Its clear predictions and broad applicability have allowed agency theory to enjoy considerable scientific impact on social science; however, it has also attracted considerable criticism.
I present an analysis of a survey in which the effect of entrepreneurship education and project-based education on students at lower secondary level is investigated. The results are based on a random sample of 2000 Danish students. The analysis indicates that entrepreneurship education has a positive effect on students’ personal development, and that its effect on entrepreneurial intentions is fully mediated by its effect on students’ self-conception. A finding with important policy implications is that there is a negative interaction effect between entrepreneurship education and project-based education regarding impact on students’ self-conception. The implication of the results is that we should replace project-based education with entrepreneurship education rather than having them run in parallel.
Three varieties of institutionalism currently dominate international business studies: new institutional economics, new organizational institutionalism, and comparative historical institutionalism. Yet corresponding measures of institutional country distance are only available for the first two strands of institutionalism. This paper addresses the under-representation of comparative historical institutional thought in currently available measures of institutional distance. Building on Whitley's business systems framework, a measure of institutional distance is developed and validated which captures intrinsic, substantive institutional differences in economic organization, rather than differences in institutional effectiveness. The results of the two-stage cluster analysis used to validate the selected indicators closely approximate the business systems typology, which is both indicative of the validity of this measure and of the distinctiveness of the business system types that make up the business system framework.
The emerging knowledge governance approach asserts the need to build micro-foundations grounded in individual action. Towards this goal, using the theory of planned behaviour, we aim to explain individual knowledge-sharing behaviour as being determined by the intention to share knowledge and its antecedents: attitude towards knowledge sharing, subjective norms and perceived behavioural control. In addition, we consider managerial interventions (governance mechanisms) that managers can employ to influence the identified antecedents and thereby govern individual knowledge-sharing behaviour. We test the model arrived at on a dataset collected among individuals engaged in knowledge sharing in two competing firms. Results of the LISREL analysis show that the use of rewards affects attitudes towards knowledge sharing negatively, while the use of reciprocal schemes and communication mechanisms have a positive effect on subjective norms and perceived behavioural control, respectively.
This paper proposes a multidimensional index of regional and global orientation that can be used in confirmatory studies with econometric methodologies. Unlike extant measures, the index is objectively scaled, and controls for home country orientation and market size differences. The index is shown to be consistent with models of internationalization that incorporate different assumptions about investment choice and global competition. Preliminary results show that large multinationals follow home region oriented internationalization paths, although much of the regional effect reported by previous studies in fact reflects strong home country biases.
The role of knowledge, organizational learning and innovation as levers of competitive advantage is now a commonly acknowledged insight in research in international management, specifically in the emerging ‘knowledge-based view’. However, this view has not yet developed into a unifying framework and there are significant holes in the understanding of how knowledge may be turned into a source of competitive advantage for MNCs. In order to advance the knowledge-based view of the MNC – and particularly of the metanational company – we develop the notion of the MNC as a global knowledge system that links local knowledge structures and combines local knowledge elements that are complementary in order to achieve strategic advantage. These ideas are used to frame the changing environments, strategic intents and learning stances that characterize MNCs, and to derive a set of research challenges for MNC research.
Absorptive capacity is frequently highlighted as a key determinant of knowledge transfer within multinational enterprises. But how individual behaviour translates into absorptive capacity at the subsidiary level, and how this is contingent on subsidiaries' social context, remains under‐addressed. This not only limits our understanding of the relationship between individual‐ and organizational‐level absorptive capacity, but also hampers further research on potentially relevant managerial and organizational antecedents, and limits the implications we can draw for practitioners who seek to increase their organization's capacity to put new knowledge to use. To address this shortcoming we conduct an in‐depth comparative case study of a headquarters‐initiated knowledge transfer at two subsidiaries of the same multinational enterprise. The findings demonstrate that social interaction is a prerequisite for subsidiary absorptive capacity as it enables employees to participate in the transformation of new knowledge to the local context and the development of local applications. The findings also illustrate how organizational conditions at the subsidiary level can impact subsidiary absorptive capacity by enabling or constraining local interaction patterns. These insights contribute to the absorptive capacity literature by demonstrating the scale and scope of social interaction as a key link between individual‐ and organizational‐level absorptive capacity.
The purpose of this exploratory study is, first, to identify the underlying dimensional nature of the range of decision variables that MNEs generally associate with making RHQ location choices and, second, to examine the extent to which MNEs, when grouped according to contextual characteristics, use discernibly different decision criteria when making RHQ location selection decisions. Based on a sample of respondents from 57 RHQs in Europe and the Asia-Pacific (specifically Australia), principal components analysis yielded 9 interpretable factor dimensions, underlying 39 location decision variables, which were then used to compare decision schemas groups. Three contextual classifications, 'strategic purpose of RHQ establishment', 'nationality of company origin', and 'industry sector', were hypothesized and used to categorize the sample. The analysis indicated that while subgroups within these grouping categories were associated with distinctive location selection priorities, those RHQs established in order to be responsive to regional markets appeared to use significantly different selection criteria compared to those RHQs established to facilitate global coordination. Similarly, the selection criteria US-based MNEs used to make RHQ location decisions, were found to be significantly different to the selection criteria Asian-based MNEs used when making their RHQ location decisions. Finally, location decision priorities were also found to vary across industry sector.
We discuss the behaviorist and empiricist foundations of the organizational routines and capabilities literature, specifically the extant emphasis placed on experience, repetition and observation as the key inputs and mechanisms of behavior, learning and change in organizations. Based on this discussion we highlight several concerns associated with specifying experience and repetition as antecedents of routines and capabilities, namely, (1) the problem of origins and causation, (2) the problem of extremes, (3) the problem of intentionality, (4) the problem of new knowledge, and (5) the problem of the environment. We highlight the “poverty of stimulus” argument and more generally discuss how internalist or rationalist, choice-based approach might provide a more fruitful (though preliminary) foundation for extant research on organizational routines and capabilities.
The knowledge-based view has recently been criticized for overlooking individual-level action and interaction in favor of an over-emphasis on the firm-level capabilities. This paper seeks to respond to that criticism by providing some individual-level explanations for a collective-level phenomenon – intraorganizational knowledge transfer. We suggest that variations in individual ability, motivation and the use of interaction opportunities provided by the organization explain part of the variation found in individuallevel knowledge acquisition and use, and that this has an influence on organizational level knowledge transfer within a firm. More specifically, we find that ability and intrinsic motivation are important drivers of individual level knowledge acquisition and use, while extrinsic motivation has no impact. Furthermore, the extent to which an individual uses interaction opportunities provided by the organization influences knowledge transfer both directly and through a moderator effect with ability and person-to-person interaction.
Entrepreneurs in a competitive economy face three fundamental problems. They need to search for and discover a business opportunity (Kirzner, 1973), evaluate it (Knight, 1921), and then seize the opportunity to reap entrepreneurial profits (Schumpeter, 1911) (Langlois, 2007). The problem that we address is how the ability to exploit business opportunities is influenced by entrepreneurial search and the economic organization of entrepreneurship (Arrow, 1962; Lippman & Rumelt, 2003; Aghion et al., 2005; Foss et al., 2007). In many cases, the discovery for a new business opportunity needs to be motivated by expected gains, since the search and evaluation of business opportunities is a costly, resource-consuming process (Denrell, Fang & Winter, 2003; Nickerson & Zenger, 2004; Foss & Klein, 2005; Teece, 2007; Foss & Foss, 2008). We show the critical role of expectations for understanding of the economic organization of entrepreneurship, and argue that transaction cost economics, with its insistence on bounded rationality, but far-sighted contracting offers useful insights and presents rich opportunities for further theoretical and empirical research (cf. also Furubotn, 2002).
Entrepreneurship has become a fast-growing subfield in management research, and is increasingly appearing in economics, finance, and even law. We survey a number of approaches to entrepreneurship in the economics and management literatures, and argue that modern research in this area need to be focused around ideas from Austrian economics and Frank Knight on entrepreneurial judgment. We critically discuss the recent opportunity discovery literature in management, and argue that it has partially misunderstood the Austrian origins of the theory, and fails to adequately distinguish between opportunity identification and opportunity exploitation.
Interest in entrepreneurship education is growing over the world, especially in innovation based economies, such as Denmark (GEM, 2010). However, we know rather little about the outcomes of entrepreneurship education, in particular with respect to which type of course content produces the best results (i.e. most high performing entrepreneurs) and how this affects different types of students. There is a great variety of different views in the field of research concerning the content and structure of entrepreneurship courses, but no comprehensive study has yet been done in which these competing views are clearly articulated as rivals and tested against each other. There is also a lack of programme evaluations that use control groups and have a longitudinal design (Gorman, Hanlon & King, 1997; Karlsson & Moberg, 2011; Matlay, 2008). Those that have this setup often experience methodological problems due to their conceptual framework (Krueger, 2009), or they have a view of entrepreneurship that does not take into account the advancements within research that have been made during the last decade (Sarasvathy, 2008). Thus, we clearly need to dig deeper into this field in order to create methods and models that allow us to evaluate the outcomes of different types of entrepreneurship courses.In the beginning of 2011, the Danish Foundation for Entrepreneurship – Young Enterprise initiated a research project with the aim to further our understanding of the type of impact entrepreneurship education and different educational designs have on different types of students. Two longitudinal surveys, one with a focus on elementary- and secondary-level education and one with focus on tertiary-level education, will be performed and databases with students from all levels of the Danish educational system will be created. The surveys will use entrepreneurial self-efficacy (Mauer, Neergaard & Kirketerp, 2009) as a performance indicator, but in order to generate robust results the development of new measurement tools is needed. In this paper the initial phases of this project and the research design of these two surveys will be presented. The development of a new ESE scale and the results from the pilot surveys will also be presented.
Israel Kirzner's concept of entrepreneurship as alertness to profit opportunities is one of the most influential modern interpretations of the entrepreneurial function. Shane and Venkataraman's (2000: 218) influential assessment defines entrepreneurship research as "the scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited." As such, "the field involves the study of sources of opportunities; the processes of discovery, evaluation, and exploitation of opportunities; and the set of individuals who discover, evaluate, and exploit them." Shane's General Theory of Entrepreneurship (2003) cites Kirzner and "Kirznerian opportunities" more than any writer other than Joseph Schumpeter. More generally, the entrepreneurial opportunity, rather than the individual entrepreneur, the startup company, or the new product, has become the centerpiece of the academic study of entrepreneurship. In Kirzner's framework, profit opportunities result from prices, quantities, and qualities that diverge from their equilibrium values. Some individuals tend to notice, or be alert to, these opportunities, and their actions bring about changes in prices, quantities, and qualities. The simplest case of alertness is that of the arbitrageur, who discovers a discrepancy in present prices that can be exploited for financial gain. In a more typical case, the entrepreneur is alert to a new product or a superior production process and steps in to fill this market gap before others. Success, in this view, comes not from following a well-specified maximization problem, such as a search algorithm (High, 1980), but from having some insight that no one else has, a process that cannot be modeled as an optimization problem. Entrepreneurship, in other words, is the act of grasping and responding to profit opportunities that exist in an imperfect world. Unlike other approaches in modern economics, the imperfections in question are not seen as temporary "frictions" resulting from ill-defined property rights, transaction costs, or asymmetric information. While those imperfections can be cast in an equilibrium mold - as in the modern economics of information-Kirzner has in mind a market in permanent and ineradicable disequilibrium. Kirzner's approach, like that of Knight, Schumpeter, and other key contributors to the economic theory of entrepreneurship, sees entrepreneurship as an economic function, not an employment category (i.e., self-employment) or type of firm (i.e., a startup company). The main effect of the entrepreneurial function is market equilibration: by closing pockets of ignorance in the market, entrepreneurship always stimulates a tendency towards equilibrium (Selgin, 1987). While Kirzner's "pure entrepreneur," an ideal type, performs only this function, and does not supply labor or own capital, real-world business people may be partly entrepreneurs in this sense, partly laborers, partly capitalists, and so on. The relationship between entrepreneurial discovery and capital investment distinguishes Kirzner's approach sharply from Knight's (and, arguably, from Kirzner's mentor Ludwig von Mises's). Because Kirzner's (pure) entrepreneurs perform only a discovery function, rather than an investment function, they do not own capital; they need only be alert to profit opportunities. Kirznerian entrepreneurs need not be charismatic leaders, do not innovate, and are not necessarily creative or in possession of sound business judgment. They do not necessarily start firms, raise capital, or manage an enterprise. They perform the discovery function, and nothing else. Kirzner's work is routinely invoked in references to the classics of the economics of entrepreneurship, alongside Knight's (1921) and Schumpeter's (1911) contributions. Kirzner's framework builds on the market-process approach associated with the Austrian school of economics and can trace its roots further back to Richard Cantillon, J. B. Clark, Frank A. Fetter, and other writers. Kirzner himself sees his contribution as primarily an extension of the work of Mises and F. A. Hayek, in effect bridging Mises's (1949) emphasis on the entrepreneur with Hayek's (1946, 1968) conceptualization of market competition as an unfolding process of discovery and learning. Among mainstream economists, Kirzner has been cited in the literature on occupational choice, and there have been a few attempts to formalize his model of the market process (Littlechild, 1979; Yates, 2000) and a few experimental investigations (Demmert and Klein, 2003; Kitzmann and Schiereck, 2005). Kirzner has explained the Austrian model of the entrepreneurial market process to readers of the prestigious Journal of Economic Literature (Kirzner, 1997). Still, his work has been more influential among management scholars than among economists. Thus, his approach underlies much of the opportunity-discovery or opportunity-recognition branch of the modern entrepreneurship literature (Shane and Venkataraman, 2000; Gaglio and Katz, 2001; Shane, 2003) which makes opportunities, and their discovery and (potential) exploitation, the unit of analysis for entrepreneurship research. This has given rise to a large theoretical, empirical, and experimental literature looking into the various antecedents of such opportunity discovery. As we shall argue, this literature goes much beyond Kirzner's work, making opportunity discovery and its determinants the key feature of the theory, whereas Kirzner's real interest lies in explaining market equilibration, a higher-level phenomenon. This chapter traces the origin and development of the concept of entrepreneurial alertness. In particular, we place Kirzner's contribution within the broader context of the Austrian school of economics, comparing and contrasting it with other Austrian conceptions of entrepreneurship. We argue that while Kirzner's contribution is often thought of as the Austrian conception of the entrepreneur, there is in fact an alternative Austrian tradition that emphasizes the entrepreneur as an uncertainty-bearing, asset-owning individual and that this tradition offers some advantages over the discovery approach (whether in the Kirznerian or modern-management incarnations). We also critically discuss the way Kirzner's work has been interpreted and used in the opportunity discovery approach in recent management research on entrepreneurship.
This paper offers a critical perspective on Israel Kirzner’s basic analytical framework. Specifically, we characterize Kirzner’s emphasis on processes of equilibration as a departure from the causal-realist price theory developed by Menger and his nineteenth- and twentieth-century followers. In this context, we contrast Kirzner’s interpretation of entrepreneurship as discovery with a more realistic, and operationally meaningful, idea of entrepreneurship as action. Finally, we discuss an inconsistency in Kirzner’s treatment of the antecedents of entrepreneurial behavior.
This chapter discusses entrepreneurship in the context of the RBV. What does the RBV have to say that the study of entrepreneurship may usefully draw on? And, conversely, how can entrepreneurship research further the RBV? I begin by sketching the RBV. I then discuss the relation between the RBV and entrepreneurship research, before I characterize a new research stream that has emerged over the last decade or so in the intersection of the RBV and entrepreneurship research, namely “strategic entrepreneurship.”
The field of strategic entrepreneurship is a fairly recent one. Its central idea is that opportunity-seeking and advantage-seeking — the former the central subject of the entrepreneurship field, the latter the central subject of the strategic management field — are processes that need to be considered jointly. The purpose of this brief chapter is to explain the emergence of SE theory field in terms of a response to research gaps in the neighboring fields of entrepreneurship and strategic management; describe the main tenets of SE theory; discuss its relations to neighboring fields; and finally describe some research gaps in extant theory, mainly focusing on the need to provide clear microfoundations for SE theory and link it to organizational design theory.
The study of entrepreneurship and the study of economic organizing lack contact. In fact, the modern theory of the firm virtually ignores entrepreneurship, while the literature on entrepreneurship often sees little value in the economic theory of the firm. In contrast, we argue in this chapter that entrepreneurship theory and the theory of the firm can be usefully integrated, and that doing so would improve both bodies of theory. Adding the entrepreneur to the theory of the firm provides a dynamic view that the overly static analysis of firm organizing cannot support. Moreover, adding the firm to the study of the entrepreneur provides important clues to how we can understand entrepreneurship.
Entrepreneurship is ultimately about the arrangement of resources into productive activities. Much of the entrepreneurship literature, however, has focused on the demand side of the market. While resource heterogeneity is a feature of many theories of the firm, such theories are not built on a systematic theory of capital. We show how the approach to capital developed by the Austrian school of economics provides a natural bridge between theory of entrepreneurship and the theory of the firm. We refine Austrian capital theory by defining capital heterogeneity in terms of subjectively perceived attributes, the functions, characteristics, and uses of capital assets. Such attributes are not given, but have to be created or discovered by means of entrepreneurial action.
While (managerial) beliefs are central to many aspects of strategic organization, interactive beliefs have been rather neglected. In an increasingly connected and networked economy, firms confront coordination problems that arise because of network effects. The capability to manage beliefs will increasingly be a strategic one, a key source of wealth creation, and a key research area for strategic organization scholars.
In this article, we explore the idea that offshoring of services and technical work should be regarded as a dynamic process that evolves over time. Firms gradually move from offshoring of simple, standardized activities towards offshoring of advanced activities when they accumulate experience with offshoring, and this type of offshoring comes with an entirely different set of characteristics compared to traditional, cost-seeking offshoring. Based on a unique survey among the total population of firms in the eastern region of Denmark, we analyze some of the dynamics of this process through a model that incorporates two different aspects of the process of offshoring. First, we approach the question of whether to offshore and establish a baseline that investigates the determinants of firms' participation - or lack thereof - in offshoring. Secondly, we approach the question of what to offshore and the subsequent process of offshoring, as we analyze the determinants of the offshoring of advanced, highend technical, and service activities. The findings are consistent with the notion of offshoring as a dynamic process as they show how some (cost-related) determinants play a role when firms first engage in offshoring, while rather different determinants matter for the subsequent process of offshoring of advanced activities. Although the model portrays a simplified expression of the offshoring process with two stages, the findings underpin our view that a process perspective on offshoring is a useful analytical framework.
As the editors of this volume note in their introductory chapter, collaboration is inherent in any operating market economy, and collaboration is, of course, sought because of the advantages it yields relative to non-collaboration. At the most abstract level, “collaboration” simply means “non-autarcic”; thus, Austrian economist Ludwig von Mises (1936) saw the division of labor as organized under capitalist institutions as a primary example of peaceful collaboration. Less abstractly, collaborative advantage may be related to notions of social capital and generalized trust. Still, such understandings capture a very large part of extant social science research. A more narrow understanding of collaborative advantage is required, lest we merely engage in an unproductive relabeling game. In fact, starting with important contributions by, for example, Hirschman (1970) and Richardson (1972), modern writers associate collaborative advantage with (typically) long-lasting and stable relations between actors, supported by informal trust relations, relations based on formal contracts or property rights, or some combination thereof (Lazzarini, Miller & Zenger, 2004). The relevant actors may exist at different analytical levels (e.g., individuals, firms, dyads, industries, clusters, regions, nations) and may in turn be embedded in various formal and informal institutions (North, 1990), as well as in certain geographical contexts. However, even this conceptual narrowing of the notion of collaborative advantage still implies that we are making reference to very large and still expanding literatures in (fields in) economics (e.g., economic geography, urban economics, trade theory) and sociology, as well as management fields, such as strategic management, international business, and innovation studies. In various field and discipline-specific ways, these examine the morphology of collaboration and collaborative advantage, and seek to identify their antecedents and consequences. Methods differ, ranging from longitudinal single case studies to multi-level panel data studies using state of the art econometrics. Not surprisingly, it is far from clear that what is effectively a jumble of contributions actually adds up to robust generalizations and insights. Parts of extant work on collaboration and collaborative advantage is nicely summarized in the editors’ introductory chapter. In this chapter we argue that because there are so few obvious constraints on the meaning of collaboration on the social domain, and because it is mixed up with fundamental multi-level issues, both with respect to conceptualization, antecedents and consequences, clarity and rigor with respect to construct definition, location of constructs at various analytical levels, and methods is absolutely essential. For example, while collaborative advantage may be well-defined at the level of firm dyads (Richardson, 1972; Williamson, 1985; Dyer & Wilkins, 1993), it may be (in fact, is) less well defined at higher levels of analysis, such as industries or industrial districts. Or, collaborative advantage at these latter levels may actually mean something different from collaborative advantage at the dyadic level, and have different antecedents and consequences. For example, as the notion of collaborative advantage traverses levels of analysis, antecedents likely differ (Nielsen, 2010). As these examples suggest, many of the difficulties of researching collaboration and collaborative advantage stem from the multi-level nature of these constructs themselves, as well as from the fact that their antecedents and consequences may be located at multiple different levels. For instance, with respect to antecedents, dyad-level collaborative advantage (e.g., superior innovation resulting from pooling innovation capabilities in specific projects) may arise from particularly skilled R&D personnel or alliance managers; the firms’ endowments of innovation capabilities or their experiences from previous R&D collaboration; advantages accruing to the specific region they are located in; governmental support programs; broad societal institutions; etc. Thus, collaborative advantage may have antecedents on lower (”micro”) as well as higher (”macro”) analytical levels (Knudsen & Nielsen, 2010). In fact, one of our key points in the following is that researching collaborative advantage inherently requires a multi-level approach. Theoretically, account must be made of antecedents and consequences at different levels, as well as potential cross-level effects. In extant research, this is often not done; for example, research on national systems of innovation (e.g., Lundvall, 1992) often makes no reference to firms whatsoever (which logically must be part of the micro-foundations of such systems). By the same token, little effort has been devoted to defining the level at which constructs operate and little theory development within the strategic alliance field explicitly addresses the role played by variables at different levels (Nielsen, 2010). Proper — multilevel — empirical research methods must be adopted; otherwise, relevant causes are not identified and/or estimated parameters become biased. Accordingly, this chapter offers a condensed primer on multi-level conceptual and methodological issues pertaining to collaborative advantage in order to guide future research. Rather than striving to be all-encompassing, we focus our discussion on a particular type of collaboration—strategic alliances among independent business firms—as this area of research continues to play a central role in strategic management, international business and organizational science. Despite this focus, most of the ensuing discussion applies equally well to other kinds of collaborations and we draw parallels to these where relevant. A further limitation is that we restrict our inquiry to variable-centered theoretical and empirical inquiry, and as such do not touch upon collaborative advantage in the context of small-N research, such as narrative approaches or approaches relying on comparative case method.
We survey the resource-based view in strategic management, focusing on its roots in economics. We organize our discussion in terms of the Gavetti and Levinthal distinction between a “high church” and a “low church” resource-based view, and argue that these hitherto rather separate streams are increasingly overlapping.
A substantial literature has evolved focusing on the ownership structure of international strategic alliances (ISAs). Most of the relevant studies are theoretical in nature and concentrate on the conceptual factors that influence the choice between equity and non-equity structures. A smaller number of studies provide some empirical evidence on the importance of some of the conceptual factors. The theoretical literature highlights the potential influence of relational capital and transaction costs as determinants of ISA structure; however, there is little empirical evidence on the relative importance of these potential determinants. Moreover, there is only limited and indirect evidence bearing upon the impact of host country governance attributes on ISA ownership structure. In this study, we provide statistical evidence on the importance of potential determinants of governance mode choice for a sample of ISAs involving Danish firms. Our study documents how the determinants of governance mode choice vary in importance depending upon the "quality" of the governance infrastructure of the host country.
In his seminal 1945 essay Hayek argued that the dispersed nature of much commercially relevant knowledge places strong constraints on the feasibility of centralized allocation and coordination mechanisms, but that there remains a problem of making efficient use of such knowledge (the first Hayekian knowledge problem). He realized that firms, because they make use of authority, are also challenged by dispersed knowledge, and his emphasis on delegation as a response to dispersed knowledge may lead to the prediction that (large) firms shouldn't exist. Yet (large) firms obviously do exist (the second Hayekian knowledge problem). Recently, many management and organizational scholars have echoed Hayek's argument that centralized coordination mechanisms, such as authority, may fail in the presence of dispersed knowledge. We examine these modern arguments and argue that they rest on shaky foundations: dispersed knowledge is a less strong constraint on authority than is often thought. We examine the wider implications of this for knowledge-based arguments in management and organizational theory, and call for more research into the micro-foundations of such arguments.
A critical knowledge governance problem concerns the consequences for the use of the authority if the knowledge that is essential in a work setting is partially unknown to the person who is to exercise authority. Is it possible to rationally direct work and activities and efficiently utilize knowledge under such conditions? Recently, many scholars have given negative answers to this question, arguing that authority relations are becoming strained by the increasingly distributed nature of knowledge in and between firms. We analyze this argument on the basis of definitions of authority and distributed knowledge. This allows us to show that - while intuitively appealing - the argument that authority cannot be an efficient coordination mechanism in the presence of distributed knowledge is at best problematic. The argument is based on the flawed inference that because the holder of authority is ignorant about some of the knowledge held by employees, he cannot rationally direct them. However, it is correct that the quality of centralized direction (planning, authority) may be compromised by distributed knowledge, leading to choices of other governance mechanisms and structures.
Drawing on insights from managerially-oriented literature, this article explores the role of management in situations where the market transaction costs of using local, independent operators are negligible at market entry, but grow over time. A key question pertaining to this situation is: What management instruments may ensure persistent concurrence between changing pressure for internalisation in a foreign market and the effectuated internalisation of a MNE in that market?
The article demonstrates the operating cost saving potential of putting in place options for gradual internalisation. Practical examples of such options are outlined.
It is emphasized that gradual internalisation not only pertains to appropriation of local operators' financial assets, but also to their non-financial assets in relation to user rights, customer relations, and value added activities.
Nationality diversity and international experience constitute two related yet distinct sources of competence among upper echelons. While both TMT international experience and nationality diversity increases the likelihood of firms expanding outside their home region, our results show that TMTs with international experience are more likely to expand abroad via greenfield investments, whereas nationally diverse TMTs are more likely to engage in international acquisitions and joint ventures. This highlights the need to treat TMT nationality diversity and international experience as two different characteristics influencing foreign entry mode decision.
SHRM increasingly emphasizes HRM practices as means to build strategic knowledge resources such as superior capabilities. While the knowledge-based view increasingly pays attention to micro-foundations, the SHRM field neglects these and emphasizes collective constructs such as "human capital pools," "HRM architectures", etc. As a result, causal links between HRM practices, knowledge and organizational performance are black-boxed. We propose a program for research and identify some of the key issues that future research must deal with.
In Europe, in particular, the number of foreigners appointed to top management teams has increased significantly over the past decade. However, the question of why some firms elect to employ foreign nationals on their top management teams remains unclear. This study utilizes a multi-level methodology to test the degree to which employment of a foreigner on the top management team is driven by individual level human capital characteristics versus firm level strategic considerations. Results from empirical tests on a sample of Swiss publicly listed companies suggest that degree of international diversification is positively associated with the likelihood of having a foreign executive, whereas human capital characteristics do not explain the propensity to employ a foreigner on the top management team. Further analyses indicate that nationality diversity at the board level, as well as the international experience of the top management team, are possible predictors of the probability of having a foreigner on the top management team.
Collaborative capability has predominantly been conceptualized and analyzed from a firm-level perspective, paying inadequate attention to the individual level mechanisms that enable this ability to develop and flourish. Utilizing the dynamic capabilities perspective, we suggest that antecedents of collaborative capabilities can be found at the organizational and individual level. Hence, this study examines the role of collaborative capability in R&D alliances with particular focus on the interplay between organizational and individual level mechanisms. We explore the development of Novozymes' Partnering Project and show how individual level factors work in concert with organizational level mechanisms in creating collaborative capability. Based on the in-depth case study and a review of the extant literature, we propose a framework for explaining the multi-dimensional nature of collaborative capabilities in R&D alliances and show how firms can benefit from increased attention to the interaction between individual and organizational level issues when designing R&D alliances.
As multinational corporations operate in multiple countries, headquarters must take into account differences in local settings when seeking the means to coordinate and control subsidiaries. The local system of industrial relations sets the framework for what kind of human resource management a multinational corporation can implement. Yet another question is whether the still stronger multinationals can change the existing systems of industrial relations, directly or indirectly. The paper analyzes four Danish enterprises over a ten-year period. This longitudinal study shows that none of the multinationals directly try to interfere in local industrial relations. However, by exercising their management prerogative in a way that differs from the Northern European tradition of industrial relations, they do influence the cooperation between employers and employees. In particular, the results show that a shift from a stakeholder to a shareholder management style and the increased degree of HQ control have an effect on the whole cooperative atmosphere in each of the companies. In the long run, they may affect the collective bargaining system as such.
How to motivate knowledge sharing is of crucial importance to many companies. This paper analyzes individual knowledge sharing behavior in a self-determination theory (SDT) perspective. The primary aim is to explore what type of motivation predicts knowledge sharing behavior and how this type of motivation is affected by reward structures and management styles in organizations. The paper builds on survey and interview data from a pilot case study and provides statistical evidence of a strong positive relationship between autonomous motivation and knowledge sharing behavior. Furthermore, tangible rewards are found to correlate negatively with autonomous motivation for knowledge sharing. The more employees perceive knowledge sharing to lead to tangible rewards, the less they are autonomously motivated to share. On the other hand, a management style supportive of employees' needs for autonomy is found to promote autonomous motivation for knowledge sharing.
This chapter introduces HRM practices that help MNCs to overcome knowledge transfer barriers (knowledge-driven HRM practices). It argues that MNCs can institute various HRM practices that impact knowledge transfer barriers associated with behavior of knowledge senders and receivers. HRM practices relevant for absorptive capacity of subsidiary employees form two groups - cognitive (job analysis, recruitment, selection, international rotation, career management, training and performance appraisal) and stimulative (promotion, performance-based compensation, internal transfer, orientation programs, job design and flexible working practices). The application of cognitive HRM practices enhances the ability of knowledge receivers to absorb transferred knowledge, while the use of stimulative HRM practices increases their motivation. Temporary and permanent types of international assignments respectively influence the ability and motivation of expatriate managers to share their knowledge.
This paper is the Introductory chapter to my forthcoming book, Knowledge, Organization, and Property Rights: Selected Essays of Nicolai J Foss, to be published by Edward Elgar in 2008. It provides a brief bio-statement and then discusses and places in context the various papers in the collection. The papers in the book are listed in the Appendix.
Human capital (HC) may be defined as the stock of valued skills, knowledge, insights, and so on, controlled by an individual: the attributes of the relevant individual that are valuable in an economic context. It yields services such as labour services, management services, or entrepreneurship. While this overall perspective cuts across organizational economics perspectives-such as transaction-cost economics (TCE), property rights/incomplete contracts theory, and agency theory-the specific terminology applied here is particular to TCE. This article surveys TCE as it pertains to HC, concentrating on: the work of TCE's most prominent flag-bearer, Oliver Williamson; the precursors of his work; and the various operationalizations and extensions of his approach. Also briefly discussed is the property-rights approach, which, like TCE, rests on the notion of incomplete contracting and the need to safeguard transactions under such conditions.
Arguments derived from the theory of science have been present in strategic management discourse since at least the beginning of the 1970s. The field's top-journal, the Strategic Management Journal, has printed several theory of science-based papers. Most positions in the theory of science (falsificationism, instrumentalism, realism, constructivism, etc.) have been present in the methodological discourse in the field. This chapter briefly reviews theory science applications to strategic management, before a distinctive perspective on the evolution of the strategic management field is developed. According to this perspective, science progresses when deeper level mechanisms are identified and theorized. Theoretical reduction may therefore be an independent criterion of scientific progress. Application to the strategic management field of this perspective, which in the social sciences is closely connected to the notion of methodological individualism, reveals that the field has evolved in a manner akin to a swinging pendulum, oscillating between micro and macro perspectives.
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