For decades, scholars have put forward the idea that change in industrial networks depends on the relationships and networks themselves. However, models are still lacking that conceptualize the heterogeneity of relationships and networks and that show how this heterogeneity actually affects change. This paper puts forward a model suggesting that network structure—in terms of an open or closed system—and relational embeddedness together affect the ways knowledge is gained, given knowledge flow and problem solving as two sources of knowledge. Moreover, the paper proposes that this effect influences the tacitness and novelty of the knowledge gained. Additionally, network structure and gained knowledge are postulated to have an impact on two changes, the establishment of relationships and the development of technology, which take place in industrial networks. The paper advances six propositions and concludes with implications for research and practice.
This study investigates the performance implications of the distinct mechanisms represented by business and social networks in the effectual internationalization. Our hypotheses consider the influence of both network types on firms’ decision-making during internationalization, including the use of effectuation’s overarching principle of non-predictive strategy and the analysis of affordable losses as preferred criterion for selecting between action paths. We test our structural model on a sample of 469 SMEs from Brazil, China, and Poland. The analysis demonstrates that the knowledge circulating in the firms’ business networks negatively moderates the relationship between non-predictive strategy and affordable losses, while social networking mediates the relationships between both non-predictive strategy and affordable losses, on the one hand, and international performance, on the other.
Returnee entrepreneurs, despite their assumed advantages in possessing international experiences and advanced knowledge, suffer from liability of returnee due to a lack of relationships with political and business actors and experience institutional uncertainty in the home market as they move across different institutional environments. This study investigates how returnee entrepreneurs can strategically utilize relationships with political and business actors to achieve better performance and the conditional effect of institutional uncertainty. Based on a survey of 200 Chinese returnee entrepreneurs, we find that business relationships play a dominant role in influencing business performance and that this role is even stronger under institutional uncertainty. Political relationships support the formation of business relationships and are associated with business performance via the mediation of business relationships. Our study contributes to developing a nuanced understanding of the complementary effect of political and business relationships on returnee venture performance in emerging economies.
This paper relies on a comparative case study of two antibiotics R&D networks, ENABLE and CARB-X, to understand how interorganizational interactions can be managed to achieve social impact. In particular, we investigate (1) how particular management mechanisms and interorganizational interactions relate to the network's intended social impact, and (2) how these management mechanisms influence interorganizational interactions. We find that (1) the intended social impact influences the choice of management mechanisms from the very start of a partnership and orients the kind of interactions occurring within the network, and (2) that management mechanisms can shape the interactions unfolding in the network, but that the structural elements of these interactions also make these mechanisms more or less applicable to the network. We contribute to the Industrial Marketing & Purchasing (IMP) view with a model of managing networks building on the three concepts of: intended social impact, management mechanisms, and interorganizational interactions.
The focus of this article is on discussing the foundations, conceptual development, and implications of resource interaction in inter-organizational networks. The article conceptualizes and classifies resources before discussing how resource interfaces enable to utilize, manage, and change resources. In doing so it provides a set of basic principles as to how resources interact at a network level, or how firms combine, develop, mobilize, and manage resources over time. This is in strong contrast to a focus on the acquisition, accumulation, and exchange of resources by the firm. The article further provides a comparison with two other research streams, the Resource-Based view (RBV) and the Service-Dominant logic (S-D logic), in order to better position this perspective on inter-organizational resource interaction. It concludes by discussing an agenda for further research.
This study aims to develop a more dynamic and relational view of centers of excellence (CoE) within multinational enterprises (MNEs), that is, business units with specific and highly valuable competencies and knowledge, which are transferred and leveraged by other units of the MNE. We employ a longitudinal case study to analyze how, between 1986 and 2014, an external supplier progressively became a CoE within IKEA and even improved this role, thereby becoming increasingly important for the MNE. Particularly, we develop a model linking internal (resources, competencies, and structure) and external factors (exchange volumes, interorganizational routines, mutual dependence, trust and commitment, and identities) with changed network positions, which, in turn, define the intensity and importance of a CoE's role. Thus, the elements required to establish a CoE may not originate from the MNE's core competencies, but may be extracted, recombined, and integrated externally from the MNE's global supply network.
Information technology and such business applications as IT systems create great expectations to solve most problems a company faces. However, these expectations are seldom fulfilled. This article treats IT and IT systems simply as a facility among many other resources (products, facilities, business units and relationships) in business networks. By making use of a case study centred around Product Information Assistance (PIA), one of IKEA’s key IT systems for product information administration, the analytical part extracts a series of interactions patterns between IT facilities and the surrounding resources. Being IT systems also embedded into other resources implies that
their effects seldom turn out to be as expected or simply defined by their technical potentials.
Foreign market selection and entry are important decisions for internationalizing small and medium-sized enterprises (SMEs) because they involve uncertainty, and influence performance. While it is inherent in effectual foreign market entry (FME) decision-making to rely on international partners and relationships to develop international markets, causal foreign market selection and business relationships/networks have frequently been presented as alternative ways to expand abroad. We conceive SMEs' foreign market selection and entry as international business decisions and build on causal and effectual logic, and business network theory, to propose a model explaining SMEs' international performance. We contribute to international business and SME literature by uncovering two different paths (causal and effectual) to FME collaboration and international performance. FME collaboration mediates the relation between causal foreign market selection and effectual entry decisionmaking and international performance. Our theoretical explanation for the mediating mechanism through which international performance can be enhanced is the network approach.
Although there is an urgent need to find new antibiotics to fight growing antibiotic resistance, the development of antibiotics is at its lowest level ever. This innovation drought in the antibiotics industry is a challenge for managers, policy makers, and public health authorities. Currently, several strategies to incentivize antibiotic innovation are being considered, but their effects are unknown. Using the theoretical lens of the entrepreneurial orientation framework and Monte Carlo-based simulations on state-of-the-art pharmaceutical industry data, this study found that several incentives can increase the innovativeness of firms in this industry. However, the results show that these effects vary between incentives, between large and small firms, and across different research and development stages. This study analyzed these findings in the light of the entrepreneurial orientation framework and presents implications for theory, policy makers, and managers.
Every business builds on a specific set of resources. New businesses in particular have to assemble external resources that are mostly new to them. This resource assembly requires developing business relationships with other actors that control and can provide the needed resources. Adopting a resource interaction perspective, this paper examines a case of a new business venture in the automobile industry. The case study shows that when forming a new business the actors possess only partial knowledge of how to assemble the resources. Consequently, the actors must engage in extensive adaptation and interaction with others to enact workable resource interfaces and combinations. This necessity makes the new business formation process nonlinear and onerous. Further, the case demonstrates that new business formation is a collective process involving not only the emergence of a formal business organization but also reorganizing the applicable resource market. Since third parties involved in developing the necessary resource combinations can be considered part of the new business venture, setting the boundaries of the new venture becomes arbitrary. The arbitrary nature of such boundary setting has implications in entrepreneurship studies with regard to the unit of analysis and the concept of opportunity.
A conceptual framework is proposed to examine value creation through the evolution of business model themes. A critical assessment of the literature on business models, business model themes, and their evolution is presented. This assessment highlights the fact that business model themes are typically theorized as being static. Instead, the framework presented here characterizes business models and the business model themes of value creation as co-evolving within an evolving industry. The framework provides a set of propositions that specify how firms can create value by entering an industry, reacting to imitators, and co-evolving with product market strategies and with environmental factors. This study contributes to the literature on value creation through business model themes.
This study investigates the link between export behavior, labor productivity and R&D activities in 17,168 small and medium-sized firms (SMEs) in Austria, during the period 1995-2011. The analysis covers six subgroups of SMEs: young, old, micro, born global, manufacturing, and services. Using a two-part model controlling for firm effects, the results show that both the export participation and the export share of SMEs depend significantly and positively on the level of labor productivity (relative to that of large firms in the same industry) and the R&D-sales ratio. Another important finding is that labor productivity strengthens the relationship between R&D activities and exports. Marginal effects show a large degree of heterogeneity in the relationships across the six subgroups of SMEs. The link between R&D and export behavior, for a given level of labor productivity, is relatively pronounced for manufacturing SMEs, larger and older SMEs, while the other sub-groups are less affected.
This article describes and discusses nominated procurement as a means through which buyers select sub-suppliers to achieve sustainability compliance upstream in emerging economies' supply chains. Hence, it critically examines the ways buyers articulate nominated procurement and the unfolding supply chain consequences. Based on in-depth interviews and fieldwork in the Sri Lankan apparel supply chain, the findings indicate that buyers accomplish sustainability compliance among their sub-suppliers while prioritizing their own business agenda. In doing so, however, buyers perpetuate “suboptimal compliance” of raw material suppliers and “sandwiching” of direct suppliers as harmful consequences on the supply chain. These consequences link theoretically with commercial, geographical, compliance and extended-compliance pressure. This article contributes to the advancement of the Sustainable Supply Chain Management literature by theorizing about nominated procurement, direct and indirect pressure, and pointing to the supply chain consequences beyond achievements in sustainability compliance.
While business networks and relationships in international and industrial marketing studies are explored extensively, relationships between firms and socio-political actors are rarely been studied. This paper addresses this gap and examines how MNCs manage their relationship with socio-political organizations. The study builds from the proposition that business firms, besides their actions in business market, have to manage their socio-political market. The study aims to develop a theoretical view that is based in business networks and contains the three concepts of legitimacy, commitment and trust. The proposition is that business firms behave proactively towards the actors in the socio-political environment which is related to their business goals. The three conceptual elements will enable us to understand more deeply the varieties in the firms' managerial behavior. Two cases test the concept in the model - those of Daewoo Motor Company (a South Korean MNC) and the Swedish MNC, Vattenfall. The study will contribute towards deeper understanding of socio-political market and how firms manage their socio-political relationships. The conclusions describe the theoretical and managerial implications.
Studies focus on the process of business model innovation as performed by start-up firms, while incumbent industrial firms' attempts to innovate their business models often fail, being hindered by path-dependency. There is a lack of understanding of what in a business model of such firms is modified to produce an innovation that gives rise to value creation. Based on explorations of twenty-two incumbent industrial firms, five dimensions of a business model are identified that, when modified, may result in business model innovation by incumbents. These dimensions are exchangeable, activity, actor, transaction mechanism, and governance setup. The results show how business model innovation can be systemically characterized in terms of several dimensions that must be modified in concert to produce an innovative business model. The results also show that such business model innovations require novel uses of digital technologies that enable new activities to be incorporated into existing business models.
A firm’s business model accounts for direct and indirect network effects, where the network size is a key enabler of value creation and appropriation. Additional conception of a business network’s contribution is provided by a recent advancement of the theory of data network effects, where machine learning is used to analyze large data sets to learn, predict, and improve. The more learning there is, the more value is generated, producing ever more data and learning and creating a virtuous circle. For the first time, this study combines the theory of data network effects with business model theory. The contribution lies in extending a business model’s lock-in effects through direct and indirect network effects to encompass data network effects. This paper provides a case study that supports the theoretical advancement and illustrates how this form of machine learning can increase profitability while reducing negative ecological impacts in an industrial context.
Highly valued firms exploit machine learning to activate data network effects. Data is gathered and analyzed to generate predictions and recommendations. This loop locks in existing service users and locks out potential competitors, thus creating a sizeable entry barrier, particularly for small and medium-sized (SME) enterprises. The literature does not describe the possible pathways to enter markets protected by incumbents’ data network effects. This study examines an SME that successfully entered such a market. A key finding is that, for successful market entry, an SME can focus on different stakeholders from those that are targeted by incumbents, provided such stakeholders can legitimize the SME's use of user data generated by incumbents.
Business researchers and policymakers frequently overlook ethnic minority microbusinesses. Yet, together with small and medium-sized organizations, microbusinesses drive both local and national economies. Combining social capital theory with the resource-based view and building upon 43 in-depth interviews, this study proposes a model of 'compassionate customer service'. In ethnic minority microbusinesses, coethnic culturally sensitive customer service is an important strategic resource for sustainable success, which high street chains lack. A key challenge for ongoing business survival and success is to ensure that future ethnic minority generations sustain coethnic compassionate customer service.
While studies on social innovation (SI) have expanded significantly, our understanding of multinational cor-porations (MNCs) in the "social" innovation arena remains in its infancy. Through a systematic literature review, we consolidate and examine literature linking the MNC with the ongoing discussion of SI based activities. Based on a qualitative content analysis of 60 articles, this review explores how the MNC is portrayed with regard to its involvement in SI. The analysis identifies a fragmented view of MNCs involvement in SI and reveals a variety of theoretical approaches and conceptualisations in prior research. Our review presents a framework of 'MNC involvement in SI' encompassing: differentiated conceptualisations, a dual value approach, five generic MNC roles, proactive and/or responsive motives, and specific barriers connected to the involvement in SI activities. From this, we suggest a number of implications for theory and practice as well as some directions for future research.
This study investigates the effects that expatriate managers' relationships within multinationals have on reverse knowledge transfer. Specifically, drawing on agency theory, we characterize how expatriate managers' relationships with subsidiary local managers, and with headquarters' managers, influence subsidiary willingness and reverse knowledge transfer. Based on a survey of 128 subsidiaries in 73 Chinese multinationals, we show how a good-quality relationship between expatriate managers and subsidiary local managers has positive effects on subsidiary willingness, which acts as a mediator between this relationship quality and the extent of reverse knowledge transfer. The paper contributes to the international business and knowledge transfer literature by generating new insights into whether and how expatriate managers' relationships within multinationals can help reduce agency problems and support reverse knowledge transfer processes. Understanding the potential role of expatriates in relation to reverse knowledge transfer is particularly important within the context of emerging market multinationals employing knowledge-seeking strategies overseas.
Drawing on service-dominant logic and institutional theory, this paper examines innovation as a process that unfolds through changes in the institutional arrangements that govern resource integration practices in service ecosystems. Four cases are used to illustrate the interdependent patterns of breaking, making and maintaining the institutionalized rules of resource integration occurring on multiple levels of institutional context. Such institutional work allows actors to cocreate value in novel and useful ways by a) including new actors, b) redefining roles of involved actors and c) reframing resources within service ecosystems. Our findings show that while the efforts of breaking and making the institutionalized rules are required for such changes to occur, at the same time, institutional maintenance is also important for these changes to institutionalize, that is, to become an integral part of the institutional structure coordinating value cocreation.
This study investigates the factors that drive an innovation network formation comprising companies, government, and society, and the ways these actors contribute and collaborate within a network to develop technologies that have a social impact. A conceptual framework has been developed by combining literature-based arguments and insights from two cases of smart city innovation. This study demonstrates that the innovation network is driven by the activities of searching, acting, and convincing actors of an opportunity to develop smart city solutions. The findings also show that innovation networks emerge not solely from a business goal, but also from a social goal and can still generate business opportunities for companies. Therefore, innovation for smart cities specifically requires a new form of configuration (public-private and citizens' participation), drivers (economic and social), and resources (technological and non-technological) in both its development and implementation. The analysis of the different configurations suggests more/less effective innovation.
In this conceptual paper, we draw attention to the conflicting effects that trust may have on internationalization speed, exploring the fact that trust is a major component of the influential Uppsala Model of firm internationalization and considering internationalization speed as a multidimensional phenomenon. Building on the literature on trust and international business relationships, we argue that internationalization speed is initially fostered by the bright side of trust but its dark side prevails as the firm strengthens its relationships with foreign business partners. Inspired by research on how to suppress the dark side of trust before it emerges, we identify the choice between causation and effectuation as important in alleviating the negative effects of trust on internationalization speed. Therefore, besides making explicit the role of trust in understanding internationalization speed, our paper contributes to the International Business literature by examining the effects of decision logic in the internationalization process.
In the last years, research on reshoring has gained momentum and experienced rapid development. Relying on bibliometric and content analyses of 135 articles from the Web of Science and Scopus databases, this review takes stock and guides future research on the topic. In particular, performing bibliometric performance analysis, conceptual thematic mapping and bibliographic coupling using the Bibliometrix R-package, this study identifies the main contributions to reshoring research, its conceptual structure and emerging themes. Combining the results of bibliometric and content analyses, we propose a conceptual reshoring framework characterized by five main themes: (i) antecedents, (ii) contingencies, (iii) decision, (iv) implementation, and (v) outcome. Following this framework, we organize and discuss past literature, propose a research agenda for each single theme and new avenues for future research on the conceptualization of reshoring as a process.
Researchers often use Lindblom's concept of “muddling through” to explain how complex and incremental processes can lead to satisfactory results even without the systematic application of “management”. However, this tendency to look for positive outcomes from muddling might be limiting, as this tends to ignore muddling that ends in failure. This article aims to extend the work following Lindblom by studying the failure of an innovation in engine technology. The key argument is that by paying more attention to failures, business research can develop a more complete theory of muddling through, and this article uses the case of how a new engine for lawnmowers incrementally failed to become an innovation as an illustration. In this, the term “sliding” is introduced to clarify the role of incrementalism in the processual study of business failure.
This paper examines venture capital (VC) governance in innovation processes. The VC literature often presents the relationship between a VC firm and a start-up as dyadic and analyzes it with agency theory. In contrast, this paper deploys the resource interaction framework presented in Hakansson and Waluszewski (2002) to governance and innovation in networks. The paper reports an in-depth case study of Pyrosequencing, a Swedish biotech firm financed with VC. The results from this study reveal how the relationship between a VC and a start-up company is embedded in a wider network and how the governance of the VC spreads in the surrounding network and influences a start-up's possibilities to develop organizational and technical resource interfaces to critical counterparts such as suppliers and customers.
In light of emerging-market multinationals’ substantial engagement in strategic asset-seeking internationalization, this study explores the effects of home-country political ties on innovativeness and reverse innovation transfer in Chinese multinationals. Based on a survey of 99 Chinese multinationals and their 177 subsidiaries, the results reveal that headquarters’ political ties hamper their innovativeness, an important factor in stimulating subsidiary innovativeness and, in turn, reverse innovation transfer in Chinese multinationals. This study contributes to the literature on subsidiary entrepreneurship and emerging-market multinationals and suggests that, without a certain level of innovativeness at headquarters, relying only on strategic asset-seeking overseas investment to achieve innovation catch-up is problematic. Our findings point also to the co-evolving nature of Chinese multinationals’ competence growth and catch-up process, and support the view on the liability of stateness suffered by Chinese multinationals.
It is often assumed that Chinese multinationals invest overseas to obtain knowledge. Acknowledging political ties as an important aspect of Chinese multinationals, we investigate the respective interests of headquarters and subsidiaries to support knowledge transfer from host countries to China. Based on data from 177 headquarters-subsidiary relationships, our findings indicate that political ties of Chinese headquarters increase the organizational distance between headquarters and subsidiaries. This distance has a positive impact on headquarters’ demand for subsidiary knowledge transfer, but a negative effect on the subsidiaries’ willingness to actually transfer knowledge. This suggests that Chinese multinationals with strong political ties have to spend efforts in aligning the motives of headquarters and subsidiaries concerning knowledge transfer practices. This study contributes to the research on Chinese multinationals, cross-border knowledge acquisition, and the springboard perspective by shedding light on post-internationalization managerial challenges related to a knowledge-seeking strategy.
While many artificial intelligence (AI) strategies are successful, countless others fail. Why do some strategies succeed while others fail? We adopt a network effects (NEs) perspective to conceptualize AI strategies, highlighting the AI context’s specifics. We argue that nascent AI strategies’ success depends on data NEs: companies establishing a functional “running system” to capitalize on these effects. However, this presents a challenge known as the cold-start problem (CSP), which involves initiating and accelerating a virtuous cycle: more data benefits the AI system, enhancing performance, which then attracts more data. In this paper, we examine the CSP in nascent AI strategy, exploring how it can be understood in terms of its technological and business dimensions and ultimately be overcome to kick-start a virtuous cycle of data NEs. By drawing insights from existing literature and practitioner interviews, we present a research agenda to encourage further investigation into overcoming the CSP.
A temporal workload model is introduced to identify the relationship between the work time and economic performance of the activities conducted by a human agent in the context of an economic organization. The model's novelty derives from the account of time perception and its consequent cognitive time distortion, the latter being understood as a discrepancy between physical and cognitive time. Current praxis, both theoretical and empirical, assumes only physical time. This assumption is challenged here through the inclusion of time perception and cognitive time distortion in estimating the temporal workload of an economic agent. This inclusion enables a novel comprehension of frequent operational challenges, such as work delays, human stress, output quality issues, and economic inefficiencies. The main contribution to the literature is a specification of a new condition that governs the performance of any economic organization where human agents conduct time assessments.
A novel service price equation is advanced to explain how prices in the services market depend on service workers' cognitive time in relation to the actual clock time (physical time) that is contracted for a service. Cognitive time affects service revenues, costs, the targeted service profit, and budgeted service time. The equation shows how the cognitive time of service workers produces a hidden price-lever effect, in which the service price behavior becomes non-linear. A minor difference between the cognitive time and the physical time of a given service generates a significant change in the price level required to realize a targeted service profit. If the workload of a service worker is increased to a certain level, there is a potential service price collapse, implying that the service provider cannot reach the budgeted profit. This collapse condition further advances the emerging literature on behavioral pricing of services.
The present study advances a novel productivity function of knowledge workers. Cognitive science studies provide clear evidence that, for a given event, there is a difference between a worker's cognitive time and physical clock time; this difference gives rise to a cognitive time distortion. The proposed productivity function accounts for workers' dual experiences of time and the kinds of contracts utilized by an economic organization and its customers and workers. This function shows—for the first time and contrary to intuition—that, given certain conditions, workers' cognitive time and the form of contracts utilized are the only conditioners of knowledge worker productivity. The proposed productivity function unearths a hidden economic lever effect whereby a minor degree of time distortion generates a significant level of worker inefficiency. This constitutes a novel contribution to the literature on knowledge worker productivity.
Although received research emphasizes direct experiential knowledge as a key driver of firms' internationali-zation, the role of indirect experience has been increasingly recognized in recent studies. In this paper, we extend these studies by examining the role of source and context of experiential knowledge in relation to firms' internationalization into specific host markets, and offer a fine-grained analysis of when and how indirect experience complement or substitute direct experience. We test our hypotheses with data from 1,478 Swedish SMEs. Our results reveal that a firm can address its knowledge gaps and increase its extent of internationalization into a host market by combining direct and indirect experience, especially when they yield different types of knowledge needed for internationalization. We further show that direct and indirect experience derived from comparable contexts could substitute for each other but may also create knowledge redundancies.