Weiss, Martin; Koenig, Andreas; Mammen, Jan; Junge, Sebastian; Hungenberg, Harald (Academy of Management Annual Meeting Proceedings, 2014)
We provide a new explanation of corporate-level performance by introducing the concept of portfolio dynamism heterogeneity (PDH)─the cumulative variation across businesses in the industry dynamism represented in a company’s business portfolio. Dynamic capability theory suggests that managerial challenges and appropriate capabilities differ substantially depending on the level of dynamism in a given industry. We argue that it is therefore counterproductive for companies to simultaneously manage businesses from industries that differ strongly with regard to their dynamism; furthermore, these consequences of PDH are likely to be exacerbated to the extent of a corporation’s asset intensity. However, we also propose that companies could eventually (over)compensate for the hazards inherent in PDH if they flexibly adjust their portfolios. We find support for our theory but also counterintuitive results, when testing it on a global sample of 275 companies in the years 2003 to 2010. Our study is the first to combine research on dynamic capabilities and the corporate strategy literature to develop and test comprehensive measures of market dynamics and PDH. We portray PDH as a key concept in corporate strategy and envision possible approaches to managing PDH as first steps towards corporate-level dynamic capabilities and ambidexterity in corporate strategy.
This study shows that firms adjust the scope of activities entrusted to foreign services production units to adapt their knowledge and content protection strategy to the availability of strong legal protection or internal control mechanisms. We hypothesize and empirically confirm that, when the above mechanisms are not available, firms use the substitute protection mechanism of “fine-slicing” foreign value chain activities to exploit the complementarities that exist between tasks and reduce misappropriation hazard. We also find a positive moderating effect of firm country-specific experience and content value on the propensity to use the fine-slicing mechanism.
The paper develops an integrative framework that identifies, describes and links the firm-specific and non-firmspecific factors that co-evolve and mutually influence the changes in configurations of global business services value chains over time. We focus on the heterogeneity of configurations resulting from idiosyncratic choices regarding what processes to unbundle, what activities to locate where, and what control mechanisms to use. Expanding current models and empirical studies in International Business, we argue in particular in favour of a behavioural approach that gives more room to decision makers and the decision making process to explain changing but persistent heterogeneity in ALC configuration (Activity-Location-Control mechanisms) of business Page 44 TUESDAY AIB 2014 Conference Proceedings services global value chains.
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