Strategy Science

Journal Information
ISSN / EISSN : 2333-2050 / 2333-2077
Total articles ≅ 159
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Latest articles in this journal

Rajiv Krishnan Kozhikode, Rekha Krishnan
This paper asks what motivates new chief executive officers (CEOs) to engage in an acquisition spree despite the considerable risk it entails to themselves and their firms. Building on status theory and performance feedback theory, we theorized that status distance between new CEOs and their predecessors explains the empire-building behavior of new CEOs early in their tenure. Because of the uncertainty surrounding a CEO’s quality early in the individual’s tenure, status serves as a signal of quality for the new CEO. Hence, CEOs had to rely on status signals to maintain or close the status gap between them and their predecessors. Drawing on performance feedback theory, we theorized that new CEOs’ status contrast relative to their predecessor influences their acquisitive behavior. Our examination of the acquisition behavior of 429 new CEOs of S&P 500 firms in the United States revealed that relatively low-status CEOs engaged in risk-taking to improve their status, but relatively high-status new CEOs engaged in risk-taking to maintain their lead. It also revealed that new CEOs changed their risk-taking behavior when direct evidence of their quality or that of their predecessors deviated from the underlying quality expectations indicated by their relative status position.
Arkadiy V. Sakhartov
By analogy with portfolio diversification by stock market investors, managers and researchers have often expected that firms that spread operations across product or geographic markets reduce risk. However, numerous exploratory studies in corporate strategy and in international business have not been able to robustly confirm this expectation. This study develops a formal model to scrutinize implications of corporate diversification for corporate risk. The model incorporates the key distinction of corporate diversification, economies of scope, that qualifies the analogy between corporate and portfolio diversification. The presence of a particular type of economies of scope, resource redeployability, not only inherently increases risk but it can also raise risk over the level in undiversified firms. The model uses determinants of resource redeployability from previous research to derive conditions with which corporate diversification enhances risk. The developed elaborate operationalization of corporate risk should facilitate future research and help corporate managers.
, John E. Prescott
A central strategic imperative for surviving technological change requires firms to attenuate the inertia and rigidity imposed by its legacy technology orientation (defined as the relative emphasis placed on technological knowledge and products aligned to an incumbent technology) and successfully transition to a new technology. We theorize that resource reconfiguration through corporate scope decisions—alliances, acquisitions, divestitures, and different postacquisition integration approaches—enables firms to achieve the twin requirements of attenuation and transition. Initially, a legacy technology orientation exerts inertia due to legacy reinforcement—decreasing the likelihood of firms making new technology acquisitions and legacy technology divestitures. New technology alliances mitigate this inertia via legacy attenuation—increasing the likelihood of acquisitions and legacy divestitures. Finally, when firms make new technology acquisitions, we theorize that acquirers choosing partial acquisition integration approaches (partial integration and partial autonomy) are more likely to achieve a successful transition to the new technology-legacy transition and, thus, more likely to survive technological change relative to firms choosing full integration or full autonomy. Using a sample of firms from the digital camera product market over 1991–2006, we found strong empirical support for our predictions. We contribute to research on technological change by demonstrating that firms may overcome the inertia of a legacy technology orientation and adapt to an emerging new technology by employing corporate scope decisions and postacquisition integration as resource reconfiguration mechanisms. Specifically, we advance the novel finding that postacquisition integration is an important survival-enhancing mechanism that facilitates adaptation to technological change.
, Daitian Li
Strategy Science, Volume 6, pp 436-443;

History-friendly models have been increasingly adopted to study innovation and industry evolution, the catch-up of latecomer firms and countries, and public policies. However, they have been used less in the field of strategic management. In this article, we first provide a review of the history-friendly literature, identifying its intellectual roots in evolutionary economics. Then, we discuss three possible motivations that could explain the history-friendly paradox. Finally, we propose history-friendly models as a promising tool to study current research questions in strategy.
Strategy Science, Volume 6, pp 338-352;

This article discusses recent results and future research possibilities in the areas of econometrics and firm growth, drawing on Dosi and Marengo’s “10 building blocks” of evolutionary theory. These 10 building blocks are: dynamics first!, microfoundations, realism is a virtue, bounded rationality, persistent heterogeneity, novelty in the system, selection mechanisms, emergent properties at the aggregate level, emergence of organizational forms and institutions, and coevolution across levels of analysis and timescales. As it happens, many of our comments relate to the theme of “realism is a virtue.” We also suggest, in some cases, which econometric techniques might be more appropriate for research into firm growth and performance, given these 10 building blocks.
Giovanni Gavetti, Jose Ramon Lecuona Torras
Strategy Science, Volume 6, pp 353-359;

This article discusses the role of agency in discovering strategic opportunities by comparing two perspectives: the evolutionary and the cognitive view of strategy. The conceptions put forth by evolutionary scholars and cognitivists reflect different sensibilities, make different assumptions, and end up delineating different roles for the strategist. We recognize the fact that each view focuses on relevant facets of a multifaceted phenomenon and propose a “Neo-Carnegie” path to integrate these views.
Strategy Science, Volume 6, pp 305-330;

Chinese firms have been widely seen as imitative. This historical case study explores what organizational mechanisms allowed Tencent, a Chinese firm in the fast-changing instant messaging (IM) service sector, to achieve a new-to-the-world innovation with its WeChat smartphone app. Tracing the competitive dynamics in the Chinese IM sector from its inception, we found that Tencent was able to create the innovative WeChat product through a crisis-induced intrafirm coopetition dynamic that was embedded in variation-selection-retention evolutionary processes spanning the market, the firm, and the business unit levels. Building on the intrafirm coopetition and evolutionary literatures, the paper shows that three business units simultaneously competed and cooperated in developing alternative IM products while being exposed to market selection for survival. The coopetition dynamic took place in three key areas: technology, product promotion, and complementary assets of suppliers. The relative balance between competition and cooperation changed over time, and top management guidance and firm-level routines were essential in managing the challenges of coopetition within the firm.
, Franco Malerba
Strategy Science, Volume 6, pp 265-289;

We examine the progress of the evolutionary research on innovation, the firm, and the dynamics of industries in the last four decades. The paper acknowledges that the themes related to knowledge and technological regimes, the evolutionary processes leading to innovation, and the long-term dynamics of technologies have generated, and still remain, relevant research trajectories. The same can be said for the research trajectories on organizational and dynamic capabilities, evolutionary strategies, vertical integration, diversification, niche construction, and authority and power in organizations. Important progress has also been made in understanding the evolutionary trajectories of industries, the link between industry architecture and industry dynamics, the types of knowledge of entrants, the role of focal and vertical spinouts, the relevance of institutions and sectoral innovation systems in industry dynamics, and the catch-up process by firms from latecomer countries. We argue that future developments in the evolutionary camp should continue to be characterized by eclecticism and multidisciplinarity, as well as by the integration of different methodologies from cases to stylized facts, quantitative analyses, appreciative theorizing, and formal modelling. We conclude with an analysis of the main methodologies used by evolutionary scholars and a discussion of the road ahead.
, Stefano Brusoni, Francois Candelon
Strategy Science, Volume 6, pp 412-435;

We analyze the sectoral and national systems of firms and institutions that collectively engage in artificial intelligence (AI). Moving beyond the analysis of AI as a general-purpose technology or its particular areas of application, we draw on the evolutionary analysis of sectoral systems and ask, “Who does what?” in AI. We provide a granular view of the complex interdependency patterns that connect developers, manufacturers, and users of AI. We distinguish between AI enablement, AI production, and AI consumption and analyze the emerging patterns of cospecialization between firms and communities. We find that AI provision is characterized by the dominance of a small number of Big Tech firms, whose downstream use of AI (e.g., search, payments, social media) has underpinned much of the recent progress in AI and who also provide the necessary upstream computing power provision (Cloud and Edge). These firms dominate top academic institutions in AI research, further strengthening their position. We find that AI is adopted by and benefits the small percentage of firms that can both digitize and access high-quality data. We consider how the AI sector has evolved differently in the three key geographies—China, the United States, and the European Union—and note that a handful of firms are building global AI ecosystems. Our contribution is to showcase the evolution of evolutionary thinking with AI as a case study: we show the shift from national/sectoral systems to triple-helix/innovation ecosystems and digital platforms. We conclude with the implications of such a broad evolutionary account for theory and practice.
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