Journal of Strategy and Management

L. Jay Bourgeois III; Adam Ganz; Andrew Gonce; Keith Nedell

2014 Journal of Strategy and Management

doi: 10.1108/JSMA-04-2014-0027

Purpose – The purpose of this paper is to further the knowledge of how industries perform, and sheds light on how the relative positions of industry change over time. Design/methodology/approach – Using rank‐order listings, histograms, and linear regressions, the comparisons of firms in the Fortune 1000 yield four results, two that are confirmatory, and two that are new. Findings – As expected, industries differ widely in performance, regardless of the financial metric used, and there is a dramatic difference between within‐industry variance (high) and between‐industry variance (low). In fact, high‐performing firms in less profitable industries often outperform low‐performing firms in more profitable industries. Contrary to previous research, the paper shows that industries shift relative position over time: the industries with the highest return on equity in one year often are not the highest in subsequent years; and, contrary to IO theory, the paper finds that concentration is not a reliable predictor of profitability. Although certain industries may show increased profitability after undergoing concentration, there is no consistent relationship between an industry's concentration ratio and that industry's average profitability. Research limitations/implications – While the research is limited to its use of visual (such as histogram) and qualitative (such as rank‐order) observations of only large ( Fortune 1000) US‐based, public firms, the results suggest that researchers should decompose the elements of industry structure and firm strategies to understand what, specifically, contributes to variation in firm performance. Practical implications – For executives, the research confirms that the quality of their business strategies is more important than the initial choice of industries within which they choose to compete. Simply competing in an industry with high average profitability does not guarantee success. Originality/value – This research shows how industries vary significantly in relative profit rankings over time, a finding that differs from prior research where time coefficients are found to be small. In addition, the research challenges the traditional IO notion that industry concentration leads to superior performance.

Said Elbanna; Ioannis C. Thanos; Vassilis M. Papadakis

2014 Journal of Strategy and Management

doi: 10.1108/JSMA-02-2014-0013

Purpose – The purpose of this paper is to enhance the knowledge of the antecedents of political behaviour. Whereas political behaviour in strategic decision‐making (SDM) has received sustained interest in the literature, empirical examination of its antecedents has been meagre. Design/methodology/approach – The authors conducted a constructive replication to examine the impact of three layers of context, namely, decision, firm and environment, on political behaviour. In Study 1, Greece, we gathered data on 143 strategic decisions, while in Study 2, Egypt, we collected data on 169 strategic decisions. Findings – The evidence suggests that both decision‐specific and firm factors act as antecedents to political behaviour, while environmental factors do not. Practical implications – The findings support enhanced practitioner education regarding political behaviour and provide practitioners with a place from which to start by identifying the factors which might influence the occurrence of political behaviour in SDM. Originality/value – The paper fills important gaps in the existing research on the influence of context on political behaviour and delineates interesting areas for further research.

Bita Arbab Kash; Aaron Spaulding; Larry D. Gamm; Christopher E. Johnson

2014 Journal of Strategy and Management

doi: 10.1108/JSMA-06-2013-0040

Purpose – The purpose of this paper is to examine how two large health systems formulate and implement strategy with a specific focus on differences and similarities in the nature of strategic initiatives across systems. The aim is to gain a better understanding of the role of resource dependency theory (RDT) and resource based view (RBV) in healthcare strategic management. Design/methodology/approach – A comparative case study design is used to describe, categorize and compare strategic change initiatives within a children's health and a multi‐hospital system located in two competitive metropolitan markets. A total of 61 in‐person semi‐structured interviews with healthcare administrators were conducted during 2009. Summary statistics and qualitative content analysis were employed to examine strategic initiatives. Findings – The two health systems have as their top initiatives very similar pursuits, thus indicating that both utilize an externally oriented RDT method of strategy formulation. The relevance of the RBV becomes apparent during resource deployment for strategy implementation. The process of healthcare strategic decision‐making incorporates RDT and RBV as separate and compatible activities that are sequential. Research limitations/implications – Results from this comparative case study are based on only two health systems. Further, the RBV perspective only takes managerial resources and time into consideration. Practical implications – Given that external resources are likely to become more constrained, it is important that hospitals leverage relevant internal resources, in the identification of competitive advantages and effective execution of strategic initiatives. Originality/value – The author propose a refined healthcare strategic management framework that takes both RDT and RBV into consideration by systematically linking strategy formulation with deployment of resources.

Scott L. Newbert

2014 Journal of Strategy and Management

doi: 10.1108/JSMA-10-2013-0061

Purpose – The purpose of this paper is to demonstrate why greater attention to performance measurement is so essential to assessing the meaningfulness and usefulness of the knowledge gained from empirical tests of the resource‐based view (RBV). Design/methodology/approach – This paper reviews the RBV empirical literature and relies on illustrative examples from various industries in order to assess the degree to which the empirical operationalization of the dependent variable in RBV research adheres to its theoretical specification. Findings – This analysis shows that although RBV theorists routinely conceptualize the dependent variable in terms of a firm's performance in direct comparison to the performance of its competitors, or relative performance, the overwhelming majority of empirical studies conducted in the field operationalize the dependent variable in terms of a firm's performance in isolation, or absolute performance. Research limitations/implications – Because significant findings are only meaningful if they are grounded in valid data, the findings suggest that support for the RBV and subsequent practical advice about resource‐based strategy appears tenuous. Therefore, this paper highlights several possible reasons for the tendency to equate absolute and relative performance, discusses the implications of this disconnect on the RBV's usefulness and scientific rigor, and suggests how both theorists and empiricists might advance theory and method to produce more meaningful knowledge about the RBV. Originality/value – By providing a critical view of the RBV, this paper offers new insights into what the authors know, what the authors do not know, and how the authors can improve what is known about this important and well‐accepted theory.

Willie Hopkins

2014 Journal of Strategy and Management

doi: 10.1108/JSMA-06-2013-0039

Purpose – For firms entering a foreign market for the first time, institutional distance can be thought of as being insufficient in the sense that knowledge gap issues associated with large distances are not easily resolved. The purpose of this paper is to explore the concept of knowledge sufficiency and the implications that this concept holds for assuaging these issues. Design/methodology/approach – The concept of knowledge sufficiency is developed into a practical framework. The framework is comprised of the knowledge that firms accumulate about potential host countries. This accumulated knowledge is disaggregated into components that provide the basic structure of the knowledge sufficiency framework and facilitate a systematic assessment of accumulated knowledge. Findings – Accumulated knowledge about foreign market risk factors that exist in potential host countries is disaggregated into three components. The breadth of knowledge component is designed to help answer the question: what do firms know about foreign market risk factors in potential host countries? The depth of knowledge component is designed to help answer the question: how much do firms know about foreign market risk factors in potential host countries. The quality of knowledge component is designed to answer the question: are firms confident in what they know about foreign market risk factors in potential host countries? Research limitations/implications – There is a tendency for strategic decision makers in firms to feel that they have “deep” knowledge of foreign market risk factors when they may actually have only “surface” knowledge of these factors. The result is likely to be an unwarranted lowering of the risk they perceive to exist in potential host countries. Consequently, the host country selected for entry may not be optimal and the mode of entry may be inappropriate. The issue to be resolved is how to ascertain how much knowledge firms actually possess about these foreign market risk factors. Practical implications – Selecting the “right” foreign market and entering that market in the “right” way is unquestionably one of the most important topics in the international literature and has been extensively studied. However, there is no central repository of finding from these studies that will help firms going international for the first time to systematically assess whether their choice of market and entry mode is optimal. Utilization of the knowledge sufficiency framework will significantly improve firms’ chances of entering the “right” foreign markets in the “right” way, which holds practical implications for their initial and long‐term performance in these markets. Originality/value – For firms entering a foreign market for the first time, answers to two questions are essential: what foreign market should we enter? How should we enter that foreign market? The extant literature does not provide a framework that allows firms to systematically search for answers to these questions such that, when satisfactorily found, will boost confidence that answers to these two questions are optimized. In addition to filling an important gap in the extant literature, the framework's usefulness as an aid for making internationalization decisions also makes an important contribution to practice.

Julie Winnard; Andy Adcroft; Jacquetta Lee; David Skipp

2014 Journal of Strategy and Management

doi: 10.1108/JSMA-11-2012-0059

Purpose – Businesses are always seeking resilient strategies so they can weather unpredictable competitive environments. One source of unpredictability is the unsustainability of commerce's environmental, economic or social impacts and the limitations this places on businesses. Another is poor resilience causing erroneous and unexpected outputs. Companies prospering long‐term must have both resilience and sustainability, existing in a symbiotic state. The purpose of this paper is to explore the two concepts and their relationship, their combined benefits and propose an approach for supporting decision makers to proactively build both characteristics. Design/methodology/approach – The paper looks at businesses as complex adaptive systems, how their resilience and sustainability can be defined and how these might be exhibited. It then explores how they can be combined in practice. Findings – The two qualities are related but have different purposes, moreover resilience has two major forms related to timescales. Both kinds of resilience are identified as key for delivering sustainability, yet the reverse is also found to be true. Both are needed to deliver either and to let businesses flourish. Practical implications – Although the ideal state of resilient sustainability is difficult to define or achieve, pragmatic ways exist to deliver the right direction of change in organisational decisions. A novel approach to this is explored based on transition engineering and robustness engineering. Originality/value – This paper links resilience and sustainability explicitly and develops a holistic pragmatic approach for working through their implications in strategic decision making.