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VideoArticle Title/ Author(s)/Managerial Abstract
The effect of coordination requirements on sourcing: Evidence from patent prosecution services| SMJ Video AbstractThe effect of coordination requirementson sourcing decisions: Evidence frompatent prosecution services
George Chondrakis;Eduardo Melero, Mari Sako
Although the link between coordination requirements and vertical integration is theoretically well established, empirical tests of this relationship are hard to implement due to the simultaneous determination of both variables. In this study, we take advantage of regulatory changes in patent prosecution in the United States to provide plausibly causal evidence linking increases in coordination requirements with insourcing. Moreover, we examine the role of plural sourcing, that is, simultaneously making and buying, when responding to changes in coordination requirements. We find that the move toward insourcing is more pronounced for plural-sourcing firms as compared to firms relying on outsourcing. These results are consistent with the view that plural sourcing provides firms with flexibility to switch between sourcing modes when facing changing coordination requirements.
How Does a Partner’s Acquisition Affect the Value of the Firm’s Alliance with That Partner?| SMJ Video AbstractHow does a partner's acquisition affect thevalue of the firm's alliance with that partner?
Dovev Lavie;Randi Lunnan Binh Ming T. Truong
How does an acquisition initiated by a firm's alliance partner affect the value that the firm can create and capture from its alliance with that partner? We conjecture that the similarity between the businesses of the firm and its partner's acquisition target restricts the firm's ability to create and capture value from its alliance, whereas the complementarity between their businesses enhances the firm's gain from its alliance. We further expect relational embeddedness between the firm and its partner to mitigate the competitive tension associated with similarity while rein-forcing synergies ascribed to complementarity. Our analysis of 361 firms and their 590 alliances with91 partners that acquired 164 targets during 2000–2016 supports our predictions about business similarity and complementarity but refutes those concerning relational embeddedness.
Hyperspecialization and Hyperscaling: A Resource-Based Theory of the Digital Firm| SMJ Video AbstractHyperspecialization and hyperscaling:A resource-based theory of the digital firm
Brian Wu;Gianluigi Giustiziero, Tobias Kretschmer, Deepak Somaya
Digital firms tend to be both narrow in their vertical scope and large in their scale. We explain this phenomenon through a theory about how attributes of firms' resource bundles impact their scale and specialization. We posit that highly scalable resource bundles entail significant opportunity costs of integration(vs. outsourcing), which simultaneously drive “hyperspecialization” and “hyperscaling” in digital firms. Using descriptive theory and a formal model, we develop several propositions that align with observed features of digital businesses. We offer a parsimonious modeling framework for resource-based theorizing about highly scalable digital firms, shed light on the phenomenon of digital scaling, and provide insights into the far-reaching ways that technology-enabled resources are reshaping firms in the digital economy.
The Dark Side of Institutional Intermediaries | SMJ Video AbstractThe dark side of institutional intermediaries: Junior stock exchanges and entrepreneurship
Robert N. Eberhart; Charles E. Eesley
Investors and entrepreneurs face uncertainty when deciding what firms to start and fund. We show that an intermediation effort to make entry easier for entrepreneurs increases the uncertainty that entrepreneurs and investors face. For investors, the enthusiasm for technology firms engendered by the new exchange can motivate investment in marginal firms to maintain as desired deal flow. However, lower firm growth and less liquidity in the future is likely. For entrepreneurs, our results indicate that it is more challenging to manage technology firm growth as well as there is potential opportunity to investigate other industries. Finally, for policy-makers and supporters of the new exchanges, our results imply that investment flows are altered as intended, but unless listing standards remain high, the virtuous cycle of investment upon which a healthy entrepreneurial climate rests may be disrupted, muting the intended effects of the new exchange.
Replication using templates | SMJ Video AbstractReplication using templates: Does the unit learn from itself, the template, or both?
Megan Lawrence
Transferring valuable practices within the firm is an important yet difficult task for many firm types, especially multi-unit firms. One way that firms choose to transfer practices is through the use of templates—working examples of the new practice that act as models. Using data from a Fortune 100 retail chain, I show that the use of templates affects the way in which units learn to implement the practice. Because managers face tradeoffs when devoting attention to implementing the new practice, they must balance learning from the template with incorporating their own local experience with the new practice. Overall, my results suggest that choosing many templates is less important than choosing a few templates with superior performance for firms whose units or contexts are similar.
Entry, Exit and the Potential for Resource Redeployment | SMJ Video AbstractEntry, Exit and the Potential for Resource Redeployment
Lee,Gwendolyn K.; Marvin B. Lieberman, Timothy B. Folta
The ability to redeploy resources inside the firm reduces the cost of entry “mistakes.” If a new business turns out to have poor profitability, the ability to redeploy more of its resources back into the firm's other businesses allows recycling of investment and can speed up the retreat. This reduces not only the cost of exit, but also the cost of entry. Managers should therefore be more willing to experiment and take risks in developing businesses that are more related to the firm's existing businesses, whereas if redeployment is likely to be difficult, managers should be cautious about entering. New businesses should be chosen in ways that facilitate redeployment, and managers should consider the implications of redeployment when setting the performance thresholds that justify entry and exit .
Kim Boal on emerging from bankruptcy | SMJ Video AbstractResolving a Dilemma of Signaling Bankrupt-firm Emergence: A Dynamic Integrative View
Boal,Kimberly; Jun Xia, David D. Dawley, Han Jiang, Rong Ma
Applications of signaling theory to predict reorganization outcomes are in their infancy. The dynamic integrative framework developed in this study is useful in identifying different types of signals and predicting outcomes of firms in crisis. The results of this study can be useful for various decision makers to predict the turnaround potential of bankrupt firms. Our results show that an increase in alliance partners, institutional investors, and securities analysts following a bankrupt firm predicts the firm's reorganization outcome. Moreover, firms that are able to gain positive attention from key stakeholders will also gain positive interpretations of their strategic efforts. Signals from alliance partners and institutional investors amplify the signaling effect of a firm's de‐diversification effort in predicting its reorganization outcome.
Christian Stadler on Erwin Danneels about innovation & competence renewal | SMJ Video AbstractThe dynamics of product innovation and firm competences
Erwin Danneels
This study examines how product innovation contributes to the renewal of the firm through its dynamic and reciprocal relation with the firm's competences. Field research in five high-tech firms of varying age, size, and level of diversification is combined with analysis of existing theory to develop the findings of the study. Based on the notion that new products are created by linking competences relating to technologies and customers, a typology is derived that classifies new product projects based on whether a new product can draw on existing competences, or whether it requires competences the firm does not yet have. Following organizational learning theory, these options are conceptualized as exploitation and exploration. These organizational learning concepts are used to gain a dynamic and path-dependent view of product innovation and firm development, and to reveal the unique nature and challenges of different types of product innovation. 
Christian Stadler on Product & International Diversification | SMJ Video AbstractThe relationship between product and international diversification: The role of experience
Michael C. J. Mayer; Christian Stadler, Julia Hautz
We establish prior diversification experience as a key determinant of the relationship between growth of product and international diversification. Prior diversification experience allows firms to overcome short-run constraints on simultaneous diversification growth imposed by the difficulty to transfer tacit knowledge, ambiguous competencies, and limited absorptive capacity. Studying U.S. and European firms, we find a positive relationship between growth in product and international scope for firms with high and a negative one for those with little prior diversification experience. Further, we find that product diversification experience has greater impact than international diversification experience.