Supplier-Switching Inertia and Competitive Asymmetry: A Demand-Side Perspective

Building on strategic management, operations strategy, and supplier management literatures, this article presents a framework for supplier selection from the demand-side perspective. We highlight the role of a purchasing firm’s switching inertia in the supplier selection process and demonstrate the usefulness of our framework for the industrial automation industry. Empirical data for this study was collected from 171 corporate and plant-level executives in pharmaceutical, chemical, and paper-and-pulp manufacturing industries in the United States. A series of Web-based individually customized discrete choice experiments asked the respondents to either switch to the new supplier or stay with the existing supplier. Based on the results of these experiments, we demonstrate the existence of switching inertia in the supplier-selection process and discuss the managerial implications for incumbent and challenger supplier firms

The theory of the firm and its critics: a stocktaking and assessment

Includes bibliographical references."Prepared for Jean-Michel Glachant and Eric Brousseau, eds. New Institutional Economics: A Textbook, Cambridge, Cambridge University Press.""This version: August 22, 2005."Since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm

Mode of foreign market entry : an integrative study

This study investigates the foreign market entry decision of multinational firms from three theoretical perspectives--namely transaction cost/internalization, competitive strategy and organizational capability. It is argued that each perspective primarily focuses on a different level of analysis--the firm or division, the transaction and the organizational unit respectively. The final decision regarding the means of foreign market entry is a choice made after considering these three forces simultaneously. The study contributes by developing an understanding of the role of organizational capability in the mode of entry decision. It further enriches theory through developing some of the interrelationships between the three perspectives.The empirical research was conducted through a field study and a cross-sectional questionnaire survey sent to multinational firms with headquarters in Europe and North America. The results suggest that competitive strategy and organizational capability perspectives are most significant in determining the choice of entry mode. The transaction cost perspective does not appear to be significant.One broad implication for managers is the importance of both analyzing the characteristics of the chosen product-market and critically examining the firm's capabilities in order to focus on what it does best, build upon it and, where necessary, complement this through collaboration with others

Revisiting Multinational firm's Tolerance for Joint Ventures: A Trust-Based approach

In spite of the increasing popularity of international joint ventures, managers express a high level of dissatisfaction with them. This paper argues that overemphasis on the outcome has resulted in a neglect of the social processes underlying the outcome. The paper elaborates upon the rationale for a cooperative approach towards interorganizational collaborative relationships based on trust, and discusses it in the context of joint ventures. This is then applied towards understanding multinational ownership preferences and tolerance for joint ventures. It is argued that trust-centered logic is largely consistent with approaches that emphasize the issue of ownership, and deepens and enriches the insights provided by the latter. A shift in focus from ownership to relational dynamics is encouraged.© 1995 JIBS. Journal of International Business Studies (1995) 26, 117–137

Opportunism and trust in joint venture relationships: an exploratory study and a model

This paper discusses two approaches towards managing interorganizational relationships, based on opportunism and trust respectively. Data is presented from interviews conducted with four managers to investigate the relevance of these two approaches in their joint venture relationships. Both the approaches are found to be important but play different roles at different stages of the relationship. A conceptual model is then developed to represent the relationship process in terms of its formation and sustenance. In spite of differences between the two approaches, they share common objectives of efficiency and flexibility. It is useful to consider them as complementary to one another, with transaction costs being viewed more broadly to incorporate both the opportunism-avoidance as well as the trust-creation dimensions of interorganizational relationships.

Acquisitions as entrepreneurship: asymmetries, opportunities, and the internationalization of multinationals from emerging economies

We investigate the rapid internationalization of many multinationals from emerging economies through acquisition in advanced economies. We conceptualize these acquisitions as an act and form of entrepreneurship, aimed to overcome the ‘liability of emergingness’ incurred by these firms and to serve as a mechanism for competitive catch-up through opportunity seeking and capability transformation. Our explanation emphasizes (1) the unique asymmetries (and not necessarily advantages) distinguishing emerging multinationals from advanced economy multinationals due to their historical and institutional differences, as well as (2) a search for advantage creation when firms possess mainly ordinary resources. The argument shifts the central focus from advantage to asymmetries as the starting point for internationalization and, additionally, highlights the role of learning agility rather than ability as a potential ‘asset of emergingness.’Ye

The International Biotechnology Industry: A Dynamic Capabilities Perspective

This paper extends our understanding of the diffusion of technology across firms and nations. The dynamic capabilities perspective in its micro and macro version provides the theoretical framework for an explanation of the international organization of the biotechnology industry. We address two interrelated aspects of the phenomenon of international diffusion: organizational form and geographical flows. An examination of the empirical profile lends support to the dynamic capabilities argument.© 2000 JIBS. Journal of International Business Studies (2000) 31, 325–335

The Co-evolutional Advantage: Strategic Management Theory and the Eclectic Paradigm

The eclectic paradigm has been one of the leading frameworks for explaining multinational activity over the past two decades. Yet recent trends in international business pose a challenge to the explanatory power of the paradigm. Strategic management theory, with its focus on performance differences between firms, provides a useful complement to the OLI framework in understanding the activities of the modern multinational. In particular, global competition and the management of a firm's global stocks and flows of knowledge merit closer attention.The advent of global competition requires us to shift from the existing institutional perspective of comparisons of firms and markets or of foreign firms and local firms to a firm-level perspective of comparisons of the multinational firm to its global competitors. It also necessitates a focus on firm-level capabilities in knowledge management relative to competitors, the development of these capabilities involving both macro and micro co-evolutionary processes. Our arguments incorporate these changes to extend the OLI paradigm to accommodate both an economic and a strategic management perspective.Eclectic Paradigm, Global Strategy, Multinational Firms, Co-EVOLUTION, Resource-BASED View,