Market Frictions, Governance and Economic Rents: Taking Stock and Looking Ahead

This paper develops a more unified organizational economics theory within Strategy. We begin with perfectly competitive markets derived from the first fundamental welfare theorem of economics, and develop a parsimonious typology of market frictions. We show how two primary questions in Strategy--why firms exist and why some firms outperform others--can be evaluated from this market frictions logic. Building on this logic enables more systematic explanations and predictions concerning governance structures and economic rents in Strategy research.

Evidence-Based Management in "Macro" Areas: The Case of Strategic Management

Despite its intuitive appeal, evidence-based management (EBMgt) faces unique challenges in "macro" areas such as Organization Theory and Strategy Management, which emphasize actions by organizations, and business and corporate leaders. The inherent focus on complex, multi-level and unique problems present serious challenges. EBMgt will nurture the establishment of a new model of research that is not only cumulative in its knowledge-building but also promotes engaged scholarship. Further, the uncertainty and conflict that characterize "macro" decision contexts heighten the need for EBMgt. We put forward four recommendations to advance EBMgt: (1) using more sophisticated meta-analyses; (2) providing syntheses that go beyond quantitative summaries; (3) engaging in a disciplined conversation about our implicit "levels of evidence" frameworks; and (4) developing decision supports.

The Interdependence of Private and Public Interests

The predominant focus in research on organizations is either on private or public institutions without consistent consideration of their interdependencies. The emphasis in scholarship on private or public interests has strengthened as disciplinary and professional knowledge has deepened: management scholars, for example, tend to consider the corporation as the unit of analysis, while scholars of public policy in government, public health, social science and education often analyze governmental, multilateral, community and non-profit organizations. This article advocates a partial merging of these research agendas on the grounds that private and public interests cannot be fully understood if they are conceived independently. We review three major areas of activity today in which public and private interests interact in complex ways, and maintain that current theories of organization science can be deployed to understand better these interactions. We also suggest that theories of public-private interaction also require development and describe a concept called "global sustainable value creation," which may be used to identify organizational and institutional configurations and strategies conducive to worldwide, intertemporal efficiency and value creation. We conclude that scholarship on organizations would advance if private-public interactions were evaluated by the criterion of global sustainable value creation.

The Impact of User Interface Design on Idea Integration in Electronic Brainstorming: An Attention-Based View

This paper introduces an attention-based view of idea integration that underscores the importance of IS user interface design. The assumption is that presenting ideas via user interface plays a key role in enabling and motivating idea integration in electronic brainstorming (EBS), and thus advances productivity. Building upon Cognitive Network Model of Creativity and ability-motivation framework, our attention-based theory focuses on two major attributes of user interface: visibility and prioritization. While visibility enables idea integration via directing attention to a limited set of ideas, prioritization enhances the motivation for idea integration by providing individuals with a relevant and legitimate proxy for value of the shared ideas. The theory developed in this paper is distinct from previous research on EBS in at least two ways: (1) this theory exclusively focuses on idea integration as the desired outcome and studies it in the context of IS user interface; and (2) rather than debating whether or not EBS universally outperforms verbal brainstorming, the proposed theory revisits the links between user interface and idea integration as an attention-intensive process that contributes to EBS productivity. Idea integration by individuals within a group is an essential process for organizational creativity and thus for establishing knowledge-based capabilities. Lack of such integration significantly reduces the value of idea sharing, which has been a predominant focus of the EBS literature in the past. The current theory posits that the ability of electronic brain-storming to outperform nominal or verbal brainstorming depends on its ability to leverage information system (IS) artifact capabilities for enhancing idea integration to create a key pattern of productivity. The developed theory provides a foundation for new approaches to EBS research and design, which use visibility and prioritization, and also identify new user interface features for fostering idea integration. By emphasizing idea integration, designers and managers are provided with practical, cognition-based criteria for choosing interface features, which can improve EBS productivity. This theory also has implications for both the practice and research of knowledge management, especially for the attention-based view of the organization.

Supply Portfolio Concentration in Outsourced Knowledge-Based Services

In the extant vertical integration literature, the question of how the firm's portfolio of outsourced work is managed across suppliers has been relatively understudied. We seek to advance this area of research by examining factors that influence how concentrated the firm's outsourcing is among its set of suppliers. Using data on the outsourcing of patent legal services, we find empirical evidence that outsourced knowledge-based service work is concentrated in the hands of fewer suppliers when: (1) it requires greater firm-specific knowledge; (2) there is a higher level of interrelatedness across outsourced projects; (3) the firm's reliance on outsourcing is high; (4) its outsourced projects are focused on a narrower (capability) domain; and (5) the technological dynamism of this domain is low. Our study suggests that examining portfolio-level phenomena in outsourcing is a useful complement to the predominant focus on transaction-level outcomes in prior research because it provides insights into how firms manage tradeoffs across their entire set of outsourced projects.

Toward a new social contract theory in organization science

Includes bibliographic references (p. 23-29)

A Balancing-Process Approach to Firm Internationalization

Drawing on the resource-based view of the firm, this paper develops a balancing-process approach to explain the motivations and location choices of foreign direct investment (FDI). In this approach, FDI is viewed as a means to balance a firm's portfolio of resources and capabilities through utilizing foreign strategic factor markets with the ultimate goal of achieving growth and sustainable competitive advantage. This approach joins exploitative and explorative FDI in a single framework and helps explain why a firm can conduct both types of FDI simultaneously.

Exploring the Problem-Finding and Problem-Solving Approach for Designing Organizations

An emerging problem-finding and problem-solving approach suggests that management's discovering problems to solve, opportunities to seize, and challenges to respond to, are vital to organizations. This paper explores the extent to which the problem-finding and problem-solving approach can provide a foundation for joining the capabilities, dynamic capabilities, and governance perspectives as a way to help scholars and practitioners to coherently design organizations from the perspective of design science. The problem-finding and problem-solving approach offers a unit of analysis and a set of behavioral assumptions that enable us to address open questions within the extant literature and to propose new questions in management research.

FARMERS' PREFERENCES FOR CROP CONTRACTS

An empirical approach combining elements of principal-agent theory and transaction cost economics is used to determine farmers'Â’ preferences for contract terms in crop production. The approach is tested by asking grain farmers to rank contract choices and specify price premiums in simulated case situations. The statistical results indicate that farmers'Â’ preferences for rates of cost sharing, price premiums, and financing arrangements are significantly influenced by asset specialization and uncertainty associated with the case situations, and by selected business and personal characteristics.Farm Management,