Appropriating value from external technology: Absorptive capacity dimensions and innovation strategy

Innovation from external sources has continued to grow in importance in recent years, in defiance of conventional wisdom advocating internal sourcing of core technologies. One important reason for the previous emphasis on internal sourcing of core technologies relates to concerns of horizontal and vertical appropriability. Thus, the question arises of whether and how firms can reconcile horizontal and vertical appropriability with the rise of the external sourcing of new technologies. Must firms sacrifice value appropriation on the altar of value creation? To answer these questions, we delve beneath individual technological innovations to examine the technical and market capabilities underlying them. Specifically, we show how the amount of value a firm stands to appropriate relative to competitors and relative to technology suppliers depends on the fit between its innovation strategy and its previous investments in distinct dimensions of absorptive capacity. At the same time, we also show how first-order capabilities and dynamic capabilities interact to determine firm performance. Thus, we shed light on how and when the move to 'open' innovation will affect the amount of value innovating firms stand to appropriate.Innovation strategy; external sourcing; technology innovation; value appropriation;

Corporate strategy revisited: A view from complexity theory

Despite its long tradition and well known contributions, corporate strategy research is yet far from being mature. This paper proposes an innovative framework that approaches the field from the theoretical perspective provided by complexity theory. We propose to see the corporate level of the organization as the driver, pacer and framer of the overall firm's evolution process. Drive is provided by the cognitive representation of the corporate fitness landscape that is implicit in the firm's corporate plan. Pacing is a consequence of the kind of strategic initiatives ("search strategy") developed by the company. Framing is achieved through the architectural design that the corporate level implements for the firm.corporate strategy; complexity theory; self-organizing;

What do we really know about when technological innovation improves performance (and when it does not)?

Most approaches to innovation bear the implicit assumption that increased innovativeness leads to improved organizational performance. Thus, more attention has been focused on innovativeness than on innovation performance; on novelty than on value. However, recent empirical evidence calls into question the unqualified optimism surrounding innovation, and leads us to ask what we really know about when technological innovation improves performance. In this paper, we seek to make a contribution by presenting the results of an exhaustive review of extant knowledge on the outcomes of technological innovation. Our synthesis of the literature allows us to relate in one parsimonious model the drivers and moderators of the antecedents, technical outcomes, and performance outcomes of technological innovation and technological change. We also make sense of the proliferation of terms, and consequent terminological ambiguity, which characterizes a lot of work on technological innovation. Finally, in the light of the model presented and recent developments in work on firm capabilities, we indicate possible avenues for further development of this critical area of research.Technological innovation; organizational performance; innovation and innovativeness;

Organizational tension between static and dynamic efficiency, The

Efficiency has been defined in at least two different ways: in terms of the refinement of existing products, processes or capabilities (static efficiency) or the development of new ones (dynamic efficiency). This paper analyzes the organizational trade-off between these two forms of efficiency. It shows that there is a tendency towards extremes, and that the irreversibility of efficiency orientations tends to tip the balance to be struck between static and dynamic efficiency toward the latter. The paper also advances hypotheses about the industry, business and corporate factors that mediate between the choice of a particular efficiency orientation and organizational performance.organizational trade-off; efficiency;

Corporate strategy in turbulent environments: Key roles of the corporate level

This paper analyzes the evolution during the period 1986-2002 of the corporate strategy of Lujan, a highly successful car components manufacturer headquartered in Spain, as a way to explore how the corporate level influences the successful evolution of a company exposed to a "turbulent" environment over a long period. We find that the corporate level plays three key roles. First, it drives a firm's evolution by developing a cognitive representation of the firm's competitive landscape. Second, it paces the company's evolution by alternately shifting the balance of organizational initiatives between static efficiency-based "local search" strategies, chosen in times of stability or economic slowdown, and dynamic efficiency-based "long jump" strategies, adopted during periods of major environmental turbulence. Long-jump corporate strategies, carried out through limited downside strategic initiatives such as real options and strategic alliances ("off-line long-jumps"), are particularly frequent in these circumstances. The third role consists of developing an organizational architecture that frames the self-organized coordination of the different business divisions. The Lujan story clearly illustrates the important role of corporate strategy in a firm that must undergo radical transitions as a result of major environmental changes.corporate strategy; turbulent environments; complexity theory; car components;

Competing through business models

In this article a business model is defined as the firm choices on policies, assets and governance structure of those policies and assets, together with their consequences, be them flexible or rigid. We also provide a way to represent such business models to highlight the dynamic loops and to facilitate understanding interaction with other business models. Furthermore, we develop some tests to evaluate the goodness of a business model both in isolation as well as in interaction with other business models of different organizations, be those competitors, complements, suppliers, partners, etc.Business model; Interaction; Competitive Strategy; Competitive Dynamics;

The increasing role professional service firms play in the reform of shareholders' meetings

The purpose of this paper is to analyse the role of consultants, professional service firms or knowledge intermediaries in articulating the collective action of shareholders. The regulatory background is the current proposals for the reform of General Meetings of Shareholders in Spain. General Meetings are particularly revealing of shareholder activism, as they are the forum in which shareholders' actions can be most effective. We believe that our arguments are, to a very large extent, equally applicable to other European countries, as these proposals have been put forward in Spain within the context of the wider governance reforms promoted by the Winter Report in Europe and other national and supranational regulatory efforts.shareholders meetings; corporate governance; consultants;

A formal evaluation of the performance of different corporate styles in stable and turbulent environments

The notion of "parenting styles", introduced by Goold, Campbell and Alexander, has been widely acknowledged by the Corporate Strategy literature as a good broad description of the different ways in which corporate managers choose to manage and organize multibusiness firms. The purpose of this paper is to present a formal test of the relationship between parenting style and performance. For this test, we developed a set of agent-based simulations using the Performance Landscapes framework, which captures and describes the evolution of firms led by different parenting styles in business environments with different levels of complexity and dynamism. We found that the relative performance of each style is contingent upon the characteristics of the environment in which the firm operates. In less complex business environments, the Strategic Planning style outperforms the Strategic Control and Financial Control styles. In highly complex and highly dynamic environments, by contrast, the Strategic Control style performs best. Our results also demonstrate the importance of planning and flexibility at the corporate level and so contribute to the wider debate on Strategic Planning vs. Emergent Strategies.Corporate strategy; Parenting styles; Agent-based models;

Company strategy: Business model reconfiguration for innovation and internationalization

The competitiveness of a country is the result of the competitiveness of its firms. The competitiveness of firms is partly determined by how their business models interact with the environment to produce offerings with added value. This chapter contributes to the reflection on Catalonia's competitiveness by using the business model concept to highlight the need to adapt business models to new realities in the Catalan environment. Catalan firms have made little effort to reconfigure their business models after being affected by important external shocks. We derive recommendations by presenting and analyzing examples of companies that have innovated in their business models. Business models sit at the core of competitiveness and should be the focus of managers willing to create efficient firms that foster sustained wealth in Catalonia.Strategy; Business; Innovation; Internationalization; competitiveness; Firms;

Managerial appraisal and compensation: The case of Spain

This paper explores some fundamental tasks associated with corporate governance: manager appraisal and compensation. Most of the empirical research in this area has been centered on Anglo-Saxon countries. Some European countries, such as Spain, have a very different governance tradition. Given this context, the work presented here has two objectives: 1.- To describe existing appraisal and compensation practices in Spain, comparing them with those used in the USA. 2.- To study the determinants of CEO compensation, and the relationship between CEO compensation and certain Board practices, using agency theoryAppraisal; compensation; agency