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What are the two main schools of thought on the value of business planning?

Planning school and learning school

What is the central hypothesis of Brinckmann et al. (2010) regarding business planning and performance?

The central hypothesis is that business planning improves the performance of small businesses.

What three contextual factors did Brinckmann et al. (2010) investigate as possible moderators of the planning-performance relationship?

The three contextual factors are: The development stage of the firm. The form of business planning. The cultural context.

Describe the "liability of newness" and how it can affect the effectiveness of business planning.

The liability of newness refers to disadvantages faced by new firms due to lack of experience, resources, and legitimacy. This can reduce the effectiveness of planning because new firms encounter greater uncertainty and have less information available. Signup and view all the answers

What is cultural uncertainty avoidance, and how can this affect the planning-performance relationship?

Cultural uncertainty avoidance refers to the extent to which members of a culture feel threatened by uncertain or unknown situations. In high-uncertainty-avoidance cultures, managers may adhere more strictly to predetermined plans, limiting their flexibility and reducing performance. Signup and view all the answers

What were the key findings of the meta-analysis regarding the impact of business planning on the performance of new versus established businesses?

The meta-analysis found that business planning improves performance for both new and established businesses. However, the effect was significantly stronger for established businesses. Signup and view all the answers

Describe the influence of cultural uncertainty avoidance on the effectiveness of business planning.

High cultural uncertainty avoidance reduces the positive effects of business planning on performance, likely because managers are less inclined to deviate from their plans even when necessary. Signup and view all the answers

2 Types of uncertainty:

Effect uncertainty: concerns the inability to predict how future conditions of the environment will affect the organization Response uncertainty: regards the unknown response options and consequences that different responses will have Signup and view all the answers

Causation and effectuation: toward a theoretical shift from economic to entrepreneurial - Sarasvathy 2001

What is the primary difference between causation and effectuation in terms of goals?

Causation starts with a pre-defined goal and selects means to achieve that goal, while effectuation starts with available means and explores which goals can be achieved with them. Signup and view all the answers

Decisions in economics and management may be discussed at the several levels:

Individual Firm Industry/market Economy Signup and view all the answers

What are the three categories of "means" entrepreneurs start with according to effectuation theory?

Entrepreneurs start with: Who they are (traits, identity). What they know (knowledge, expertise). Whom they know (social networks). Signup and view all the answers

Effectuation basic principles:

<ol> <li>Bird in the hand</li> <li>Affordable loss</li> <li>Lemonade</li> <li>Crazy Quilt</li> <li>Pilot on the plane</li> </ol> Signup and view all the answers

A capabilities perspective on the effects of early internationalization on firm survival - Sapienza 2006

What is the main thesis of Lu and Beamish regarding the relationship between geographic diversification and firm performance?

Lu and Beamish argue that the relationship between geographic diversification and firm performance is not linear but takes the shape of an S-curve. Performance initially decreases with increased internationalization, then rises at moderate levels of internationalization, and finally decreases again at very high levels. Signup and view all the answers

Name three advantages of geographic diversification for companies.

The advantages are: Economies of scale and synergies. Risk diversification by spreading investments across multiple countries. Increased market power over suppliers, distributors, and customers. Signup and view all the answers

What is meant by the "liability of foreignness"?

It refers to the disadvantages foreign companies face in host countries compared to local firms. These disadvantages include unfamiliarity with local markets, cultures, and regulations, leading to higher costs or lower efficiency. Signup and view all the answers

Describe the three phases of the S-curve relationship between internationalization and firm performance.

Initial phase: Costs of internationalization (liability of newness and foreignness) outweigh benefits, causing performance to decline. Intermediate phase: Experience and economies of scale lead to improved performance. Mature phase: High coordination costs exceed the benefits, leading to declining performance. Signup and view all the answers

What were the two performance metrics used in the study?

Return on Assets (ROA): An accounting-based measure reflecting profitability. Tobin's Q: A market-based measure comparing a firm's market value to the replacement cost of its assets. Signup and view all the answers

What were the control variables:

RD-intensity Firm Size Firm Age Signup and view all the answers

Which model was found between internationalization and performance

Inverted M-curve Signup and view all the answers

A capabilities perspective on the effects of early internationalization on firm survival - Sapienza 2006

What is the central paradox explored in the article regarding early internationalization?

Early internationalization offers opportunities for rapid growth but can endanger a firm's survival chances due to the high costs and risks involved. Signup and view all the answers

What is 'imprinting,' and how does it influence the development of dynamic capabilities in firms that internationalize early?

Imprinting refers to the lasting influence of events that occur during a firm's early stages. Early internationalization exposes firms to various challenges, forcing them to adapt and develop new capabilities, creating an imprint for adaptability and readiness for change. Signup and view all the answers

Explain how a firm's age can moderate the effects of internationalization on survival and growth.

Younger firms are more flexible and quicker to develop new capabilities, enhancing their growth potential. Older firms have more resources and positional advantages, increasing their survival chances. Signup and view all the answers

Moderators of this study:

Age of internationalization Managerial experience Resource fungibility Signup and view all the answers

What is the foreign establishment mode choice, and what are the two main forms?

<ol> <li>Greenfield innovation</li> <li>Acquisition</li> </ol> Signup and view all the answers

How can the resource-based view (RBV) help explain establishment mode choice?

The RBV suggests that firms must manage their valuable, rare, inimitable, and non-substitutable resources to achieve sustainable competitive advantages. Signup and view all the answers

What are the two main categories of resources discussed in the article? Provide an example of each.

Knowledge-based resources (e.g., technological resources, marketing resources). Experience-based resources (e.g., general international experience, host country experience, experience with establishment modes). Signup and view all the answers

What is a meta-analysis, and what are its advantages for this research?

A meta-analysis combines the results of multiple studies to identify general trends and effect sizes. Its advantages include systematically aggregating and evaluating existing evidence and contextualizing relationships through moderator variables. Signup and view all the answers

Conclusion: Knowledge based:

Firms with more knowledge based resources are more likely to choose for a greenfield investment Firms with greater technological resources are more likely to choice for a greenfield investment The relation between marketing resources and the firms establishment mode is insignificant Signup and view all the answers

Conclusion Experience based:

Firms with a lot of experience based resources have a higher propensity of conducting acquisition Host country experience and acquisition experience are both significant indicating of an acquisition choice by firms with abundance of these resources Greenfield experience + general international experience -> Greenfield investment Signup and view all the answers

What is the moderator

Cultural Distance Signup and view all the answers

Integrating acquired capabilities: when structured integration is (un)necessary - Paranam, Autio, Chaundhur - 2009

How do the authors define structural integration in the context of acquisitions?

Structural integration is the combination of previously separate organizational units into the same organizational entity following an acquisition. This means that the activities of the acquiring and acquired organizations are placed within the same organizational boundaries. Signup and view all the answers

The alternative to structural integration

Structural separation: activities originating in the target and acquiring firms, although capabilities in acquired firms Signup and view all the answers

Explain why the authors see interdependence as a key factor driving the need for structural integration.

Interdependence implies that the value of performing one activity depends on how another activity is carried out. When there is a high degree of interdependence between the acquiring and acquired organizations, more coordination is needed to ensure activities align effectively. Structural integration facilitates this coordination through formal mechanisms like shared authority and procedures. Signup and view all the answers

The 3 types of interdependence

<ol> <li>Pooled</li> <li>Sequential</li> <li>Reciprocal</li> </ol> Signup and view all the answers

What do the authors mean by 'common ground,' and how can it provide an alternative to structural integration?

'Common ground' refers to shared knowledge that is known and acknowledged by individuals in both the acquiring and acquired organizations. This shared knowledge enables informal coordination, allowing individuals to align their actions without relying on formal mechanisms. Signup and view all the answers

Name three control variables included by the authors in their analysis and explain why they are important.

Size of the acquired organization: Larger acquired organizations may have more resources and expertise, which can influence integration. Age of the acquired organization: Older acquired organizations may have more established routines and cultures, making integration more complex. Acquisition experience of the acquiring organization: Acquirers with more experience in integration may have developed better processes and knowledge, facilitating integration. Signup and view all the answers

What is the main conclusion of the article regarding the role of common ground in technological acquisitions?

The study concludes that common ground plays an important role in reducing the need for structural integration in technological acquisitions. When sufficient common ground exists between the acquiring and acquired organizations, they can coordinate interdependence without relying on formal and potentially disruptive integration mechanisms. Signup and view all the answers

How to capture value from innovation - Pisano & Teece - 2007

What is the core message of the Profiting from Innovation (PFI) framework?

The PFI framework posits that innovators need either strong protection against imitation or ownership of critical complementary technologies and/or bottleneck assets in the value chain to profit from innovation. Signup and view all the answers

What is the difference between a strong and a weak appropriability regime? Provide an example of each.

A strong appropriability regime makes imitation difficult through robust legal protection or inherently hard-to-imitate technologies, such as software. A weak appropriability regime offers little protection, as seen with mechanical technologies that are easily reverse-engineered. Signup and view all the answers

Legal protections:

Patents Copyrights Trade secrets Signup and view all the answers

Describe the difference between a "vertical" and "horizontal" industry architecture.

In a vertical architecture, a company controls all aspects of a product or service, whereas in a horizontal architecture, companies specialize in specific layers of the value chain. Signup and view all the answers

How firms capture value from their innovations - James and Leiblein - 2013

When is the highest bargaining power profits?

When the appropriability regime is strong and the complementary assets are tightly held Signup and view all the answers

Value capture mechanism by Jones:

Patents Secrecy Lead time Invest in complementary assets Signup and view all the answers

Sets of factors by Jones

Institutional environment Industry Firm Technology Signup and view all the answers

Formal and informal appropriation mechanisms: The role of openness and innovativeness. Zobel, A., Lokshin, B., & Hagedoorn, J. (2017)

What are the main differences between formal and informal protection mechanisms?

Formal protection mechanisms are legally enforced, while informal mechanisms are not. Formal mechanisms provide stronger legal protection, whereas informal mechanisms are more flexible and cost-effective. Signup and view all the answers

Why might radical innovators be reluctant to use formal protection mechanisms?

Radical innovators often avoid formal protection mechanisms to prevent disclosing the details of their innovations, as this could enable competitors to develop similar products. Signup and view all the answers

Which informal protection mechanisms are particularly relevant for radical innovators?

<ol> <li>Secrecy, 2) lead time, and 3) complexity are relevant informal protection mechanisms for radical innovators, as they protect knowledge without requiring public disclosure.</li> </ol> Signup and view all the answers

Which type of external search strategy (breadth or depth) is more important for incremental innovators in determining their use of formal protection mechanisms?

For incremental innovators, external search breadth is more important than depth when determining the use of formal protection mechanisms. Broader collaboration increases the likelihood of unintended knowledge transfer, necessitating formal protection. Signup and view all the answers

What is the relationship between company size and the use of formal protection mechanisms?

Larger companies are more likely to use formal protection mechanisms than smaller ones. Larger firms have more resources and can better afford the costs associated with legal protection. Signup and view all the answers

Misery loves companies: rethinking social initiatives by business - Margolis & Walsh - 2003

Challenges of CSR:

Misappropriation: resources might be diverted from shareholders Misallocation: resources may not be used effectively for social goals Legitimacy: firms face skepticism about their role in addressing societal problems Signup and view all the answers

Describe the three types of stakeholder theory according to Donaldson and Preston.

Descriptive: How managers practically deal with stakeholders. Normative: Whether managers should consider stakeholders other than shareholders. Instrumental: The economic benefits of managing stakeholders. Signup and view all the answers

What are the two types of decision-making logics, according to Cyert and March, that can be used to analyze how companies evaluate social initiatives?

Logic of consequences: Weighing costs and benefits. Logic of appropriateness: Assessing whether options align with the company's role and identity. Signup and view all the answers

Stakeholders, reciprocity and firm performance - Bosse, Philips & Harrison - 2009

Explain what the authors mean by 'bounded self-interest.'

Bounded self-interest implies that actors’ pursuit of utility maximization is constrained by norms of fairness and reciprocity. People are willing to sacrifice for their principles and act in ways they perceive as fair, even at the expense of their own immediate benefit. Signup and view all the answers

How does the concept of reciprocity differ from the traditional idea of self-interest in economics?

Reciprocity assumes that individuals respond to others’ actions based on perceived fairness. Fair behavior is rewarded, and unfair behavior is punished. Traditional economic models assume self-interest, where actors maximize their own utility without considering others’ interests. Signup and view all the answers

Name three theories that, according to the authors, are based on the assumption of self-interest.

Transaction cost theory, agency theory, and resource-based theory. Signup and view all the answers

Describe the three dimensions of justice discussed in the research note.

Distributive: fair allocation of material outcomes, such as wages or resources Procedural: fairness in decision-making processes, including consistency, bias elimination and ethical standards Interactional: fair treatment in interpersonal interactions, emphasizes respect and dignity Signup and view all the answers

Describe the role of a 'portfolio approach' in managing stakeholder relationships.

A portfolio approach involves considering the needs and interests of all stakeholders and finding a balance between the different dimensions of justice in stakeholder relationships. This ensures equitable and sustainable management of stakeholder relations. Signup and view all the answers

How applying instrumental stakeholder theory can provide sustainable competitive advantage - Jones & Harrison - 2018

What is the core hypothesis of Instrumental Stakeholder Theory (IST)?

IST posits that developing stakeholder relationships based on traditional ethical norms such as fairness, trustworthiness, loyalty, care, and respect will lead to improved financial performance for companies. Signup and view all the answers

Describe the two relational ethics strategies presented in the article.

Communal Sharing Relational Ethics (CSRE): Focused on developing close relationships with stakeholders based on mutual trust, collaboration, and shared ownership. Arm’s-Length Relational Ethics (ALRE): Centered on traditional market transactions emphasizing self-interest and formal contracts. Signup and view all the answers

What is meant by "close relationship capability"?

"Close relationship capability" is a company’s ability to convince stakeholders to treat the company as a close relationship. This involves stakeholders committing to the company and being willing to engage in intensive collaboration and knowledge sharing. Signup and view all the answers

Name the benefits of a "close relationship capability" for companies.

More efficient mutual coordination. Better knowledge sharing. Attracting high-quality stakeholders. Lower transaction costs. Greater moral motivation among stakeholders. Signup and view all the answers

Moderators of the value of a close relationship capability

Environmental dynamism Knowledge intensity Task and outcome interdependence Signup and view all the answers

Why can a "close relationship capability" be considered a source of sustainable competitive advantage?

Rare and inimitable Signup and view all the answers

The value of self-service - Scherer, Wunderlich & Van Wagenheim - 2015

Which two core concepts from the service-dominant logic (S-D logic) do the authors use to discuss the value customers create in self-service channels?

The authors use the concepts of "value-in-use" and "value-in-context" from S-D logic to highlight that customers co-create value in their interactions with service channels, and this value depends on the customer's specific context. Signup and view all the answers

Describe the U-shaped relationship the authors expect to find between the ratio of self-service to personal service and the likelihood of customer churn.

The U-shaped relationship implies that customers derive the most value and are least likely to churn when there is a balance between self-service and personal service. Too much reliance on either can lead to dissatisfaction and churn. Signup and view all the answers

Conclusion:

Firms should mix self-service channels with personal service channels to deliver optimal outcomes particularly aligned with customer capabilities and relationship maturity. Signup and view all the answers

Giving back the the “self” in self-service - Collier, Breazeale & White - 2017

How does the presence of other customers influence customer preferences for employee intervention during an SST error?

The presence of other customers increases self-monitoring among customers. They are more inclined to complete the transaction themselves, even after an error, to avoid appearing incompetent. Signup and view all the answers

Explain how self-monitoring theory accounts for customer preferences in SST error recovery.

Self-monitoring theory suggests that individuals adjust their behavior based on social context. In an SST setting, high self-monitors, who are more aware of social evaluation, strive to demonstrate competence by completing transactions independently, even after an error. Signup and view all the answers

What are the managerial implications of these studies for implementing self-service technology?

Managers should consider the social dynamics of SST error recovery. In busy environments, it’s better to resolve the issue and let the customer complete the transaction. The design of self-service areas can influence customer self-monitoring and should be carefully planned. Signup and view all the answers

Attribution of fault:

When customers cause the failure, they are more forgiving and flexible regarding recovery strategies. When technology causes the failure, customers have higher expectations and are less tolerant of delays or mistakes. Signup and view all the answers

The link between resources and type of diversification - Chatterjee & Wernerfelt - 1991

What are the three main categories of firm resources described in the article? Provide an example for each category.

3 classes of resources: Physical resources Intangible resources Financial resources Signup and view all the answers

How do excess physical resources influence diversification strategy?

Excess physical resources lead to related diversification into industries similar to a firm's current operations. Signup and view all the answers

How do intangible assets influence diversification strategy?

Intangible assets also drive related diversification, as they can provide a competitive advantage in related markets. Signup and view all the answers

What hypothesis is formulated about the relationship between internal financial resources and diversification strategy?

The hypothesis is that the availability of internal funds leads to more unrelated diversification. Signup and view all the answers

What hypothesis is formulated about the relationship between external financial resources and diversification strategy?

The hypothesis is that the availability of external capital leads to more related diversification. Signup and view all the answers

Control variables:

Risk Size Capital intensity Signup and view all the answers

Curvilinearity in the diversification - performance linkage - Palisch, Cardinal & Miller - 2000

What are the 3 models explained

<ol> <li>Linear</li> <li>Curvilinear - Inverted U shape</li> <li>Curvilinear - Intermediate model</li> </ol> Signup and view all the answers

Describe the linear model of the diversification-performance relationship. What are the key arguments supporting this model?

The linear model posits that diversification and performance are positively and linearly related, meaning that greater diversification leads to better performance. Supporting arguments include market power advantages, internal capital market efficiency, tax benefits, and portfolio effects. Signup and view all the answers

What is the difference between the Inverted U-Model and the Intermediate Model?

The Inverted U-Model predicts that performance declines after an optimal level of diversification, while the Intermediate Model suggests that the benefits of diversification diminish but do not necessarily result in worse performance than moderate diversification. Signup and view all the answers

What is "excessive relatedness," and how can it impact the performance of related diversified firms?

"Excessive relatedness" refers to overestimating the similarities between business units, which can lead to unrealized synergies and negatively affect the performance of related diversified firms. Signup and view all the answers

Related diversification offers advantages over single business or limited diversification strategies

Convert underrationalized assets Sharing resources Combining activities along the value chain Signup and view all the answers

Unrelated diversification

Comes with costs that hamper performance Signup and view all the answers

What were the main findings of Palich et al. (2000) regarding the diversification-performance relationship?

They found an Inverted U shape model: Diversification improves performance up to a point, but going to far, especially outside a company’s core business, leads to higher costs that hurt performance Signup and view all the answers

Solution provider’s strategic capabilities - Huikala & Kontamaki - 2017

What is servitization, and how is it defined in the context of this study?

Servitization refers to the transformation of product manufacturers into solution providers. This involves shifting from a focus on standardized products to offering solutions or advanced services. In this study, solutions are defined as combinations of products, services, and software requiring relational processes to successfully develop, sell, and deliver. Signup and view all the answers

What is the Resource-Based View (RBV), and how is it relevant to understanding strategic capabilities?

The RBV suggests that a firm’s sustainable competitive advantage is based on its valuable, scarce, and hard-to-imitate resources and capabilities. Resources are the assets a firm owns or controls, while capabilities describe what a firm can do to deliver value. The RBV emphasizes that effectively leveraging resources through strategic business processes is crucial for creating exceptional value. Signup and view all the answers

6 Categories of resources available to solution providers:

The installed base of products and service contracts Physical and technological assets Intellectual capital Human capital Financial capital External assets Signup and view all the answers

3 Types of strategic business processes that steers the exploitation of resources identified:

<ol> <li>Productive enhancing business processes</li> <li>Customer value enhancing business processes</li> <li>Innovation enabling business processes</li> </ol> Signup and view all the answers

7 Strategic capabilities that determined the emergence of the solution providers sources of competitive advantage:

Fleet management capability Technology development capability M&A capability Value quantifying capability Project management capability Supplier network management capability Value co-creation capability Signup and view all the answers

Separate or integrate - Oliva, Gebauer & Braun - 2012

Why is management commitment important in the transition from product to service?

Management commitment is crucial because this transition involves significant changes, including reallocating resources, developing new skills, and overcoming employee resistance. Without clear management commitment, these challenges are likely to result in failure. Signup and view all the answers

What two constructs are used to operationalize the ‘separation’ between product and service firms?

The two constructs are organizational clarity (the degree to which the service organization is clearly defined and recognizable) and profit center (whether the service unit is responsible for its own profit and loss). Signup and view all the answers

Loyal customers are more profitable than new customers, why?

Satisfaction > Loyalty > Profitability Signup and view all the answers

More profitability can be done by:

A broader range of service are offered Signup and view all the answers

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Business Planning Schools

Two main perspectives on the value of business planning: Planning school (planning improves performance) and Learning school (planning fosters learning).

Brinckmann et al. (2010) Hypothesis

Business planning improves the performance of small businesses, dependent on contextual factors.

Contextual Factors (Brinckmann)

"Development stage","Form of planning," and "Cultural context" influence the planning-performance link.

Liability of Newness

Disadvantages new firms face due to lack of experience, resources, and legitimacy, potentially hindering planning effectiveness.