Understanding 'Storming the Castle' in JBV Article

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Questions and Answers

What do the authors of the JBV-article mean with entrepreneurs ‘storming the castle’?

o The term 'storming the castle' refers to entrepreneurs launching into business ventures without extensive planning, relying more on action and adaptation rather than formal, detailed business planning

For which two planning contexts do they find statistical evidence in their meta-analysis? For which context-hypothesis do the authors not find any statistical evidence?

The firm's development stage is considered, suggesting that planning benefits established firms more than new ones.
The cultural context in which planning occurs, particularly in cultures with lower uncertainty avoidance

Which shape describes the relatedness of international diversification and firm performance best?

o The S-curve hypothesis best describes the relationship, indicating initial costs of international diversification that may lead to lower performance followed by benefits that enhance performance as diversification continues

Explain which liabilities a firm has to overcome when entering foreign markets?

Liabilities include the need to understand and adapt to local market conditions, deal with cultural differences, and navigate foreign regulatory environments Signup and view all the answers

Explain how the economic rents of an innovation will be divided over the innovator and the owner of relevant complementary assets for different appropriability regimes and distributions of complementary assets.

In 'strong' appropriability regimes, the innovator captures more of the economic rent when the complementary assets are tightly held, compared to when they are freely available. In 'weak' appropriability regimes, the opposite is true Signup and view all the answers

Explain three different factors that according to James et al. (2013) may determine decision makers’ preference for Intellectual Property Rights over other appropriation measures.

<ul> <li>Technology:</li> <li>Firm:</li> <li>Industry:</li> <li>Institutional enivronments:</li> </ul> Signup and view all the answers

When are resources considered VRIN according to the Resource Based View on organizations?

o Resources are considered VRIN when they are Valuable, Rare, Inimitable, and Non-substitutable Signup and view all the answers

Develop three arguments for the difficulty of imitating close stakeholder relationships.

<ol> <li>Pattern dependency</li> <li>Causal ambiguity</li> <li>Social complexity</li> </ol> Signup and view all the answers

Give two reasons why firms don’t treat their stakeholders respectfully despite stakeholders being considered important instruments for achieving growth objectives.

<ol> <li>Short-term financial pressures may lead firms to prioritize immediate financial returns over long-term stakeholder relationships.</li> <li>There may be a misalignment between the firm’s strategies and the perceived benefits of stakeholder engagement, particularly if the outcomes are uncertain or intangible</li> </ol> Signup and view all the answers

Draw the conceptual model proposed by Scherer et al. (2015) with customer retention as the dependent variable.

o Scherer et al. propose a model where technology-based self-service increases customer satisfaction, which in turn improves customer retention. The model emphasizes the mediating role of satisfaction between self-service technologies and retention( Signup and view all the answers

Which service theory are the authors proposing to understand the value of self-service? How is value created according to this theory?

o The Service-Dominant Logic is the theory proposed. According to this theory, value is co-created through interactions between providers and Signup and view all the answers

What are the moderators of the relationship between the service proposition type and the retention of customers according to Scherer et al. (2015)?

o Moderators include customer characteristics such as age and tech-savviness, as well as contextual factors like the competitive intensity of the market and the complexity of the services offered(GS & OC notes (1)). Signup and view all the answers

Why would firms owning a lot of Intellectual Property predominantly invest in related and not in unrelated diversification?

o Firms with significant intellectual property invest in related diversification to leverage their existing knowledge and maximize the returns from their IP. Investing in unrelated areas may not allow for the effective use of this specialized knowledge( Signup and view all the answers

Study Notes

Entrepreneurs Storming the Castle

Entrepreneurs “storming the castle” refers to their pursuit of new opportunities, challenging established firms and market structures.

Planning Contexts

The authors found statistical evidence for the effectiveness of strategic planning in both incremental and radical innovation contexts.
Incremental innovation involves making small improvements to existing products or processes.
Radical innovation involves creating entirely new products or processes.

Context-Hypothesis Without Evidence

The authors did not find statistical evidence to support the hypothesis that strategic planning is more effective in dynamic than in stable industries.

International Diversification and Firm Performance

The relationship between international diversification and firm performance is best described as inverted U-shaped.
This means that performance initially increases with diversification, peaks at a certain level, and then declines as diversification increases further.

Liabilities of Foreign Market Entry

Firms entering foreign markets face several liabilities:
- Liability of foreignness: difficulties adapting to unfamiliar markets, regulations, and cultures.
- Liability of newness: challenges associated with being a new entrant in a foreign market, including establishing brand recognition and relationships.
- Liability of smallness: challenges faced by small firms in competing against larger, established firms in foreign markets.

Economic Rents and Innovation

Appropriability regimes determine the extent to which firms can capture the economic rents from an innovation.
Complementary assets are resources that are necessary to exploit the value of an innovation.
The distribution of economic rents between the innovator and the owner of complementary assets depends on both the appropriability regime and the distribution of complementary assets.

Factors Influencing IP Rights Preference

Decision-makers’ preference for intellectual property rights (IPR) over other appropriation measures may be influenced by:
- The perceived effectiveness of IPR in protecting their innovation.
- The cost of obtaining and enforcing IPR.
- The availability of alternative appropriation measures, such as trade secrets.

VRIN Resources

According to the Resource-Based View (RBV), resources are considered VRIN (valuable, rare, inimitable, non-substitutable) when they:
- Contribute to a firm's competitive advantage.
- Are not readily available to competitors.
- Are difficult for competitors to imitate.
- Cannot be easily replaced by other resources.

Difficulty of Imitating Stakeholder Relationships

Imitating close stakeholder relationships is difficult due to:
- Trust and commitment: Deep relationships are built on trust and commitment, taking years to develop.
- Shared history and values: Longstanding relationships are often based on shared history, values, and experiences that are difficult to replicate.
- Social networks and embeddedness: Relationships are often embedded in social networks that are difficult to access and replicate.

Firms and Stakeholder Respect

Reasons why firms may not treat stakeholders respectfully:
- Short-term focus: Firms often prioritise short-term profits over long-term stakeholder relationships.
- Agency problems: Managers may pursue their own interests at the expense of stakeholders.

Scherer et al. (2015) Conceptual Model

The conceptual model proposed by Scherer et al. (2015) portrays customer retention as the dependent variable, influenced by:
- Service proposition type.
- Value creation mechanism.
- Moderators: Customer heterogeneity, service quality, and customer-perceived value.

Service Theory

Scherer et al. (2015) propose "value-in-use" theory to understand the value of self-service.
Value creation in this theory is based on the customer's perceived benefit from using a self-service option.

Moderators of Service Proposition and Retention

Moderators influencing the relationship between service proposition type and customer retention:
- Customer heterogeneity: different customers have varying needs and preferences.
- Service quality: the quality of the self-service offering affects customer satisfaction.
- Customer-perceived value: the value perceived by the customer in using the self-service option.

Intellectual Property and Diversification

Firms with abundant intellectual property (IP) tend to focus on related diversification (expanding into similar industries) rather than unrelated diversification (entering unrelated industries).
This is due to the synergistic effect of their IP in related industries, allowing for easier market access and competitive advantage.

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Description

This quiz explores the concept of entrepreneurs 'storming the castle' as discussed in the JBV article. Participants will analyze the implications of this metaphor in the context of entrepreneurship and innovation. Test your understanding of the authors' perspectives and interpretations related to this concept.