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Resource allocation as an outcropping of strategic consistency: Performance implications
Abstract and Figures
Similarities in financial resource allocations across the lines of business of diversified firms may indicate corporate strategic consistency, which may lead to superior corporate performance. In support of this argument, the variance in R&D intensity across the lines of business of 96 diversified firms was found to be inversely related to industry-adjusted return on assets. However, no relationship was found for capital intensity. These results provide partial support for the usefulness of a resource-based approach to the study of diversification strategy.
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... Uma empresa demonstra apresentar uma consistência estratégica quando há um equilíbrio na alocação de recursos nas empresas, ou seja, um equilíbrio entre as escolhas estratégicas nos negócios e os níveis funcionais das estratégias escolhidas (HARRISON, HALL E NARGUNDAKAR, 1993). A consistência estratégica de uma empresa é considerada de alto nível quando sinaliza a existência de uma estratégia competitiva forte, ou que possa, simplesmente, ser caracterizada com sendo de inércia estrutural (PORTER, 1992). ...
Resumo: A pesquisa propõe analisar o impacto de fatos relevantes dos dois últimos anos nos preços das ações da Kroton Educacional S.A., empresa do setor de educação de ensino superior. As reações dos investidores diante das informações que normalmente alteram decisões gerenciais das instituições podem influenciar no retorno das ações. A pesquisa trará à luz como foi o desempenho das ações da empresa diante de vários fatos relevantes e que podem ter impactado os resultados contábeis e financeiros da empresa. Ademais, verificará se a estratégia de fusão foi uma ação de gestão eficaz para manter o negócio atrativo e rentável diante da crise vivida pelo país. Por meio de uma pesquisa de natureza empírico-analítica, exploratória, de abordagem quantitativa, e sob a forma de estudo de caso, utiliza-se o estudo de eventos para avaliar se os preços e retornos das ações foram alterados após as seguintes divulgações: (i) resultado do ano de 2015 em meio à crise econômica; (ii) alteração das regras de concessão do Fundo de Financiamento ao Estudante do Ensino Superior (FIES); e (iii) compras e fusões das empresas deste setor e a publicação de uma revista criticando o programa de crédito estudantil FIES. A janela de evento utilizada foi de 4 dias antes (D-4) até 4 dias depois (D+4) ao redor da data do evento (D0), com uma janela de estimação de 40 dias (D-5 a D-44). Para o cálculo do beta utilizou-se o método dos mínimos quadrados e estimou-se a partir daí os retornos anormais e os retornos anormais acumulados. O retorno anormal foi calculado a partir do modelo de mercado. Obteve-se a ocorrência de p-value inferior a 5%, que comprova a forma de eficiência semiforte de mercado nos resultados, visto que os preços das ações foram impactados, porém logo após voltaram ao seu patamar normal, pois o mercado havia absorvido a informação. Palavras-chave: Retornos Anormais; Análise de Estudo de eventos; Eficiência Informacional.
... Uma empresa demonstra apresentar uma consistência estratégica quando há um equilíbrio na alocação de recursos nas empresas, ou seja, um equilíbrio entre as escolhas estratégicas nos negócios e os níveis funcionais das estratégias escolhidas (HARRISON et al., 1993). A consistência estratégica de uma empresa é considerada de alto nível quando sinaliza a existência de uma estratégia competitiva forte, ou que possa, simplesmente, ser caracterizada como sendo de inércia estrutural (PORTER, 1992). ...
A pesquisa propõe analisar o impacto de fatos relevantes dos dois últimos anos nos preços das ações da Kroton Educacional S.A., empresa do setor de educação de ensino superior. As reações dos investidores diante das informações que normalmente alteram decisões gerenciais das instituições podem influenciar no retorno das ações. A pesquisa trará à luz como foi o desempenho das ações da empresa diante de vários fatos relevantes e que podem ter impactado os resultados contábeis e financeiros da empresa. Ademais, verificará se a estratégia de fusão foi uma ação de gestão eficaz para manter o negócio atrativo e rentável diante da crise vivida pelo país. Por meio de uma pesquisa de natureza empírico-analítica, exploratória, de abordagem quantitativa, e sob a forma de estudo de caso, utiliza-se o estudo de eventos para avaliar se os preços e retornos das ações foram alterados após as seguintes divulgações: (i) resultado do ano de 2015 em meio à crise econômica; (ii) alteração das regras de concessão do Fundo de Financiamento ao Estudante do Ensino Superior (FIES); e (iii) compras e fusões das empresas deste setor e a publicação de uma revista criticando o programa de crédito estudantil FIES. A janela de evento utilizada foi de 4 dias antes (D-4) até 4 dias depois (D+4) ao redor da data do evento (D0), com uma janela de estimação de 40 dias (D-5 a D-44). Para o cálculo do beta utilizou-se o método dos mínimos quadrados e estimou-se a partir daí os retornos anormais e os retornos anormais acumulados. O retorno anormal foi calculado a partir do modelo de mercado. Obteve-se a ocorrência de p-value inferior a 5%, que comprova a forma de eficiência semiforte de mercado nos resultados, visto que os preços das ações foram impactados, porém logo após voltaram ao seu patamar normal, pois o mercado havia absorvido a informação.
Purpose
This research aims to investigate how entrepreneurial orientation influences a firm’s differentiation–cost advantage ambidexterity (DCAA) and performance indirectly through dynamic capabilities, while also investigating the impact of the interactive effect of the level and consistency of entrepreneurial orientation on dynamic capabilities. The goal of this study is to better understand the importance of consistently following an entrepreneurial orientation, as well as the linkage of such a consistently implemented strategy upon gaining both a cost and differentiation positioning enhancement.
Design/methodology/approach
Two empirical studies are conducted to test the proposed hypotheses – one longitudinal with multiple forms of data (i.e. text data, survey data and archival data) from 100 Taiwanese electronics firms and the other using primary data from a survey of senior managers.
Findings
Entrepreneurial orientation improves dynamic capabilities, which in turn promote superior DCAA and enhanced firm performance. In addition, as captured through a unique measure of consistency allowed through computer-aided text analysis, the results indicate that the effect of entrepreneurial orientation on dynamic capabilities is amplified when a firm consistently adopts entrepreneurial decisions and actions.
Research limitations/implications
The specific context was a sample of electronics firms in Taiwan. This limits the generalization of findings, as would be possible with assessing the hypotheses in other industries.
Practical implications
This research clearly demonstrates the significance of consistency in pursuing a strategic orientation. The consistent support and deployment of resources facilitates an organization’s achieving positive outcomes associated with an entrepreneurial orientation.
Originality/value
While entrepreneurial orientation contributes to firm performance, extant knowledge on the internal process through which entrepreneurial orientation affects performance is relatively limited. The findings not only highlight the full mediating role of dynamic capabilities and DCAA, but also shed light on the importance of consistency in entrepreneurial orientation over time.
Purpose
Firms report varied levels of success in relation to using alliances to aid in new product development (NPD). This study aims to investigate internal processes that might influence the experience of alliance success. Specifically, this study investigates the role of mediating and moderating mechanisms underlying the alliance orientation (AO)–new product success relationship, while also investigating the impact of the level and consistency of AO. The primary goal is to understand the importance of a firm’s maintaining a consistent focus upon alliance scanning, coordination and learning.
Design/methodology/approach
A survey was conducted to collect data from 141 Taiwanese electronics companies. The proposed model and hypotheses were tested using path analysis in analysis of moment structures.
Findings
AO improves the success of new products indirectly through the enhancement of product program innovativeness and NPD decision-making flexibility. The positive effect of AO on product program innovativeness and NPD decision-making flexibility is heightened when a firm consistently carries out a series of alliance management activities, including alliance scanning, coordination and learning. Market turbulence and the intensity of competition differentially affect the association between product program innovativeness and NPD decision-making flexibility and new product success.
Research limitations/implications
The measures were self-reported and may result in the threat of common method bias. While this study focused upon protecting against and assessing this bias, collecting data from multiple sources would have helped to eliminate the bias. Further, the sample consisted of Taiwanese electronics firms. This makes it difficult to generalize this study’s findings to other industrial contexts.
Practical implications
While AO may be viewed as a dynamic capability, product program innovativeness and NPD decision-making flexibility represent competitive advantage in NPD program and process, respectively. Managers should not focus only on competitive advantage in NPD while overlooking the development of dynamic capabilities, as this study’s results demonstrate that both elements must work in tandem. AO is relevant at higher levels of the organizational hierarchy, while product program innovativeness and decision-making flexibility are operational, demanding cross-functional coordination and involvement within a firm. Senior executives ought to not only confirm the appropriate provision of their resources to activities and actions associated with product program innovativeness and decision-making flexibility in NPD but also continually monitor and assess whether the inputs of AO lead to desirable competitive advantage in the context of NPD.
Originality/value
This study sheds light on the underlying mechanism through which AO improves new product success. This research proposes two different aspects of AO, level and consistency, and empirically identifies their interactive effect in the context of NPD. The findings offer specific guidelines for the assessment and implementation of AO to improve new product success. Consistency, especially, has not been investigated in relation to alliance-generated new product success.
Extant research on CEO hubris has amassed substantial evidence on the positive association of this prominent managerial disposition and CEOs’ attraction to challenging and consequential strategic activities. Similarly, one may well anticipate more hubristic CEOs to strive for frequent transformations of their firms’ overarching trajectories as they overestimate their ability to reap the fruits of such challenging and highly consequential endeavors. In contrast to these arguments, however, higher levels of hubris might also lead CEOs to see little reason for scrutinizing and adapting extant paths in light of the magnificent prospects under their outstanding leadership. We explicate this theoretical obscurity surrounding the dispositional preference for change or steadiness associated with higher degrees of CEO hubris by carving out sets of competing hypotheses on the effect of CEO hubris on two key domains of change within the immediate purview of a CEO: strategic change and top management team (TMT) membership change. Empirically, we examine these arguments using a panel data set comprising 1, 197 S&P 1500 CEOs and find strong support for a negative effect of CEO hubris on a set of indicators of strategic change as well as on TMT membership change. Our results indicate that, beyond their attraction to manifold and challenging strategic activities, more hubristic CEOs exhibit a preference for steadiness that may prevail in the overall effect of hubris on certain organizational outcomes.
The appropriate valuation of information security (InfoSec) intellectual property (IP) is of interest to both business scholars and investors. This topic is important because InfoSec IP is a complementary knowledge resource that can complement a firm's existing and new products, services, business models, and operations. This paper attempts to understand the marginal effects of having additional InfoSec IP on a firm's performance in terms of return on investment and market capitalization. We collected objective InfoSec IP data from the United States Patent Office, the United States Copyright Office, and Compustat. Specifically, our data includes various types of IP, including patents, copyrights, and patent portfolios. We exclude IT-security firms in this study because we are interested in the effect of InfoSec IP on non-IT security firms. We include panel regression models using fixed effects that test the interplays between the various types of InfoSec IP and a firm's performance. In addition, we conduct generalized moment method and Heckman correction model analyses to alleviate potential endogeneity and sampling biases. Our results suggest that InfoSec IP is positively related to both return on investment and market capitalization. Further, we find that diverse InfoSec IP portfolios strengthen the effects of a firm's InfoSec patents and copyrights on market capitalization.
To mitigate risk, should companies signal a broad range of environmental, social, and governance (ESG) initiatives or instead focus on only a few ESG issues? Drawing on signaling theory, we propose that a broad array of ESG initiatives generates not only signal consistency but also accelerating signal costs. Our empirical results support the resultant hypothesis of a curvilinear relationship between ESG scope and equity risk. In addition, this U-shaped curve seems to become steeper when firms face multiple media-reported ESG controversies. Overall, our study qualifies the conventional wisdom that firms can reduce equity risk by attending to a wide variety of stakeholders and highlights the moderating (signal-amplifying) impact of the firm’s media environment.
Understanding why some firms outperform others is central to strategy research. The resource-based view (RBV) suggests that competitive advantages arise due to possessing strategic resources (i.e., assets that are valuable, rare, nonsubstitutable, and inimitable), and researchers have extended this logic to explain performance differences. However, RBV is relatively silent about the actions managers could use to create or capitalize on a resource-based advantage. Enriching RBV, the resource orchestration framework describes specific managerial actions that use such resources to realize performance gains. After reviewing the conceptual evolution of these two literature streams as well as related streams, we use meta-analytic structural equation modeling to aggregate evidence from 255 samples involving 111,614 observations to answer outstanding research questions regarding the strategic resources–actions–performance pathway. The results show strong complementarity and interdependence between their logics. Additional inquiry drawing on their complementarity is a clear path toward enhancing scholars’ understanding of how and why some firms outperform others. We build on our findings to lay a foundation for such inquiry, including a call for theorizing centered on the interdependence of resources and actions, as well as new theoretical terrain that can help resource-based inquiry continue to evolve.
Purpose
The purpose of this paper is to identify, characterize, classify and conceptualize different perspectives on strategic alignment still in use, propose a taxonomy and definitions that allow understanding the various coexisting concepts, as well as investigate the implications of strategic alignment for data-driven sustainable performance of firms and supply chains.
Design/methodology/approach
Bibliographic review was used.
Findings
The taxonomy proposes two classes of strategic alignment : (1) Align – more rigorous types of alignment: structure alignment, strategic congruence and strategy alignment; (2) Fit – less rigorous types of alignment: contingency strategic adjustment, strategic coalignment and strategic consistency. Companies are accumulating large amounts of data, which relevance varies widely. The strategic alignment can define criteria to select only the data that have strategic value, which restricts the amount of data to be analyzed. Each of the six types of strategic alignment is appropriate for a given situation in companies and/or supply chains.
Research limitations/implications
The limitations stem from the exclusive use of the taxonomy of strategic alignment, without considering the most diverse perspectives of strategy.
Practical implications
Decision makers will be able to identify more objectively which classes of data should be explored in each situation.
Social implications
Theoretical implications – The taxonomy proposal and the definition of each of the strategic alignment perspectives solve generalized misunderstandings resulting from the lack of a clear delimitation between the perspectives and the conceptual divergence between authors, who use them as equivalent or synonymous.
Originality/value
From 1961 to 2019, no paper was found proposing taxonomy, typology, systematization, ranking, distribution or classification of strategic alignment. The strategic alignment can define criteria to select, within the large amount of data accumulated by the company, only those that have strategic value, what restricts the quantity of data to be analyzed and facilitates the decision of the leaders.
A number of studies examine the extent to which boards compensate CEOs for their firm's performance (i.e., pay‐for‐performance), but these studies typically do not incorporate what CEOs actually do to bring about those performance outcomes. We suggest that directors will make stronger internal attributions about firm performance when the CEO engages in high levels of corporate strategic investment. CEOs that invest in firm growth essentially “place their bets,” so the pay‐for‐performance relationship is stronger for them than it is for CEOs who do not invest as much in firm growth. We also theorize and find that directors make internal attributions about firm performance more for prestigious, but not less prestigious, CEOs and more when the directors collectively exhibit conservative, but not liberal, political ideologies.
A sample of 114 mergers made by randomly selected bidders during 1962 to 1983 is classified by changes in the product market opportunities of the bidder firms. Multivariate regression analysis shows that acquisitions which permit the bidder access to new but related markets create the most value.
Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.
This study examined the extent to which the percentage of outside directors on a corporation's board of directors, the concentration of equity ownership, and the roles of individual and institutional stockholders influence the company's R&D strategy. We found that high insider representation on a board and a concentration of equity among institutional investors positively affected corporate R&D spending.