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Complex Business Models: Managing Strategic Paradoxes Simultaneously
Abstract
As our world becomes more global, fast paced and hypercompetitive, competitive advantage may increasingly depend on success in managing paradoxical strategies - strategies associated with contradictory, yet integrated tensions. We identify several types of complex business models organizations will need to adopt if they are to host such paradoxical strategies. Managing complex business models effectively depends on leadership that can make dynamic decisions, build commitment to both overarching visions and agenda specific goals, learn actively at multiple levels, and engage conflict. Leaders can engage these functions through team-centric or leader-centric structures.
... (1) cannibalization and conflicts (Aversa et al., 2015(Aversa et al., , 2017(Aversa et al., , 2020Casadesus-Masanell & Tarzija´n, 2012;Kim & Min, 2015;Kuo, 2017;C. Markides & Oyon, 2010;Smith et al., 2010;Snihur & Tarzijan, 2018;Velu & Stiles, 2013;Wiener et al., 2018), (2) increased complexity (Aversa et al., 2020;Casadesus-Masanell & Tarzija´n, 2012;Sabatier et al., 2010;Smith et al., 2010;Snihur & Tarzijan, 2018;Wiener et al., 2018), (3) heterogeneity management (Casadesus-Masanell & Tarzija´n, 2012;Kuo, 2017;Wiener et al., 2018), (4) inconsistent firm identity (Kuo, 2017;Smith et al., 2010), and (5) resource misallocations (Kuo, 2017;Sund et al., 2016). ...
... (1) cannibalization and conflicts (Aversa et al., 2015(Aversa et al., , 2017(Aversa et al., , 2020Casadesus-Masanell & Tarzija´n, 2012;Kim & Min, 2015;Kuo, 2017;C. Markides & Oyon, 2010;Smith et al., 2010;Snihur & Tarzijan, 2018;Velu & Stiles, 2013;Wiener et al., 2018), (2) increased complexity (Aversa et al., 2020;Casadesus-Masanell & Tarzija´n, 2012;Sabatier et al., 2010;Smith et al., 2010;Snihur & Tarzijan, 2018;Wiener et al., 2018), (3) heterogeneity management (Casadesus-Masanell & Tarzija´n, 2012;Kuo, 2017;Wiener et al., 2018), (4) inconsistent firm identity (Kuo, 2017;Smith et al., 2010), and (5) resource misallocations (Kuo, 2017;Sund et al., 2016). ...
... (1) cannibalization and conflicts (Aversa et al., 2015(Aversa et al., , 2017(Aversa et al., , 2020Casadesus-Masanell & Tarzija´n, 2012;Kim & Min, 2015;Kuo, 2017;C. Markides & Oyon, 2010;Smith et al., 2010;Snihur & Tarzijan, 2018;Velu & Stiles, 2013;Wiener et al., 2018), (2) increased complexity (Aversa et al., 2020;Casadesus-Masanell & Tarzija´n, 2012;Sabatier et al., 2010;Smith et al., 2010;Snihur & Tarzijan, 2018;Wiener et al., 2018), (3) heterogeneity management (Casadesus-Masanell & Tarzija´n, 2012;Kuo, 2017;Wiener et al., 2018), (4) inconsistent firm identity (Kuo, 2017;Smith et al., 2010), and (5) resource misallocations (Kuo, 2017;Sund et al., 2016). ...
Business models (BMs) are extensively studied by academics and practitioners alike. Yet, there is still no consensus for the term’s precise interpretation, dimensions, and idiosyncratic features. Considering that the BM literature is constantly evolving and nowadays firms commercialize ideas and technologies through their BMs more than ever, this shortcoming poses a major challenge to both the academic and business community. In this vein, scholars have made concerted efforts to offer several literature reviews. Nonetheless, in the methodological front most of them rely on fragmented suggestions without clear guiding frameworks. At the conceptual level, a majority of these contributions is disproportionally oriented toward digital-driven business model innovation. In view of the steady increase in BMs’ importance within the academic and organizational milieu, we aim to revisit the literature and provide a multi-method review; with the overall scope to accommodate the diverse research objectives pertinent in the extant research and trace a future roadmap. Our combination of systematic literature review (SLR) analysis with bibliometric elements assessed 174 peer-reviewed publications and concluded in four – partly overlapping – research streams: (1) business model concept, (2) business model design, (3) business model innovation, and (4) business model portfolios. Suggestions for future research endeavors in each one of these streams are further discussed.
... While digital platform business models (DPBM) facilitate interaction and scaling (Cusumano et al., 2019), they can intensify tensions (Mini & Widjaja, 2019). Due to the hybrid nature of social business, these tensions need to be managed as value creation paradoxes, that is, they need to be addressed by recognizing and balancing the apparent contradictions between social and economic objectives (Smith et al., 2010). ...
... Based on paradox theory (Smith et al., 2010;Smith & Lewis, 2011), we suggest that social businesses need to deal with the value creation paradox: create both social and economic value simultaneously (the left middle block in Figure 1). The value creation paradox can lead to four different groups of paradoxes, namely belonging paradox, organizing paradox, learning paradox, and performing paradox (Smith et al., 2013). ...
... Paradox theory (Smith et al., 2010;Smith & Lewis, 2011) informs our approach to understanding the value creation paradox within social businesses (left middle block in Figure 1). This paradox, involving simultaneous creation of social and economic value, is categorized into four groups: belonging, organizing, learning, and performing paradoxes (Smith et al., 2013). ...
Objective: this paper examines how business model design influences value creation paradoxes in social businesses, with a focus on DPBMs (digital platform-based models).
Methods: case studies in the Brazilian education and employability sector are analyzed using the activity system perspective of business model design.
Results: the findings show that DPBM-based social businesses exhibit a mix of traditional business model value drivers (complementarity, lock-in, and novelty) and social business value drivers (impact complementarity, shared values, and integration novelty). DPBMs can help social organizations address the learning paradox and improve activity efficiency for business scalability. However, challenges in implementing DPBMs, such as user group selection, revenue models, and platform access regulation, can amplify performance and learning paradoxes.
Conclusions: the study provides empirical evidence supporting specific drivers of social business value while highlighting a coexistence with traditional business model drivers. DPBM can aid scalability but presents challenges impacting performance and learning paradoxes. Insights for managers include the significance of business model design and the need to consider social and traditional value drivers in DPBM decisions.
Keywords: business model; digital platform; hybrid organization; social business
... The most recent of the highly cited foundational articles (Birkinshaw & Gupta, 2013) argues that OA should be seen as a multilevel capability that allows tensions between competing objectives to be managed in many different ways. The ability to combine integrating and differentiating techniques is essential but difficult for leaders (Andriopoulous & Lewis, 2010;Smith et al., 2010). ...
... Most highly cited PA papers concern the antecedents of OA (present in 21 out of 35), with employee characteristics, leader characteristics, organizational structure, cultures, social relationships, and organizational environments commonly studied (Junni et al., 2015). Leadership is a large stream, with the value of paradoxical leadership (Smith, 2014;Smith et al., 2010) and CEO leadership (Tushman et al., 2011) being prominent. Four studies consider ambidextrous leadership, which through balancing 'opening' and 'closing' behaviors fosters both exploration and exploitation in individuals and teams and increases ambidextrous innovation (Rosing et al., 2011). ...
... cao et al. (2009) (30) resource constrained firms need to balance the relative size of the exploratory and exploitative activities while larger firms will benefit more from the total size of exploitation and exploration. Smith et al. (2010) (38) Successful firms need paradoxical strategies which adopt a 'both/and' rather than 'either/or' response to apparently conflicting demands. addressing this effectively requires the senior leadership team to adopt processes to address apparently conflicting agendas such as such as • Dynamic decision-making • building commitment to overarching visions but agenda specific goals • understanding each agenda and the relationships between them • engaging conflict. ...
The public administration (PA) discipline recognizes public sector organizations’ need to manage tensions and competing pressures, especially in the context of turbulence and complexity. But it but has only recently considered organizational ambidexterity (OA) as a capability that allows this. This study reports bibliometric reviews and content analyses concerning OA. It identifies
implications for PA and research gaps. Despite OA’s appeal in addressing PA challenges, an understanding of how the PA context might influence OA applicability is just emerging. We describe a PA research agenda that includes OA and the conditions promoting it.
... The classification of strategic, tactical, operational, and transactional decisions is based on several decision dimensions. These dimensions include the degree of structure (Edwards et al., 2000), complexity, ambiguity, resource decision-making process (e.g., performance versus learning, stability versus change, control versus flexibility, alignment versus ability, Smith et al., 2010). These tensions can generate paradox if they conflict. ...
... The multi-level nature of decision-making poses challenges for researchers (Ketchen et al., 2008) and managers (Smith et al., 2010). From a research perspective, the study of decision-making at different levels is facilitated by observing that decision processes tend to follow patterns (Sibony et al., 2017). ...
... Strategies range from accepting to using to transcending paradox through new conceptions (Farjoun, 2010) afforded by a paradox-friendly mindset (i.e., reframing from "either/or" to "both/and") (Ivory & Brooks, 2018;Calabretta et al., 2017;Smith, 2014). Common to all these strategies lies the understanding that the resolution of paradox is not possible and that the goal is to support continued tension (Smith et al., 2010;Calabretta et al., 2017;Miron-Spektor et al., 2018). Effective management responses to paradox employ strategies that themselves appear paradoxical (Lewis & Smith, 2014;Eisenhardt et al., 2010). ...
This study explores the thinking behind decision-making when paradoxical tensions are present. This decision-making norm consists of ignoring rather than engaging with underlying paradoxical tensions. This study supports the idea that engaging with paradoxical tensions at a cognitive level is influenced by the kind of tensions involved in the decision situation. This study also points to two cognitive dimensions that decision-makers use to distinguish between types of decisions: information use and contextual
focus. Finally, this study offers the possibility that a class of decisions with paradoxical tensions requiring information for cognitive exploration and a focus on external context has yet to be identified.
... Drawing on recent literature, four key types of tensions are identified as central to the sustainable consumption discourse: belonging, performing, learning, and organizing (Smith et al. 2013;Smith and Lewis 2011). Belonging tensions emerge as consumers navigate between their individual identities and the values or expectations of their social groups or communities (Smith and Lewis 2011). ...
... While social networks act as anchors, supporting and normalizing meat analogue consumption, they can also introduce pressures that discourage it. This reflects the tensions between belonging and performing identified in the literature, where consumers must reconcile their personal values with social expectations during practices like barbecues or cultural gatherings (Smith et al. 2013;Smith and Lewis 2011;Randers et al. 2021). Shared practices involving traditional meats often carry symbolic significance, making it challenging for consumers to deviate from entrenched norms. ...
This study investigates factors influencing the ongoing consumption of contemporary plant‐based meat analogues (PBMAs), focusing specifically on products designed to mimic the taste, texture, and nutritional value of traditional meat products. We do this by exploring the tensions between established and emerging food consumption practices. Through the lens of social practice theory, the research examines how shifting meanings, competencies, and material elements shape the habitual integration of meat analogues into daily routines. A qualitative methodology, involving online food diaries and in‐depth interviews with US‐based consumers, was employed to explore these dynamics. Analysis revealed three important mechanisms in the reconfiguration of meat analogue consumption practices: reinforcing practice reproduction, appropriating knowledge and skills, and product progression. Together, these mechanisms highlight the pathways for successful food practice transformation and the sustained inclusion of meat proteins in consumers' daily routines.
... The dominant feature of business models is value creation. This position is presented by many authors, including Smith et al. (2010), Sterman (2000), Zott and Amit (2010), Climent and Haftor (2021), perceiving the business model as a "configuration", thanks to which the company selects a strategy variant that enables value creation, and consequently uses organisational architecture to create and sustain value (Smith et al., 2010). Chesbrough and Rosenbloom claim that an essential component of a business model is to "formulate the competitive strategy by which the innovating firm will gain and hold an advantage over rivals", and "heuristic logic is employed to discover an appropriate business model" that combines technical potential with creating the economic value" (Chesbrough & Rosenbloom, 2002). ...
... The dominant feature of business models is value creation. This position is presented by many authors, including Smith et al. (2010), Sterman (2000), Zott and Amit (2010), Climent and Haftor (2021), perceiving the business model as a "configuration", thanks to which the company selects a strategy variant that enables value creation, and consequently uses organisational architecture to create and sustain value (Smith et al., 2010). Chesbrough and Rosenbloom claim that an essential component of a business model is to "formulate the competitive strategy by which the innovating firm will gain and hold an advantage over rivals", and "heuristic logic is employed to discover an appropriate business model" that combines technical potential with creating the economic value" (Chesbrough & Rosenbloom, 2002). ...
The business model is undoubtedly a new issue in scientific research and currently enjoys great popularity, in recent years, it has attracted increasing attention in relation to both financial and non-financial corporate reporting. The purpose of the article is to identify business model disclosures of fuel and energy companies in Poland presented in integrated reports. The study, which examined 70 integrated reports for 2013 and 2021, involved analysing disclosures of information about the business model, analysing the content of integrated reports of companies and checking the scope and content of disclosed information in the part of the report concerning the business model. The content analysis method was used in the study, and the Likert scale was used to measure the level/quality of disclosures. The quality assessment of business model disclosures in integrated reporting is comprised of two steps: analysis of average scores of disclosures in each of the analysed years and case study analysis to compare the practical approach to disclosing information about the business model. The findings proved that the business model disclosures are at a high level. In most cases, the companies use the capital approach, complementing the business model presentations with value creation schemes. The results of the study allow for a better understanding of the logic of running a business of fuel and energy companies for all stakeholders. The article is the result of original empirical research concerning the analysis of non-financial information disclosed by Polish companies and fills a gap in scientific research on disclosing information about the business model in integrated reports. The research presented in the article contributes to the current literature on integrated reporting by using the novel dataset.
... Furthermore, Smith et al. [43] suggest companies to develop leadership that can make dynamic decisions, build commitment to both overarching visions and agenda specific goals, learn actively at multiple levels and engage conflict to effectively manage the complex business model. Collaboration can also play a crucial role in overcoming the conflict between old and new business models. ...
... Several scholars have suggested various leadership strategies to help organizations overcome these barriers [41,43]. For instance, leaders might focus on building a culture of innovation by encouraging experimentation and learning from failures. ...
This study investigates the concept of business model innovation (BMI) in small and medium-sized manufacturing enterprises (SMEs), focusing specifically on the practices and challenges of implementing innovative business models. The study collected empirical data from manufacturing SMEs in Addis Ababa using structured questionnaires and semi-structured interviews with owners/managers of the manufacturing SMEs. Furthermore, the study employed descriptive and thematic analysis methods to analyze the quantitative and qualitative data, respectively. The results revealed that the practice of innovating business models is moderate in manufacturing SMEs. Even though, most enterprises adopt demand-driven business model innovation in which they change their business model based on the demand of customers. Unavailability of resources, the newness of the concept of business model innovation, lack of formal structure and processes in the enterprises, lack of training, lack of skilled labor, poor infrastructure, and unfavorable government policies are some factors that hinder the practice of BMI in enterprises. The study highlights the importance of developing context-specific strategies and the need for targeted policy support that addresses the unique challenges faced by manufacturing SMEs. Overall, this study contributes to the growing body of knowledge on BMI and offers practical insights into the practices and challenges faced by SMEs in the manufacturing sector.
... For example, integrated business planning (IBP) frameworks promote continuous alignment between finance, supply chain, and sales to enhance forecast precision and P&L management. Such models enable organizations to anticipate risks and opportunities better, improving agility and financial performance [25]. ...
In the context of increasingly complex multinational supply chains, traditional finance functions face significant challenges in effectively owning profit and loss (P&L) responsibilities and delivering accurate forecasts. This paper investigates cross-functional finance partnership models that enable strategic P&L and forecasting ownership by integrating finance with operations, sales, and supply chain functions. Drawing on theoretical foundations such as agency theory, contingency theory, and the resource-based view, the study synthesizes literature and case examples from leading multinational corporations to identify
key components of successful partnerships. Critical factors include clearly defined roles, robust communication and governance structures, and advanced technology integration, which collectively enhance collaboration, accountability, and data-driven decision-making. The paper further examines common barriers like cultural differences and siloed data, proposing mitigation strategies and an implementation framework. Finally, it highlights emerging research avenues, including AI integration and resilience to global risks. This comprehensive analysis provides actionable insights for multinational companies seeking to transform finance from a transactional function into a strategic
business partner within complex supply chains.
... This balancing act, referred to as organizational ambidexterity (Markides 2013), requires the coordinated use of SA's meta-capabilities. Accordingly, the effective management of dual business models requires organizational leaders to deal with paradoxical strategies that involve conflicting yet integrated tensions (Smith et al. 2010). Specifically, SS identifies the components of the old BM that need to be redesigned, while RF enables resource sharing and reallocation between old and new models. ...
Strategic agility (SA) has become an essential capability for established firms to successfully navigate the challenges of business model innovation (BMI) in dynamic environments. This study develops both a conceptual process model and a theoretical framework to explore the interplay between SA and BMI. The conceptual process model provides a practical, stage‐by‐stage analysis of how the three meta‐capabilities of SA—strategic sensitivity (SS), leadership unity (LU), and resource fluidity (RF)–enable the initiation, ideation, integration, and implementation stages of BMI. The theoretical framework expands on this by exploring the relationships between these meta‐capabilities and incorporating moderating factors such as market dynamism and enabling factors such as digital capabilities. Through a theorizing approach, the study synthesizes foundational and recent literature to derive key constructs and propositions, offering new insights into the dynamic interactions between SA and BMI. The findings contribute to the literature by addressing gaps in the integration of SA and BMI research and by providing actionable guidance for practitioners to enhance organizational agility and innovation. Additionally, the study highlights the importance of fostering synergy among SA meta‐capabilities and outlines how contextual factors influence the effectiveness of BMI processes. By presenting both a conceptual process model and a theoretical framework, this paper bridges the gap between theoretical advancement and practical applicability, offering a comprehensive perspective for researchers and practitioners alike. The study concludes with implications for future research and managerial practice.
... Exploration is required in the search and validation of new business models. Exploitation involves the refinement and improvement of previously explored knowledge (Smith, Binns & Tushman, 2010). This highlights the conceptual overlap between innovation and entrepreneurial ecosystems, which both aim to bring about innovation through the collaborative sourcing of knowledge, technology and relationships, either in existing organizations (intrapreneurship) or through new ventures (Bouncken & Kraus, 2022). ...
... Previous research demonstrates that successful leadership depends on the complexity of managed business models and decision-making managers. It facilitates and encourages employees' involvement in implementing practices that achieve the specific objectives of sustainable organizational behavior [68,69]. Also, developing partnerships with other organizations, NGOs, or governments to amplify the impact of circular initiatives and benefit from external resources and expertise. ...
This chapter explores the interdependence between organizational behavior and the circular economy, highlighting how these concepts work together to develop a sustainable and responsible organizational environment for the future. By clearly defining the terms and basic principles of the circular economy and sustainable development, the chapter lays the foundations for a deep understanding of the importance of integrating these concepts into organizational strategies. Subsequent sections examine how circular economy principles can transform organizational culture and the pivotal role of technological innovations in contributing to achieving sustainability goals. The efficient management of natural resources and the reduction of waste are also highlighted, with a strong emphasis on the positive impact of the circular economy on organizational performance. This reassures the audience about the tangible benefits of these principles, instilling a sense of confidence in their potential. The challenges and opportunities associated with adopting sustainable organizational behavior are analyzed to provide a balanced perspective on implementing these practices to achieve long-term sustainability objectives. In this context, organizations must rethink their operating models, implement new methods of designing products/services, and perfect the entire value chain per the principles of the circular economy to optimize organizational behavior sustainably.
... Casadesus-Masanell and Ricart (2010, p. 205) argued that a "business model is a reflection of a firm's realized strategy." Depending on the strategic choices, BMs help create and deliver the intended value to the intended customers (Smith et al., 2010). Further, BMs can be hard to imitate (Chesbrough, 2007), resulting in a competitive advantage supporting the business strategy. ...
This study examines the motivations for businesses to integrate sustainability into their business models (BMs) and how they can innovate those models to become more sustainable. The concept of business model innovation for sustainability (BMIfS) has emerged as a viable means to help companies innovate sustainable business models (SBMs). However, it remains a “black box” for many companies, and a design‐implementation gap has been identified. Utilizing an embedded case study approach, we conducted 49 interviews, observed three meetings, and collected over 1000 pages of archival data. The findings offer practical strategies for BMIfS, clarify the integration between business model innovation and SBM concepts, and provide a framework for adding new SBMs to an existing business portfolio. This research is of interest to scholars and business practitioners involved in integrating sustainability into their business strategies for building a sustainable future.
... Business advisors provide knowledge of customer problems and markets, as well as information regarding supplier relationships, sales techniques, capital equipment requirements, and business models (Shane, 2000;Urban & von Hippel, 1988). They take a holistic perspective and can manage complexity, with some possessing the ability to integrate across seemingly contradictory tensions (Smith et al., 2010). This generalist approach can be critical when managing technology commercialization processes comprising numerous constituents and multiple potential market spaces (Fini et al., 2019;Kapoor & Klueter, 2021;Molner et al., 2019). ...
Early-stage science-based ventures (SBVs) require a wide range of intellectual resources and practical know-how to successfully commercialize their technologies. Often SBV founders actively gain this knowledge through advisory relationships providing business and technology guidance. We explore the effects of both business and technology advisors in combination with the founder’s entrepreneurial and technology experience. We measure early-stage success in an SBV using application readiness, a novel concept that encompasses progress in both technology discovery and validation as well as market identification and application. Using hand-collected longitudinal data from 112 emerging science-based ventures associated with American universities, we find that business advisors have a positive impact on application readiness, while technology advisors delay it; and these effects are moderated by the founder’s experience. Remarkably, a small number of advisors can have the same impact as decades of experience. Our article unpacks underexplored mechanisms through which advisors—an often-used policy tool supporting entrepreneurship—are implemented in emerging science-based ventures and makes academic contributions to the literatures on technology commercialization, advisors and human capital.
... (Markides, 2013;Markides and Charitou, 2004;Visnjic et al., 2022), yet market idiosyncrasies compel multinational corporations to do just that if they wish to maintain their presence in foreign markets. While how tensions can be identified and managed has been researched (Visnjic et al., 2022) and it has been suggested that a holistic view of the organization is necessary for leaders to do this successfully (Smith et al., 2010), few studies have examined what contributes to successful BMI in foreign business units from the perspective of the narratives of local management. We have shown that instilled with both corporate values and extensive knowledge of the local market, intrapreneurs can possess the necessary capabilities to e/iciently manage the trade-o/s observed between integration and di/erentiation of BMs in the multinational context. ...
When a multinational operates different business models in different markets, a trade-off typically exists between local-market adaptations and cross-market economies of scale and scope. How do country managers navigate these trade-offs and the tensions inherent in developing and operating such dual business models? In this short paper we explore how a local subsidiary can innovate its business model in a way that creates alignment with the local market while respecting the larger corporate structure. We study the Chinese subsidiary of Velux, a multinational window manufacturer, that has transformed its business model from simple production to engineering, and further to modular solutions. We show that by respecting both the corporate strategic mission and the corporate culture, in combination with avoiding any direct challenge to the core corporate business model, the subsidiary has bypassed the tensions commonly observed with dual business models.
... Within these works on organizational tensions, the local/global one is frequently cited, as clear example Smith et al., 2010;Smith and Tracey, 2016). Lewis et al. (2014, p. 60) state that "achieving strategic agility often means attending to multiple, often contradictory demands -innovation and efficiency, global demands and local markets, and social missions and financial outcomes". ...
Over the past fifteen years, several studies have used the organizational theory of paradoxes to understand some typical organizational tensions, including that between global and local dimensions typically faced by multinational corporations. ese studies analyze paradoxical tensions at the organizational or even intra-organizational level, while the paradox lens has not yet been applied to study systems such as industrial districts. is paper attempts to do so by analyzing and comparing the local/global paradox in multinational corporations and industrial districts. For the latter, the analysis rests on some empirical studies conducted on Italian districts. Moreover, as the presence of multinationals in these districts has become stronger in the recent phase, an attempt has been made to understand if and how this phenomenon impacts the local/global tension at the district level.
... As businesses grow and seek external financing, it is customary to appoint independent directors who have no or minimal ownership stakes in the business (Smith et al. 2010). The rationale behind this practice is to ensure good governance by holding directors accountable to shareholders for their decision making within the company. ...
Fintech companies are relatively young and operate in a rapidly evolving and ever-changing industry, which makes it important to understand how different factors, including shareholder presence in management roles, affect their performance. This study investigates the impact of shareholder presence in director and manager positions on the financial performance of Latvian fintechs. Our investigation centers on essential financial ratios, including Return on Assets, Return on Equity, Profit Margin, Liquidity Ratio, Current Ratio, and Solvency Ratio. Our findings suggest that the presence of shareholders in director and manager roles does not significantly affect the financial performance of fintech companies. Although the statistical analysis did not yield significant results, it is important to consider additional insights garnered from Cliff’s Delta effect sizes. Specifically, despite the lack of statistical significance, practical significance indicates that fintech companies in which directors and managers are shareholders show slightly better performance than other fintech companies. Beyond shedding light on the intricacies of corporate governance in the fintech sector, this research serves as a valuable resource for investors, stakeholders, and fellow researchers seeking to understand the impact of shareholder presence in director and manager roles on the financial performance of fintechs.
... BM is also defi ned as a description of a company's operations, structure, and value creation (Slávik and Zagoršek, 2016). Additionally, BM is defi ned in the context of its connections to strategy or strategic management (Smith et al., 2010). The lack of a universal definition of BM means that any discussion should be preceded by an explanation of how BM is defi ned (Osterwalder and Pigneur, 2013, 19). ...
The concept of sustainable development is considered one of the most important and urgent challenges facing humanity today. Therefore, solutions that promote sustainable business are of particular importance. The purpose of this article was to explore the concept of a business model as a potentially promising way of shaping the contribution of businesses to sustainable development. A systematic literature review method was used to identify, analyze and critically evaluate the first theoretical proposals for the concept of a sustainable business model. Fundamental differences between the proposed conceptualizations were identified, stemming from different understandings of the business model concept on the one hand, and from its embedding in different, partly contradictory approaches, to corporate contributions to sustainable development, on the other. The article adapts the holistic approach of corporate sustainability and the understanding of the business model as a representation of the essence of business including the proposition, creation, delivery and capture of value. As a result, key elements of the emerging new ontology of the sustainable business model have been identified and defined. The proposed concept of a sustainable business model primarily means adopting a different logic of business, and the basis for defining the various elements of the business model is the reconstruction of the concept of value. The sustainability of a business model is thus referred to the extent to which this model maximizes benefits while reducing economic, social, and environmental damage, and creates value not only for the company and its customers but also for various stakeholder groups. The main part of the article is a systematic identification of the opportunities and challenges associated with the new proposal. These are discussed according to the key elements of the sustainable business model, which are: the value proposition, value creation and value capture.
... The business model literature frequently discusses the concepts of value creation, value delivery, and value capture (Abdelkafi et al., 2013;Bocken et al., 2014;Smith et al., 2010;Teece, 2010). For example, Osterwalder and Pigneur defined a business model as "the rationale of how an organization creates, delivers, and captures value" (2010, p. 14). ...
The COVID-19 pandemic has forced Philippine micro-, small-, and medium-scale enterprises (MSMEs) to undergo some form of digitalization to survive and continue servicing clients' needs. Many MSMEs failed to cope with the business-related impacts of the pandemic-70.6% of which decided to shut down temporarily (Shinozaki, 2020). Others were able to transition with the help of digital technologies, allowing them to withstand the pandemic's impacts. These businesses started adopting social media and e-commerce platforms and meeting with clients via virtual setups, to name a few. For this research, we identified the enablers, barriers, and challenges faced by select Philippine MSMEs as they attempted to enhance their digital capabilities. Using the multiple case study research design, we examined the narratives derived from our in-depth interviews with 9 Philippine-based MSMEs. Our findings show that Philippine MSMEs experienced diverse enablers, barriers, and challenges during COVID-19 and exhibited increased openness to digital technologies. Finally, we present that MSMEs that can effectively address their barriers and challenges are likely to come out stronger in the post-pandemic era. Given this, post-pandemic resilience is necessary for MSMEs to sustain business operations, withstand future shocks, and capitalize on new business opportunities. .
... Another challenge arises from the trade-offs that emerge over time between static and dynamic models, necessitating more agile methods and monitoring of additional control variables [56,66]. An illustrative example of a model based on trade-offs is the servitization model, where a product company offers an associated service. ...
This dissertation analyzes digital transformation in the post-harvest grain sector, emphasizing the adoption of digital technologies, their associated opportunities, challenges, and economic and operational impacts. The research includes a bibliometric analysis of emerging technological trends, two case studies involving a Brazilian engineering solutions company, and an empirical investigation conducted at an international research institute in Germany. The dissertation comprises three significant articles. The first article employs bibliometric analysis to identify key global research trends related to digital transformation in post-harvest operations. The second article explores the opportunities that digitalization presents for an engineering solutions provider. The third article provides a comprehensive analysis of the impacts of digital transformation on the company's efficiency, competitiveness, and operational results, utilizing data from the empirical investigation. The findings underscore the importance of digital technologies - such as automation systems, artificial intelligence, and sensors - illustrating their positive effects in 9 distinct areas within storage units, where notable losses occur. The research indicates that these technologies can reduce grain losses by up to 7%, enhancing overall process efficiency. The adoption of these innovations contributes to reducing energy consumption, improving quality control of grains, and increasing food safety. In the drying process, the identified innovations suggest potential operational gains estimated at USD 700 million annually in Brazil. The dissertation analyzes the strategy adopted by a company during the digital transformation process, demonstrating the capacity of these innovations to generate both quantitative and qualitative economic value, benefiting not only the post-harvest sector but also the entire agricultural supply chain. This research offers valuable insights for companies and researchers interested in exploring digitalization opportunities in the post-harvest grain sector, emphasizing the achievable economic and efficiency gains.
... The above findings suggest that the discrepancies in the cognitions of business activity participants on business model innovation result in their different effects on business model innovation behaviors, and the resources and characteristics formed in the development course of enterprises will have different effects on the behaviors. For instance, strategic objectives drive enterprises to innovate business models towards specific directions (Smith et al. 2010, Sinkovics et al. 2014). Organizational learning is conducive to heightening enterprises' cognition of the external environment and understanding of external knowledge and information, such that they can learn from successful experience and avoid risks. ...
In the era of a digital economy, business model innovation takes on a critical significance to the transformation of conventional manufacturing enterprises. Factors for the innovation originate from both inside and outside the manufacturing enterprises. Previous studies focused on external factors, and few on the main factors of innovation. With Chinese wooden furniture manufacturing enterprises as an example, the paper focuses on the effect of innovation subject factors on the formation and practice of business model innovation planning. It was found that employees of all ages and levels have different ideas about business model innovation practice, and learning and absorptive abilities of employees, entrepreneurship, and factors at all dimensions of enterprise culture at the organizational level play an active promoting role at different stages of business model innovation, among which enterprise culture has a regulatory effect. This study enriches the research field about the effect of innovation subjects on business model innovation behaviors, and provides reference for wooden furniture manufacturing enterprises and even conventional manufacturing enterprises to facilitate the realization of business model innovation.
... In this cluster, the BMI approaches focus on characterising the elements and processes as ongoing reactions to alterations in the business environment (Demil and Lecocq, 2010), evolutionary processes (Dunford et al., 2010), continuously repeating cycles (Schaller et al., 2018), and reiterative reiterating learning processes (Chanal and Caron-Fasan, 2010). The approaches in this cluster also highlight the need to reflect on double-loop learning (Moingeon and Lehmann-Ortega, 2010) and to see BMI as a discovery-oriented experimentation process instead of an analytical procedure (McGrath, 2010;Smith et al., 2010;Sosna et al., 2010). The red cluster considers not only antecedents but also potential barriers to the BMI process. ...
... We also contribute to goal orientation research, showing the consequences of different orientations for companies embracing the complexities of BMI. Smith et al., 2010), as they entail a complex combination of elements (Foss & Saebi, 2017), such as the value proposition and the profit logic (Kranich & Wald, 2018;Micheli et al., 2020;Teece, 2010). Shaping and adapting these core elements involve radical choices (Andersen et al., 2022;Berends et al., 2016;Martins et al., 2015;Massa et al., 2017;Volberda et al., 2017), often requiring managers to narrow their focus to specific goals (Laasch, 2018;Sheng & Chien, 2016). ...
Even though business model innovation (BMI) is crucial to enhance competitive advantage, our understanding about how organizations innovate their business model when pursuing contrasting goals is rather underdeveloped. To address this issue, we explore how and why managers' learning and performance orientations affect BMI. Using a survey among managers at companies within the creative industries , such as design, architecture and gaming, we find a positive relationship between learning orientation and BMI, while a performance orientation does not affect the ability to innovate the business model. We also explain that learning orientation has a stronger effect in dynamic environments. Our study contributes to research on business model, exploring the antecedents of BMI and showing how companies can enhance innovation, while navigating contrasting goals. We also contribute to goal orientation research, showing the consequences of different orientations for companies embracing the complexities of BMI. K E Y W O R D S business model innovation, contrasting goals, environmental dynamism, learning orientation, performance orientation
... A challenge to many organizations when confronting highly complex and ambiguous market-driven pressures is the depth of their organization's intellectual capital, considered by theorists as essential for building robust and resilient organizational performance (Johnson et al., 2003;Kashdan et al., 2020;Mention, 2012;Smith et al., 2010;Whittington, 2019;Wolfson & Mathieu, 2020). Intellectual capital can be described as 'the knowledge and knowing capability of a social collectivity, such as an organization, intellectual community, or professional practice' (Nahapiet & Ghoshal, 1998, p. 245 (Gino, 2018;Kashdan, 2015;Reio Jr & Wisell, 2000). ...
In this paper, we draw on extant studies about curiosity and practice to analyse and frame curiosity as a salient social practice for organizations. We go beyond the psychological applications of curiosity to consider the social practices of 'doing' curiosity. We draw on the strategy as practice (SAP) literature and propose a curiosity as practice (CaP) conceptual framework. We argue that CaP is enacted at the nexus of three practices-sociomateriality, discursivity and agency-collectively enabling CaP to engage and connect with other practice bundles, including decision-making, sensemaking and strategising. Finally, we discuss the implications of our conceptual research and suggest an agenda of empirical research aligned with the CaP conceptual framework.
... On the other hand, process-level agents (like "corporate explorers") include managers overseeing innovation and product development initiatives -also often referred to as middle managers. Smith et al. (2018) emphasized the importance of these agents in fostering innovation within organizations. They highlighted how innovation managers facilitate the generation and implementation of new ideas, promote collaboration among different departments, and act as a bridge between upper management and frontline employees. ...
Corporate innovation and entrepreneurship are important ways of accumulating, converting, and leveraging resources for established organizations to innovate, renew, and bring about venturing activities. They have been recognized as critical for companies' competitiveness and long-term prosperity, and many organizations have established innovation labs to foster the proliferation of innovation and entrepreneurship practices and methods. Senior executives of Top Management Teams (TMT) are critical in supporting innovation initiatives. Yet, we know little about the managerial actions and decisions that enable or inhibit the successful pursuit of entrepreneurial innovations and the lived experiences of innovation managers. This research explores how senior managers influence middle managers driving corporate innovation initiatives. We adopt a microfoundations perspective, which focuses on understanding individual actions that lead to macro-level outcomes. We focus on the agents' (or actors') role in shaping and informing strategic innovation. We explore the interactions of senior managers who oversee innovation activities with individual innovation managers of a company's innovation lab initiative. Our study is based on a 6-year longitudinal case study of a leading Australian property development company. It reveals the practices senior managers adopt, how they impact middle managers, and their role in achieving strategic innovation outcomes. By understanding how senior managers enable or inhibit corporate innovation and entrepreneurship, we contribute to the growing body of research on the microfoundations of innovation. We offer practical insights to help established organizations enhance innovation and entrepreneurship capability.
... Collaborating in multiple partnerships allows firms to learn diverse problemsolving approaches and reframe paradoxical tensions (Beckman & Haunschild, 2002;Jarzabkowski et al., 2019). In addition, a PPS provides access to resources, capabilities, and knowledge that stimulate creativity and experimentation thanks to the diverse set of partners it contains (Lucena & Roper, 2016), which enables firms to develop innovative solutions to paradoxical tensions (Miron-Spektor et al., 2011;Smith et al., 2010). Moreover, a PPS can help incorporate stakeholders from different backgrounds, facilitating learning about diverse stakeholder demands and orientations (Van Tulder & Da Rosa, 2012). ...
This article investigates how firms address the stability-change paradox inherent in sustainability transitions through the maintenance and utilization of a portfolio of sustainability-oriented partnerships. Drawing on a retrospective case study of Dong/Ørsted, a Danish energy company, we demonstrate the varying manifestations of the stability-change paradox during different phases of the company’s transition, influenced by both exogenous and endogenous factors. Furthermore, our findings reveal how Dong/Ørsted employed their partnership portfolio to implement diverse responses to manage the paradox. Based on these findings, we argue that partnership portfolios can serve as spatiotemporal pockets, enabling organizations to effectively address and leverage the temporal and spatial aspects inherent in sustainability paradoxes. In addition, we highlight how partnership portfolios facilitate sustainability transitions by creating and leveraging different forms of collaborative value.
This chapter discusses the process of implementing a micro innovation strategy for the development of the company’s mainstay business at present (incremental innovation) and a future growth strategy (radical innovation) in an age when there are dramatic changes in the environment and the future is hard to predict from the perspective of boundaries innovation that the company should implement based on the creation of boundaries knowledge and convergence knowledge. To implement knowledge convergence processes, outstanding companies dynamically establish various project teams and diverse mixed teams, which are strategic communities, as well as network organizations that integrate these teams and continually generate new boundaries innovation. The chapter presents a theoretical framework, detailed case studies, and new insights regarding combination of exploration and exploitation through triadic strategic community formations for boundaries innovation strategies where dynamic strategic communities that overcome and transcend various boundaries create boundaries knowledge from various different types of knowledge and dynamically converge these different types of knowledge to create new convergence knowledge (such as the development of new products and services and the development of new business models, etc.).
This article explores the microfoundational aspects of business model innovation (BMI) under conditions of rapid change caused by technological and regulatory disruptions. Based on empirical analysis of relevant industry incumbents, we address the following research question: How do key microfoundational elements, notably individual behaviors and organizational processes and design, interact to drive business model innovation? Despite its importance, little is known about this question. We explore the microfoundations of BMI via a multiple-case study method. We specifically investigate the interplay between microfoundational components at varying levels (individual, process, interaction, and organizational design) in three incumbent companies in Finland's power electricity sector. Theoretically, this article's contributions lie in examining the interaction mechanisms that drive the interplay between microfoundational elements at macro and micro levels during the different BMI stages. These mechanisms are critical for shaping interaction processes in BMI and supporting value creation and appropriation. For managers, our research provides a microfoundational framework for guiding BMI, including guidelines for critical tasks such as promoting a creative culture, enhancing cross-functional collaboration, balancing innovation with operational stability, aligning with industry trends, and preparing the organization for continuous innovation.
Digitalization is a transformative process that deeply impacts the business world and society today. Technological advances accelerate changes in communication and business practices within organizations, positioning digital technologies as a strategic necessity for adapting to these transformations and making digitalization inevitable for businesses. Digital infrastructure relies on a strong foundation in areas such as marketing, sales, data analytics, and business intelligence. This process necessitates the reshaping of business models, customer relationships, and operations, while also transforming how societies access information, communicate and shape their lifestyles. Businesses that integrate traditional operations with digital technologies optimize their processes, enhance workflows through mobile applications and automation tools, and improve efficiency. Companies that strategically leverage digital technologies to gain a competitive advantage adopt a flexible, innovative, and technology-focused approach to succeed in the rapidly evolving business environment. This study aims to evaluate the digital transformation processes of manufacturing enterprises operating in Izmir using multi-criteria decision-making methods. Within the study, the Analytic Hierarchy Process (AHP) was employed to determine the weights of the criteria prioritized in digital transformation, and the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method was used for ranking the enterprises. The findings shed light on identifying the most appropriate business strategies for digital transformation processes and concretely demonstrate the impact of digitalization on business performance. After the study, the enterprises were evaluated based on their digital transformation scales, and the most suitable ones were identified and analyzed. Key Words: Digitalization, Digital Businesses, Multi-Criteria Decision Making, AHP, TOPSIS JEL Classification: M10, D70, D81
Based on publication: Jaroslaw Wojciechowski, Renata Lisowska (2024). Implementation of a Variable Costing Method to Calculate the Profitability of a Production Investment for a Textile and Clothing Start-Up, European Research Studies Journal Volume XXVIΙ Issue 3, 583-596
Background: Rapid changes and dynamic markets significantly impact the way businesses operate. Many companies fail to adapt and innovate their business models, which jeopardizes their sustainability. Managers, as key decision-makers, play a pivotal role in the innovation process, whereby their entrepreneurial competencies directly influence various dimensions of business model innovation. Objectives: The main aim of this study is to examine the impact of entrepreneurial competencies on the new value proposition dimension of business model innovation (BMI), exploring competencies such as opportunity recognition, analytical thinking, innovativeness, tenacity, and passion for work. It investigates how these competencies contribute to developing new offerings and new channels, attracting new customers and markets, and building new customer relations. Methods/Approach: The study is conducted on a sample of 267 managers of medium and large companies across various industries in Bosnia and Herzegovina. The data were analyzed using structural equation modeling (SEM). Results: The results show that different entrepreneurial competencies have a significant impact on various aspects of a new value proposition. Conclusions: The study contributes to a deeper understanding of the influence of different entrepreneurial competencies on new value proposition dimensions within BMI. Managers who effectively utilize these competencies can enhance their companies' value propositions, thereby increasing competitiveness and business success.
The view of dynamic capabilities in evolutionary economics as being based on capabilities comprised of routines has so far precluded their integration in evolutionary economics. This Element contributes to such integration by introducing the dynamic metacapabilities framework. Borrowing from quantum mechanics, dynamic metacapabilities assume that resources and capabilities, rather than being created ex-nihilo, result from bundles of information 'decohering ' to bundles of resources and capabilities as new information becomes available to the firm. Operationalized by a management paradigm we call 'quantum management, ' dynamic metacapabilities contribute to integrating dynamic capabilities in evolutionary economics and to resolving the ongoing debate on what dynamic capabilities are by postulating an informational view of the firm according to which firms 'evolve ' with strategy throughout a lifecycle governing the transition from dynamic 'metacapabilities ' to dynamic capabilities and onto ordinary capabilities.
The main aim of this study is to extend our understanding of ambidextrous leadership. For this purpose, a systematic review of the literature published since 1991 has been conducted to reveal a variety of viewpoints on how leaders manage ambidexterity. A total of 141 articles were included in this study. According to our findings, at the individual level, the role requires that people be both capable and willing to act ambidextrously to foster ambidexterity. At the team level, middle managers’ composition and willingness to embrace ambidextrous activities of their leaders are important as their role and behaviors differ significantly from those of top managers. At the organizational level, many factors may affect ambidexterity management, from leaders’ personal characteristics to organizational characteristics, such organizational size, structure, strategy, and external environment. This study uses a multi-level framework to explain the concept of ambidextrous leadership, and then proposes future research directions.
Este artigo propõe-se a examinar o papel das startups localizadas na Bahia, uma região geograficamente desafiadora, na promoção da sustentabilidade e no enfrentamento das dificuldades inerentes à sua localização. A pesquisa utiliza um estudo de caso de cinco startups baianas de setores diversos para analisar como elas superam obstáculos geográficos, implementam práticas sustentáveis e impactam o desenvolvimento regional. Os resultados revelam que essas startups demonstram notável resiliência e inovação, adotando estratégias específicas para lidar com as complexidades geográficas e contribuindo positivamente para a sustentabilidade ambiental e econômica da região. Espera-se que este estudo forneça insights valiosos para empreendedores, investidores e formuladores de políticas interessados em estimular o crescimento sustentável em áreas desafiadoras, ao mesmo tempo em que destaca o potencial das startups como motores de transformação.
Purpose
This paper aims to critically examine traditional approaches to paradoxes and propose a new approach and perspective that views “chiasmic” organizing as a intertwining combination of structure and processes that facilitate the handling of multiple interrelations for processing paradoxes and harness their creative potential in organizations.
Design/methodology/approach
Employing a cross-disciplinary approach, a literature review and a critical lens, along with conceptual work (typology), are used to identify problems and deficiencies in existing research on paradoxes. Specifically, it draws on Merleau-Ponty's process-oriented phenomenology and post-Cartesian ontology to gain a comprehensive understanding of post-dualistic forms of chiasmic organizing and its relationship with paradoxical phenomena.
Findings
The process-oriented phenomenology and post-Cartesian ontology used in this article offer valuable insights and a critical approach to comprehend post-dualistic forms of chiasmic organizing in relation to paradoxes. This understanding can help in tapping into the energizing and creative potential of paradoxes. The paper also highlights the significance of the “in(ter)-between” as a reversible principle in chiasmic organizing and proposes some implications.
Research limitations/implications
Limitations and implications of this study are identified and discussed.
Practical implications
The paper offers practical implications for organizations in processing paradoxes.
Originality/value
This paper contributes to the existing literature by providing a conceptual critique and proposing a novel understanding of chiasmic organizing as an intertwining structure and mediating processes by employing a process-oriented phenomenology and post-Cartesian ontology. It also offers innovative ways to approach paradoxes and tap into their creative potentials, which can bring about change in organizations.
L’innovation du modèle d’affaires ou business model (BM) joue un rôle important pour le succès et la croissance des entreprises dans des marchés de plus en plus concurrentiels. Ce type d’innovation pose des défis majeurs aux entreprises dont les structures sont établies de longue date telles que les entreprises familiales (EF). Dans ce contexte, les capacités dynamiques paraissent essentielles pour que les entreprises puissent exploiter les opportunités et répondre aux changements de l’environnement. En outre, l’implication de la famille dans l’entreprise crée des motivations et des caractéristiques spécifiques qui exercent une influence importante sur le comportement stratégique des EF. L’objectif de cet article est d’explorer, au travers d’une étude exploratoire de cas unique, le rôle de l’implication familiale dans l’innovation du BM tout en soulignant l’apport des capacités dynamiques dans ce processus. Les résultats de cette recherche montrent la façon dont la vision à long terme des entreprises familiales, qui englobe à la fois le passé et l’avenir, contribuent à l’innovation du BM. Ils révèlent, en outre, le rôle des capacités de détection, de saisie des opportunités et de transformation dans l’innovation en termes de logique de création, de proposition et de capture de la valeur.
In a rapidly changing and ambiguous business environment, employees need to develop the capacity for psychological resilience, which is a positive adaptation despite adversity. One key process that can cultivate resilience is learning. We suggest that employees' learning agility orientation (the willingness to learn flexibly and speedily) can foster ambidextrous learning, that is, the motivation to learn from both direct experiences of successes and failures which, in turn, may translate into higher levels of resilience. We conduct two studies-a time-lagged study and an experimental study-to examine the mediating relationship between learning agility orientation and psychological resilience via ambidextrous learning. The results generally support to the hypothesized model and show that learning-agility-oriented employees develop resilience through their motivation to ambidextrously learn from both success and failure. We discuss the implication for theory and practice on learning agility, motivation to learn from different experiences, and resilience.
Implementing new value systems in municipal organizations to add societal value is extremely challenging. Value tensions emerge inside public organizations when the traditional (TPA) and market (NPM) value systems are confronted with new collaborative value systems (NPG). A multi-level case study, based on interviews, observations and documents, was conducted in two large Dutch municipalities to analyze implementation challenges that civil servants encounter due to the implementation of NPG. By integrating a governance mechanisms-based approach with a value tension approach, the paper contributes to the understanding of internal hybridity in municipal organizations, and the wickedness of organizing public administration when implementing NPG, by identifying both vertical - formalization, flexibilization, and misalignment in top-down and bottom-up governance - and horizontal - different organizational pillars, professions, and value interpretations - implementation challenges. The paper concludes that in the paradoxical situation of complex policy arenas, values elements of TPA and NPG governance models associated with “doing it right” remained dominant in the trade-offs with new values of NPG modes associated with “doing the right thing”. Value conflicts hinder civil servants in ‘doing the right thing right’.
Corporate governance is an increasingly provocative topic, evident in ongoing debates between proponents of control versus collaborative approaches. We accommodate these contrasting approaches within a paradox framework, using agency and stewardship theories to elaborate the underlying tensions and to emphasize the value of monitoring, as well as empowerment. Building from these tensions, we examine reinforcing cycles that foster strategic persistence and organizational decline. We conclude by discussing means of managing control and collaboration, highlighting the implications for corporate governance.
As change becomes a constant in organizational life, middle managers charged with interpreting, communicating, and implementing change often struggle for meaning. To explore change and managerial sensemaking, we conducted action research at the Danish Lego Company. Although largely absent from mainstream journals, action research offers exceptional access to and support of organizational sensemaking. Through collaborative intervention and reflection, we sought to help managers make sense of issues surfaced by a major restructuring. Results transform paradox from a label to a lens, contributing a process for working through paradox and explicating three organizational change aspects-paradoxes of performing, belonging, and organizing.
Idea brokers are good at sparking cross-divisional innovation through their broad social networks. But implementation - marshaling resources and getting various stakeholders on board - requires dense webs of strong interpersonal relationships.
Grameen bank, founded in 1976, has both pioneered the development of micro-finance, and created nearly 30 businesses designed to alleviate poverty. The article traces the gradual development of Grameen’s expertise in formulating social business models, which require new value propositions, value constellations and profit equations, and as such, resembles business model innovation. The article presents five lessons learned from this experience: three are similar to those of conventional business model innovation: challenging conventional thinking, finding complementary partners and undertaking continuous experimentation; two are specific to social business models: recruiting social profit-oriented shareholders, and specifying social profit objectives clearly and early. We suggest these new business models - where stakeholders replace shareholders as the focus of value maximization - could empower capitalism to address overwhelming global concerns.
Exploration and exploitation have emerged as the twin concepts underpinning organizational adaptation research, yet some central issues related to them remain ambiguous. We address four related questions here: What do exploration and exploitation mean? Are they two ends of a continuum or orthogonal to each other? How should organizations achieve balance between exploration and exploitation-via ambidexterity or punctuated equilibrium? Finally, must all organizations strive for a balance, or is specialization in exploitation or exploration sometimes sufficient for long-run success? We summarize the contributions of the work in this special research forum and highlight important directions for future research.
Sustained organizational performance depends on top management teams effectively exploring and exploiting. These strategic agendas are, however, associated with contradictory organizational architectures. Using the literature on paradox, contradictions, and conflict, we develop a model of managing strategic contradictions that is associated with paradoxical cognition-senior leaders and/or their teams (a) articulating a paradoxical frame, (b) differentiating between the strategy and architecture for the existing product and those for innovation, and (c) integrating between those strategies and architectures. We further argue that the locus of paradox in top management teams resides either with the senior leader or with the entire team. We identify a set of top management team conditions that facilitates a team's ability to engage in paradoxical cognitive processes.
Organizational ambidexterity, defined as an organization's ability to be aligned and efficient in its management of today's business demands while simultaneously being adaptive to changes in the environment, has gained increasing interest in recent years. In this article, the authors review various literature streams to develop a comprehensive model that covers research into the antecedents, moderators, and outcomes of organizational ambidexterity. They indicate gaps within and across different research domains and point to important avenues for future research.
"Paradox" appears increasingly in organization studies, often to describe conflicting demands, opposing perspectives, or seemingly illogical findings. This article helps researchers move beyond labeling - to explore paradoxes and contribute insights more in tune with organizational complexity and ambiguity. I first develop a framework that clarifies the nature of paradoxical tensions, reinforcing cycles, and their management. Using this framework, I then review studies in which paradoxes spurred by change and plurality are investigated. I conclude by outlining strategies for identifying and representing paradox, addressing implications for research.
While a firm’s ability to jointly pursue both an exploitative and exploratory orientation has been posited as having positive performance effects, little is currently known about the antecedents and consequences of such ambidexterity in small-to medium-sized firms (SMEs). To that end, this study focuses on the pivotal role of top management team (TMT) behavioral integration in facilitating the processing of disparate demands essential to attaining ambidexterity in SMEs. Then, to address the bottom-line importance of an ambidextrous orientation, the study hypothesizes its association with relative firm performance. Multisource survey data, including CEOs and TMT members from 139 SMEs, provide support for both hypotheses.
Organizational learning has many virtues, virtues which recent writings in strategic management have highlighted. Learning processes, however, are subject to some important limitations. As is well-known, learning has to cope with confusing experience and the complicated problem of balancing the competing goals of developing new knowledge (i.e., exploring) and exploiting current competencies in the face of dynamic tendencies to emphasize one or the other. We examine the ways organizations approach these problems through simplification and specialization and how those approaches contribute to three forms of learning myopia, the tendency to overlook distant times, distant places, and failures, and we identify some ways in which organizations sustain exploration in the face of a tendency to overinvest in exploitation. We conclude that the imperfections of learning are not so great as to require abandoning attempts to improve the learning capabilities of organizations, but that those imperfections suggest a certain conservatism in expectations.
The relationship between the social composition of top management teams and innovation adoptions was examined in a sample of 199 banks. The following characteristics of top management teams were examined: average age, average tenure in the firm, education level, and heterogeneity with respect to age, tenure, educational background, and functional background. In addition, the effects of bank size, location (state of operation), and team size were assessed. Results indicate that more innovative banks are managed by more educated teams who are diverse with respect to their functional areas of expertise. These relationships remain significant when organizational size, team size, and location are controlled for.
Companies strive for profitable growth in their quest to create superior returns for their shareholders. Profitable growth requires an organizational design that pursues seemingly contradictory demands: mechanistic structures to ensure the efficient exploitation of existing capabilities, and organic structures to enable the exploration of new growth opportunities. Researchers have suggested a range of ‘balanced’ structural concepts to reconcile these conflicting requirements at the corporate level. The solutions include temporarily cycling through different structures (temporal separation), creating differentiated units (structural separation), and enabling employees to move back and forth between different structures (parallel structures). While theoretical concepts have been presented for balanced structures, much less is known about how organizations deploy and execute these solutions.In this article, data from an inductive study of six leading Central European companies are used to explore the specific conditions under which different structural solutions were adopted, the strategies deployed to execute these solutions, and the learning outcomes that resulted from their implementation. The organizations observed in this study used the three balanced design options as complementary rather than mutually exclusive solutions. The solutions were deployed in different contexts and contributed to different learning outcomes. While the solutions all combined exploitation and exploration activities to some extent, each solution addressed different dimensions of these learning processes. The process model of balanced structural designs, presented in this article, provides insights into the structural solutions that may be most appropriate given the requirements of specific situations. Four general design rules are presented to support practitioners in the successful execution of balanced structures.
This paper explores the paradoxes and competing values inherent in leadership behavior. Scales for eight leadership roles are developed, providing empirical data about 176 executives. The article contributes to the theoretical understanding of the paradoxes of leadership and introduces the concept of behavioral complexity to understand leader behavior and integrate theoretical findings in the leadership literature.
In the past 15 years, the IBM Company has undergone a remarkable transformation from a struggling seller of hardware to a successful broad range solutions provider. Underlying this change is a story of foresighted strategy and disciplined execution—of connecting knowing to doing. In strategic terms, the IBM transformation illustrates the ideas behind dynamic capabilities, showing how the company has been able to sense changes in the marketplace and to seize these opportunities by reconfiguring existing assets and competencies. We review the literature on dynamic capabilities and, using IBM as a case example, show how their strategy process permits them both to explore new markets and technologies (e.g., life sciences, pervasive computing) as well as to exploit mature products and markets (e.g., mainframe computers, middleware).
How do organizations survive in the face of change? Underlying this question is a rich debate about whether organizations can adapt—and if so how. One perspective, organizational ecology, presents evidence suggesting that most organizations are largely inert and ultimately fail. A second perspective argues that some firms do learn and adapt to shifting environmental contexts. Recently, this latter view has coalesced around two themes. The first, based on research in strategy suggests that dynamic capabilities, the ability of a firm to reconfigure assets and existing capabilities, explains long-term competitive advantage. The second, based on organizational design, argues that ambidexterity, the ability of a firm to simultaneously explore and exploit, enables a firm to adapt over time. In this paper, we review and integrate these comparatively new research streams and identify a set of propositions that suggest how ambidexterity acts as a dynamic capability. We suggest that efficiency and innovation need not be strategic tradeoffs and highlight the substantive role of senior teams in building dynamic capabilities.
A ‘business model’ is commonly seen as composed of two elements: a business system and a profit model. While the latter often gains the higher profile, the former is arguably the real ‘meat’ of a firm's business model. Not only does it act as the ‘system of works’ that actually produces and delivers the firm's products or services, it is also the locus where a firm can learn about its operations and the behaviors of its suppliers and customers. This learning can accumulate to represent a considerable competitive advantage, one that risks being wasted if activities are unwisely unbundled. While the profit model earns revenues for the short term, the business system learns information for the longer term: a successful business model must aim for both these outcomes.
Strategic discontinuities and disruptions usually call for changes in business models. But, over time, efficient firms naturally evolve business models of increasing stability - and therefore rigidity. Resolving this contradiction can be made easier by developing three core meta-capabilities to make an organization more agile: strategic sensitivity, leadership unity and resource fluidity. This article reviews the underlying determinants of these capabilities, based on detailed research undertaken in a dozen companies who were re-conceiving their business models - among others, Nokia, easyGroup, HP, SAP and Kone are used as examples. We propose a repertoire of concrete leadership actions enabling the meta-capabilities needed to accelerate the renewal and transformation of business models. To organize our argument we borrow the three main dimensions of the strategic agility framework presented in our earlier work, and develop corresponding vectors of leadership actions, each of which can enhance a firm's ability to renew its business models.
Corporate governance is an increasingly provocative topic, evident in ongoing debates between proponents of control versus collaborative approaches. We accommodate these contrasting approaches within a paradox framework, using agency theory and stewardship theories to elaborate the underlying tensions and to emphasize the value of monitoring, as well as empowerment. Building from these tensions, we examine reinforcing cycles that foster strategic persistence and organizational decline. We conclude by discussing means of managing control and collaboration, highlighting the implications for corporate governance.
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This article uses data from a field study of five large U.S. restaurant chains to model how chains use a plural form - simultaneous use of company and franchise units - to maintain uniformity and achieve systemwide adaptation to changing markets. From interview and observational data, I identify organizational structure, control systems, career paths, and strategy-making processes as four means through which the combination of company and franchise units helps chains achieve their objectives. The paper shows how the control and innovation processes provided by this plural form ameliorate some of the weaknesses and leverage some of the strengths of the company and franchise arrangements, enhancing the performance of the chain overall.
This thought piece proposes a framework for addressing the challenges of poverty and human suffering so widespread around the world. Based on the WSWP action research program, we suggest that visionary businesses can play a role in creating new business models that open up new markets, and simultaneously attend to societal wealth improvements. This framework should be of great interest to global firms intent on creating new markets for their own futures. One of the critical problems managers face in opening up new markets is to maintain fiduciary responsibility in the face of little, if any, market information. We consider such environments to be characterized by significantly high – or near-Knightian – uncertainty, and propose a framework for designing business models that simultaneously attend to the planning and project evaluation concerns of such firms, as well as the societal needs of the activity's proposed beneficiaries.
Some of established businesses' most ubiquitous and profitable business models are increasingly being challenged by a new breed of emerging market players. Rather than simply focusing on cut-priced, undifferentiated offerings, emerging country multinationals are deploying their cost advantages in creative ways to deliver high technology, variety and customisation at minimal price premiums, and to redirect niche offerings towards volume segments. This amounts to the emergence of a new type of generic strategy: ‘cost innovation’. Meanwhile, fundamental changes in global market structures are afoot which favour these new business models, and the confluence of these forces is creating a global ‘value-for-money’ revolution. Incumbents will require new types of responses to survive and prosper – but the pre-requisite for any effective response is a shift in mindset about the new business models required to succeed in the future.
Decision-making (prediction) behavior under two types of conflict was experimentally examined within the Social Judgment Theory research paradigm. Interpersonal cognitive conflict (the degree of disagreement over the interpretation of a common stimulus), goal conflict (the degree of competition for payoffs), and trial blocks were independent variables. Prediction error was the dependent measure. Individuals made better predictions about task-criterion values under no-goal conflict than under goal conflict conditions. During the initial stage of a series of prediction trials, subjects made better predictions of task-criterion values under high cognitive conflict than under low cognitive conflict conditions. All groups of subjects were able to improve prediction performance significantly over time. These results are generally consistent with arguments stressing the potential benefits of minimal goal conflict over payoffs and high cognitive conflict on decision quality.
Substantive conflict is natural within top management teams as executives struggle with making high-stakes choices under conditions of ambiguity and uncertainty. Yet, many top management teams fail to sufficiently debate appropriate courses of action. This article reports on a field study of top management teams and examines four managerial levers that can help executives overcome the cognitive, emotional, and political barriers to engaging in conflict. These levers are: build a heterogeneous team; create frequent interactions within that team; cultivate a distinct symphony of roles such as Counselor, Futurist, and Ms. Action around fundamental tensions within managing; and use multiple-lens tactics such as competitor role playing and multiple alternatives to provide unexpected vantage points on key issues.
Companies are increasingly asked to provide innovative solutions to deep-seated problems of human misery, even as economic theory instructs managers to focus on maximizing their shareholders' wealth. In this paper, we assess how organization theory and empirical research have thus far responded to this tension over corporate involvement in wider social life. Organizational scholarship has typically sought to reconcile corporate social initiatives with seemingly inhospitable economic logic. Depicting the hold that economics has had on how the relationship between the firm and society is conceived, we examine the consequences for organizational research and theory by appraising both the 30-year quest for an empirical relationship between a corporation's social initiatives and its financial performance, as well as the development of stakeholder theory. We propose an alternative approach, embracing the tension between economic and broader social objectives as a starting point for systematic organizational inquiry. Adopting a pragmatic stance, we introduce a series of research questions whose answers will reveal the descriptive and normative dimensions of organizational responses to misery.
This article describes the contrasting systems of coordination and control at American and Southwest Airlines. Contrary to popular belief, the best way to achieve coordination in high velocity settings like the airline industry is not to create a flat organization based on performance measurement and little supervision. Rather it is better to build an organization based on cross-functional accountability to diffuse blame, with adequate supervisory staffing to provide coaching and feedback. Coordination benefits from strengthening this role of supervisors while weakening the role of accountability and performance measurement.
We investigated contextual organizational ambidexterity, defined as the capacity to simultaneously achieve alignment and adaptability at a business-unit level. Building on the leadership and organization context literatures, we argue that a context char- acterized by a combination of stretch, discipline, support, and trust facilitates contex- tual ambidexterity. Further, ambidexterity mediates the relationship between these contextual features and performance. Data collected from 4,195 individuals in 41 business units supported our hypotheses. A recurring theme in a variety of organizational literatures is that successful organizations in a dy- namic environment are ambidextrous—aligned and efficient in their management of today's busi- ness demands, while also adaptive enough to changes in the environment that they will still be around tomorrow (Duncan, 1976; Tushman & O'Reilly, 1996). The simple idea behind the value of ambidexterity is that the demands on an organi- zation in its task environment are always to some degree in conflict (for instance, investment in cur- rent versus future projects, differentiation versus low-cost production), so there are always trade-offs to be made. Although these trade-offs can never entirely be eliminated, the most successful organi- zations reconcile them to a large degree, and in so doing enhance their long-term competitiveness. Authors have typically viewed ambidexterity in structural terms. According to Duncan (1976), who first used the term, organizations manage trade-offs between conflicting demands by putting in place "dual structures," so that certain business units—or groups within business units—focus on alignment, while others focus on adaptation (Duncan, 1976).
Defines what is meant by executive discretion, and discusses the major factors that are thought to enhance or restrict the discretion of chief executives. Some of the organizational effects of abundant and restricted chief executive discretion are portrayed. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
This chapter is followed by a scoring manual for conceptual/integrative complexity by Gloria Baker-Brown, Elizabeth J. Ballard, Susan Bluck, Brian de Vries, Peter Suedfeld and Philip E. Tetlock. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Examines the correlation between the exploration of new possibilities and the exploitation of old certainties in organizational learning. Also discusses the difficulty in balancing resource management between gaining new information about alternatives to improve future returns (i.e., exploration) and using information currently available to improve present returns (i.e., exploitation). Two models which evaluate the formation and use of knowledge in organizations are developed. The first is a model of mutual learning in a closed system having fixed organizational membership and stability. The second is a model which considers the ways in which competitive advantage is affected by knowledge accumulation. The analysis indicates that the choice to rapidly develop exploitation over exploration might be effective in the short term, but is potentially detrimental to the firm in the long term. (SFL)
Corporate effects in variance decomposition capture heterogeneity of business performance derived from factors internal to firms at the corporate level. Most estimates of corporate effects do not include effects associated with fluctuations in returns over time, except insofar as the fluctuations affect the average corporate return for the time period in question. Exclusion of the time-varying dimension of the corporate effect makes it difficult to fully understand the effect of corporate strategy and the actions of corporate managers, particularly in response to a changing environment. The evidence in this article shows that within a single industry, where managers face the same external environment, time-varying corporate effects associated with corporate level managerial decisions are statistically significant. We introduce the concept of dynamic managerial capabilities to underpin the finding of heterogeneity in managerial decisions and firm performance in the face of changing external conditions. Copyright © 2003 John Wiley & Sons, Ltd.
The business model concept offers strategists a fresh way to consider their options in uncertain, fast-moving and unpredictable environments. In contrast to conventional assumptions, recognizing that more new business models are both feasible and actionable than ever before is creating unprecedented opportunities for today's organizations. However, unlike conventional strategies that emphasize analysis, strategies that aim to discover and exploit new models must engage in significant experimentation and learning – a ‘discovery driven,’ rather than analytical approach.
This book studies the changing strategies and administrative structures of U.S. industrial companies after World War II. It traces the rise of the multidivisional (decentered) type of organization used by firms carrying out the most diverse economic activities. Presented in detail are case studies of du Pont, General Motors, Standard Oil of New Jersey, and Sears. Each firm developed their new structure independently; each thought they were unique in their problems and solutions. The new structures were characterized by autonomous, integrated operating divisions with managers who had authority and facilities to make day-to-day tactical decisions, and a coordinating general office whose senior officers carried on entrepreneurial activities and coordinated, planned, and appraised the work of the divisions. From study of the four firms, Chandler found that (1) analysis of the creation of the new administrative structure required knowledge of the firm's entire administrative former history; (2) changes in organization were related to the way the firm expanded; (3) the patterns of growth reflect changes in the over-all economy, and (4) reorganizations were affected by the state of administrative science at the time. In brief, structure follows strategy, where strategy is the planning and carrying out of different types of growth, and structure is the design of the organization through which the enterprise is administered. Strategy is determination of the basic long-term goals and objectives, and adoption of necessary courses of action and allocation of resources. Structure is the lines of authority and communication between offices and officers, as well as the information and data that flow through these lines. The most complex structures result from the convergence of several basic strategies. Expansion of volume or geographical distribution led to particular structures. The theoretical questions can be framed as, (1) why is there delay in developing new organizations to meet new strategies, and (2) why the new structure emerges in the first place. In summary, found that strategic growth resulted from an awareness of the needs and opportunities (created by exogenous change) to employ existing or expanding resources more profitably. The new strategy required a new structure if the enlarged firms were to be efficient. After detailed examination of the four case studies, which represent decision-making under pressure, the author summarizes by presenting four stages in the history of large U.S. industrial enterprise: initial expansion and accumulation of resources; rationalization of use of resources; expansion into new markets and lines; and development of new structures to allow continuing mobilization of resources to meet short- and long-term market demands and trends. (TNM)
There are still few explanations of the micro detail through which top managers influence employee commitment to multiple strategic goals. This paper argues that through their language, top managers can construct a context for commitment to multiple strategic goals. We therefore propose a rhetoric-in-context approach to illuminate some of the micro practices through which top managers influence employee commitment. Based upon an empirical study of the rhetorical practices through which top managers attempt to influence academic commitment to multiple strategic goals in university contexts, we demonstrate relationships between rhetoric and context. Specifically, we show that rhetorical attempts to shape commitment to multiple goals are associated with the degree of organizational change, the established nature of multiple goals, and the internal consistency of the rhetorical practices used by top managers.AIM Working
Analysis of decision making under risk has been dominated by expected utility theory, which generally accounts for people's actions. Presents a critique of expected utility theory as a descriptive model of decision making under risk, and argues that common forms of utility theory are not adequate, and proposes an alternative theory of choice under risk called prospect theory. In expected utility theory, utilities of outcomes are weighted by their probabilities. Considers results of responses to various hypothetical decision situations under risk and shows results that violate the tenets of expected utility theory. People overweight outcomes considered certain, relative to outcomes that are merely probable, a situation called the "certainty effect." This effect contributes to risk aversion in choices involving sure gains, and to risk seeking in choices involving sure losses. In choices where gains are replaced by losses, the pattern is called the "reflection effect." People discard components shared by all prospects under consideration, a tendency called the "isolation effect." Also shows that in choice situations, preferences may be altered by different representations of probabilities. Develops an alternative theory of individual decision making under risk, called prospect theory, developed for simple prospects with monetary outcomes and stated probabilities, in which value is given to gains and losses (i.e., changes in wealth or welfare) rather than to final assets, and probabilities are replaced by decision weights. The theory has two phases. The editing phase organizes and reformulates the options to simplify later evaluation and choice. The edited prospects are evaluated and the highest value prospect chosen. Discusses and models this theory, and offers directions for extending prospect theory are offered. (TNM)
Paradoxical Demands and the Creation of Excellence: The Case of Just-In-Time Manufacturing
- Eisenhardt
K. Eisenhardt and B. Westcott, Paradoxical Demands and the Creation of Excellence: The Case of Just-In-Time Manufacturing, in R. Quinn
and K. Cameron (eds.), Paradox and Transformation: Toward a Theory of Change in Organization and
Management, Ballinger Publishing Company, Cambridge, 169e194 (1988).