Complementary Assets Research Articles

Creating community: the process of entrepreneurial community building for civic wealth creation

ABSTRACT This article examines the development of an entrepreneurial community focused on civic wealth creation. This case study identifies how a team of community entrepreneurs successfully leveraged their relationships to develop a shared vision and invest complementary assets to re-build a defunct cotton mill and form an entrepreneurial community around it to create civic wealth through the creation of opportunities of others and curation of the space. Building on the case, the paper explicates the process through which the entrepreneurial community is formed with the intent to create civic wealth, elaborates on the challenges of maintaining dual roles of animator and entrepreneur and highlights the importance of the maintenance of relationships in entrepreneurial communities.

What Enables a Chinese Firm to Create New-to-the-World Innovations? A Historical Case Study of Intrafirm Coopetition in the Instant Messaging Service Sector

Chinese firms have been widely seen as imitative. This historical case study explores what organizational mechanisms allowed Tencent, a Chinese firm in the fast-changing instant messaging (IM) service sector, to achieve a new-to-the-world innovation with its WeChat smartphone app. Tracing the competitive dynamics in the Chinese IM sector from its inception, we found that Tencent was able to create the innovative WeChat product through a crisis-induced intrafirm coopetition dynamic that was embedded in variation-selection-retention evolutionary processes spanning the market, the firm, and the business unit levels. Building on the intrafirm coopetition and evolutionary literatures, the paper shows that three business units simultaneously competed and cooperated in developing alternative IM products while being exposed to market selection for survival. The coopetition dynamic took place in three key areas: technology, product promotion, and complementary assets of suppliers. The relative balance between competition and cooperation changed over time, and top management guidance and firm-level routines were essential in managing the challenges of coopetition within the firm.

The impact of breakthrough innovation on firm performance: evidence from China

As breakthrough innovation as well as its successful commercialization is a critical driving force for competitive advantage and firm performance, we try to examine the factors and mechanism of breakthrough innovation from the perspective of profiting from innovation. To capture the underlying mechanism of asset-performance relationship, we explore how complementary assets affect firm performance. By testing the data collected from 230 firms in China, we find that (marketing and manufacturing) complementary assets both positively affect breakthrough innovation and firm performance, while the mediating role of breakthrough innovation between the two types of complementary assets and firm performance is different. To be specific, breakthrough innovation plays a full mediating role in the relationship between marketing complementary assets and firm performance while plays a partial mediating role between manufacturing complementary assets and firm performance. In doing this, we may make contributions to the intersectional research on complementary assets and breakthrough innovation, as well as extensive theoretical explanations of profiting from innovation theory. Besides, we also offer some theoretical guidance for firms to promote breakthrough innovation with nurturing complementary assets to achieve the success of its commercialization and improve firm performance.

Differential Incentives for Portfolio Expansion: Internal versus External Complementary Assets

Prior research highlights that complementary assets provide incentives for portfolio expansion, but has not compared internal complementary assets, which are owned by focal firms, with external complementary assets, which are owned by external entities. We argue that internal complementary assets provide stronger incentives for introducing new features in existing products, compared to external complementary assets. However, for new products, external complementary assets provide stronger incentives, with the difference in incentives conditioned by the scope of complementary assets. Finally, we argue that external complementary assets can endogenously provide incentives for expanding internal complementary assets. Empirical analysis of portfolio expansions by Android smartphone vendors from 2010 to 2018 supports our predictions. Overall, the paper shows how internal and external complementary assets have differential consequences for portfolio expansions.

Complementary Assets and Managerial Cognition in Surviving Technological Change

Despite the terminology describing the role of complementary assets on incumbent firms’ responses to technological change, the interaction between complementary assets and other organizational antecedents is scarcely understood. This study juxtaposes the complementary asset argument with managerial cognition perspective, specifically exploring how managerial cognition influences an incumbent firm’s investment decisions to pursue specific complementary assets and how this decision logic ultimately led to the failure to explore emerging

Peer-to-Peer Platforms and the Substitution of Incumbents’ Complementary Assets

In this paper, we study how the entry of peer-to-peer platforms affects incumbents’ performance by changing the way incumbents transact with consumers. We argue that the increasing supply of potential substitutes for incumbents’ core assets on peer-to-peer platforms results in increasing competitive pressure, which pushes incumbents to find new ways to promote their own core assets. At the same time, with the entry of peer-to-peer platforms, more offerings are available for consumers on digital platforms, and their incentives to look for opportunities to transact through digital platforms increase. Together, these two effects result in a shift towards more business between incumbents and consumers being done on digital platforms. This, in turn, poses a major challenge for incumbents because digital platforms act as a substitute for the complementary downstream assets that many incumbents have traditionally benefited from to capture (and protect) value in the market. Using data from the hotel industry in the state of Texas, we show that peer-to-peer do not only affect incumbents operating in the same market segment, but also those whose complementary downstream assets will become less valuable as more business is shifted to digital platforms.

Jumping Out or Following theRoad Post-Converstion Innovation Behavior of InternationalJointVentures

This study examines the effect of converting international joint ventures (IJV) to either local for foreign wholly owned entities on the subsequent impact of innovation from the perspective of knowledge-based view, complementary asset and knowledge recombination literature. We argue that different knowledge compositions (technological vs. complementary) of post-conversion firms affect the way they integrate learnt knowledge with existing ones and subsequent recombination strategies. Based on longitudinal data in China between 1998 and 2013, we use an instrumental variable (IV) estimation to strengthen identification of causal effects. We find that substantial stock of complementary knowledge of post-conversion local wholly owned subsidiaries (LWOS) promotes subsequent recombinant reuse (i.e., reconfigure combinations already known to the firm), while hinders their recombinant creation (i.e., create combinations new to the firm). In contrast, substantial stock of technological knowledge increases the likelihood that post-conversion foreign wholly owned subsidiary (FWOS) will take a recombinant creation strategy, but decreases the likelihood of taking a recombinant reuse strategy. Contingencies such as knowledge features obtained through IJV and external appropriability regimes are discussed. Our study contributes to the literature on IJV operation mode, knowledge-based view, complementary asset, and knowledge recombination.

Corporate Venture Capital, Big Data, and Privacy Regulation

Firms face a choice over the types of assets they own, especially complementary assets with specificity when making corporate venture capital (CVC) investments. As data has become an increasingly important type of asset, this paper explores the role of data in the formulation of CVC investments. Due to constraints arising from the context in which data is collected, and the intended use of the data, we find that data can enhance complementarities between competitors. Using a regulation in China, which prohibits transactions of personal data, as an exogenous shock, we find that, as the cost of obtaining data increases, more CVC investments are made between former competitors. Furthermore, we find this effect to be stronger for companies that are already using data as their core asset, and this effect can be mitigated by the availability of other information acquisition channels, such as common ownership between the company pair.

A Tale of Two Origins: Tracing the Diffusion of University versus Firm Inventions

Knowledge diffusion drives both technical progress and economic growth. Underlying much diffusion scholarship is an assumption that organizational origin – that is, whether knowledge stems from a university or commercial firm – plays an important role. Universities are motivated to share and may thus catalyze diffusion, while profit-driven firms seek to protect private gains from new knowledge and thus may limit diffusion. However, very little work has directly compared diffusion patterns between these two origins. We present a unique comparative case study design that examines the diffusion of two comparable, foundational biotechnology inventions – recombinant DNA (rDNA) and polymerase chain reaction (PCR) – that originated in university and firm settings. Using a variety of metrics, we find robust evidence contrary to existing assumptions; the diffusion of PCR significantly outperforms rDNA along a range of metrics. Examining the historical record, we consider how early social networks and complementary assets may play an outsized role in shaping knowledge diffusion – and one that overwhelms the role of organization origin. We show that reliance on the university-firm dichotomy is insufficient in explaining knowledge diffusion; we argue for the exploration of underlying mechanisms in diffusion studies; and we highlight the utility of employing multiple complementary measures in diffusion research.

Intra-organizational Coopetition as a Source of New-To-The-World Innovations

Chinese firms have been widely seen as imitative. This historical case study explores what organizational mechanisms allowed Tencent, a Chinese firm in the fast-changing instant messaging (IM) service sector, to achieve a new-to-the-world innovation with its WeChat smartphone app. Tracing the competitive dynamics in the Chinese IM sector from its inception, we found that Tencent was able to create the innovative WeChat product through a crisis-induced intra-firm coopetition dynamic that was embedded in variation-selection-retention evolutionary processes spanning the market, the firm and the business unit levels. Building on the intra-firm coopetition and evolutionary literatures, the paper shows that three business units simultaneously competed and cooperated in developing alternative IM products while allowing the market to select the winner. The coopetition dynamic took place in three key areas — technology, product promotion, and complementary assets of suppliers. The relative balance between competition and cooperation changed over time, and top management guidance and firm-level routines were essential in managing the challenges of coopetition within the firm.

Creative AI-based inventions: How incumbents strategically renew their invention portfolios

Artificial Intelligence (AI) is often considered a general purpose technology with the potential for disruption in most existing markets. When facing a substantial technological disruption, it has been shown that incumbents are confronted with many challenges to develop new products (conflicting customer incentives, cognitive lock-in, lack of complementary assets), despite that this activity is critical to ensure companies' survival. Overcoming those issues lies with companies' capacity to strategically renew their resources and remain competitive in their market. However, while the literature has shown how incumbents used AI technologies to increase efficiency or productivity, little is known about how they rely on AI technologies in their inventive process. It has also been observed that companies broadly vary in the ways they are embracing AI technologies, but most studies approach AI-based inventions as homogeneous. Hence, to cope with this research gap, we adopted a strategic renewal perspective (e.g., Agarwal & Helfat, 2009), and we conceptualized a new taxonomy of different types of AI technology usages in companies' inventive processes. Creative AI-based inventions focus on implementing AI technologies that serve new-to-company applications and open up new technological paths. Follow-up creative AI-based inventions indicate the company's efforts in following the newly created technological path. Low AI-based inventions specify the usage of AI to extend the existing technology portfolio without disrupting the current business of the company. By drawing upon an example from the agricultural sector, we developed techniques relying on patent data to implement our taxonomy by dealing with 39,000 utility patents from the sector's top-19 companies. First, we explored how incumbents and new entrants from different industry origins relied on different AI technology usages with different adoption patterns. Second, by relying on patent indicators, we reviewed the performances of the different types of AI technology usages in companies' inventive process. We contribute to strategic renewal theory by revealing that incumbents from the industry we focus on others rely on AI to renew their patent portfolio to strategically develop new business. Second, we demonstrated the co-existence of different usages of AI technologies in companies' inventive processes to complement incumbents' portfolios and open new innovative paths. Consequently, companies should plan which type of strategic renewal is appropriate for their organisations based on their strategic playing field to achieve the desired outcome.

The enabling power of transport infrastructure: A case of entrepreneurship in China

Prior literature on economic geography highlights the role of transport infrastructure in shaping economic growth, while its implications for entrepreneurship have received less attention. Shedding new light on the decision-making processes of entrepreneurs, this paper examines how transport infrastructure affects entrepreneurship and explores potential mechanisms beyond the focal relationship. Based on the construction of high-speed railways (HSRs) in China, we find that local cities’ connections to HSR networks increase the probability of individuals’ entrepreneurship. Furthermore, we find that this positive relationship will be stronger for people with fewer social networks and no migration experience, revealing a substitute effect of HSRs. Our study contributes to the literature on transport infrastructure and research on entrepreneurship ecosystems by linking HSRs and personal decision making in entrepreneurship. We also provide a more comprehensive understanding of the information asymmetry and complementary asset mechanisms involved, which in turn explains the spillover of improved transport infrastructure. Finally, the findings of this study provide insight into the geography of entrepreneurial policies in coordinating “regional” transportation and “local” entrepreneurs.

Homogamy or Heterogamy: The Effects Of CEO Marriage on Family Firm Performance

By integrating the complementary needs theory of mate selection and the notion of complementary assets into the research of family business, we propose that three components of spousal capital comp...

The Military-Civilian Symbiosis: Evidence of Civil Innovation from the Global Drone Industry

Private parties operating in the civil domain are not always capable of engendering innovation and new industry creation because of lacking complementary assets, short-term horizons, underinvestment in fundamental research, and limited ‘translational’ capacity. In this study, we theorize and demonstrate that important innovations often have their roots in an institutional realm that can compensate for these shortcomings: the military. We hypothesize that the military is capable of fostering private sector innovation through technological and human-capital spillover, investments in high-risk innovation projects, and building vital innovation infrastructure. We test our hypotheses in the context of the global drone industry, using a unique longitudinal database tracking the emergence of the industry between 2006 and 2016. Our sample consists of 1341 civil drone systems created by 473 producers situated in 52 countries. We employ survival analysis to test the influence of national-level military drone production, overall military expenditure and arms imports on civil drone market-readiness. Our results show that the military plays an integral role in civil innovation and new industry creation in this setting. As one of the first studies in management to provide systematic, non-anecdotal evidence on the civil innovation role of the military, our work contributions to the institutions-for-innovation and innovation policy literatures.

Justifying environmental sustainability in small‐ and medium‐sized enterprises: An analysis of complementary assets in the printing industry

AbstractContrary to large enterprises, the environmental impact from small‐ and medium‐sized enterprises (SMEs) has not, to the same extent, attracted stakeholder attention and engagement. A similar lack of attention seems to have dominated management scholars who seem to have predominantly focused on the competitive implications of environmental sustainability of large enterprises. To fill up some of that gap, this study draws on the resource‐based view of the firm and the innovation‐value‐capturing‐framework to identify and characterise complementary assets utilised to materialise the competitive advantage of environmental management practices (EMP) in SMEs. Based on a multifirm case study among Danish SMEs in the printing and graphic industry, we demonstrate why and how SMEs' strategic involvement in EMP can be justified. This research complements existing insights in the field by exposing how SMEs operating under conditions of weak appropriability can justify investment in EMP thus highlighting their role in pursuing corporate sustainability.

Specific Features of Anti-Crisis Personnel Management in Modern Conditions

Aim. The presented study aims to examine approaches to anti-crisis personnel management in the context of a pandemic.Tasks. The authors identify the features of remote work as a method of anti-crisis personnel management and provide recommendations for organizing efficient anti-crisis personnel management in the context of a pandemic.Methods. This study uses general scientific methods of cognition to analyze the problems of personnel management in the context of a pandemic and their possible solutions.Results. It is possible to apply recommendations for improving the anti-crisis personnel management system in the context of a pandemic using the model of complementary assets for switching to remote work. Conclusions. As a modern direction of anti-crisis personnel management, remote work is a promising method of organizing work activities. The proposed recommendations make it possible to adjust an organization's personnel management policy and facilitate the use of different forms of remote work.

Preemption with a second-mover advantage

We examine a timing game with complete information and observable actions when there is a second-mover advantage. Allowing for heterogenous payoffs between players and for both leader and follower payoff functions to be multi-peaked and non-monotonic, we develop a new solution method to characterize the pure-strategy equilibria. Sometimes these resemble familiar second-mover advantage equilibria from the literature. However, we show, despite a follower advantage at all times for both players, that there can be a preemption equilibrium. Our generic solution method can be applied to a range of applications, such as market entry, innovation and holdout games for rival sellers of complementary assets.

Innovation, growth and the transition to net-zero emissions

The climate crisis and the global economic impact of the Covid-19 crisis occur against a background of slowing growth and widening inequalities, which together imply an urgent need for a new environmentally sustainable and inclusive approach to growth. Investments in “clean” innovation and its diffusion are key to shaping this, accompanied by investments in complementary assets including sustainable infrastructure, and human, natural and social capital which will not only help achieve net-zero greenhouse gas emissions, but will also improve productivity, living standards and the prospects of individuals. In this article, we draw on the theoretical and empirical evidence on the opportunities, drivers and policies for innovation-led sustainable growth. We highlight the importance of a coordinated set of long-term policies and institutions that can enable and foster private sector investments in clean innovation and assets quickly and at scale. In doing so, we draw inspiration from Chris Freeman's work on the system-wide drivers of innovation, and his early vision of achieving environmental sustainability by reorienting growth.

High‐performer mobility to entrepreneurship and parent‐firm performance

AbstractResearch SummaryWe investigate the effect of high‐performer employee mobility to same‐industry startups on parent‐firm performance. High‐performer mobility induces a loss of human assets but might also enable competition by transferring human and complementary assets from the parent firm to a competitor. Only when such transfer occurs is mobility to same‐industry startups more harmful than other types of high‐performer mobility. Human and complementary asset transfer is conditional on the departing high performer's ability to accumulate (and hence transfer) knowledge from the parent firm and the recipient firm's ability to absorb such knowledge. In support of this hypothesis, we show that the high performer's tenure and the startup's resources (size) moderate the performance effect of high‐performer mobility on same‐industry startups.Managerial SummaryIndustry experience is critical for new venture performance, and spinoff entrepreneurs (former employees from the same industry) perform better than other start‐ups. However, studies have found that high performers' mobility to spinoffs harms the performance of their former employers. This paper asks when do spinoffs result in increasing competition and when is spinoff entrepreneurship more harmful compared to other types of high performer mobility? We show that additional detrimental performance effects on former employers depend on employee tenure and the spinoffs' start‐up size. We argue that longer tenure increases competition because it allows the employee to form and strengthen personal relations, for example, to customers, and to accumulate more knowledge on products and processes. Start‐up size is important for the recreation and appropriation of this knowledge.

Examining the moderating role of HIHRP in the relationship between external integration and productivity

PurposeBased on the human resource (HR) and supply chain integration (SCI) literature, this paper aims to argue that high-involvement human resource practices (HIHRP) work as a complementary capability for SCI, and thus, HIHRP moderates the relationship between SCI and firm productivity. This moderating role is analyzed through the following HIHRP dimensions, namely, ability-enhancing, motivation-enhancing and opportunity-enhancing practices framework.Design/methodology/approachUsing empirical data collected from a survey of the agri-food sector (horticultural firms of southern Spain), the moderating effects of HIHRP on the relationship between supply chain external integrations (with customers and suppliers) and productivity are examined. Hierarchical regression analysis is used to test the proposed hypotheses.FindingsThe results support that HIHRP has a moderating effect on the SCI/productivity relationship. However, these results are only significant in the case of supplier integration.Originality/valueThis study analyzes HIHRP as a complementary asset in the context of SCI and makes both theoretical and managerial contributions to the SCI literature by empirically analyzing the role of HR practices in enhancing the relationship between SCI and performance.