Firm Strategy Research Articles

Strategy in New Firms: The Influence of Founding Team Institutional Background

Strategy in New Firms: The Influence of Founding Team Institutional Background

Is organizational ambidexterity always beneficial to family-managed SMEs? Evidence from China

Organizational ambidexterity is considered an essential strategy for firms to achieve sustainable competitive advantages, but it is unreasonable to expect all firms to equally profit from pursuing organizational ambidexterity, as this is a resource-intensive strategy. Using the resource-based view, we proposed and tested two internal boundary conditions that shape the impact of organizational ambidexterity on firm performance: family management and formalization. The results of our three-way interaction analysis of data from 324 Chinese SMEs show that a higher level of family management weakens the positive impact of organizational ambidexterity on firm performance, and this negative moderating effect is further strengthened by the degree of a firm’s formalization. These findings help us better understand why resource-constrained firms are more likely to struggle when pursuing organizational ambidexterity.

Flying in Flocks? How Platform Entry Influences Firm Strategies in Traditional Industries?

Flying in Flocks? How Platform Entry Influences Firm Strategies in Traditional Industries?

Decarbonizing Energy Supply: Corporate Strategies of Renewable Energy and Fossil Firms

Decarbonizing Energy Supply: Corporate Strategies of Renewable Energy and Fossil Firms

Corporate social responsibility, business strategy and governance performance

PurposeThis study aims to examine the effect of corporate social responsibility (CSR) adoption on differentiation and cost leadership strategies and how governance structure moderates this CSR–strategy relationship.Design/methodology/approachThe study data were retrieved from Thomson Reuters for non-financial firms between 2013 and 2019, and a fixed-effects panel regression analysis was executed.FindingsThe results indicate that CSR fosters cost leadership strategy but weakens differentiation strategy. This result supports the value generation school for cost leaders but also confirms the agency theory perspective for differentiators. Moreover, the governance structure does not moderate the relationship between a firm's CSR engagement and its business strategy, which implies a lack of corporate policies that concurrently consider both its CSR investment and strategies.Research limitations/implicationsThe findings of this study imply that cost leaders can integrate CSR practices into their business strategy and use their CSR engagement to increase their competitive position by stimulating cost efficiency and creating greater turnover. On the contrary, for differentiators, there is a trade-off between environmental and social engagement and business strategies. Thus, they are advised to enrich their unique product development abilities through the integration of environmental and social practices and reinforce their competitive position by addressing stakeholders' interests. The practical implication of the moderation analysis is that there is no rooted corporate policy behind the connection between CSR and firm strategy for both cost leaders and differentiators, which constitutes a missing link.Originality/valueThe findings of this study are of critical importance for firms, offering justification for the integration of two vital perspectives: social and environmental sustainability and financial sustainability. The moderating effect of governance performance tests the upper echelon's role in maintaining both sustainability perspectives concurrently and strengthening the legitimacy of the firms in society. Although maintaining a business strategy is important for shareholders' interests, pursuing a social and environmental sustainability strategy is crucial for meeting the expectations of all stakeholders.

Visioning strategy through the “Johari window”: discovering critical “unknowns” in a rapidly evolving context

PurposeThe purpose of this article is to examine the interaction of strategy formulation with the intelligence variation of the Johari window. Formulating firm strategy with an understanding of these four knowledge-awareness areas can help a company understand their own strengths and weakness in relation to the dynamics of the industry in which they operate while also developing a greater awareness and understanding of their competition, environmental considerations, and future implications. Through this interaction, a firm can identify factors impacting the organization's future success and can develop a comprehensive strategic plan that adapts to changes and uncertainties in the environment.Design/methodology/approachExtant literature and available tools are explored to develop a usable framework in conducting an extensive SWOT analysis as related to the four knowledge-awareness areas, known knowns, known unknowns, unknown knowns, and unknown unknowns.FindingsIt is crucial for businesses to acknowledge the significance of integrating all four categories of knowledge-awareness, known knowns, known unknowns, unknown knowns, and unknown unknowns, into their strategic formulation, as this can facilitate the development of adaptable and effective strategic plans that consider the constantly evolving business landscape. This approach can equip organizations with the necessary tools to thrive over the long term, even with unforeseen obstacles and uncertainties. It is imperative that businesses do not overlook the importance of considering all four categories during analysis to enable them to achieve strategic planning that is both effective and adaptable.Originality/valueFocusing only on the knowns that are already identified, while disregarding the unknowns that have not been discovered, can lead to blind spots and oversights that can be detrimental to the organization's growth and sustainability. By being aware of all four categories of knowledge, an organization can adapt to changes and uncertainties in the business environment, and make informed decisions based on a fuller picture of the situation.

From nickel to Electric cars? Indonesia’s resource cum automotive industry policy

This paper elucidates Indonesia’s resource-cum-industrial policy to leverage domestic nickel resources for building a localised value chain from mining to electric vehicles. The value chain is first mapped in order to facilitate the policy analysis. While Indonesia is successful in attracting investment projects which aim to build the value chain from mining to electric vehicle batteries within her borders, our analysis nevertheless finds that this process must be rather attributed to value chain lead firm strategy than Indonesian resource policy. Further, the final stage of electric vehicle assembly is only sparsely developed, suggesting that the attempted integration of forward linkage creation from mining and simultaneous backward linkage creation from vehicle assembly is not systematically deployed.

The impact of the Covid‐19 pandemic on the environmental sustainability strategies of listed firms in Sweden

AbstractHow macroeconomic crises affect firms' environmental sustainability strategies is an open question. We study the impact of the Covid‐19 pandemic on the environmental sustainability strategies of firms listed on the OMXNasdaq stock exchange in Sweden. The analysis is based on a survey distributed twice, once during the summer of 2020 and once during the summer of 2021 with detailed questions related to the firms' environmental strategies. We find that most firms view the pandemic as an opportunity to strengthen their environmental strategies. However, we also find that the economic downturn caused most firms to redirect scarce resources away from environmental sustainability. We also find that firms which had adopted the Taskforce on Climate‐Related Financial Disclosures were less likely to divert resources. These short‐term results indicate that the pandemic will not enhance firms' environmental sustainability practices in the future.

The half‐life of political capital: An examination of the temporal effects of board political connections

AbstractResearch SummaryDoes corporate political activity (CPA) help sustain performance? Prior literature did not address this question, only whether CPA increases profits—with mixed results over short timescales. We theorize about how political capital affects the regression‐to‐the‐mean of profits through firm and industry persistence mechanisms. Using data on over 6000 firms from 14 democratic countries, we estimate time‐varying, firm‐specific performance persistence coefficients with random‐coefficient models—and profit volatility measures. Triangulating identification methods suggests that the half‐life of political capital is shorter than expected, also compared with other strategy interventions. Political connections are marginally effective at sustaining performance and reducing volatility, delaying profit convergence by only 0.180 years—and with no effect beyond 7 years. Preliminary evidence shows that legislative constraints further curb these modest benefits of CPA.Managerial SummaryCorporate political activity (CPA) has an ambiguous impact on firm profits. Yet, it still is a prominent and recurrent firm strategy. Do firms use CPA to sustain existing performance advantages—rather than to create new ones? We show that one type of CPA—the co‐optation of politicians into company boards—does increase the persistence and lowers the volatility of firm performance. However, this effect is surprisingly small: advantages only last 2.4% longer, 7.44 years compared to 7.26 years for politically unconnected firms. Political capital erodes faster than expected, presumably due to political cycles or politically motivated firm strategies that are detrimental to performance. CPA seems less effective at sustaining performance advantages than firm investments in R&D or skilled labor—and has a limited anticompetitive effect.

Ecological and social sustainable change through corporate social responsibility: The enabling role of employees

AbstractCorporate social responsibility (CSR) provides companies with an opportunity to contribute to addressing global challenges such as climate change, resource scarcity, wealth inequality, and fragile economic and political systems. Previous research has primarily focused on examining firm strategies and policies in response to these issues, but has paid limited attention to the involvement and role of employees in implementing CSR within organizations. By adopting a stakeholder theory perspective, this article aims to explore the perceptions and experiences of internal stakeholders regarding CSR initiatives. It also seeks to identify themes emerging from narrative interviews that are relevant to employees engaged in a transformative change process toward sustainability. The findings underscore the crucial role of employees as facilitators of CSR, highlight potential divergent perspectives on sustainability efforts, and recommend the inclusion and empowerment of employees in CSR initiatives. By doing so, organizations can effectively implement ecological sustainability and increasingly address social sustainability both within the firm and in the broader context.

Channel Management for Digital Products in the Two-sided Market with Network Externality Effects

Channel selection is a critical trade-off for digital products firms whose products are characterized by network externality. This work develops the models of consumers’ utility impacted by the network externality for two channel strategies of the digital product firms in the two-sided market: direct channel strategy and platform channel strategy. Deriving from the consumers’ utility, the optimization models of the two channel strategies are presented. The optimization models are solved through the Lagrangian method, and the comparative statics analysis is conducted to investigate the effect of network externality on optimality. Mathematical results show that if the intensity of network externality in the online platform surpasses that in the direct channel, the platform channel strategy dominates the other channel strategy; otherwise, the direct channel strategy is the firms’ optimal decision. In addition, the two channels share the equal optimal price, and the firms’ profit (and demand) would be positively impacted by the network effect and the products’ features but negatively impacted by the consumers’ learning cost. This work provides decision support for the digital product firms on channel selection in the context of the two-sided market.

Factors Influencing Cultural Industry Competitiveness in Anhui Province Using Porter’s Diamond Model and the Mediating Effect of Government Support

Purpose: In modern society, culture and economy are closely integrated, with cultural industry gradually playing a more and more significant role for national competitiveness. Anhui province is located in the central plain of China of which cultural industry has developed faster and faster in recent years. However, culture and related industries still lag compared with some provinces and cities in China. There is an urgent need to improve the overall competitiveness of cultural industry in Anhui province. Theoretical framework: This study used Porter’s diamond model theory as the underpinning theory and examined the influencing factors of the dependent variable, cultural industry competitiveness in Anhui province, with factor conditions, demand conditions, related and supporting industries, firm strategy, structure and rivalry, chance as the independent variables and government role as the mediating variable. Design/methodology/approach: Based on a quantitative research methodology, the study utilized a questionnaire survey and manage to gain 536 respondents on the target population. Findings: The finding from the study show that factor condition and chance have unsignificant direct relationship with culture industries. For mediating effect of government support, again, factor condition and chance show unsignificant relationship to culture industries in Anhui, China. Research, Practical & Social implications: The study analyzes the current developing situation of cultural industry in Anhui province based on Porter’s diamond model. Originality/value: The value of the study formulated differentiated policies to support and develop cultural industries and guide the investment directions of cultural industries in different regions of the province and promote the coordinated development of overall cultural industry competitiveness.

Adjustment strategies for firms affected by international sanctions

PurposeWhen terrorism threaten geopolitical stability, many policymakers turn to economic sanctions. In this way, governments and multilateral organizations continue to affect corporate and managerial choices, through the shaping and constraining of international trade policies. Still, most of the international business remain relatively quiet about the impact of the non-market environment on firms’ strategic efforts. Questions remain about how firms adjust their strategies in the face of the often-sudden impact of changes in multilateral rules and enforcement mechanisms. This study aims to address this question by shedding light on three potential adjustment strategies for firms that have been impacted by sanctions.Design/methodology/approachAs part of a larger, multimethod study, the authors undertook 16 semi-structured interviews with senior managers of firms whose operations have been affected by international sanctions.FindingsInternational and political tensions can affect businesses in many ways, from exporting to strategies associated with global knowledge sourcing. Learnings from organizations that have had to respond to sudden and extreme changes in their fragile ecosystems will aid this study. In this commentary paper, the authors offer suggestions about how to adapt, respond and operate in a new reality.Originality/valueWhile the imposition of long-term political sanctions, especially by powerful nations and multilateral institutions, has become more frequent, how businesses cope with these extreme external shifts still remains unknown. This paper focuses on firms operating in a sanctioned regime, investigating how they deal with these sudden changes in their environment.

STRATEGI UMKM USAHA MAKANAN PADA MASA PANDEMI COVID-19 (STUDI KASUS DI KOTA PONTIANAK)

This study seeks to identify priority strategies for MSME food firms in Ponianak City by analyzing internal and external aspects and alternative approaches. Data was collected directly in a survey using cross-sectional data and a qualitative descriptive methodology. The population consists of the 738 owners of all MSME food enterprises in Pontianak City. Associated offices and agencies, banks, village and sub-district officials, BPS, traders, and food entrepreneurs served as the sources for the data. MSME food businesses make up the entire sample of 30 respondents. sampling in an unintentional manner. SWOT and QSPM analysis for strategy evaluation The study's findings suggest that growth and development techniques or aggressive tactics, which emphasize maximizing strength, are alternatives that allow it to be adopted.

Corporate Social Responsibility and the Willingness to Eco-Innovate among Chilean Firms

Adopting social responsibility can be a key strategy for firms to mitigate the impact of production on the environment, contributing to a more sustainable business model. Based on the triple bottom line perspective, we analyze the effect of Corporate Social Responsibility (CSR) on the willingness to allocate resources to eco-innovation among companies in a developing country. Firm-level data from the Fifth Longitudinal Survey of Chilean Firms are used to estimate a binary probit model for the willingness to eco-innovate and a Heckman sample-selection model for total expenditures and investment in eco-innovation. Results confirm that legal regulations and R&D efforts are drivers of eco-innovation among Chilean firms. Larger-sized and export-oriented firms also exhibit a higher willingness to eco-innovate. The main findings show a positive influence of CSR policy on the willingness to eco-innovate and on the resulting resource allocation decision. Interestingly, the evidence reveals that while financial and environmental CSR dimensions only affect the probability of adopting eco-innovation, the social CSR dimension also increases the amount firms spend on eco-innovation. This result suggests that social CSR may act as a complement to other CSR dimensions. These results are robust when controlling for firm-level specific effects under sample-selection models.

Interaction of home and host countries' institutional conditions: An analysis of greenfield projects by Latin American firms

AbstractStudying firms from emerging economies has been receiving more attention in recent decades. However, the host‐ and home‐country perspectives have allowed understanding, to a significant extent, of the firms' expansion abroad. We argue the necessity of investigating the interaction of home and host‐country institutional conditions to advance the understanding of the internationalization strategies of firms from emerging economies. Employing a sample of 1387 firms from 17 Latin American countries, we examine how their operations expanded from 2003 to 2019 by undertaking 2636 cross‐border greenfield projects in 94 host countries. Results indicate that the interaction of home and host countries' weak institutional conditions drives the decision‐making process for the internationalization of Latin American firms.

Diversification Strategy and Performance of Processing Firms: A Case Study of Diamond Foods in California, USA

Diversification strategy refers to the expansion of a firm's product offerings or entry into new markets beyond its existing core business. It is aimed at reducing risks, capitalizing on growth opportunities, and enhancing the overall performance of the firm. The impact of diversification on performance varies depending on various factors such as the industry, market dynamics, strategic alignment, resource allocation, and customer perception. Successful diversification strategies can lead to increased revenue streams, market share expansion, enhanced brand equity, and improved operational efficiency. However, the effectiveness of diversification ultimately depends on careful planning, strategic decision-making, and continuous monitoring of performance metrics. The study used the descriptive research design. The target population was 30 heads of departments in the Diamond Foods California, USA.  The study did sampling of 25 respondents that were selected from the target population of 30 heads of departments in the Diamond Foods California, USA. Questionnaires were used to collect the data. It was concluded that through an analysis of Diamond Foods' diversification activities, it was evident that the company had pursued a strategic approach aimed at expanding its product portfolio and entering new markets beyond its core nut processing business. The study highlighted the importance of maintaining a strong brand identity and customer loyalty when diversifying, as it can be a challenge to ensure consistent quality and customer satisfaction across diverse product offerings. The study recommended that it is crucial for firms to conduct a thorough analysis of the market dynamics and competitive landscape before embarking on diversification. These firms should prioritize strategic alignment and resource allocation when diversifying. Processing firms should prioritize maintaining a strong brand identity and consistent quality across diverse product offerings. Firms should actively seek customer feedback and adapt their diversification strategy based on consumer preferences and market demands. Keywords: diversification strategy, performance, Processing Firms, California

Revisiting the consequences of loans secured by patents on technological firms' intellectual property and innovation strategies

This article analyzes the impact of loans secured by patents (LSPs) on the intellectual property and innovation strategy of technological firms that benefit from them. The literature mostly emphasizes that LSPs, by reducing the risk taken by lenders in case of borrowers' default, facilitate the financing of technological firms. However, it remains silent on the impact of LSPs on the behavior and strategy of borrowers. With regard to this second point, our research suggests that LSPs are not neutral. In particular, we provide evidence that LSPs might induce technological firms to deviate from innovative activities toward more short-term strategies based on the monetization and litigation of their patents. We also show that financing groups might attempt to encourage this strategic change. Our research is based, first, on empirical insights provided by a qualitative analysis of publicly known LSPs offered by an international investment group and their consequences for four borrowers. Second, we propose a theoretical model that formally explores how LSPs might impact borrowers' strategies. Even though the welfare implications of these findings are difficult to evaluate, this research has likely important economic and managerial implications with regard to intellectual property management, the financing of innovation and the organization of the innovation process.

The Alignment of Circular Economy Business Models (CEBM) with the Strategies of Small and Micro Enterprises Operating in Malta

This paper sets out preliminary findings for research investigating, from a dynamic viewpoint, how small and micro enterprises operating in the small island state of Malta align their business strategies with Circular Economy Business Models (CEBM). The aim is to establish an analytical framework evaluating their process of alignment. These businesses are a major economic driver for the island. In 2021, out of the 55,950 registered businesses in Malta, 52,674 were micro-firms and 2,686 were small businesses (NSO 2021). The study applies grounded theory methodology, using Corbin and Strausss conditional matrix (2015) and Charmazs constructivist approach (2006). To understand their implementation of circular practices, interpretative, in-depth interviews were carried out with five owners-managers in the service, logistics, manufacturing, retail, and wholesale sectors. The research postulates an early conceptual model showing how a set of contextual conditions influences the alignment of CEBM with the strategies of businesses in Malta. Factors influencing CEBM adoption include owner-managers personal traits, organisational factors, and external factors. The findings presented are part of a larger study mapping common alignment paths pursued by firms in the circular economic shift. It offers recommendations to owners-managers, policymakers, and academic researchers. Few studies have yet focused on the alignment between CEBM and the business strategy of firms in small island states. Generally, studies concentrate on larger businesses in bigger countries. This research study adds significantly to existing knowledge and academic literature.

Configurations of business model themes and strategies in small firms: a qualitative comparative analysis

Firms’ strategies and business model themes (BMTs) entail choices that create a configuration of interdependent elements that ultimately affect a firm’s performance. So far, extant studies on BMTs (i.e. novelty, efficiency, complementarity and lock-in) have neglected an explorative analysis of how configurations of BMTs and the choices of a firm’s strategy (namely, the source of the competitive advantage and the market scope) are associated with a firm’s performance in small and medium enterprises (SMEs). We address this limitation by analysing a sample of 96 small firms using a configurational approach. We identified four equifinal configurations leading to high performance and five equifinal configurations associated with low performance. Overall, our results suggest that in small firms, it is essential to combine a differentiation strategy with either consistent pairs of BMTs or the search for new avenues of value creation and capture, while featuring too many BMTs might be detrimental to their growth. Our study contributes to the scholarly debate about the relationship between business models and strategy.