Multi-unit Organizations Research Articles

Managing coopetition in multi-unit organizations: a management-control perspective

Managing coopetition in multi-unit organizations: a management-control perspective

Incentivizing centrally regulated units to improve performance: Pitfalls and requirements

This paper explores the foundations for developing incentives for influencing units operating within centrally managed organizations. We begin by laying out the theory of managerial control in principal-agent contexts and draw from the incentive mechanisms developed in the related field of economic regulation. In particular, we highlight issues, differences and similarities in three recently proposed approaches under these circumstances, not only to compare them, but more importantly to motivate and arrive at requirements that should be met by incentivization systems in centrally managed multi-unit organizations. The stipulated requirements are not intended to be exhaustive but rather aim at defining conceptual foundations for further discussions and encouraging avenues for future research in this field. Our investigations are supported by graphical examples and an analysis of empirical data from banking.

Power Consumption Efficiency in Multiunit Firms

Strategic management literature suggests that business units/subsidiaries have learning benefits from their intra-organizational knowledge networks. In this paper, we continue exploring those benefits by examining the contingent effect of the network size on the business units’ resource consumption efficiency in the context of power consumption. We argue that by facing a wider range of power consumption practices within their structure, multiunit organizations can develop better power consumption practices and then share those with their business units. However, building on the attention-based view, we contend that the internalization of that knowledge would require the units’ managerial attention. We suggest that such managerial attention is more likely to be provided when a business unit is facing higher competition, experiences financial problems, and when its management’s employment risks are stronger tied to that business unit. Our findings from a multilevel analysis of the power consumption efficiency in 2,347 subsidiaries of Canadian private firms in 2012-2016 support those contentions. The implications for theory and practice are discussed.

Frontier-based incentive mechanisms for allocating common revenues or fixed costs

In practice, allocating common revenues or fixed costs is a common practice in multi-unit organizations to motivate subunits to improve performance. Recently, Dai et al. (2021, EJOR) developed an incentive approach for allocating common revenues or fixed costs. We identify two shortcomings of their approach and propose two frontier-based incentive mechanisms for allocating common revenues or fixed costs. First, the incentive common revenue allocation (ICRA) and incentive fixed cost allocation (IFCA) are conceptualized. On the basis of ICRA and IFCA, the generalized incentive efficiency measures that satisfy strong monotonicity and self-excluded in technology are identified to evaluate subunit performances. To seek for incentive efficiency measures, several ex-post technologies with frontier change rate (FCR) are considered. Different technologies are formulated for the information asymmetry situation, in which FCR is not available to subunits when they select production mixes, and the information symmetry situation, in which FCR is available to subunits when they select production mixes. We elucidate that the formulated technologies are applicable to derive corresponding incentive efficiency measures. ICRA and IFCA are then obtained via the concept of efficiency proportion. Subsequently, the mechanisms for information asymmetry situation and information symmetry situation are summarized, and several theorems and interesting observations of the proposed mechanisms are reported. Finally, we illustrate our proposed mechanisms for allocating common revenues or fixed costs using data from a home appliance enterprise in China.

How management teams foster the transactive memory system–entrepreneurial orientation link: A domino effect model of positive team processes

AbstractResearch SummarySpecialized knowledge can be a facilitator of entrepreneurial orientation (EO), but little is known about how management teams transform their knowledge resources into entrepreneurial activity. Complementing the knowledge‐based view with social interdependence theory, we suggest that team processes mediate the impact of teams' transactive memory system (TMS) on EO. Our empirical analysis of data from interdisciplinary management teams shows that a strong TMS serves as a starting point to initiate a beneficial “domino effect” of positive team interaction patterns (enhanced team learning and participative decision‐making) and positive team psychological processes (enhanced team identification), which, in turn, foster the development of EO. We thereby contribute new insights to the largely unresolved questions about the “where” and “why” of EO genesis within organizations.Managerial SummaryEnhancing entrepreneurial orientation (EO) is of major importance for established firms to stay competitive in the market. This study sheds light on the question how EO emerges within management teams of a firm's decentralized units and specifically gives insights about how team design and team processes can foster the EO of these units. We find that teams with specialized experts who share a common meta‐knowledge about who knows what in their team (i.e., teams with a strong transactive memory system) engage in more team learning and participative decision‐making and identify themselves more strongly with their team, which consequently spurs unit EO. Our results highlight that well‐designed and well‐functioning management teams below the executive level can play an important role in fostering entrepreneurship in multiunit organizations.

Identifying production units with outstanding performance

In many applications of data envelopment analysis, there are situations in which a central body manages a large set of similar units delivering some services. In such multi-unit organizations, the central management desires a mechanism by which the local management of each unit is incentivized to perform towards the improvement of the performance of the organization as a whole. In a recent paper, Afsharian et al. (2017) have proposed a system of incentives under these circumstances. In their approach, – which relies on the original concept of super-efficiency – units with outstanding performance are identified and incentivized by some reward compatible with the level of their impact on the overall performance of the organization. We discuss why the conventional super-efficiency approach may not be optimal in such situations. We revisit the definition of the collective impact and propose a new method, which can identify – in a controlled manner – a subset of k outstanding DMUs among n existing units in the system. The proposed approach is illustrated using data from a German retail bank.

Should competition authorities care about conglomerate mergers?

Mergers and acquisitions may change competition even when they do not affect market structure, a case known as conglomerate mergers. In this paper, we explore a wave of acquisitions of higher education institutions by educational groups in Brazil, which allows us to disentangle the effects of conglomerate mergers and of horizontal mergers on price, quantity, and quality indicators. Our findings show that multiunit organizations are able to increase some quality indicators. As for the effect on price and quantity, results are different. For conglomerate mergers, we estimated an increase in the number of freshmen and tuition fees, whereas for acquisitions that lead to horizontal concentration there is no increase in quantity, just in prices. Also these effects are larger the smaller the market share of the acquired HEI. On the whole, our findings are consistent with the hypothesis that multiunit operations increase efficiency, but only conglomerate mergers tend to pass those gains on to consumers. Results also indicate that greater caution should be taken in market extension mergers when the acquired firm has a clear dominant position.

Not in the Same Boat: How Status Inconsistency Affects Research Performance in Business Schools

This study examines the consequences of status inconsistency for the performance of multi-unit organizations. Status inconsistency refers to the extent to which social actors occupy status position...

The roles of cross-cultural adjustment and social capital formation in the dynamic capabilities development of multiunit organizations

Abstract There is little emphasis in the literature on the relationship between social capital and dynamic capabilities (DCs) development, and little attention has been paid to how cross-cultural adjustment and social capital affect DC development in multiunit organizations. This study used a multiunit sample of 455 to examine the roles of cross-cultural adjustment and social capital formation in DC development in multiunit organizations. The results showed that two facets of cross-cultural adjustment (i.e., general adjustment and work adjustment) are important antecedents of social capital formation among expatriate managers; moreover, social capital formation plays a pivotal and essential role in DC development in multiunit organizations. This study contributes to the literature in two important ways. First, it identifies a new central role of social capital formation in enabling DC development. Second, it shows that general adjustment and work adjustment are important antecedents to social capital formation and to DC development in multiunit organizations.

How to deploy multiunit organizations’ dynamic capabilities?

Purpose – The purpose of this paper is to provide a more robust understanding of how to deploy multiunit organizations’ dynamic capabilities (DCs) by examining the roles of embedded social (structural and relational) capital and knowledge archetype (exploitative and exploratory) learning. Design/methodology/approach – This study uses 315 multiunit samples and structural equation modeling to determine the relationships among the variables. Findings – The analysis reveals that, while embedded structural social capital exerts a positive influence on exploratory knowledge learning in multiunit organizations, embedded relational social capital exerts a positive influence on knowledge archetype (exploitative and exploratory) learning. Knowledge archetype (exploitative and exploratory) learning also positively influences DC deployment in multiunit organizations. Research limitations/implications – Few DCs studies have empirically examined the roles of embedded social (structural and relational) capital and knowledge archetype (exploitative and exploratory) learning in multiunit organizations. The results of this study address the failure of past theoretical perspectives on DCs to fully specify and verify the links between the roles of embedded social (structural and relational) capital and knowledge archetype (exploitative and exploratory) learning. Originality/value – This paper offers one practical trajectory for DC deployment in modern multiunit organizations and offers two contributions to the theoretical perspectives on DCs. First, it identifies the critical role of embedded social capital in enabling knowledge archetype learning and DC deployment, which had never been fully specified or verified in the DCs literature. Second, it identifies the importance of DCs’ deployment trajectory in multiunit organizations’ routine processes.

The management of coopetitive tensions within multi-unit organizations

Coopetition strategy is often considered critical for firm performance (Gnyawali, He & Madhavan, 2008; Yami, Castaldo, Dagnino & Le Roy, 2010). However, this paradoxical strategy creates tension, especially when coopetition occurs within an organization (Tsai, 2002; Luo, Slotegraaf & Pan, 2006). This paper addresses existing knowledge gaps by providing the first analysis of the specific managerial methods and the key approaches needed to reduce internal tensions within multi-unit and multi-brand organizations. Using an in-depth study approach in the banking industry, we examine two exemplary cases: Crédit Agricole (CA), which is the leading bank in France and the third leading bank in Europe, and Banque Populaire Caisse d'Epargne (BPCE), which is the third leading bank in France. Our findings indicate that firms simultaneously use formal and informal coordination to manage coopetitive goals. Moreover, to reduce tensions due to coopetition, the banks have developed an original organizational model that allows for the distribution of the antagonist powers and fosters integration. The research shows that inter-unit projects balance responsibilities across the firm, while horizontal coordination and social interaction also eliminate blocking and facilitate decision making. To the best of our knowledge, this study represents the first attempt to examine the management of coopetitive tensions within a multi-unit and multi-brand organization.

Middle Managers’ Horizontal and Vertical Interpersonal Processes in Achieving Unit Ambidexterity

Although scholars have relied upon structural and contextual perspectives in explaining how ambidexterity may emerge, little is known about how managers can contribute directly to it. Hence, we develop a managerial capabilities perspective about middle managers’ horizontal and vertical interpersonal processes in relation to business unit ambidexterity. We find that horizontal knowledge, which fosters unit ambidexterity, is contingent upon the extent to which middle managers’ interactions with top managers are characterized by integrative bargaining and cognitive flexibility, revealing complimentary and substitution effects, respectively. Our results have implications for the co-involvement of top and middle managers in executing complex strategies in multi-unit organizations. Moreover, this study provides guidance for practitioners to leverage the complementarities of vertical and horizontal interpersonal processes, while avoiding the pitfalls of engaging in both.

Causal Explanation in the Coordinating Process: A Critical Realist Case Study of Federated IT Governance Structures

Large, multi-unit organizations are continually challenged to balance demands for centralization of information technology that lead to cost and service efficiencies through standardization while providing flexibility at the local unit level in order to m

Performance Implications of Related Product-Market and Business-Model Diversification

This study develops a conceptual framework that captures key dimensions of product-market relatedness (i.e., product and customer relatedness) and business-model relatedness (i.e., value-proposition and distribution-channel relatedness). While previous research has typically investigated how related diversification along the product dimension affects performance, this study argues that superior performance may be driven by heretofore widely neglected intangible dimensions of relatedness beyond the product dimension. We test this argument using a unique dataset of 170 multiunit chain organizations for the period from 1999 to 2010. We first verify prior empirical findings by showing that related product diversification alone appears to be positively related to performance. Moreover, beyond previous findings, results show that related diversification along the customer and value-proposition dimensions also increases performance. Interestingly, the tangible product dimension of relatedness becomes insignificant in combination with intangible relatedness dimensions, providing support for our argument that superior performance is mainly driven by resource flows along intangible dimensions of relatedness.

Knowledge Transfer & Innovative Behavior in Multiunit Organizations: The Role of Knowledge Outflows

Innovation is important for firms in rapidly changing environments. In multiunit firms, knowledge transfer among units within the firm is a key source of innovation. Contrary to the current researc...

How do organizations remember? The influence of organizational structure on organizational memory

How do organizational factors influence knowledge retention and storage within companies? In this study, we examine the influence of organizational structure on organizational memory. We are specifically interested in the effects of specialization and standardization—dimensions of the organizational structure—on organizational memory as conceptualized by Walsh and Ungson (1991) and Argote (2005). This study is based on recent survey data from 122 respondents of multi-unit organizations that are mainly from the consulting, financial, automotive, and electrical industries. The results suggest that structural organizational factors, i.e. specialization and standardization as well as organizational processes such as codification and personalization of information and electronic communication influence organizational memory. Furthermore, the results show that codification of information fully mediates the relationship between standardization and organizational memory and that electronic communication partially mediates the relationship between specialization and organizational memory. Overall, the results suggest that the processes of codification of knowledge as well as electronic communication are conducive to the formation of organizational memory and that respective organizational memory bins have unique associations with the organizational structure factors. Our study is one of the first to empirically test propositions with regard to the concept of organizational memory.

The efficiency of hospital-based clusters

The rapid increase in the number of hospitals becoming members of multihospital systems in recent decades has led to the formation of local and regional clusters that have the potential to function as regional systems, a model long advocated as a policy strategy for improving health system performance. This study addresses both cluster efficiency and the hierarchical configuration with which hospitals are grouped into clusters. This study uses 2004 data from the American Hospital Association Annual Survey multihospital system designations updated to 2005. Efficiencies are measured using data envelopment analysis. The data envelopment analysis results show that 20 clusters or 5.8% of the sample of 343 clusters are highly efficient; the remaining 323 or 94.2% of the clusters received lesser efficiency scores, averaging 0.73 on the data envelopment analysis measure. The study found the number of beds in the primary hospitals and the percentage of hospitals in the clusters that were urban, two of three variables that reflect patterns of regional model service configurations, to be significantly correlated with cluster efficiency. Results suggest that many hospital clusters have evolved service configurations that are consistent with historically conceptualized regional organizational forms and that the particular regional pattern of distributing service capacities across cluster members might contribute to measured performance. The study also confirms the applicability of data envelopment analysis for assessing the performance of complex, multiunit organizations.

An Exploratory Study of Multiunit Restaurant Management Training: A Qualitative Perspective

Over the past 20 years, multiunit restaurants (MURs) have grown significantly in gross revenue, number of units, and market share. As the number of MUR companies grow, so do the number of multiunit managers (MUMs) needed to oversee the operations of those units. The concern in many food service organizations is the lack of consistent training that is provided to MUMs. The following qualitative study looks in depth at seven multiunit organizations and the training they provide to their MUMs. This study can help to inform both industry practitioners and academics regarding training best practices in the MUR industry. Implications for practitioners are discussed.

Foreignness, Multinationality, and Inter-Organizational Relationships

I examine how foreignness and multinationality affect the propensity of affiliates to form inter-organizational relationships, using local firms as benchmarks to identify the sources of the distinctiveness of foreign affiliates. The empirical testing is based on data on 554 advertising agencies in the US. The findings show that foreign affiliates form fewer inter-organizational relationships than local firms do. Interactions with the MNEs partly explain these differences, and suggest complex relationships between inter- and intra-organizational interactions. The differences between foreign and local firms arise primarily from varying organizational scope, whether single- or multi-unit organizations, while geographic scope is less influential.

Organizing IT to promote agility

Agility at the individual business unit and organizational levels presents a challenge for many information system (IS) departments. Business unit agility demands the ability to sense and respond to changes in local competitive environments, whereas organizational agility demands the ability to sense broader market opportunities and respond with changes that are organization-wide. The former requires experimentation and customization of system designs, while the latter demands uniformity and standardization. Although flexible and customizable software might assist organizations in adapting systems to meet these challenges simultaneously, coordination across multiple business units also demands effective organization and governance of system design and development. This paper presents a longitudinal case study of an insurance company that was effective at sensing and responding to changes in the environment at the business unit level, but less effective at sensing and responding at the organizational level. Using the platform logic as a theoretical lens, we analyze this case and offer insights into how multi-unit organizations can manage system design at the organizational and business unit levels, thereby supporting agility through the development of effective organizing and governance mechanisms. Our analysis outlines relational and integration mechanisms and explains how these arrangements helped the organization to attain greater enterprise agility and support its overall strategy.