Anoop Madhok

COST, VALUE AND FOREIGN MARKET ENTRY MODE: THE TRANSACTION AND THE FIRM

This paper compares and contrasts the mode of foreign market entry decision from the transaction cost/internalization and organizational capability perspectives. Each of these perspectives operates at a different level of analysis, respectively the transaction and the firm, and consequently differs in the primary arena of attention, namely transaction characteristics and the capabilities of firms. In making the comparison, a key distinction is made between the cost and the value aspects in the management of know-how, based on which issues pertaining to the transfer of knowledge within and across firm boundaries and the exploitation and enhancement of competitive advantage are closely examined. The main purpose of this paper is to demonstrate the implications of a shift in frame from cost to value in the analysis of decisions related to firm boundaries. Entry into foreign markets is used primarily as a vehicle for the accomplishment of this purpose. The paper shows how the value-based framework of the organizational capability perspective radically and fundamentally shifts the approach towards the governance of firm boundaries and argues that, even though TC/internalization theory raises some valid concerns, the organizational capability framework may be more in tune with today’s business context. Some of the assumptions of the TC/internalization perspective, both direct— ‐opportunism, exploitation of existing advantage—and indirect—preservation of the value of know-how across locational contexts, asymmetry between bounded rationality for transaction and production purposes—are critically examined and questioned. Implications of a shift from a cost to a value-based framework are discussed and the need for a shift in research focus is emphasized.

Acquisitions as entrepreneurship: asymmetries, opportunities, and the internationalization of multinationals from emerging economies

We investigate the rapid internationalization of many multinationals from emerging economies through acquisition in advanced economies. We conceptualize these acquisitions as an act and form of entrepreneurship, aimed to overcome the ‘liability of emergingness’ incurred by these firms and to serve as a mechanism for competitive catch-up through opportunity seeking and capability transformation. Our explanation emphasizes unique asymmetries (and not necessarily advantages) of emerging multinationals due to their historical and institutional differences with advanced economy multinationals, as well as a search for advantage creation when firms possess mainly ordinary resources. The argument shifts the central focus from advantage to asymmetries as the starting point for internationalization.

Trust and Formal Contracts in Interorganizational Relationships - Substitutes and Complements

We hypothesize that trust is a moderator of the direct relationship between control and coordination concerns and contractual complexity. Our results suggest that high trust weakens the positive relationship between control concerns and contractual complexity and reinforces the positive relationship between coordination concerns and contractual complexity. By highlighting the dual role of contracts (i.e. a controlling and coordinating function) and the moderating role of trust in this regard, our paper provides a new focus to the current discussion on the relationship between trust and contracts (i.e. substitutes or complements) that may help reconcile some divergent perspectives in the literature. Copyright

Opportunism and trust in joint venture relationships: an exploratory study and a model

This paper discusses two approaches towards managing interorganizational relationships, based on opportunism and trust respectively. Data is presented from interviews conducted with four managers to investigate the relevance of these two approaches in their joint venture relationships. Both the approaches are found to be important but play different roles at different stages of the relationship. A conceptual model is then developed to represent the relationship process in terms of its formation and sustenance. In spite of differences between the two approaches, they share common objectives of efficiency and flexibility. It is useful to consider them as complementary to one another, with transaction costs being viewed more broadly to incorporate both the opportunism-avoidance as well as the trust-creation dimensions of interorganizational relationships.

Process Capabilities and Value Generation in Alliance Portfolios

This paper develops a multidimensional, process-based conceptualization of alliance portfolio management capability. Arguing that such a capability consists of organizational processes to proactively pursue alliance formation opportunities, engage in relational governance, and coordinate knowledge and strategies across the portfolio, we examine the impact of such a capability on organizational outcomes in the context of formal structure (alliance function) and strategy (portfolio diversity). Using data from 235 firms, we find that these three processes have a positive effect on a firms alliance portfolio capital, and some of these effects are conditioned by a formal alliance function and diversity of the portfolio. Whereas the ability of proactive formation and relational governance processes to create value is further strengthened in the presence of an alliance function, that of the coordination dimension is weakened. Furthermore, the benefits of relational governance are strengthened for firms with diverse portfolios, whereas the benefits of coordination processes are weakened. We discuss implications of these findings for the alliance and network literature, and in general, for firm heterogeneity. In summary, we find evidence that variance in process-based capabilities to manage alliance portfolios can explain performance heterogeneity among firms.

Supplier-Switching Inertia and Competitive Asymmetry: A Demand-Side Perspective

Building on strategic management, operations strategy, and supplier management literatures, this article presents a framework for supplier selection from the demand-side perspective. We highlight the role of a purchasing firms switching inertia in the supplier-selection process and demonstrate the usefulness of our framework for the industrial automation industry. Empirical data for this study was collected from 171 corporate and plant-level executives in pharmaceutical, chemical, and paper-and-pulp manufacturing industries in the United States. A series of Web-based individually customized discrete choice experiments asked the respondents to either switch to the new supplier or stay with the existing supplier. Based on the results of these experiments, we demonstrate the existence of switching inertia in the supplier-selection process and discuss the managerial implications for incumbent and challenger supplier firms.

Investment and Control Decisions in Foreign Markets: Evidence from Service Industries

We empirically investigate the entry mode choice in the service sector. In contrast to current models, we propose a model for choice of entry mode that breaks down the decision into two levels of analysis: first, at the more macro level, the choice of the degree of commitment is influenced mainly by country-related variables; second, at the more micro level, the choice of the degree of control is addressed by firm-related variables. Based on a sample of 328 foreign market entries, our study contributes to the literature of entry mode in two ways: first, by showing the explanatory capacity of the hierarchical model in the analysis of entry mode choice in the service sector; and second, through identifying and analysing the moderating role of two important contingencies in this decision – capital intensity and degree of customization. Moreover, the study advances our knowledge of some of the particularities in the internationalization of service firms.

The Co-evolutional Advantage: Strategic Management Theory and the Eclectic Paradigm

The eclectic paradigm has been one of the leading frameworks for explaining multinational activity over the past two decades. Yet recent trends in international business pose a challenge to the explanatory power of the paradigm. Strategic management theory, with its focus on performance differences between firms, provides a useful complement to the OLI framework in understanding the activities of the modern multinational. In particular, global competition and the management of a firms global stocks and flows of knowledge merit closer attention.The advent of global competition requires us to shift from the existing institutional perspective of comparisons of firms and markets or of foreign firms and local firms to a firm-level perspective of comparisons of the multinational firm to its global competitors. It also necessitates a focus on firm-level capabilities in knowledge management relative to competitors, the development of these capabilities involving both macro and micro co-evolutionary processes. Our arguments incorporate these changes to extend the OLI paradigm to accommodate both an economic and a strategic management perspective.

Knowledge Transfer within the Multinational Firm: What Drives the Speed of Transfer?

■ This paper examines the process of knowledge transfer in an intra organizational context. We first hypothesize that internal transfers will occur faster than external imitation due to the conceptual view of the multinational corporation as a social community that specializes in the creation and transfer of knowledge. ■ We then present an analysis of the determinants of the speed of intra firm knowledge transfer by using a dyadic level of analysis, involving sender and recipient subsidiaries, examining the effects of subsidiary technology specialization and dyad interaction and technological distance. We test our hypotheses using patent citation data in the semiconductor industry.

The Evolution of Strategic Management Research: Recent Trends and Current Directions

Strategic management is a relatively youthful discipline that has steadily matured over the past fifty years. The field has become consolidated over this period, while simultaneously expanding the range of topics analyzed and research methodologies used. Different theories and approaches, addressing different research topics, have been developed to explain the reasons underlying firms’ competitive advantage and success. In this paper, we posit the existence of two pendulums in constant motion that, on the one hand, reflect the tension that has historically existed between the focus on internal firm factors and external environmental attributes respectively and, on the other hand, the tension between a more macro level of analysis, i.e., the firm and its environment, and a more micro level one, i.e., individuals and their relations within the firm. The frontier of research in strategic management is shaped by the simultaneous movement of both pendulums.