Charles Baden-Fuller

Creating a Strategic Center to Manage a Web of Partners

Successful networks of partners are typically guided by a strong strategic center which is far more than a broker and organizer of contacts. This article examines three special features of the activities of successful central firms: their ability to create value for themselves and their partners, the agenda and core competencies they develop, and the capacity to be innovative by simultaneous strategizing and structuring.

Mastering Strategic Renewal: Mobilising Renewal Journeys in Multi-unit Firms

How do large multi-unit firms in a deconstructing world reconcile the conflicting forces of profits for today and flexibility to adapt for tomorrow? Profits for today requires order, control, and stability: adaptation for tomorrow requires flexibility and creativity in the value-added system. Large firms in many industries are confronted with this challenge of exploration and exploitation. In the European financial services industries these conflicting tendencies are increasingly obvious. Existing large financial players seem well placed to exploit the present but ill suited to adapt to the future. Why is this so, and what can be done about it? We consider the mechanisms of selection, adaptation and co-evolution that take place between levels within the firm and between the firm and its environment, and from this identify four ideal kinds of strategic renewal journeys that organisations can adopt as a way of coping with increasing environmental pressures. We label these journeys: emergent, directed, facilitated, and transformational. We show how these ideal types represent different options for top, middle and front-line managers, and we identify how each type differs in its capacity to cope with the changing environment. We illustrate our renewal journeys with examples from Dutch (ING and Rabobank) and British financials (Barclays, Lloyds and Prudential) and other organisations such as GE, IBM, Intel, Novotel and Philips. We suggest that for mobilising renewal in well-established financial institutions—once protected but now exposed to the winds of change—managers have to recognise that many of the current journeys are unsuitable for the future.

Co-Evolution of Firm Capabilities and Industry Competition: Investigating the Music Industry, 1877-1997

This paper proposes that rival firms not only search for new capabilities within their organization, but also for those that rest in their competitive environment. An integrated analysis of these search processes at both firm and industry levels of analysis shows how their interaction makes industries and firms co-evolve over time. To contribute to an enhanced understanding of the concept of co-evolution, a dynamic and integrative framework crossing meso and micro levels of analysis is constructed. This framework is applied to a longitudinal study of the music industry with a time-span of 120 years. The first part, a historical study, covers the period 1877-1990. The second part, a multiple-case study, covers the period 1990-1997. We conclude that search behaviour drives co-evolution through competitive dynamics among new entrants and incumbent firms and manifests itself in the simultaneous emergence of new business models and new organizational forms.

Exit from Declining Industries and the Case of Steel Castings

Because of conflicts between owners, managers and creditors, closure of unprofitable plants may be more difficult for an undiversified firm than a diversified firm. An examination of qualitative and quantitative evidence on plant closures in the U.K. steel castings industry between 1979 and 1983 supports the view that firm effects matter and suggests that closure patterns may have been inefficient. Copyright 1989 by Royal Economic Society.

Lessons from the Celltech Case: Balancing Knowledge Exploration and Exploitation in Organizational Renewal

This article applies the lens of the knowledge exploration/exploitation dilemma to the renewal of Celltech Plc. From a theoretical perspective it has often been argued that as a firm matures, exploitation of current organizational knowledge drives out exploration of new ideas, and that this increases the likelihood of firm failure. This same literature gives few clues as to how balance can be maintained, or decline reversed. Our case study documents the decline of Celltech, its rejuvenation from near bankruptcy in 1990, and its subsequent ability to prosper to become the eighth largest biotech firm in the EU in terms of market capitalization. Through the Celltech case we show empirically that renewal based on exploration is possible even in a firm where exploitation has come to dominate. This case also illustrates how a balance between exploration and exploitation can be maintained for over half a decade, despite the theoretical tendency stated in the literature for exploitation to dominate. We offer insights into the process of maintaining a balance, including reorganization to release internal diversity to stimulate exploration, creation of a common language, and building systems to institutionalize the maintenance of a balance between exploration and exploitation.

Outsourcing to outmanoeuvre:: Outsourcing re-defines competitive strategy and structure

Based on a case study approach, the authors examine the question: are there some aspects of a companys core business which can and should be outsourced? This question challenges traditional models of strategy which maintain that outsourcing of core activities is risky. Four circumstances are identified for outsourcing and examined in detail. The arguments and case studies suggest a number of lessons for managers and a general conclusion reached which supports the view that the outsourcing of core skills can be very beneficial for firms, providing the right approach is taken.

The Influence of Technological Knowledge Base and Organizational Structure on Technology Collaboration

This study investigates how an incumbent companys internal characteristics influence its propensity to form learning alliances. A firm may be reluctant to enter a research alliance when it has deep knowledge in a certain technological field due to concerns about knowledge leakage and the low possibility of being able to learn much from collaboration. On the contrary, when the firm has a broad knowledge base, it may have high propensity to enter alliances due to more self-confidence in its ability to learn fast from partners. In addition, we argue that when a firm concentrates its R&D at a central location, this neutralizes the positive and negative influences of the two knowledge base features on alliance formation. We tested and found support for the hypotheses using a database of 1550 alliances undertaken by 78 large incumbent pharmaceutical, chemical, and agro-food companies active in the biotechnology sector during 1993–2002.

Competitive Groups as Cognitive Communities: The Case of Scottish Knitwear Manufacturers Revisited

In this paper we reflect on the contribution of our 1989 article ‘Competitive Groups as Cognitive Communities: The Case of Scottish Knitwear Manufacturers’. We begin by recalling our backgrounds and motivations as collaborators on the project, and then discuss recent developments in the Scottish Borders knitwear industry. Noting that the industry has suffered continual decline in the twenty years since we published our paper, we suggest that the case still raises issues that remain open questions in the field despite the significant efforts by management researchers in recent years to understand the sources of industrial decline and revitalization. We outline what we feel are gaps in the existing literature and then end with the suggestion that these gaps are likely to be addressed only through multidisciplinary research that integrates resource, power, and cognitive theories of industrial dynamics.

From Funding Gaps to Thin Markets: UK Government Support for Early-Stage Venture Capital

Hybrid venture capital funds have a small positive impact on firm performance. This paper explores the implications of this finding for public policy in the United Kingdom.

Building Reputations: The Role of Alliances in the European Business School Scene

Abstract How should businesses best choose foreign partners as they seek to internationalise? We use reputation theory to examine this question. Building reputation is a key aim on the European Business School scene, and this article starts by using more than 2,000 articles written by European academics in top quality journals to update the LRP research reputation rankings of European Schools. We then look at the way international research collaboration takes place, and find that alliances between schools are far from random. It seems that academics from US and European schools are strongly attracted to form alliances with one another, and the choice process appears to be consistent with reputation theory that suggests US schools seek out the most reputable foreign partners. Moreover, the “charmed circle” of high-reputation partners appears to be defined on a country-to-country basis rather than from a whole-Europe perspective. The lessons for managers in internationalising industries are that international alliance choice must include a reputation perspective, with great care being paid to the exact nature of the foreign partners achievements.