Constantinos C. Markides

Corporate Diversification And Organizational Structure: A Resource-Based View

We argue that related diversification enhances performance only when it allows a business to obtain preferential access to strategic assets—those that are valuable, rare, imperfectly tradable, and costly to imitate. As the advantage this access affords will decay as a result of asset erosion and imitation by single–business rivals, in the long run only competences that enable a firm to build new strategic assets more quickly and efficiently than competitors will allow it to sustain supernormal profits. Both short– and long–run advantages are conditional, however, on organizational structures that allow the firms divisions to share existing strategic assets and to transfer the competence to build new ones efficiently.

Consequences Of Corporate Refocusing: Ex Ante Evidence

During the 1980s, many diversified firms reduced their diversification by refocusing. This study examined whether this refocusing created market value for the companies involved. It is shown that r...

International acquisitions:: Do they create value for shareholders?

This paper empirically tests whether international acquisitions -- in contrast to their domestic counterparts -- on average create value for the shareholders of acquiring firms. We find that whereas US international acquisitions in Britain and Canada create no value, US acquisitions in Continental Europe create significant value. We try to explain these results by examining: (1) the governance characteristics of the acquiring firms; (2) the competitiveness of the market for corporate control in the different countries; and (3) the characteristics of the acquisition and the acquiring firms. Our results suggest that in the main, investors do not consider international expansion through acquisitions as a worthwhile investment unless the acquiring firm has intangible assets to exploit abroad.

The Last Frontier: MARKET CREATION IN CONFLICT ZONES, DEEP RURAL AREAS, AND URBAN SLUMS

By operating in war zones, urban slums, and deep rural areas, companies could not only achieve growth and profits, but could also improve the economic and social conditions of these impoverished regions. Yet how can a company operate in areas with unstable security, poor infrastructure, and little or no formal legal frameworks in place? To do so successfully, companies need to go beyond transactional alliances or legalistic business partnerships with local partners. Instead, they need to develop community buy-in and long-term personal relationships based on trust with “unorthodox” local inhabitants—the ones offering them security and protection rather than technology and business assets. Such deep social embeddedness is not cost-free. To prevent it from derailing their success, companies need to nurture and grow their local partners beyond their specific needs.

Crossing the Chasm: How to Convert Relevant Research Into Managerially Useful Research

There is growing concern within the Academy of Management that a big and growing gap exists between management research and practice. The persistence of this gap is a mystery! Over the past 20 years, literally hundreds of ideas have been proposed to close it. Yet nothing seems to work and according to some, the gap continues to grow. Why is that? Is it that all the ideas proposed are bad or are we simply guilty of not implementing our own ideas in a manifestation of the “knowledge—doing gap”? In this article, the author proposes that a much more serious issue may be at work. Specifically, the author argues that our research is (sufficiently) relevant but still not what our customers (i.e., the managers) want or need. The gap that exists is not between rigorous and relevant research; it is between relevant and useful knowledge. For our (relevant) research to become managerially useful, it still needs to go through a transformation. Unfortunately, academics are not good at this transformation process. This has a serious implication on what we actually need to do to make our research more managerially useful.

Creativity is Not Enough: ICT Enabled Strategic Innovation

Purpose – To show how information and communication technologies (ICTs) could help a company implement radical new strategies.Design/methodology/approach – Generalizations are made based on 20 case studies of companies that strategically innovated in their industries by introducing radical new business models. Several of these cases are used in the paper to highlight the points made.Findings – The paper shows that ICT enables firms to: reach consumers that most competitors cannot serve profitably; offer radically new value propositions to consumers that other firms cannot deliver in a cost‐efficient way; and put in place value chains that no other firm could do efficiently. ICT also allows strategic innovators to scale up their business models quickly and so protect themselves from competitive attacks.Originality/value – This paper shows that coming up with a radical business model that breaks the rules of the game in an industry is easy! The difficult part is to implement such radical strategies in the m...

Corporate restructuring: A symptom of poor governance or a solution to past managerial mistakes?

If one was to examine the academic literature for an explanation of the restructuring that we have witnessed in the last decade, the most prominent explanation to emerge would be the agency explanation. According to this explanation, firms with poor internal governance devices fail to monitor their managers appropriately who, as a result, engage in self-serving activities such as excessive diversification and short-term investments. This, in turn, leads to poor performance which invites the attention of corporate raiders who force the management of the firm either to undertake painful restructuring or become a takeover target. In this article, Costantinos Markides and Harbir Singh challenge this explanation by arguing that restructuring may be brought about by honest managerial mistakes in the choice of organizational structure rather than managerial excesses allowed by poor corporate governance. They further argue that these managerial mistakes are not identified and corrected in time because restructuring firms lack the appropriate internal controls. In this article, they offer empirical evidence to support their arguments.

Six Principles of Breakthrough Strategy

This article proposes a view of strategy based on the author’s research on companies that have strategically innovated in their industries, and done so successfully. Each of these companies developed a strategy which was not only fundamentally different from those of its competitors, but also turned out to be tremendously successful. The author calls this combination a “breakthrough” strategy.

Research on Business Models: Challenges and Opportunities

Abstract The growing literature on business models has so far had limited impact on research in strategy. The main reason for this is the fact that the intellectual territory of the business model construct overlaps significantly with that of strategy. Without acknowledging this overlap, academics doing research on business models run the risk of asking questions that have already been explored in the strategy literature. This implies that research on business models can only become more impactful if we first identify explicitly what is different between the business model and strategy concepts and then focus our research questions on that difference.

Innovation through Ambidexterity: How to Achieve the Ambidextrous Organization

It has long been recognized in the literature that the pursuit of radical or disruptive innovation by established firms poses an organizational challenge for the firm. This is because the skills, structures, processes and mindsets required for exploiting the existing business are fundamentally different and often conflict with those required for radical innovation (i.e. exploration). This has led researchers to propose the need for “ambidextrous” organizations—companies capable of achieving efficiency in their existing business while at the same time having the strategic foresight to innovate and explore new businesses. Past research has found some support for a positive relationship between performance and the ability to be ambidextrous. There is, however, little evidence on how a firm can actually achieve ambidexterity. In this paper, we explore the issue of ambidexterity in the context of diversified firms. Specifically, we examine diversified firms that need to manage divisions that face conflicting demands for integration and responsiveness. Not all divisions of a diversified firm face such conflicting demands, so we focus on only those divisions that do. These divisions must be given autonomy to be locally responsive but must also be centrally controlled to allow for the efficient exploitation of interdependencies with the parent (and other divisions in the diversified firm). We use theory to propose ways by which a diversified firm could achieve such ambidexterity in its handling of these divisions. We then utilize questionnaire data from the 100 biggest business Groups in Taiwan to empirically test our hypotheses. We find that granting operational autonomy to separate divisions while centralizing strategic and financial controls promotes the achievement of ambidexterity. We also find that ambidexterity could be promoted through the use of strong values, rotation of managers and internal training programs.