Glenn Hoetker

Modularity and the Impact of Buyer--Supplier Relationships on the Survival of Suppliers

Modularity in product design and flexible supply chains is increasingly common in buyer--supplier relationships. Although the benefits of supply chain flexibility and component modularity for end-product manufacturers are accepted, little is known about their impact on suppliers. We advance the literature on modularity by exploring how three aspects of a suppliers relationships with its customers affect the suppliers survival: duration of buyer--supplier relationships, autonomy from customers, and links to prominent buyers. We compared the effects of these aspects of buyer--supplier relationships for low- and high-modularity components. Using data on U.S. carburetor and clutch manufacturers from 1918 to 1942, we found that suppliers of high-modularity components benefited more from autonomy provided by potential customers, whereas suppliers of low-modularity components benefited more from ties to higher status customers. Both benefited from autonomy generated by existing customers. Thus, relationships that require trust and extensive sets of interfirm routines, as do those for low-modularity components, led to both greater relationship benefits and greater constraints.

The Unreluctant Litigant? An Empirical Analysis of Japan’s Turn to Litigation

This paper analyzes the rapid increase in civil litigation in Japan during the 1990s in light of existing theories of Japanese litigiousness. Using a unique set of prefecture‐level data, it demonstrates that the 1990s increase in litigation is best attributed to two factors: the expansion in institutional capacity for litigation traced to procedural reforms and an expansion in the bar, and structural changes in the Japanese economy related to the postbubble slowdown in growth. The paper contributes to three literatures. First, it builds on earlier institutionally oriented research on civil litigation in Japan by John Haley and Mark Ramseyer by providing new data and detail about the institutional barriers to litigation. Second, it contributes to the literature on the relationship between economic change and litigation more generally. Finally, it contributes to the empirical and comparative literature on litigation rates by providing evidence about the determinants of litigation in one country.

NK modeling methodology in the strategy literature: Bounded search on a rugged landscape

We discuss recent methodological advances in the NK modeling in the Strategy literature and analyze issues related to its current use including different implementation algorithms, relative versus absolute performance, establishing significance of simulation results and long- versus short-term performance measurements. To facilitate cross-pollination of ideas, we point to advances and extensions of the model developed in other fields that could be effectively utilized to answer Strategy-related questions. These include modeling the strength of interaction, varying the importance of decision elements, utilizing alternative functional forms, incorporating endogeneity in N and K parameters and embedding the NK model in a broader dynamic framework.

Confounded Coefficients: Extending Recent Advances in the Accurate Comparison of Logit and Probit Coefficients Across Groups

The logit and probit models are critical parts of the social scientists analytical arsenal. We often want to know if a covariate has the same effect for different groups, e.g., men and women. Unfortunately, many attempts to compare the effect of covariates across groups make the unwarranted assumption that each group has the same residual variation. If this assumption is false, comparisons of coefficients can reveal differences where none exist and conceal differences that do exist. Recent work has emphasized the theoretical potential for this problem and proposed a test of whether the effect of covariates differs across groups that is accurate, if limited, despite differences in residual variation. This paper extends these advances in three ways. First, it uses simulations to show that this theoretical problem is substantively significant under a wide range of common conditions, meaning that traditionally executed comparisons of logit coefficients should be viewed skeptically. Second, it uses simulations to assess the power of the test recently proposed to overcome the problem, finding that they are an improvement over naive comparisons of coefficients, but have significant limitations. Third, it proposes and tests two alternative means of comparing coefficients across groups that avoid the assumption of equal residual variation entirely. The article closes with implications for the practice of research.

Alliance Experience and Governance Flexibility

Prior work has mapped the transaction at the heart of an alliance to the risks of opportunism inherent in that alliance and, ultimately, to how the alliance is structured and governed. We extend this approach by noting that the parties in an alliance do not necessarily perceive the same hazards as predominant and thus may have different preferences for how the alliance is structured. Nevertheless, it is in each partys best interest to find a structure that protects its interests, while also allowing its partner to protect its interests sufficiently. Drawing from the alliance management capabilities literature, we argue that firms with more alliance experience are better able to protect their interests under any given alliance structure, making the choice of structure less consequential to them. The resulting governance versatility provides a competitive advantage by enabling firms to form advantageous alliances that are less available to inexperienced competitors. Our study of innovative alliances in biopharmaceutical industry lends support to the hypotheses, allowing us to advance the literature on governance choice in alliances, the literature on alliance management, and their intersection.

Choice and Performance of Governance Mechanisms: Matching Contractual and Relational Governance to Sources of Asset Specificity

We examine the relationship between the nature of assets involved in an alliance and the optimal configuration of contractual and relational governance mechanisms. Examination of governance choice and performance in the German telecommunications industry indicates that physical assets are more suited to contractual controls, while knowledge assets are best governed via relational mechanisms. Relational governance actually harms alliance performance in the presence of physical assets. Implications for the study and management of alliances are discussed.

Japanese Firms’ Innovation Strategies in the Twenty-First Century: An Institutional View

The landscape within which Japanese companies innovate stands altered by events of the past two decades. Buffeted and metamorphosed by the forces of a severe asset value decline beginning in 1990, and a decade of economic malaise, followed by a subsequent decade of growth – and now the recent financial crisis – Japanese firms are transforming their innovation strategies because the national institutional framework of those strategies is altered by new economic realities. Even though the basis of the strategies that evolve from the framework, and perhaps the strategies themselves, are changing, Japan is more than maintaining its level of innovation, according to recent data. Even small companies seem to be increasingly part of recent innovation outcomes. So we ask, how is the level maintained given that the strategies that created Japan’s acknowledged industrial innovativeness seem to be transformed by events?

Alliance Experience and Accommodation in the Choice of Alliance Governance Structure

This paper explores a less-recognized aspect of alliance management capabilities, accommodation, which occurs when a firm refrains from applying its bargaining power, agreeing to terms that address their partner’s concerns or interests to a greater degree than their own. Despite its potential importance, the strategy and marketing literatures provide few insights into when and how accommodation occurs in alliances. We propose that firms with greater alliance experience are more likely to accommodate their partner’s concerns through the choice of governance structure, relying on their accumulated alliance capabilities to mitigate their own governance concerns. We find evidence to support our propositions in innovation alliances initiated between target and client firms in the biotechnology and pharmaceutical industries. In addition to formally introducing the concept of accommodation into the literature on the governance of alliances, we establish that there are boundary conditions for accommodation to occur; in our case, sufficient alliance experience. Moreover, we provide evidence in support of the transaction value perspective, which - while intellectually appealing - has been difficult to test empirically. Lastly, we demonstrate the value of considering the (possibly conflicting) concerns and preferences of all partners in the alliance, rather than focusing on the hazards faced by a focal partner.