Markus Schimmer

Firm performance and aspiration levels as determinants of a firm’s strategic repositioning within strategic group structures

Previous studies on strategic group dynamics have generated valuable insights into the industry-level determinants of changes in strategic group membership and group strategy. Complementary to this line of research, the present study focuses on the firm-level determinants underlying shifts in firm positioning within strategic group structures. Drawing on the behavioral theory of the firm, the study examines the influence of firm performance and performance aspirations on the extent to which firms strategically diverge from or converge towards their strategic groups. Empirical results from a longitudinal analysis of the strategic repositioning by 1191 US insurance firms over a 10-year time period (1999–2008) suggest that firms performing below aspirations show a greater inclination to diverge from their current strategic group than firms performing above aspirations. Industry conditions are found to moderate the relationship between performance aspirations and strategic divergence–convergence. The study’s findings highlight the influence of performance feedback on strategic group dynamics, and the importance of considering the interplay between firm-level and industry-level characteristics in explaining strategic group dynamics.

Performance Effects of Corporate Divestiture Programs

Even though acquisitions have generally taken a much more prominent place in strategic management research, divestitures have attracted more and more research attention recently (Brauer, 2006; Johnson, 1996). The term divestiture stands for a group of vehicles through which a firm adjusts its ownership structure and reduces its business portfolio scope. The most prominent vehicles which are commonly captured under the umbrella term divestiture are sell-offs, spin-offs or equity carveouts. Over the past few decades, scholars have contributed considerably to our knowledge of the antecedents of divestitures and offered further insights into divestiture performance (Berger & Ofek, 1999; Bergh & Lim, 2008; Haynes, Thompson, & Wright, 2002, 2003; Hite, Owers, & Rogers, 1987; John & Ofek, 1995; Lang, Poulsen, & Stulz, 1995; Montgomery, Thomas, & Kamath, 1984). But still, many ambiguities and gaps remain in our understanding of divestitures.

Dynamic Balancing of Exploration and Exploitation: The Contingent Benefits of Ambidexterity

We study the evolution of firms’ exploration–exploitation allocations and their long-term performance outcomes. Extending current ambidexterity theory, we suggest that not only firms pursuing one-sided exploration or exploitation orientations show self-reinforcing tendencies but also ambidextrous firms adopting balanced exploration–exploitation orientations. Integrating formal modeling arguments, we further propose that reinforcing ambidexterity can be good or bad for firms’ long-term performance, depending on the environment they face: In contexts characterized by incremental change, firms benefit more from the learning effects of maintaining ambidexterity, which lead to superior performance. Firms in discontinuous change contexts, however, suffer more from the misalignment that reinforcement creates, which affects their performance negatively. A longitudinal data set of global insurance firms (1999–2014) supports our arguments. Building on these findings, we reconceptualize ambidexterity as the ability to dynamically balance exploration and exploitation, which emerges from combining capability-building processes (to balance exploration and exploitation) with capability-shifting processes (to adapt the exploration–exploitation balance). We contribute to the organizational literature by developing a dynamic perspective on balancing exploration and exploitation, by clarifying the contingent nature of the ambidexterity–firm performance relationship, and by integrating and extending the ambidexterity and formal modeling perspectives on exploration and exploitation.

Quantitative methods in Strategy-as-Practice Research

While most of the prior work in the Strategy as Practice research has been conceptual or qualitative in nature, there would be major potential in researching strategy practices also quantitatively. There are a number of different benefits that could be gained in comparison to a solely qualitative research orientation. Expanding the use of quantitative methods in studying strategy practices would further lead to the development and validation constructs for the study of strategy practices, verification of the applicability of the results across different contexts, and, as a whole, more effective accumulation of the empirical evidence. Moreover, innovative quantitative methods could also lead to the emergence of novel insights that might not be achievable with purely qualitative research designs. Despite the scarcity of quantitative research on strategy practices, there is extensive research in closely related research streams that one can build on. In particular, prior research on top management teams, middle management, strategic decision-making, strategic consensus, and strategic issues and initiatives provide in this respect important pillars on which to build ones own research on strategy practices.

Convergence-Divergence Within Strategic Groups

Since Hunt (1972) initially grouped strategically similar firms within the appliance industry into sets of direct competitors and dubbed these clusters “strategic groups”, numerous strategy scholars have adopted the strategic group concept. While early studies mostly applied strategic groups as a middle-ground between the industry and the firm for predicting profitability differences between firms, more recent studies turned toward investigating the internal structure of strategic groups (Cool & Schendel, 1987; McNamara et al., 2003), the groups’ roles in guiding managerial decision making and the competitive behavior of firms (Baum & Lant, 1995; Bresser, Dunbar, & Jithendranathan, 1994; Fiegenbaum & Thomas, 1995; Porac & Thomas, 1994), as well as the temporal dynamics of strategic groups (DeSarbo, Grewal, & Wang, 2009; Fiegenbaum & Thomas, 1993; Lee, Lee, & Rho, 2002; Mascarenhas, 1989; Oster, 1982).

Mit dem Strategieausschuss zur effektiven Unternehmensaufsicht – Zum Prinzip der symmetrischen Überwachung

Der Beitrag prasentiert ein an der Verbesserung von Informationsverarbeitungs- und Entscheidungsprozessen orientiertes Konzept zur Einrichtung eines Strategieausschusses, welches aus der legalen, strategischen und der personellen Perspektive diskutiert wird. Es wird argumentiert, dass ein Subkomitee, welches auf die informationelle Aufbereitung und Evaluierung der Unternehmensstrategie spezialisiert ist, Mehrwert schafft, indem es einen kontinuierlichen, fokussierten Dialog zwischen den Mitgliedern des Strategieausschusses und der Geschaftsleitung herbeifuhrt. Hierdurch soll nicht nur die Aufsicht verbessert werden, sondern auch die strategische Entscheidungsfindung generell; dies, indem Wahrnehmungs- und Evaluierungsfehler auf Seiten des Aufsichtsorgans und der Geschaftsleitung im Rahmen einer korrektiv-interaktiven Uberwachung gegenseitig aufgedeckt werden und Informationsasymmetrien auf Ebene des Komitees und des ubergeordneten Aufsichtsorgans in Relation zur Geschaftsleitung sinnvoll genutzt werden. Indem das Konzept den Vor- und Nachteilen von Unabhangigkeit und Involvierung des Kontrollorgans zielgerichtet Rechnung tragt, folgen aus seiner strukturell und kompositorisch effektiven Umsetzung eine bessere Informationsversorgung des gesamten Aufsichtsorgans sowie eine qualitativ umfassendere Beratung der Geschaftsleitung.

Diversification and the Achievement of Scope Economies

The utility industry is undergoing major regulatory changes, freeing up a competition between alternative business models. Diversification marks one of the main themes in this struggle for success. The question of how companies can add value by engaging in multiple businesses inevitably relates to the concept of economies of scope. This chapter introduces the concept as a rationale for diversification, highlights its practical limitations, and discusses whether it explains the exhibited diversification trends within the utility industry. The chapter concludes by supporting the relevance of the concept for explaining diversification in general and the trends within the utility industry in particular.