Michael A. Hitt

International Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms

Theory suggests and results show that firm performance is initially positive but eventually levels off and becomes negative as international diversification increases. Product diversification moder...

Direct and Moderating Effects of Human Capital on Strategy and Performance in Professional Service Firms: A Resource-Based Perspective

The current study examines the direct and moderating effects of human capital on professional service firm performance. The results show that human capital exhibits a curvilinear (U-shaped) effect and the leveraging of human capital a positive effect on performance. Furthermore, the results show that human capital moderates the relationship between strategy and firm performance, thereby supporting a resource-strategy contingency fit. The results contribute to knowledge on the resource-based view of the firm and the strategic importance of human capital.

Managing Resources: Linking Unique Resources, Management and Wealth Creation in Family Firms

The appropriate resources are necessary but insufficient to achieve a competitive advantage. Resources must also be managed effectively. Herein, we develop a resource management process model composed of three components that can lead to a competitive advantage. These components include the resource inventory (evaluating, adding, and shedding), resource bundling, and resource leveraging. We examine resource management in family firms and thus explore the unique characteristics of five resources and attributes of family firms that provide potential advantages over nonfamily firms. The resources are human capital, social capital, patient capital, survivability capital, along with the governance structure attribute.

Alliance Management as a Source of Competitive Advantage

Strategic alliances are an important source of resources, learning, and thereby competitive advantage. Few firms have all of the resources needed to compete effectively in the current dynamic landscape. Thus, firms seek access to the necessary resources through alliances. We examine the management of strategic alliances using the theoretical frames of transactions cost, social network theory and the resource-based view. Alliances must be effectively managed for their benefits to be realized. Effective alliance management begins with selecting the right partner. Furthermore, alliances must be managed to build social capital and knowledge. To maximize cooperation among the partners, a trust-based relationship must be developed. Therefore, we conclude that managing alliances is crucial for firms to gain competitive advantage and create value with strategic alliances.

A Model of Strategic Entrepreneurship: The Construct and its Dimensions

Strategic entrepreneurship (SE) involves simultaneous opportunity-seeking and advantage-seeking behaviors and results in superior firm performance. On a relative basis, small, entrepreneurial ventures are effective in identifying opportunities but are less successful in developing competitive advantages needed to appropriate value from those opportunities. In contrast, large, established firms often are relatively more effective in establishing competitive advantages but are less able to identify new opportunities. We argue that SE is a unique, distinctive construct through which firms are able to create wealth. An entrepreneurial mindset, an entrepreneurial culture and entrepreneurial leadership, the strategic management of resources and applying creativity to develop innovations are important dimensions of SE. Herein we develop a model of SE that explains how these dimensions are integrated to create wealth.

Partner Selection in Emerging and Developed Market Contexts: Resource-Based and Organizational Learning Perspectives

This study of the international partner selection of firms from emerging (Mexico, Poland, and Romania) and developed (Canada, France, and the United States) markets supports resource-based and organizational learning explanations of such partner selection, a critical factor for success with international strategic alliances. Emerging market firms emphasized financial assets, technical capabilities, intangible assets, and willingness to share expertise in selection of partners more than developed market firms. In contrast, developed market firms tried to leverage their resources through partner selection. In particular, they emphasized unique competencies and local market knowledge and access in their partner selection more than emerging market firms.

A Causal Model of Linkages Among Environmental Dimensions, Macro Organizational Characteristics, and Performance

An integrative model of relationships among environmental dimensions, diversification strategy, firm size, structural divisionalization, and economic performance was developed and tested using environmental and organizational data from 110 large manufacturing firms. The results suggested that among those organizations, (1) higher levels of environmental instability were associated with lower levels of divisionalization and diversification, (2) strategy followed structure, and (3) size did not mediate the strategy-structure relationship. Furthermore, both environmental instability and diversification were positively related to market-determined performance, and instability was negatively related to operating performance. The results provided support for portions of each of three models, the external control, strategic management, and inertial models.

The Market for Corporate Control and Firm Innovation

This research examines an integrated theoretical model that explains how strategies for participating in the market for corporate control (acquisitions and divestitures) affect internal control mec...

Resource complementarity in business combinations: Extending the logic to organizational alliances

Organizations are combining resources through acquisitions and alliances in record numbers. Since publication of our original study in 1991, research has confirmed that resource complementarity creates the potential for greater synergy from acquisitions and alliances, leading to higher long-term firm performance as an end result. The valuable, unique, and inimitable synergy that can be realized by integrating complementary resources provides an opportunity for the firm to create competitive advantages that can be sustained for a period of time. In addition, complementary resources present opportunities for enhanced learning as well as the development of new capabilities. However, we also suggest that the existence of complementary resources is a necessary but insufficient condition to achieve synergy. The resources must be effectively integrated and managed to realize the synergy.

Dynamic Core Competences through Meta-Learning and Strategic Context

Traditional approaches to studying competitive advantage, while valuable, are not adequate to explain how firms can operate effectively in turbulent and often chaotic environments. A resource or skill-based view focusing on development and application of core competences is offered to supplement the traditional approaches. We present a model of the development and outcomes of dynamic core competences based on organizational meta-learning. A firm’s core competence(s) is defined as a set of problem-defining and problem-solving insights that fosters the development of idiosyncratic strategic growth alternatives. Dynamic core competences are based on the integration into systemic meta-learning of universal and tacit knowledge through information transfer, redefinition of heuristics and continuous improvement based on experimentation and the development of firm-specific skills based on dynamic routines. Dynamic core competences can be leveraged to create growth alternatives of global diversification, new applications of existing technologies and/or the development of new lines of business. Finally, dynamic core competences can be used to reduce uncertainty and to induce path dependencies that create causal ambiguity (making imitation from other firms difficult). In so doing, they can form the basis of competitive advantages.