Will Mitchell

Learning from competing partners : Outcomes and durations of scale and link alliances in Europe, north America and Asia

This paper investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We show that alliance outcomes vary systematically across link and scale alliances. Link alliances are interfirm partnerships to which partners contribute different capabilities, while scale alliances are partnerships to which partners contribute similar capabilities. We find that partners are more likely to reorganize or take over link alliances than scale alliances. By contrast, scale alliances are more likely to continue without material changes. The two types of alliances are equally likely to shut down, at similar ages. These results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances. Copyright

Path-dependent and path-breaking change: reconfiguring business resources following acquisitions in the U.S. medical sector, 1978–1995

This paper studies how firms use acquisitions to achieve long-term business reconfiguration. We base the study in a routine-based perspective on business dynamics. We develop and test hypotheses concerning the relative extent of change by acquiring and non-acquiring businesses, focusing on product line addition, retention, and deletion as forms of changing resources. We develop and test hypotheses that compare and contrast resource-deepening and resource extension arguments. We test the hypotheses with data from more than 3000 firms that offered more than 200 product lines in the U.S. medical sector between 1978 and 1995. We find that acquisitions play a major role in business reconfiguration, offering opportunities for firms to both build on existing resources and obtain substantially different resources.

THE EFFECT OF OWN-FIRM AND OTHER-FIRM EXPERIENCE ON FOREIGN DIRECT INVESTMENT SURVIVAL IN THE UNITED STATES, 1987-92

We argue that foreign firms operating in a host country generate information spillovers that have potential value for later foreign direct investment. We test two predictions. First, we expect foreign direct investments by firms with experience in a host country to be more likely to survive than investments made by first-time entrants. Second, foreign direct investments will be more likely to survive the greater the foreign presence in the target industry at the time of investment, subject to two contingencies. The first contingency is that the relationship will be weak or nonexistent among firms with no experience in the host country, because these firms have difficulty evaluating and taking advantage of the information spillovers. The second contingency is that the presence of other foreign firms will not affect investment survival among firms that already have a presence in the target industry and undertake expansion. These firms already possess general information about the target industries and are unlikely to gain additional benefit from information spillovers. We find supportive evidence based on the survival to 1992 among 354 U.S. investments undertaken by foreign firms in manufacturing industries during 1987.

Two Faces: Effects of Business Groups on Innovation in Emerging Economies

This paper shows that business groups in emerging economies exert dual effects on innovation. While groups facilitate innovation by providing institutional infrastructure, groups also discourage innovation by creating entry barriers for nongroup firms and thereby inhibit the proliferation of new ideas. This pattern reflects an evolutionary process in which the interplay of the availability of innovation infrastructure and variety of ideas influences the level of innovation in an industry. We show that group market share has an inverted-U impact on innovation in industrial sectors of both Korea and Taiwan during the 1981--1995 period. Institutional differences between Korea and Taiwan in terms of market structure and industrial policies lead to different innovation thresholds, the point at which the marginal costs of increasing group share begin to dominate the marginal benefits in the two countries.

Incumbents' use of pre-entry alliances before expansion into new technical subfields of an industry

Industry incumbents frequently delay entry into emerging technical subfields, fearing product cannibalization and uncertain investment, and enter only after technical and market uncertainties have subsided. We predict that many incumbents, particularly stronger firms, will participate in alliances with other firms before their standalone entry. The alliances will be used to realize part of the value of specialized assets and to gain information about the emerging products and markets. We support the predictions with evidence from the US. market of the medical diagnostic imaging industry.

The influence of local search and performance heuristics on new design introduction in a new product market

Abstract This study develops and tests three sets of predictions concerning new design introduction during the initial period of ferment in a new product market. We root our predictions most directly in the evolutionary economic concepts of local search and performance heuristics. First, we argue that new entrants will introduce most designs that are new to a product market during an initial period of ferment. Second, we argue that local search will lead most product market incumbents that introduce second or subsequent designs after their entry to introduce designs that are similar to those incorporated in their existing products. Third, we argue that firms selling products based on designs that are losing aggregate share in the market will be likely to introduce products based on new designs, while firms losing market share to firms that are selling the same design are unlikely to introduce new designs. Our empirical analysis examines the magnetic resonance imaging (MRI) subfield of the diagnostic imaging equipment industry between 1980 and 1986, a period that begins with the introduction of the first MRI design and ends with the emergence of widely accepted design characteristics. The results support the argument that local search and performance heuristics, along with other market factors and business characteristics, influence design introduction during a period of ferment.

Evolutionary diffusion: internal and external methods used to acquire encompassing, complementary, and incremental technological changes in the lithotripsy industry

This study links theories concerning methods that firms use to acquire technology with theories concerning types of technological change. We place particular emphasis on interorganizational relationships. We predict that firms will often acquire know-how needed for encompassing technological change through equity-based arrangements with other organizations, complementary technological changes through nonequity interorganizational arrangements, and incremental changes through internal R&D. Our theory draws on perspectives that emphasize the need to develop new competencies within a business organization and to protect the value of existing competencies. Our empirical analysis examines methods of technology acquisition that firms have used in the commercialization of medical lithotripters, which are devices that fragment stones in the kidney and gall bladder. The analysis contributes to a better understanding of how technology acquisition methods vary with the manner in which technological change relates to a firm’s existing capabilities. The study also helps develop our understanding of the evolutionary processes by which capabilities diffuse through an industry.© 1998 John Wiley & Sons, Ltd.

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.

Buyer intention to use internet-enabled reverse auctions: the role of asset specificity, product specialization, and non-contractibility

Information technology enabled exchanges in electronic markets have significant implications for buyer-supplier relationships. Building on studies that emphasize the role of intangible assets in interorganizational relationships, this study argues that buyers are less likely to use reverse auctions for supplier relationships involving a high degree of non-contractibility. The argument complements traditional transaction cost economics arguments that focus on the impact of asset specificity and product specialization. We identify six dimensions of non-contractibility-quality, supplier technological investments, information exchange, responsiveness, trust, and flexibility-which encompass task-based and interaction-based non-contractibility. The study finds that, together with product specialization, these non-contractible elements of interorganizational relationships have greater explanatory power for reverse auction use than asset specificity. This result highlights the importance of supplier investments in non-contractible elements of exchange relationships in an increasingly dynamic service- and knowledge-based economy.

The Persistent Effect of Geographic Distance in Acquisition Target Selection

Valuable resources often exist at distant points from a firms current locations, with the result that strategic decisions such as growth have a spatial dimension in which firms seek information and choose between geographically distributed alternatives. Studies show that geographic proximity facilitates the flow of resources, but there is limited understanding of factors that exacerbate or ease the impact of geographic distance when firms seek new resources. This paper argues that the difficulty of search increases with distance, particularly when search involves greater information processing, but that firms can partially overcome the constraints of distance with direct, contextual, and vicarious learning. We study 2,070 domestic acquisition announcements by U.S. chemical manufacturers founded after 1979. The results demonstrate the persistent effect of spatial geography on organizational search processes.