Strategic Management Journal | Papers
Strategic Management Journal

Technological overlap, technological capabilities, and resource recombination in technological acquisitions

The performance of technological acquisitions depends on the overlap between the knowledge bases of the target and acquiring firms. We argue this overlap is best viewed as two distinct constructs: target overlap, the proportion of the target’s knowledge the acquirer possesses, and acquirer overlap, the proportion of the acquirer’s knowledge duplicated by the target. Doing so simultaneously incorporates three drivers of value creation: acquirer’s absorptive capacity, knowledge redundancy, and organizational disruption due to conflict between the firms’ knowledge workers. Target and acquirer overlap have different, inter-related, effects on value created or lost from the target’s and acquirer’s technological capabilities. We also find that the low innovation quantity in acquisitions with low target overlap conceals an offsetting increase in the novelty and quality of innovations generated.

Sears J, Hoetker G. 2014. Technological overlap, technological capabilities, and resource recombination in technological acquisitions. Strategic Management Journal 35(1): 48-67
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Reconceptualizing plural sourcing

Firms often procure the same input via multiple means, e.g., making and buying. Recent papers exploring such concurrent sourcing modes have yielded rich, but inconsistent, theoretical and empirical insights. We suggest that resolving these inconsistencies and setting the foundation for future work requires reconceptualizing two aspects of concurrent sourcing: what and how. “What” refers to a surprising lack of clarity of what is meant by “same” inputs. We reconceptualize “same” as a spectrum of degrees of similarity and propose how similarity might be measured. “How” refers to the governance modes combined in concurrent sourcing. Extending the literature’s predominant focus on make/buy, we reconceptualize concurrent sourcing as a set of combined governance modes—make/buy, make/ally and buy/ally—distinguished from single modes of governance by certain shared characteristics, but differing from each other in their capabilities and limitations. We demonstrate the potential of our reconceptualization with propositions predicting the use of concurrent sourcing and choice of specific concurrent sourcing modes as a function of similarity, technological volatility and performance ambiguity. Concurrently reconceptualizing “what” and “how” resolves strains between existing studies and strengthens the foundation for future work. Furthermore, enhanced understanding of the trade-offs and synergies among governance modes generates theoretical, empirical and managerial insights relevant to governance choice situations beyond concurrent sourcing itself.

Krzeminska A, Hoetker G, Mellewigt T. 2013. Reconceptualizing plural sourcing. Strategic Management Journal 34: 1614-1627
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Choice and performance of governance mechanisms: Matching alliance governance to asset type

Formal and relational governance mechanisms are used in strategic alliances to coordinate resources and mitigate the risk of opportunistic behavior. While recent work has shown that these approaches are not mutually exclusive, we understand little about when one approach is superior to the other. Using data on the governance choices and subsequent performance of alliances in the German telecommunications industry, we find that the optimal configuration of formal and relational governance mechanisms depends on the assets involved in an alliance, with formal mechanisms best suited to property-based assets and relational governance best suited to knowledge-based assets. Furthermore, a mismatch between governance mechanisms and asset type can harm the performance of the alliance. Our findings contribute to transaction cost economics, the literature on relational governance, and recent work studying their interaction.

Hoetker, G. and T. Mellewigt (2009). "Choice and performance of governance mechanisms: matching alliance governance to asset type." Strategic Management Journal 30(10): 1025-1044. View and download

The use of logit and probit models in strategic management research: Critical issues

The logit and probit models hove become critical parts of the management researcher's analytical arsenal, growing rapidly from almost no use in the 1980s to appearing in 15% of all articles published in Strategic Management Journal in 2005. However, a review of three top strategy journals revealed numerous areas in their use and interpretation where current practice fell short of ideal. Failure to understand how these models differ from ordinary least squares can lead researchers to misunderstand their statistical results and draw incorrect conclusions regarding the theory they are testing. Based on a review of the methodological literature and recent empirical papers in three leading strategy journals, this paper identifies four critical issues in their use: interpreting coefficients, modeling interactions between variables, comparing coefficients between groups (e.g., foreign and domestic firms), and measures of model fit. For each issue, the paper provides a background, a review of current practice, and recommendations for best practice. A concluding section presents overall implications for the conduct of research with logit and probit models, which should assist both authors and readers of strategic management research.

Hoetker, G., "The use of logit and probit models in strategic management research: Critical issues", Strategic Management Journal, Vol. 28, No. 4, 2007, pp. 331-343. View and download

Do modular products lead to modular organizations?

The tacit assumption that increased product modularity is associated with advantageous increases in organizational modularity underlies much of the literature on modularity. Previous empirical investigations of this assumption, few in number, have faced numerous confounding factors and generated conflicting results. I build a causal model for the relationship between product and organizational modularity, which I test using a distinctive empirical setting that controls for confounding factors present in previous studies. I find support for only part of the assumed relationship, showing that modularity is a more multifaceted concept than previously recognized. In particular, increased product modularity enhances reconfigurability of organizations more quickly than it allows firms to move activities out of hierarchy. The paper contributes to the emerging stream of research that focuses on the previously under-appreciated costs of designing and maintaining a modular organization.

Hoetker, G., "Do modular products lead to modular organizations?", Strategic Management Journal, Vol. 27, No. 6, June, 2006, pp. 501-518. View and download

How much you know versus how well I know you: Selecting a supplier for a technically innovative component

How do firms select a supplier for an innovative component? Three literatures speak to this question. Transaction cost economics focuses on the value of internalization, the literature on inter-firm relationships on the value of past relationships, and the firm capabilities literature on the value of superior capabilities. Choosing a supplier means choosing a bundle of these characteristics - internal vs. external, amount of prior transactions, and capabilities - but no study has integrated all three characteristics, making it impossible to understand the trade-offs involved either theoretically or managerially. I propose and test a model integrating all three factors, allowing us to understand the trade-offs involved. I find that when uncertainty is low, the decision is made primarily on the basis of differences in technical capabilities. As uncertainty increases, prior relationships and a supplier being internal take on greater positive significance relative to the importance of technical capabilities. At extreme levels of uncertainty, the value of internal supply relationships becomes very high and past relationships lose their significance. While adherents of each literature have criticized the others for what they omit, this model moves beyond this mutual recrimination by incorporating the key concerns of each literature, setting the stage for future research that draws upon the strength of each. The model provides guidance for any situation where a firm must choose a partner under uncertainty. Lastly, it addresses the strategic question of how companies should organize in the long run to access the capabilities needed for competitive success. View and download