Robin Kramar, Vijaya Murthy, and James Guthrie
This article discusses how the shift to a knowledge-based economy has propelled firms' human capital (HC) and associated intellectual resources to center stage. It notes that while organizational researchers have highlighted the increasingly strategic role of HC, and despite a growing realization among firms that their human-knowledge resources are becoming more important, managerial awareness of the value of HC remains low. The article suggests that HC management, measurement, and reporting are increasingly vital capabilities that all organizations will need to acquire. It proceeds to analyse the nature of HC, trace the evolution of HC accounting, identify current accounting challenges, and describe contemporary frameworks that are seeking to address these challenges. The article defines HC within organizations as ‘employee capability, knowledge, innovation, adaptability, and experience’, noting that it is typically represented as one element in a tripartite framework of intellectual capital, the other two being relational capital and organizational capital.
Mooweon Rhee and Tohyun Kim
This article reports a behavioural theory of reputation repair with a focus on the behavioural mechanisms underlying an organisation's response to a reputation-damaging event. The reputation repair model views reputation repair as a process of problem solving, consisting of three steps: problem recognition, search for solutions and implementation of solutions. Both an organisation's successful reputation repair and an ideal research program on reputation repair must cover both the issues of repairing or reviving the stakeholders' perceptions of the organisation by protecting these stakeholders from the harm of the reputation-damaging event, and determining the root causes and restructuring or reorganising the organisation's behaviour and position to prevent the recurrence of similar events. Managing the stakeholders' perceptions of the organisation can serve as a key supplement to the substantive reputation repair process and as a crucial part of an organisation's successful reputation repair.
David P. Lepak, Riki Takeuchi, and Juani Swart
This article focuses on the alignment between human capital (HC) and organizational needs. It focuses on the question of how alignment between HC and organizational strategy influences individual and organizational performance. The starting point for this article is the human-resource architecture proposed by Lepak and Snell (1999), which suggests that firms' decisions to build or buy in HC are influenced by its strategic value and uniqueness. At the individual level of analysis, the article investigates the potential influence of job security/career prospects and the target of an individual's commitment on performance. In a wide-ranging analysis, it questions whether conventional goals of maximizing workforce commitment are necessarily desirable, given that, while core workers and firm's targets of commitment are likely to be in alignment, the targets of commitment for those in job–productivity relationships are more likely to align with their future careers outside the firm.
Tina Dacin, Douglas Reid, and Peter Smith Ring
This article defines collaborations between firms that involve the creation of a separate, autonomous, and legally recognized firm — a ‘newco’ — as a joint venture. Joint ventures usually, but not always, involve parties who have contributed equity in creating the ‘newco’, so the term joint venture in this article refers to equity joint ventures. Joint ventures typically involve collaborations between two parties, but there can be more. This article defines an alliance as a cooperative agreement between at least two firms. These firms combine their resources and capabilities in the pursuit of collective and individual strategic objectives. This article begins with a discussion of the frequency with which firms rely on joint ventures and alliances and the motivations that lead economic actors to develop joint ventures and/or alliances. It provides a detailed discussion of the theory underlying partner selection in joint ventures and alliances.
This article aims to explain the concept of organizational competences and its central role in contemporary strategic thinking about how a firm creates competitive advantages, to clarify the strategic roles of resources, capabilities, and management processes in creating organizational competences and competitive advantages, and to explain the essential aspects of a competence framework for the strategic analysis of organizations. The emergence of the field of strategic management in the last decades of the twentieth century may be broadly divided into two major periods of development of foundational concepts and theory. Both periods of development have tried to contribute to answering the central concern of strategic management, which is understanding how a firm might achieve competitive advantage in its industry.
David Levy and Benyamin Lichtenstein
This article explores the contribution of complexity theory to the understanding of business and the natural environment (B&NE), concentrating on climate change. It uses the term “complexity” to refer to a group of concepts derived from systems theory, including complex dynamic systems theory, chaos, and emergence, among other disciplines. In addition, some of the features of the business interface with the climate system that present challenges for timely and effective governance are explained. It also investigated the difficulties of intervening in complex dynamic systems, including problems of collective action, unintended consequences, and inherent limitations on effective management. The theory of emergence provides understanding of how dynamic systems generate order and exhibit “self-organization”. Life-cycle analyses can help identify resource synergies among partner firms. The development of modeling tools to represent the complexities of business-environment interactions offers substantial potential for future research.
This article outlines different approaches to the analysis of contemporary capitalism and considers what role they allocate to the business organization. Three distinct positions are distinguished. First, there are those who cling to the idea of distinctive national business systems and retain a belief in the organization of work, management, and employment relations characterized by a national system of institutions. Second, there are those who argue for the importance of globalizing trends and the convergence between organizational forms and policies and, by extension, more general features of economic organization. Third, between the extremes, there are arguments that suggest that a small number of patterns, of distinctive varieties of capitalism, can be distinguished. It is proposed that there is merit in all these positions, but none recognizes the complexity of real economies and none are able to explain the extent of change and continuity actually existing.
Michael Shayne Gary, Giovanni Dosi, and Dan Lovallo
This article examines the underlying cognitive and behavioral factors responsible for strategic decisions driving B&B dynamics, discusses the reasons firms do not learn to avoid boom and bust, and identifies tentative strategies for mitigating B&B (Boom and Bust) behavior. At the same time, it conjecturally concludes, there might be a positive collective side to B&B behavior fostering accumulation of knowledge and physical infrastructure, especially regarding new technological paradigms. The next section discusses a number of real world cases of B&B dynamics. The examples illustrate quite common dynamic behaviors and highlight the crucial role of capacity investment decisions in B&B outcomes. Subsequent sections review the findings from prior experimental research on B&B dynamics and discuss some key decision biases and heuristics that play important roles in B&B decision making. The final section outlines some tentative strategies for moderating B&B decision making. The conclusion highlights some of the collectively positive aspects of booms and busts.
This article has various aims: to demonstrate that the central concept of a ‘firm’ is more complicated than might immediately appear; to examine various explanations that have been put forward for why firms exist at all; to examine the factors which constrain the size and range of activities of firms; to compare the nature of relationships within firms with relationships between firms; and to consider how ownership of assets affects incentives. Any discussion of business strategy inevitably presupposes the existence of a business firm, for which the strategy is intended. Furthermore, the outcome of the strategic discussion will be aimed at changing the nature of the firm in various ways: the products it produces, the ways in which it produces and sells them, and the activities performed by the firm and those performed outside the firm.
Charles J. Fombrun
This article explores seven principal reference frames that have guided theorising about corporate reputations. The seven conceptual frameworks, namely institutional theory, agenda-setting theory, stakeholder theory, signaling/impression theory, identity theory, resource-based theory and social construction theory, have had a disproportionate influence on theorising about corporate reputations. These theoretical frameworks influenced the conceptual thinking that has taken place in the reputation literature. It is noted that corporate reputations develop from three principal sources. These principal factors impact the corporate reputations through the experiences that stakeholders have of the company's products and services, and the firm itself. Stakeholder support makes available a bounty of resources to companies. Many theoretical frames can be used to develop specific hypotheses linking causal drivers to reputational outcomes.
Raphael Amit and Christoph Zott
The rapidly changing economic landscape, coupled with transformational advances in information and communication technologies, presents many challenges to managers of large and small enterprises alike. They need to adopt a holistic approach to continuously renew and innovate their organizations’ capabilities, their product and service mix, their product-market strategies, their activity systems, and more. In response to such challenges, two perspectives have emerged in the strategic management literature in the last two decades: the dynamic capabilities paradigm and the business model perspective. With few exceptions, these viewpoints have been kept separate. In this chapter, we explore the rich links between these two perspectives and suggest that business model design, when viewed through a process lens, is in fact a dynamic capability. Our contribution is to elaborate on the mechanisms of this capability.
This article examines three features of the relationship between consulting firms and business schools. The discussion focuses mostly on strategy consultancies, which is where the relationship appears to be closest and the most ‘symbiotic’. It looks at the consequences of having business school graduates joining (strategy) consultancies for both the consulting firms and the business schools. It then outlines how business schools become the basic institutions connecting academe and practice.
Mauro F. Guillén
The rise of large, diversified business groups in developing and newly industrialized countries has captured the imagination of academics, journalists, and policy-makers. This article argues that the rise of business groups is best approached from a resource-based perspective—that is, by looking at the distinctive capabilities, strengths, and weaknesses of this form of organization compared to other types of firms—such as product-focused firms, small and medium enterprises, and foreign multinationals—under different development circumstances. The main argument is that business groups appear in developing and newly industrialized countries because entrepreneurs and firms learn the capability to combine the necessary domestic and foreign resources for repeated industry entry. Such a capability, however, can be developed and maintained as a valuable and rare skill only under asymmetric foreign trade and investment conditions with the rest of the world.
Steve Cropper and Ian Palmer
Since organizational research started systematically to look beyond the single organization at the character and significance of inter-organizational relationships (IOR), there has been a gradual accumulation of work seeking to understand change and dynamics in IOR. More recently, there has been interest in exploring certain temporalities in IORs, reflecting interest in the wider field of organizational studies, where a number of substantial essays have addressed issues of change and time in organizational analysis. This article aims to outline and build upon this emerging interest in how more explicit attention to change, dynamics, and temporality can assist in the understanding of IORs. It takes each of these concepts and maps their implications for IORs, indicating where IOR research has incorporated them as questions or as parts of explanatory schemes. It also identifies how relevant theoretical traditions might be harnessed to enable further development of these relatively new lines of IOR research.
The client-related and client-focused nature of management consultancy work is widely considered as one of its defining characteristics, but the various interpretations of the client relationship are still vague and shifting. This article tries to restore the balance and shows how client perspective has been included in continuing debates on management consultancy. It explains the role of clients in the change processes and the activity systems that are related to consulting, and then addresses the question of interaction between consultant and client. This article also considers the nature of consulting work.
This chapter reviews the research literature on professional service firm–client relationships. Client relationships are a defining feature of professional service firms, but are also critical strategic assets and an indicator of the market strategy of professional service firms. To assess the state of knowledge about client relationships the chapter is organized around three themes. First is the different ways that professional service firm–client relationships have been characterized and how this shapes researchers’ assumptions about and focus on client relationships. Second, it examines the life cycle of client relationships, focusing specifically on research that addresses the formation, maintenance, and dissolution of client relationships. The third theme examines research that has identified how client relationships affect professional service firms, particularly in the areas of strategy, structure, learning, and human resource practices. The author identifies important gaps in our understanding of client relationships and suggests several potential avenues for future research.
Julia Balogun, Annie Pye, and Gerard P. Hodgkinson
This article aims to bring the organizational cognition approach to decision making together with a sensemaking perspective on deciding, in an endeavor to bring real people and processes into the picture to develop a more integrative understanding of how people “do decision making”—an enterprise which has both academic and practical relevance. The article begins by positioning this approach within decision-making research. It then explains the concepts of sensemaking and deciding, and sensereading and sensewrighting; explores why such skills are critical to the processes of organizational decision making; and finally, why this is an important area for future research.
Michael V. Russo and Amy Minto
This article evaluates the literature that bridges business strategy and the environmental imperative. The literature on how environmentally oriented strategies influence profitability is assessed. The methodologies used in the study of competitive strategy and the environment are presented. A critique of knowledge creation in the field of competitive strategy and the environment (CSE) is discussed. CSE research has shown that stakeholder management may influence firm performance. Research from both stakeholder management and institutional theory domains shows that when it comes to competitive strategy and the environment, the notion of capabilities should be widened considerably. The simple provision of information by those central to organizations can enhance prospects for the adoption of practices. Behavioral frameworks may offer significant synergies when blended with more rational frameworks. A database of readily available, directly comparable measures of internal dimensions of change would affect the ability to conduct meaningful research that addresses pivotal conceptual questions.
Barbara Czarniawska and Carmelo Mazza
This article focuses on (social) constructivist perspectives on management consulting. It notes that while this perspective has been considered as a marginal issue, it may also provide some answers to the question of if and how management consultants are helping their clients. It reviews the history of constructivism and then defines the constructivist perspective. The next section demonstrates how constructivism can help in understanding the relationship between consultants and clients. It then considers consultants as ‘merchants of meaning’ and identifies several current developments of the constructivist approach to consulting. This article ends with a discussion of ‘liminality’, which is a transition stage where usual prerogatives are suspended.
Stefan Heusinkveld and Jos Benders
This article explores the role of organization concepts in management consulting work. It differentiates the supply-side perspective from the demand-side perspective, and discusses the different approaches that focus on the former. It then provides a review of related literature, where consultants are considered as important ‘knowledge entrepreneurs’ in the market for management solutions. It then turns to the demand side of the concept development process. This article also emphasizes the need to focus more on the interaction between the supply and demand sides of the market for management solutions in future research.