Strategic Organization current issue

Information-mediated network effects: network composition and customer benefit in the presence of information asymmetry

Sasson, A., Fjeldstad, O. — Mon, 16 Nov 2009 02:52:32 PST

This article advances a novel information-mediated network effect argument that is particularly relevant in industries where information asymmetry may prevent customers from obtaining full service benefits. The article presents and tests the argument that customers’ access to capital is a function of the network of other customers affiliated with their bank, hence an economic network effect. Co-affiliation in a bank by actors from a credit-seeking firm’s network increases the amount and quality of the information available pertinent to that firm and hence provides the firm with the opportunity to access capital more closely aligned with its true credit-worthiness. Contrary to intuition but in line with economic network theory, the study shows that very low levels of co-affiliation also increase a firm’s credit availability. Such information-mediated network effects is empirically studied in a sample of 613 small and medium-size firms and their bank affiliations. There are significant implications for customers’ choice of banks and major bank policy choice implications associated with segmentation and customer recruitment.

The changing nature of competition in the US manufacturing sector, 1950--2002

Thomas, L.G., D'Aveni, R. — Mon, 16 Nov 2009 02:52:32 PST

Recent work in several disciplines has established that the volatility of performance for US firms has greatly increased over the last 50 years. Yet, it is the differences in durable performance of firms that have been the primary focus of inquiry in competition and business strategy. This study documents the sharply increased within-industry heterogeneity of returns in the US manufacturing sector from 1950 to 2002, and links these changes to the documented increases in volatility. The evidence supports a broad, monotonic shift towards a new, more dynamic form of competition, which some have called hypercompetition.

Striving toward the future: aspiration--performance discrepancies and planned organizational change

Labianca, G., Fairbank, J. F., Andrevski, G., Parzen, M. — Mon, 16 Nov 2009 02:52:32 PST

Interest has been growing in understanding how organizations’ aspiration levels affect their planning for future organizational change. Previous research has not specified whether organizations use direct competitors or other comparable organizations as referents for forming their aspirations. In this study, it is argued that organizations form their social aspirations based on two types of interorganizational comparisons: competitive and striving. In competitive comparisons, an organization compares its current performance against that of its current direct competitors. When relative performance is poor, these organizations plan more extensive and more radical change. However, the study shows that organizations that are performing well relative to competitors do not necessarily become inertial, as theory suggests. Rather, organizations engage in striving comparisons by comparing their current performance against the performance of organizations to which they strive to be like in the future. The analyses show that organizations with large striving discrepancies are driven to more extensive and more radical change, even if they are performing well compared to current competitors. The study examined this interplay between competitive and striving discrepancy in explaining organizational change on a sample of 131 AACSB accredited business schools.

Heterogeneous resources and the financial crisis: implications of strategic management theory

Agarwal, R., Barney, J. B., Foss, N. J., Klein, P. G. — Mon, 16 Nov 2009 02:52:32 PST