Multidivisional vs metanational governance of the multinational enterprise

The effective and efficient management of diversified business firms that supply multiple products and operate in multiple, dynamic markets, especially large multinational enterprises (MNEs), builds upon a number of specific governance principles. These governance principles allow the alignment of environmental characteristics, strategy and organization. Given the rising need to “learn from the world”, Doz et al., in their influential Harvard Business School Press book entitled From Global to Metanational, have proposed a new set of governance principles described under the “metanational” umbrella concept. This paper revisits the metanational, using a comparative institutional perspective; here we contrast multidivisional and metanational governance principles. A comparative institutional analysis suggests that the metanational's application potential in terms of actually improving the effectiveness and efficiency of MNE governance may be subject to more qualification than suggested by Doz et al. Senior MNE management must therefore reflect carefully before substituting metanational governance principles for the more conventional, multidivisional ones with established contributions to managerial effectiveness and efficiency.

The three faces of bounded reliability: Alfred Chandler and the micro-foundations of management theory

Alfred Chandler, the celebrated business historian, provided detailed descriptions of the reasons for failed human commitments and the managerial tools needed to prevent/remediate such failings in the context of large business firms. Chandler's historical narrative identifies three distinct “faces” of bounded reliability—opportunism, benevolent preference reversal, and identity-based discordance—as the main drivers of commitment failure. Adopting bounded reliability (BRel) as a micro-foundation in management studies will raise the quality and relevance of scholarly recommendations to improve managerial decision making and action, because analysis of BRel challenges closely mirrors the real-world problems facing practicing managers.

Business life cycle and capital structure: evidence from Chinese manufacturing firms

This paper uses a panel data-fixed effect approach and data collected from Chinese public manufacturing firms between 1999 and 2011 to investigate the impacts of business life cycle stages on capital structure. We find that cash flow patterns capture more information on business life cycle stages than firm age and have a stronger impact on capital structure decision-making. We also find that the adjustment speed of capital structure varies significantly across life cycle stages and that non-sequential transitions over life cycle stages play an important role in the determination of capital structure. Our study indicates that it is important for policy-makers to ensure that products and financial markets are well-balanced.

Learning across business sectors: Knowledge sharing between aerospace and construction

This report addresses the extent that managerial practices can be shared between the aerospace and construction sectors. Current recipes for learning from other industries tend to be oversimplistic and often fail to recognise the embedded and contextual nature of managerial knowledge. Knowledge sharing between business sectors is best understood as an essential source of innovation. The process of comparison challenges assumptions and better equips managers to cope with future change. Comparisons between the aerospace and construction sectors are especially useful because they are so different. The two sectors differ hugely in terms of their institutional context, structure and technological intensity. The aerospace sector has experienced extensive consolidation and is dominated by a small number of global companies. Aerospace companies operate within complex networks of global interdependency such that collaborative working is a commercial imperative. In contrast, the construction sector remains highly fragmented and is characterised by a continued reliance on small firms. The vast majority of construction firms compete within localised markets that are too often characterised by opportunistic behaviour. Comparing construction to aerospace highlights the unique characteristics of both sectors and helps explain how managerial practices are mediated by context. Detailed comparisons between the two sectors are made in a range of areas and guidance is provided for the implementation of knowledge sharing strategies within and across organisations. The commonly accepted notion of ‘best practice’ is exposed as a myth. Indeed, universal models of best practice can be detrimental to performance by deflecting from the need to adapt continuously to changing circumstances. Competitiveness in the construction sector too often rests on efficiency in managing contracts, with a particular emphasis on the allocation of risk. Innovation in construction tends to be problem-driven and is rarely shared from project to project. In aerospace, the dominant model of competitiveness means that firms have little choice other than to invest in continuous innovation, despite difficult trading conditions. Research and development (R&D) expenditure in aerospace continues to rise as a percentage of turnovers. A sustained capacity for innovation within the aerospace sector depends crucially upon stability and continuity of work. In the construction sector, the emergence of the ‘hollowed-out’ firm has undermined the industry’s capacity for innovation. Integrated procurement contexts such as prime contracting in construction potentially provide a more supportive climate for an innovation-based model of competitiveness. However, investment in new ways of working depends upon a shift in thinking not only amongst construction contractors, but also amongst the industry’s major clients.

Untangling rhetoric and reality in the CSR debate – the role of corporate social responsibility in effective business strategy

While there is a strong moral case for corporate social responsibility (CSR), the business case for CSR is certainly not irrefutable. A better understanding of how to integrate CSR into business strategy is needed but with ever increasing momentum towards sustainability as a business driver, it is often difficult to untangle the rhetoric from reality in the CSR debate. Through an analysis of eight case studies of leading firms from throughout the construction supply chain who claim to engage in CSR, we explore how consulting and contracting firms in the construction and engineering industries integrate CSR into their business strategy. Findings point to an inherent caution of moving beyond compliance and to a risk-averse culture which adopts very narrow definitions of success. We conclude that until this culture changes or the industry is forced by clients or regulation to change, the idea of CSR will continue to mean achieving economic measures of success, with ecological goals a second regulated priority and social goals a distant third.

Managing multiple markets: big firms and PFI contracts

The Private Finance Initiative (PFI) is frequently portrayed as a vehicle for change for the UK construction sector. Significant change in the working practices of construction companies is predicted as new business models based on whole-life value creation emerge. This paper shifts the focus of discussion from projected ideals and possible developments to the current situation. More specifically, it focuses on the challenges that large firms participating in both PFI and traditional markets face. The analysis focuses on the relations between business units and on day-to-day challenges to greater long-term commitment, through life-service provision and increased integration between construction and service provision. The paper offers insights into the effects of PFI on construction practice and their implications for theorizing on organizational and strategic change. It suggests abandoning a simplistic model of the centralized, homogenous firm and instead capturing the dynamics of decentralized, large firms working in multiple markets on a variety of projects. This would assist in the provision of more realistic and fruitful models of how to realize the PFI vision.

Customer experience quality: an exploration in business and consumer contexts using repertory grid technique

This study proposes a conceptual model for customer experience quality and its impact on customer relationship outcomes. Customer experience is conceptualized as the customer’s subjective response to the holistic direct and indirect encounter with the firm, and customer experience quality as its perceived excellence or superiority. Using the repertory grid technique in 40 interviews in B2B and B2C contexts, the authors find that customer experience quality is judged with respect to its contribution to value-in-use, and hence propose that value-in-use mediates between experience quality and relationship outcomes. Experience quality includes evaluations not just of the firm’s products and services but also of peer-to-peer and complementary supplier encounters. In assessing experience quality in B2B contexts, customers place a greater emphasis on firm practices that focus on understanding and delivering value-in-use than is generally the case in B2C contexts. Implications for practitioners’ customer insight processes and future research directions are suggested.

Brand protection and the globalization of British business

In expanding on earlier analyses of the evolution of multinational business that have drawn from concepts of competition and innovation, this study examines the strategies used by British multinationals, between 1870 and 1929, to protect the global reputation of their brands, which were crucial to their survival and success. Even after the passage of new trademark legislation in 1876, enforcement of trademarks remained expensive, and often firms preferred to negotiate, rather than to prosecute violations. Many trademark imitators were based in the newly industrializing countries of the time—the United States, Germany, and Japan—and were part of the British export supply chains as licensees, franchisees, or wholesalers. British firms responded to infringements by lobbying governments, appointing local agents to provide intelligence, and collaborating with other firms.

Revisiting the emergence of the modern business enterprise: entrepreneurship and the Singer global distribution system

This paper approaches the question of why entrepreneurial firms exist from a broad business historical perspective. It observes that the original development of the modern business enterprise was very strongly associated with entrepreneurial innovation rather than an extension of managerial routine. The widely-used theory of the entrepreneur as a specialist in judgmental decision making is applied to the particular point in time when entrepreneurs had to develop novel organizational designs in what Chandler described as the prelude to the ‘managerial revolution’. The paper illustrates how the theory of entrepreneurship then best explains the rise of the modern corporation by focusing on the case study of vertical integration par excellence, Singer.

How do Chinese firms deal with inter-organizational conflict?

Based on social exchange and customer relationship marketing theory, this study examines how ethical leadership contributes to inter-organizational conflict management (task conflict (TC) and relationship conflict), and the moderating role of task interdependence in these relationships. Data was collected from 81 suppliers and 45 corresponding managers of a large group company in China. Results show that ethical leadership is negatively associated with the levels of inter-organizational conflict,whether task or relationship. Task interdependence significantly moderates the relationship between ethical leadership and TC. Managerial implication in terms of creating sound buyer–supplier relationship through an ethical perspective is discussed.

Small business collaboration through electronic marketplace

It is widely recognized that small businesses with less than 50 employees make significant contributions to the prosperity of local, regional, and national economies. They are a major source of job creation and a driving force of economic growth for developed countries like the USA (Headd, 2005; SBA, 2005), the UK (Dixon, Thompson, & McAllister, 2002; SBS, 2005), Europe (European Commission, 2003), and developing countries such as China (Bo, 2005). The economic potential is further strengthened when firms collaborate with each other; for example, formation of a supply chain, strategic alliances, or sharing of information and resources (Horvath, 2001; O’Donnell, Cilmore, Cummins, & Carson, 2001; MacGregor, 2004; Todeva & Knoke, 2005). Owing to heterogeneous aspects of small businesses, such as firm size and business sector, a single e-business solution is unlikely to be suitable for all firms (Dixon et al., 2002; Taylor & Murphy, 2004a); however, collaboration requires individual firms to adopt standardized, simplified solutions based on open architectures and data design (Horvath, 2001). The purpose of this article is to propose a conceptual e-business framework and a generic e-catalogue, which enables small businesses to collaborate through the creation of an e-marketplace. To assist with the task, analysis of data from 6,000 small businesses situated within a locality of Greater Manchester, England within the context of an e-business portal is incorporated within this study.