Corporate strategic responses to foreign entry: insights from prospect theory

Purpose – The purpose of this paper is to address how firms adapt their product and geographic diversification as a response to foreign rivals penetrating their domestic market by adopting a behavioral perspective to understand firm-level strategic responses to foreign entry. Design/methodology/approach – The study proposes that strategic responses to foreign entry selected by domestic incumbents have both a framing component and a related, strategic choice component, with the latter including changes in product and geographic market diversification (though other more business strategy-related responses are also possible, e.g. in product pricing and marketing). This study tests a set of hypotheses building on panel data of large US firms. Findings – The study finds, in accordance with our predictions, that domestic incumbents reduce their product and geographic diversification when facing an increase in import penetration. However, when increased market penetration by foreign firms takes the form of FDI rather than imports, the corporate response appears to be an increase in product and geographic diversification, again in line with our predictions. Originality/value – The study develops a new conceptual framework that is grounded in prospect theory, but builds on recent insights from mainstream international strategic management studies (Bowen and Wiersema, 2005; Wiersema and Bowen, 2008).

Procedural justice, not absorptive capacity, matters in multinational enterprise ICT transfers

This paper empirically tests the effectiveness of information and communications technology (ICT) knowledge transfer and adoption in the multinational enterprise (MNE) as an issue of critical importance to contemporary MNE functioning. In contrast to mainstream thinking on absorptive capacity, but in line with prevailing international business theory, our research supports the proposition that perceptions of procedural justice, rather than absorptive capacity, determine effectiveness, especially in cases of high tacit knowledge transfers. Data was collected from senior ICT representatives in 86 Canadian subsidiaries of foreign owned MNEs. Each of these subsidiaries recently experienced a significant ICT transfer imposed by the parent organization. Support was found for the main propositions: Procedural justice significantly predicted successful ICT transfer and adoption, while absorptive capacity was not significant. These findings are consistent even when knowledge tacitness was high. The perceived success of the ICT transfer as well as its adoption varied widely across these firms. The potential reasons for this divergence in effectiveness are manifold, but our findings suggest that in situations of substantial knowledge tacitness, a higher level of procedural justice, rather than a higher level of absorptive capacity, is critical to effective transfer and adoption.

The future of stakeholder management theory: a temporal perspective

We propose adding a temporal dimension to stakeholder management theory, and assess the implications thereof for firm-level competitive advantage. We argue that a firm’s competitive advantage fundamentally depends on its capacity for stakeholder management related, transformational adaptation over time. Our new temporal stakeholder management approach builds upon insights from both the resource-based view (RBV) in strategic management and institutional theory. Stakeholder agendas and their relative salience to the firm evolve over time, a phenomenon well understood in the literature, and requiring what we call level 1 adaptation. However, the dominant direction of stakeholder pressures can also change, namely, from supporting resource heterogeneity at the firm level to fostering industry homogeneity, and vice versa. When dominant stakeholder pressures shift from supporting heterogeneity towards stimulating homogeneity in industry, the firm must engage in level 2 or transformational adaptation. Stakeholders typically provide valuable resources to the firm in an early stage. Without these resources, which foster heterogeneity (in line with RBV thinking), the firm would not exist. At a later stage, stakeholders also contribute to inter-firm homogeneity via isomorphism pressures (in line with institutional theory thinking). Adding a temporal dimension to stakeholder management theory has far reaching implications for this theory’s practical relevance to senior level management in business.

The future of strategic management research: assessing the quality of theory borrowing

In many business schools, the field of strategic management has been elevated to the same status as more traditional subject areas such as finance, marketing and organizational behaviour. However, the field is rather unclearly delineated at present, as a result of the heavy usage of borrowed theories, a phenomenon we discuss in this article. For strategic management to become a legitimate subject area, truly at par with the more conventional fields taught in business schools, we recommend much stronger selectivity when borrowing theories from other areas of scholarly inquiry than management, as the foundation of empirical work. We propose a new model consisting of seven quality tests to assess whether proper selectivity is being applied when ‘importing’ concepts from other fields than management. Our perspective has major implications both for future, evidence-based strategic management research and for the field's key stakeholders such as strategy teachers, practitioners and policy makers – who rely on research outputs from strategy scholars.

The transaction cost economics theory of the family firm: family-based human asset specificity and the bifurcation bias

We develop a transaction cost economics theory of the family firm, building upon the concepts of family-based asset specificity, bounded rationality, and bounded reliability. We argue that the prosperity and survival of family firms depend on the absence of a dysfunctional bifurcation bias. The bifurcation bias is an expression of bounded reliability, reflected in the de facto asymmetric treatment of family vs. nonfamily assets (especially human assets). We propose that absence of bifurcation bias is critical to fostering reliability in family business functioning. Our study ends the unproductive divide between the agency and stewardship perspectives of the family firm, which offer conflicting accounts of this firm type's functioning. We show that the predictions of the agency and stewardship perspectives can be usefully reconciled when focusing on how family firms address the bifurcation bias or fail to do so.

Towards a meta-analysis and toolkit for port-related socio-economic impacts: a review of socio-economic impact studies conducted for seaports

Port authorities increasingly need to communicate with a variety of external stakeholders in order to maintain and strengthen the societal acceptance of seaport activities. The availability of socio-economic impact studies on port authority and regional development agency websites has often made this information accessible to the public at large. However, the differences in methodologies adopted, in terms of selecting, defining and measuring various types of socio-economic impacts, sometimes lead to misconceptions as well as misleading comparisons across ports within and between regions. In this paper, we suggest guidelines for the design and application of a potential best practice from an interregional perspective (UK, France and Belgium), based on research in the framework of a European Commission co-funded project, ‘IMPACTE’. The paper also aims to develop guidelines for comparing the socio-economic impacts of ports across regional and national borders and discusses the development of a European port economic impact measurement toolkit. We analyse a sample of 33 recent socio-economic impact assessment reports in terms of methodologies adopted and types of impacts measured. The review shows a great diversity among these studies, leading to important differences between the impacts of port activity communicated to stakeholders.

Modulation of potassium channels inhibits bunyavirus infection

Bunyaviruses are considered to be emerging pathogens facilitated by the segmented nature of their genome that allows reassortment between different species to generate novel viruses with altered pathogenicity. Bunyaviruses are transmitted via a diverse range of arthropod vectors, as well as rodents, and have established a global disease range with massive importance in healthcare, animal welfare and economics. There are no vaccines or anti-viral therapies available to treat human bunyavirus infections and so development of new anti-viral strategies is urgently required. Bunyamwera virus (BUNV; genus Orthobunyavirus) is the model bunyavirus, sharing aspects of its molecular and cellular biology with all Bunyaviridae family members. Here, we show for the first time that BUNV activates and requires cellular potassium (K+) channels to infect cells. Time of addition assays using K+ channel modulating agents demonstrated that K+ channel function is critical to events shortly after virus entry but prior to viral RNA synthesis/replication. A similar K+ channel dependence was identified for other bunyaviruses namely Schmallenberg virus (Orthobunyavirus) as well as the more distantly related Hazara virus (Nairovirus). Using a rational pharmacological screening regimen, twin-pore domain K+ channels (K2P) were identified as the K+ channel family mediating BUNV K+ channel dependence. As several K2P channel modulators are currently in clinical use, our work suggests they may represent a new and safe drug class for the treatment of potentially lethal bunyavirus disease.

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.

Global, local, or regional? The locus of MNE strategies

This paper provides an overview of the main insights arising from the ‘regional strategy’ literature. It also develops the contours of a new, rich research agenda for future international strategy scholarship, whereby the region should be introduced as an explicit, third geographic level of analysis, in addition to the country-level and the global level. Regional strategy analysis requires a fundamental rethink of mainstream theories in the international strategy sphere. This rethink involves, inter alia, internalization theory, with its resource-based view and transaction cost economics components, as well as the integration (I) – national responsiveness (NR) framework.

The water vapour continuum in near-infrared windows – current understanding and prospects for its inclusion in spectroscopic databases

Spectroscopic catalogues, such as GEISA and HITRAN, do not yet include information on the water vapour continuum that pervades visible, infrared and microwave spectral regions. This is partly because, in some spectral regions, there are rather few laboratory measurements in conditions close to those in the Earth’s atmosphere; hence understanding of the characteristics of the continuum absorption is still emerging. This is particularly so in the near-infrared and visible, where there has been renewed interest and activity in recent years. In this paper we present a critical review focusing on recent laboratory measurements in two near-infrared window regions (centred on 4700 and 6300 cm−1) and include reference to the window centred on 2600 cm−1 where more measurements have been reported. The rather few available measurements, have used Fourier transform spectroscopy (FTS), cavity ring down spectroscopy, optical-feedback – cavity enhanced laser spectroscopy and, in very narrow regions, calorimetric interferometry. These systems have different advantages and disadvantages. Fourier Transform Spectroscopy can measure the continuum across both these and neighbouring windows; by contrast, the cavity laser techniques are limited to fewer wavenumbers, but have a much higher inherent sensitivity. The available results present a diverse view of the characteristics of continuum absorption, with differences in continuum strength exceeding a factor of 10 in the cores of these windows. In individual windows, the temperature dependence of the water vapour self-continuum differs significantly in the few sets of measurements that allow an analysis. The available data also indicate that the temperature dependence differs significantly between different near-infrared windows. These pioneering measurements provide an impetus for further measurements. Improvements and/or extensions in existing techniques would aid progress to a full characterisation of the continuum – as an example, we report pilot measurements of the water vapour self-continuum using a supercontinuum laser source coupled to an FTS. Such improvements, as well as additional measurements and analyses in other laboratories, would enable the inclusion of the water vapour continuum in future spectroscopic databases, and therefore allow for a more reliable forward modelling of the radiative properties of the atmosphere. It would also allow a more confident assessment of different theoretical descriptions of the underlying cause or causes of continuum absorption.