SGM Seminar Series
The Shape-Shifting Dynamics of Digital Platform Disruption:
How Grab Leveraged Established Players in the Southeast Asian Mobility Ecosystem
Dr. Michael Jacobides, London Business School
Friday, January 21
Our historical case study of the Southeast Asian digital ride-hailing platform ecosystem reveals that incumbents faced with an innovative platform entrant first ignore and then accommodate them, rather than repelling them. This is because there is no clear sense of who is an entrant or incumbent, friend or foe, as industry boundaries are effaced and reconstructed. The digital platform entrant we studied, Grab, had the advantage of being able to morph and transform itself. Rather than trying to adapt to the existing industry architecture, it repositioned its business model with little regard for the focal industry or its incumbents, who ultimately clamored to support it. Our study contributes a novel perspective on incumbent–entrant dynamics to research on disruptive innovation and digital platform ecosystems.
Why do firms with recent initial public offerings end up delisting?
Role of acquisitions and capital investments
Dr. Asli Arikan, Kent State University
Friday, February 12
One of the strategic concerns for newly public firms is to balance its internal investments and mergers and acquisitions (M&As) in the immediate aftermath of an initial public offering. We theorize that both capital investments and acquisitions impact survival (or hazard of delisting) as public firms, and empirically investigate whether these corporate development activities extend or shorten the survival of public firms differently under internal (reorganization) and external turbulence (demand uncertainty). Using a multi-industry sample of 4,350 US firms that held an IPO during 1988–2000 and tracking their post-IPO corporate development activities until they delist or 2012, we find that pursuing capital investments and acquisitions independently but together decreases the hazard of delisting compared to firms with no or specialized corporate development activities. While both internal and external turbulence increases hazard of delisting, pursuing capital investments mitigates the negative effect of high demand uncertainty yet acquisitions have no effect. Increased hazard of delisting due to voluntary reorganization is dampened for firms pursuing M&As but amplified for firms that pursue capital investments.
Organizational Responses to Direct and Indirect Environmental, Social, and Governance Pressures
Dr. Olga Hawn, UNC Chapel Hill
Friday, February 19
Companies face increasing pressures on multiple environmental, social, and governance (ESG) issues simultaneously, generating challenges in deciding which issues to address and to what extent. We expect companies to respond more to an ESG issue when faced with greater direct pressure on the issue and with greater indirect pressure related to both other ESG issues they simultaneously face and other peers facing the issue. To identify these pressures in a comprehensive manner, we use media criticisms on 20 ESG issues, collected daily by RepRisk from over 80,000 global sources in 15 languages. We then integrate them with ASSET4 data to determine to what extent 3,037 public firms responded to these issues between 2007 and 2016. We find that direct pressure (more criticisms on the issue) does not lead to a stronger response, while indirect pressure does (both the number of criticisms on other ESG issues and the number of peers criticized on the focal issue are positively associated with the response to the issue). These effects are reinforced by the firm’s attentional engagement with respect to ESG issues and availability of slack resources. By explaining why firms respond to certain ESG issues more while other ESG issues go unnoticed, we contribute a nuanced understanding of organizational responses to direct and indirect ESG pressures to the corporate social responsibility and the attention-based-view literatures, and offer implications for research on the role of media as a trigger of strategic change.
You Get What You Pay For: The Rise of the Index Fund and Exploration in R&D
Dr. Gautam Ahuja, Cornell University
Friday, February 26
We address the debate about whether institutional ownership can remediate agency problems in public corporations by examining how a specific type of institutional investor, the index fund, affects a key outcome that is a locus for potential conflict between shareholder and manager interests: R&D exploration. Drawing on exploration and decoupling theories, we argue that managers will only pursue R&D exploration if shareholders provide the kind of costly oversight that insulates managerial reputation from the risks that exploration poses to short-term performance, yet index funds have neither the incentives nor the ability to do so given their competitive imperative to minimize costs while managing large portfolios. We use multiple approaches including within-firm effects, IV estimation, and alternate measures of index ownership to find that index ownership constrains R&D exploration in R&D-intensive industries. Thus, while index funds are hailed as the investment vehicle of choice for the retail investor, our study suggests that the same features that make index funds effective financial instruments—low expense ratios and broad portfolios—limit their efficacy as providers of corporate governance. You get what you pay for: the strong commitment to low expense ratios limits investment in stewardship, which ultimately constrains exploration by their portfolio firms.
“Back to the future: Technology reemergence through the lens of the music synthesizer”
Dr. Mary Tripsas, UC Santa Barbara
Friday, March 12
Models of technological change typically adopt a perspective in which technologies continuously improve along dimensions such as capabilities, features and price-performance ratios. Yet recent observations of the reemergence of “old” technologies – such as vinyl records, instant film cameras, and analog watches – suggest that technology markets may be more complex than such linear models allow. Our paper sheds light on the process of technology reemergence through an inductive study of the music-synthesizer industry. Leveraging more than 30 years of data, we trace how consumer demand that is informed by the ongoing use of a prior technology led manufacturers to engage in iterative efforts to make the new technology increasingly look, feel and sound like the very technology it replaced. Yet these very actions served to crystallize the authenticity of the old technology and to clarify how it afforded expertise that the new technology did not. Ultimately, this process can lead to the reemergence of a seemingly-“dead” technology. Our work foregrounds the role of users in shaping technology trajectories, demonstrates how the framing of new technologies can shape the perceived authenticity of old ones, and explores the relationship between technology affordances, occupational expertise, and technology adoption.
Are native plants green? Assessing environmental performances of locally-owned facilities
Dr. Jiao Luo, University of Minnesota
Friday, April 9
We study the impact of corporate ownership and community conditions on firm environmental pollution. While the existing literature often thinks of environmental pollution as a unitary construct, we emphasize the distinction between toxic emissions, which have immediate but locally bounded impact, and greenhouse gas (GHG) emissions which have gradual but global impact, producing climate change. Using a facility-level panel of all manufacturing facilities in the US from 2010-2018, and leveraging within-facility changes in ownership status, we show that locally owned firms have lower levels of toxic emissions, but they are also less likely to report GHG emissions, and have higher levels of such emissions when they do report them, with these effects being stronger where the owner is not only headquartered locally, but has operations limited to that state. Our study suggests that while the pressures of local embeddedness may drive firms to be more environmentally responsible towards their local community, they also make firms more indifferent to their global environmental impact.
Uncertainty, Capability Creation, and Market Entry in Nascent Industries: Diversifying versus New Firms
Charlotte Jacobs, Temple University
October 9, 2020
Extant research analyzing the determinants of firms’ market entry in nascent industries found that the match between a firm’s capability portfolio and the capabilities needed within the new business environment is an important predictor of entry. This research does not recognize however, that new and diversifying firms may pursue a different approach when building a capability portfolio for this new market. Moreover, extant literature abstracted away from the technological uncertainty that new and diversifying firms face when building this capability portfolio. In this study, I examine the different strategic approaches pursued by new and diversifying firms when building a capability portfolio in the light of uncertainty inherently present in nascent industries, and how these different approaches may determine their entry into a nascent industry. The results based on a novel longitudinal database of technology development and market entry in the photovoltaic cell industry show that among firms investing in the development of new capabilities, new firms are more likely to enter the market than diversifying firms. In addition, for diversifying firms the accumulated number of technical capabilities created predicts market entry, whereas for new firms the relevance of the new capability portfolio is a key predictor. These findings demonstrate that in pre-market entry studies, both the presence of diversifying and new firms, and their different strategic approach to capability building under uncertainty as well as the impact of these approaches on market entry should be recognized.
First-Mover Advantages Versus First-Mover Benefits: What’s the Difference and Why Does It Matter?
Dr. Richard Makadok, Purdue University
October 23, 2020
We present a theoretical framework to address the inherent endogeneity problem in entry-timing research by distinguishing the concept of first-mover benefits (FMB) from first-mover advantages (FMA), the former being a counterfactual and (usually) unobserved pure treatment effect, and the latter being an actual observed combination of treatment and selection effects. They differ in the baseline to which the first mover’s performance is compared – either to the follower’s actual performance (for FMA) or to the first mover’s hypothetical performance if it had been a follower (for FMB). Our formal economic model analyzes this distinction, making predictions about biases arising from using FMA as a proxy to estimate FMB, and also about how FMA, FMB, and their difference are affected by inter-firm asymmetries in resources and information.
The Role of Social Identity and National Conflicts in International Joint Venture Failures
Dr. Ilgaz Arikan, Kent State University
October 30, 2020
There have been inconclusive findings pertinent to the causes of high failure rates of international joint ventures (IJVs). Even if IJV partners have had repeatedly satisfactory contractual relationships, the chances of safeguarding transactions with IJVs are slim. Our study sheds new light on the impacts of organizational members’ social identities on the longevity and success of IJVs. We utilize an embedded case study of one Western German and one Israeli company between which interfirm relationship evolves from market contracts to establishing an IJV in Eastern German. The unique context of this study is a natural experiment in which organizational members with clear ingroup and outgroup boundaries (e.g., national and subnational groups) are embedded in the developmental process of cooperative interfirm relationships shifting from formal contract to IJV. We argue that national groups confer distinctive value connotation on ingroup members whose ethnocentric attitudes and behaviors undermine hierarchical coordination. Therefore, within firm frictions inherent in individuals’ ethnocentrism yield adverse selection, moral hazard, cheating, and hold-up that generate coordination costs. Our observations also suggest that competition for power, group relative deprivation, symbolic threat, and historical animosity among national groups give rise to intergroup conflicts that impede relational cooperation. Positive intergroup contacts lacking optimal conditions can hardly resolve such conflicts. Our study extends our understanding of how social identities of IJV partners impact coordination and cooperation costs.
The pressure to go long: Analyst coverage and out-licensing decisions in the biopharmaceutical industry
Dr. Solon Moreira, Temple University
November 20, 2020
A central finding from research on analysts is that increased analyst scrutiny creates greater pressure on firms to deliver short-term earnings, often at the expense of longer-term innovative R&D projects. However, we have not yet considered that analysts in some industries might prefer growth strategies over choices to maximize short-term earnings. This paper fills this gap by examining the role of analyst scrutiny on firms’ strategic choices in a setting where firms are pressurized to focus on long-term growth opportunities. We study the bio-pharmaceutical industry where firms engage in highly uncertain and costly internal R&D to develop and commercialize the next “blockbuster” drug. We relate analyst pressures to a key strategic choice firms face: whether or not to depart from the internal “blockbuster” model and license out their technologies to other firms. We argue that greater analyst scrutiny decreases the likelihood that a firm demonstrates an intent to out-license, because it sends a negative signal to external stakeholders who are entrenched towards the internal blockbuster model. To explicate the mechanism underlying this argument, we undertake an inductive qualitative analysis of analyst reports covering, which reveals several strong reservations by analysts against the out-licensing model. Using a robust research design that accounts for the endogeneity of analyst coverage, we show that analyst pressures may lead to choices that are more aligned towards long-term and future earnings by pursuing inherently risky R&D projects in-house. These findings have important implications to the literature examining how financial analysts shape firm strategy and behavior.
Do Shareholders Acquiesce or Resist Female Board Nominees?
Headquarters Economy: Managers, Mobility, and Migration
Dr. Myles Shaver, University of Minnesota
February 28, 2020
When people think of corporate headquarters two images generally come to mind. They picture engines of economic power and impressive infrastructure such as skyscrapers or glass-clad corporate campuses. Having immersed myself in the study of corporate headquarters, I see them as engines of corporate success and contributors to regional economic and social vitality. However, I no longer picture the physical infrastructure when I think about corporate headquarters.
When I look at corporate headquarters, my focus extends beyond the buildings, the offices, and the employee amenities. I am drawn to the essence of a corporate headquarters—the talent that utilizes this physical infrastructure. In particular, my focus turns to a company’s skilled, professional managerial and administrative workforce. When I view headquarters in this manner, I better comprehend how headquarters influence the companies that they guide and impact the regions in which they reside.
Take, for example, the senior management of a company headquartered in the region where I live—the Minneapolis-St. Paul metropolitan area. This group of men and women possess an impressive set of credentials. They are business professionals. They have all made investments in their human capital—many with graduate degrees from prestigious universities. Their prior work experience spans a diverse set of vibrant industries including pharmaceuticals, consumer packaged goods, medical devices, chemicals, publishing, industrial controls, animal nutrition, and agribusiness. And it is clear that they have been effective in guiding and managing their company. A look at the company’s performance shows that it doubled sales and tripled profits between 2006 and 2016. This is especially impressive in light of the economic climate over that time period.
What company is this? It is not a start-up or a mid-sized company. Many would not consider it to be “high-tech” or in an “industry of tomorrow”— although I am sure many within the company would rightly disagree. It is not even a publicly traded company. In fact, it is a cooperative.
Dr. Solon Moreira, IESE
October 19, 2018
Discontinuities, Competition, and Cooperation: Coopetitive Dynamics between Incumbents and Entrants
Dr. Frank T. Rothaermel, Georgia Institute of Technology
April 5, 2018
We advance an integrative model in which distinct types of technological discontinuities (core knowledge vs. complementary-asset) are combined with different appropriability regimes (strong vs. weak) to predict competitive and cooperative dynamics between incumbents and entrants. We posit that incumbents ally with entrants following a core-knowledge discontinuity when the appropriability regime is strong. When the appropriability regime is weak, incumbents are more likely to acquire entrants. We submit that the additional consideration of complementary-asset discontinuities reveals a more integrated theoretical model of competition and cooperation between incumbents and entrants. In particular, incumbents tend to cooperate among themselves following complementary-asset discontinuities, although we highlight theoretical nuances due to different appropriability regimes. We provide falsifiable propositions and introduce contingencies such as firm-level heterogeneity and time dynamics.
Speaker: Dr. Frank T. Rothaermel
The Russell and Nancy McDonough Chair
Professor & Sloan Industry Studies Fellow
Scheller College of Business
Georgia Institute of Technology
Research | Google Scholar | Web
The Influence of CEO Core Self-Evaluations on Firm Performance
Zeki Simsek, Clemson University
March 9, 2018
Despite growing interest in the role of executive confidence in firm outcomes, the question of whether and under what conditions a CEO’s level of core self-evaluations has an influence on firm performance remains unanswered. We argue that firms should benefit from having CEOs with high core self-evaluation (CSE), but only to the extent to which they have both the opportunity and the means to enact the behavioral manifestations of their level of CSE. We then test the model using a longitudinal, mixed-methods design and dataset. Following a survey of CEOs in 2005, we tracked the performance of 172 firms across macroeconomic shifts in the Irish economy from 2006 through 2010. The findings show that CEO CSE is positively associated with firm performance under conditions of macroeconomic buoyancy and abundant slack, but not under conditions of the opportunity and resource scarcity.
Speaker: Zeki Simsek
Professor, Gressette Chair of Business Strategy and Planning
Associate Editor, Academy of Management Journal
College of Business
You Worked at Google Too? The Influence of Centrality in Founder Affiliation Networks on the Attention and Financing of New Ventures
Laura Gasiorowski, Temple University
January 19, 2018
We extend the knowledge-based view to consider how centrality in founder affiliation networks impacts new venture knowledge acquisition and, subsequently, the attraction of external financing. Prior research has highlighted the importance of the structure and strength of entrepreneurs’ existing social ties for gaining access to resources and affecting venture outcomes. This research has largely excluded the networks of potential interorganizational ties that arise from founders’ prior affiliations. Affiliations consist of the languages, knowledge and social identity of those institutions. How can entrepreneurs use these shared understandings and tap into this resource to acquire knowledge? We address these gaps by building theory on the role of centrality in affiliation networks on the acquisition of knowledge and venture financing outcomes. To test our predictions, we use a novel dataset that exploits the random sorting of founding teams into cohorts, supplemented by qualitative interviews. We show how shared prior affiliations create network structures and how position in the network affects knowledge acquisition and outcomes. Our interviews shed light on the mechanisms and processes behind this relationship. Overall, this paper extends our understanding of entrepreneurial resource acquisition and how differences in knowledge access from affiliation ties affect venture outcomes.
Speaker: Laura Gasiorowski
6th year PhD student in Strategy
Fox School of Business
International Organizations and Political Risk:
The case of multilateral development banks in infrastructure projects
Srividya Jandhyala, ESSEC Business School, Singapore
February 19, 2018
Firms in regulated industries face challenges of capturing value from an investment when subject to contentious ex-post renegotiation with governments. I examine how international intermediaries can offer operational and political assistance to lower the likelihood of project distress. In the context of private investment in infrastructure projects, I focus on the role played by Multilateral Development Banks (MDBs). Using a sample of 2406 private infrastructure projects in 49 developing countries from 1989 to 2009, I find that projects with MDB participation are less likely to be distressed. Empirical analyses suggest that MDB effectiveness may be driven by factors related to operational assistance rather than political assistance.
Speaker: Srividya Jandhyala
Associate Professor, Management Department, ESSEC Business School (Singapore)
Currently visiting at Princeton University
Can Reputation-based Platform Design Deter the Entry of New Complementors?
Tedi Skiti, Temple University
February 23, 2018
In this paper, we study the relationship between platform design and new complementor entry, an important factor of product innovation and indirect network effects for two-sided platforms. We hypothesize that a widely-used reputation-based platform design has two main effects. On the one hand, the platform design increases new complementor entry because it reduces search costs and uncertainty about consumer preferences. On the other hand, higher visibility for higher quality incumbent complementors functions as an entry barrier for new complementors. Our hypotheses are supported by an extensive proprietary dataset from a major sharing economy platform and an exogenous platform design change. We provide the first causal evidence that platform design and complementor heterogeneity may deter new complementor entry.
Speaker: Tedi Skiti
Assistant Professor of Strategic Management
Fox School of Business
Framing Effects of CEO Compensation Reference Point and Board Equity Pay on Product Diversification
Elizabeth Lim, George State University
September 15, 2017
Agency research demonstrates that CEO pay influences product diversification, but the literature has generated mixed findings. These inconsistent results may be attributable to an emphasis on CEP absolute pay level. However, relative pay may be more important as CEOs frequently compare their own pay with industry peers. Yet it remains unclear whether the framing of CEO pay during social comparisons exerts a significant impact. We build an integrated conceptual framework based on social comparison theory and behavioral agency model that empirically tests product diversification in response to how CEOs frame their pay relative to compensation reference point. We also assess boundary conditions of the relationships by investigating the moderating influences of outside director options and stock grants. The empirical analysis largely supports our hypotheses.
Complementary Technologies and Returns to Disclosure During Standard Setting
PK Toh, University of Texas, Austin
September 29, 2017
In industries or system with many technological components that need to be interoperable, coordination is increasingly achieved via firms’ disclosure to Standard Setting Organizations (SSOs). We study whether and how such disclosure generates returns to the disclosing firm during standard setting. Departing from the convention of focusing on disclosed standard essential patents (SEPs), we examine the role of the firm’s non-disclosed complementary technologies in generating returns during standard setting. Main results show that firms with more non-disclosed complementary technologies experience greater returns to stock prices over disclosure events, and these technologies gain more in value (indicated by patent citations) over disclosure events, at rates higher than even that of the disclosed SEPs. Our findings suggest that, in these systems, a firm is using its larger technological portfolio to appropriate value from coordinating a smaller part of it with others via standard setting, and that a systemic view of the firm’s portfolio is important in understanding firm strategy within these systems.
Speaker: PK Toh
Associate Professor of Management
Department of Management
McCombs School of Business
University of Texas, Austin
When your problem becomes my problem: The Impact of Airline IT Disruptions on On-Time Performance of Competing Airlines
Jennifer Tae, Temple University
October 13, 2017
We study the effect of firm disruptions on competitor performance in the presence of shared resources, and conditions under which competitors experience performance degradation. We propose that the impact of disruption is moderated by the routine complexity of both a disrupted firm and a competitor. We examine these questions in the context of the U.S. airline industry, leveraging four large IT outages from 2011-2016. Competitors’ flights which originated from, or were inbound to, a disrupted hub experienced significant changes in on-time performance, depending on the routine complexity of the disrupted airline. Performance deteriorated during the disruption of full-service carriers, but improved during that of a low-cost carrier. We also find that this effect is strongly moderated by the competitors’ routine complexity.
Speaker: Jennifer Tae
Assistant Professor of Strategic Management
Fox School of Business
The Fundamental Endogeneity of Survey Based Cultural Dimensions: The Case of the Societal Mood
Amir Shoham, Temple University
November 10, 2017
The seminal Works of Hofstede (1980), Schwartz (1994), House et al (2004) have advanced our cumulative understanding of culture, culture outcomes, and the ability to capture culture in a qualitative way. However, their work has relied on the survey based measure to gauge the different dimensions of culture by asking individuals directly. This causes a severe endogeneity problem as non-cultural effects are also embedded in the answer that are supposed to capture just culture. It is thus time to move the extra mile and start dealing with endogeneity problems, so we can capture real causal effects. I propose using language-based measures to overcome such issues in the extant, survey-based measures.
Speaker: Amir Shoham
Associate Professor of Finance
Fox School of Business
Platform organizations: Formal Structure and Control in an Organizational Dilemma
Hongryol Cha, Temple University
December 1, 2017
We develop a model to explain how platform organizations control the value-creating process of their platform participants without ownership-based authority. We challenge the underlying assumption of existing theories. The aim of our assumption-challenging research is to propose not a negative knowledge about what is misleading with existing literature but an advanced knowledge about thinking differently what is already known in response to changes in context like platform-mediated markets. Existing theories of modern organizations (i.e., Coase’s firms) do not seem to be able to account for coexistence between autonomy and control in the platform-mediated markets. We argue that platform organizations have a unique structural feature to generate externality pulling the other economic agents nearer to a common platform. In contrast to traditional views of organizational control, which emphasize the power structure within hierarchical relationships, market relationships, and social relationships, our framework brings knowledge utilization as a new dimension to understand the dynamic aspect of organizational control that is analogous to pulling and hauling effects.
Speaker: Hongryol Cha
5th year PhD student in International Business
Fox School of Business