IESE Business School

This article provides a broad and multifaceted review of the received literature on business models in which the authors examine the business model concept through multiple subject-matter lenses. The review reveals that scholars do not agree on what a business model is and that the literature is developing largely in silos, according to the phenomena of interest of the respective researchers. However, the authors also found emerging common themes among scholars of business models. Specifically, (1) the business model is emerging as a new unit of analysis; (2) business models emphasize a system-level, holistic approach to explaining how firms “do business”; (3) firm activities play an important role in the various conceptualizations of business models that have been proposed; and (4) business models seek to explain how value is created, not just how it is captured. These emerging themes could serve as catalysts for a more unified study of business models.

Empirical research on complementarity between organizational design decisions has traditionally focused on the question of existence of complementarity. In this paper, we take a broader approach to the issue, combining a “productivity” and an “adoption” approach, while including a search for contextual variables in the firm’s strategy that affects complementarity. Analysis of contextual variables is not only interesting per se, but also improves the productivity test for the existence of complementarity. We use our empirical methodology to analyze complementarity between innovation activities: internal research and development (R&D) and external knowledge acquisition. Our results suggest that internal R&D and external knowledge acquisition are complementary innovation activities, but that the degree of complementarity is sensitive to other elements of the firm’s strategic environment. We identify reliance on basic R&D—the importance of universities and research centers as an information source for the innovation process—as an important contextual variable affecting complementarity between internal and external innovation activities.

Abstract In parallel with a theoretical acceptance of the importance of the laws of competition to formulate strategy, the realization is growing that cooperative behavior among firms is at the root of many success stories in today's management. This situation calls for an effort to develop a theoretical framework to study both aspects of firm behavior (cooperative and competitive) as compatible, complementary aspects of a unique reality. Indeed, the cooperative relationships of a firm can be the source of its competitive strength. This paper develops the concept of strategic network, as a tool to understand those cooperative relationships and their role in the strategy of the firm. There are three main tasks of the paper: first, to show that strategic networks are but a ‘mode of organization’; second, to study the economic conditions of existence of a network; finally, to analyze the conditions of existence of a network from the point of view of its internal consistency. In a final section some of the most obvious strategic implications of the framework are outlined.

Drawing on institutional theory and innovation literature, we argue that greater regulatory and normative pressures concerning environmental issues positively influence companies' propensity to engage in environmental innovation. Analysis of environment‐related patents of 326 publicly traded firms from polluting industries in the United States suggests that institutional pressures can trigger such innovation, especially in those firms displaying a greater deficiency gap (i.e., firms polluting relatively more than their industry peers). Moreover, we find that this effect is stronger when asset specificity is high, and that the availability of resources plays different roles depending on the type of pressures (regulatory vs. normative).Copyright © 2012 John Wiley & Sons, Ltd .

This paper compares the environmental performance of family and nonfamily public corporations between 1998 and 2002, using a sample of 194 U.S. firms required to report their emissions. We found that family-controlled public firms protect their socioemotional wealth by having a better environmental performance than their nonfamily counterparts, particularly at the local level, and that for the nonfamily firms, stock ownership by the chief executive officer (CEO) has a negative environmental impact. We also found that the positive effect of family ownership on environmental performance persists independently of whether the CEO is a family member or serves both as CEO and board chair.

A growing body of research shows that family firms are different from other organizations in significant ways. In this paper we review this literature by examining how family firms differ from nonfamily firms along five broad categories of managerial decisions. These categories encompass a set of key organizational choices concerning management processes, firm strategies, corporate governance, stakeholder relations and business venturing. We argue that socioemotional wealth or affective endowment of family owners explain many of these choices. We also examine some contingency factors (namely family stage, firm size, firm hazard, and the presence of nonfamily shareholders) that moderate the influence of socioemotional wealth preservation as a point of reference when making managerial decisions in family firms. Lastly, we explore the firm performance consequences of family ownership.

R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium by Bruno Cassiman and Reinhilde Veugelers. Published in volume 92, issue 4, pages 1169-1184 of American Economic Review, September 2002

In this article, we theorize a novel approach to addressing the world’s grand challenges based on the philosophical tradition of American pragmatism and the sociological concept of robust action. Grounded in prior empirical organizational research, we identify three robust strategies that organizations can employ in tackling issues such as climate change and poverty alleviation: participatory architecture, multivocal inscriptions and distributed experimentation. We demonstrate how these strategies operate, the manner in which they are linked, the outcomes they generate, and why they are applicable for resolving grand challenges. We conclude by discussing our contributions to research on robust action and grand challenges, as well as some implications for research on stakeholder theory, institutional theory and theories of valuation.

Social science theories can become self-fulfilling by shaping institutional designs and management practices, as well as social norms and expectations about behavior, thereby creating the behavior they predict. They also perpetuate themselves by promulgating language and assumptions that become widely used and accepted. We illustrate these ideas by considering how the language and assumptions of economics shape management practices: theories can "win" in the marketplace for ideas, independent of their empirical validity, to the extent their assumptions and language become taken for granted and normatively valued, therefore creating conditions that make them come "true."

Relying on institutional theory, agency rationale, and environmental management research, we hypothesize that, in polluting industries, good environmental performance increases CEO pay; that environmental governance mechanisms strengthen this linkage; that pollution prevention strategies affect executive compensation more than end-of-pipe pollution control; and that long-term pay increases pollution prevention success. Using longitudinal data on 469 U.S. firms, we found support for three hypotheses. Contrary to our expectations, firms with an explicit environmental pay policy and an environmental committee do not reward environmental strategies more than those without such structures, suggesting that these mechanisms play a merely symbolic role.

A growing body of research shows that family firms are different from other organizations in significant ways. In this paper we review this literature by examining how family firms differ from nonfamily firms along five broad categories of managerial decisions. These categories encompass a set of key organizational choices concerning management processes, firm strategies, corporate governance, stakeholder relations and business venturing. We argue that socioemotional wealth or affective endowment of family owners explain many of these choices. We also examine some contingency factors (namely family stage, firm size, firm hazard, and the presence of nonfamily shareholders) that moderate the influence of socioemotional wealth preservation as a point of reference when making managerial decisions in family firms. Lastly, we explore the firm performance consequences of family ownership.

Abstract Corporate governance scholars are increasingly interested in firms' social and environmental performance. Empirical research in this area, however, has moved forward in an uncoordinated fashion, producing fragmented and contradictory results. Our paper seeks to address this situation by adopting a fact‐based research approach that comprehensively explores the link between corporate governance and environmental performance. Specifically, we aim to understand how the relationships between and among the firms' owners, managers, and boards of directors influence environmental performance. We are particularly interested in understanding the interactions among these three key sets of actors. In the end, we offer some observations about governance practices and discuss the implications for theory. Copyright © 2012 John Wiley & Sons, Ltd.

This paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture. We develop a model of the collaboration process in partnership and alliances based on earlier work by Ring and Van de Ven (1994) and by Doz (1996). We employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners, and to explicate the impact that external shocks have on their perceptions of efficiency and equity. The impact of these events, as well as the responses they elicit, on the quality of the relationship (and vice versa) are also considered. We find that the partners' assessments cause them to either engage in renegotiation of the terms of the contract, or to modify their behavior unilaterally, in an attempt to restore balance to the relationship. The process feeds back until a new mutual understanding of equity is restored, or else the relationship deteriorates gradually until a point when the venture is dissolved. We conclude that positive feedback loops are critical in the evolutionary process, that relationship quality is both an outcome and a mediating variable, and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship.

ABSTRACT Many natural competitors are jointly held by a small set of large institutional investors. In the U.S. airline industry, taking common ownership into account implies increases in market concentration that are 10 times larger than what is “presumed likely to enhance market power” by antitrust authorities. Within‐route changes in common ownership concentration robustly correlate with route‐level changes in ticket prices, even when we only use variation in ownership due to the combination of two large asset managers. We conclude that a hidden social cost—reduced product market competition—accompanies the private benefits of diversification and good governance.

Alliance portfolios are ubiquitous and influential for firm performance. Extant research addresses attributes of high-performing alliance portfolios but not how executives originate such portfolios. In our inductive case study of six entrepreneurial rivals in the wireless gaming industry, we find that executives are more likely to originate high-performing portfolios when they visualize their portfolios in the context of the entire industry as opposed to a series of single ties and when they simultaneously form ties with multiple partners. The emergent theoretical framework emphasizes agency and strategic action in contrast to a deterministic account of dyadic interdependence and social embeddedness.

Executive Overview The bottom of the pyramid (BOP) in the global distribution of income has been promoted as a significant opportunity for companies to grow profitably. Under the BOP approach, poor people are identified as potential customers who can be served if companies learn to fundamentally rethink their existing strategies and business models. This involves acquiring and building new resources and capabilities and forging a multitude of local partnerships. However, current BOP literature remains relatively silent about how to actually implement such a step into the unknown. We use two BOP cases to illustrate a strategic framework that reduces managerial complexity. In our view, existing capabilities and existing local BOP models can be leveraged to build new markets that include the poor and generate sufficient financial returns for companies to justify investments.

While family business research has prominently recognized that family firms are motivated by nonfinancial factors, the literature has remained relatively silent about whether or not these firms are more likely than others to engage actively with their stakeholders, who often have nonpecuniary demands. This paper argues that family firms are more prone to adopt proactive stakeholder engagement (PSE) activities because by doing so they preserve and enhance their socioemotional wealth (SEW). We explore the impact of the different dimensions of SEW on PSE and identify distinctive logics that explain the adoption of such practices. Finally, we offer a set of topics for future studies.

A theoretical framework is proposed to understand the structure of networks of strategic linkages in global industries. It is argued that global industry structure should be understood in terms of firm membership in ‘strategic groups’ and ‘strategic blocks’. Strategic groups are based on similarities in the strategic capabilities of firms. Strategic blocks, on the other hand, are based on similarities in their strategic linkages. Two types of strategic blocks are proposed: complementary blocks composed of firms from different strategic groups, and pooling blocks composed of firms from the same strategic group. It is further proposed that in equilibrium, each strategic block will have access to a similar set of strategic capabilities. Empirical support for these arguments is drawn from the global automobile industry during the period 1980-90. The implications of strategic blocks for intra-industry performance differences are discussed in the concluding section of this paper.

Abstract In contrast to prior studies examining strategic alliances as discrete governance structures (e.g., alliances vs. M&A, equity vs. non‐equity agreements), we investigate their particular contractual features. The analysis examines the dimensionality of the contractual complexity construct and investigates the determinants of firms' adoption of various contractual provisions. We find two underlying dimensions of contractual complexity, based upon the enforcement and coordination functions of different contractual provisions. The evidence reveals that firms' usage of particular contractual provisions is a function of asset specificity as well as whether the alliance's duration is pre‐specified or open‐ended. The findings also speak to the debate surrounding the roles of prior ties and trust for alliance governance. Firms that have collaborated with each other in the past are not less likely to negotiate enforcement provisions; rather, repeat collaborators are less likely to adopt contractual provisions that are informational in nature and are geared to the coordination of the alliance. Copyright © 2007 John Wiley & Sons, Ltd.

I analyze the effects of competition on process innovation and product introduction and obtain robust results that hold for a range of market structures and competition modes. It is found that increasing the number of firms tends to decrease cost reduction expenditure per firm, whereas increasing the degree of product substitutability, with or without free entry, increases it—provided that the average demand for product varieties does not shrink. Increasing market size increases cost reduction expenditure per firm and has ambiguous effects on the number of varieties offered, while decreasing the cost of entry increases the number of entrants and varieties but reduces cost reduction expenditure per variety. The results are extended to other measures of competitive pressure and to investment in product quality. The framework and results shed light on empirical strategies to assess the impact of competition on innovation.