The role of home country demand in the internationalization of new ventures

My article with Salih Ozdemir and Deepak Sardana was just published in Research Policy.

Abstract: International new ventures (INVs) have been documented to exist all around the world, but the literature is silent on the frequency of such companies in different countries. We contend that the propensity of new ventures to internationalize by forming international partnerships is higher in small-domestic demand countries because they have a greater motivation given their limited local demand. After discussing the methodological challenges in testing this hypothesis, we do such a test by studying alliances in the health segment of the biotech industry in relatively small-domestic demand countries (Australia, Israel, and Taiwan) and by comparing the results with five large-domestic demand countries (UK, Germany, France, US, and Japan). We find that young firms in the countries with smaller domestic demand are at least 3 times more likely to enter into international partnerships than their counterparts in countries with larger domestic demand. We further demonstrate that this difference can primarily be explained by the difference in the size of domestic healthcare markets rather than other underlying opportunity structure related factors.

Keywords: International new ventures; Internationalization; Small vs. large demand countries; Young biotechnology firms; International partnerships; Business development partnerships

Read and Download Full Article here

Murmann Lecture: What constitutes a compelling case study?

I gave a 50-min keynote lecture on what constitutes compelling case study.  The video from the event at the Forum for Case-based and Qualitative Research in Business Administration may be useful for anyone who is attempting to publish case based studies in field of management.

The slides from the lecture are visible in the video and can also be downloaded here.  Murmann Slides

The lecture is also available within China on the youku platform.  Click here if you want to access video from China:  China Video Access.  Alternative China Video Access

Click on “more” for a written summary of lecture both in English and in Chinese.

More...

Carol Dweck: Differences between Growth and Fixed Mindsets

Carol Dweck has spent her career studying how personality traits impact life outcomes. Here is it summarized into one chart.

You can see a larger image by clicking here: Full Size Image

More...

Useful if you consider submitting to AMJ: Editorial Statement by Current Editor of AMJ

I just read the editorial statement of the current editor of AMJ. If you would like to write about big problems that managers are facing in a scholarly way, AMJ may be a great outlet.

Gerry George writes:

A compelling way to frame a study for theoretical contribution is by asking questions on important anomalies or patterns that are intriguing, useful, and nonintuitive. In an earlier editorial with Jason Colquitt, I suggested that we need to explore “Grand Challenges” in management (see the June 2011 “From the Editors” [vol. 54: 432–435]). The principle is to pursue bold ideas and adopt less conventional approaches to address significant, unresolved problems. Not all our studies understandably will be grand, nor will they all challenge conventional wisdom, but considering the relative importance and scale of a problem will likely make a study more relevant to managers, and make it more interesting for our readers. There are multiple ways by which manuscripts can be better positioned for a theoretical and empirical contribution using a problem focus (Alvesson & Sandberg, 2011; Pillutla & Thau, 2013; also see the October 2011 “From the Editors” [vol. 54: 873–879]). What is important to recognize is that this team places emphasis on how a central research problem or question is articulated. Bringing organizational problems to the forefront would ease the burden on vaguely scripted “Managerial Implications” sections of manuscripts (Bartunek & Rynes, 2010).

My editorial team will look for clearly articulated problem statements or research questions motivated by managerial challenges. This problem-based focus shifts the emphasis away from motivating articles using pure theories to tackling important problems through an enriched theoretical lens. For example, Hekman and colleagues (Hekman, Aquino, Owens, Mitchell, Schilpzand, & Leavitt, 2010) motivate their study on gender and racial biases in customer satisfaction surveys by emphasizing the importance of the managerial problem that a 1 percent change in customer satisfaction creates a 5 percent change in return on investment. Understanding the scale and scope of the problem and asking the right question takes primacy over the deftness of theoretical manipulation using constructs, moderators, and moderated mediators. We prefer manuscripts that emphasize how constructs provide a coherent explanation of the phenomenon rather than framing and motivating studies by adding untested moderators and mediators. Such an effort would rightly dissuade authors from identifying smaller “gaps” in the literature and shift the discussion to managerial, organizational, and societal problems that need to be addressed.

Read the Full Editorial

Superb Example of Strategy Process Research:  New Paper by Laurent Mirabeau and Steve Maguire in SMJ

I just read a fantastic research paper that I recommend highly to anyone who is interested in strategy process research.

Mirabeau, L., & Maguire, S. 2014. From autonomous strategic behavior to emergent strategy. Strategic Management Journal, 35(8): 1202-1229.

The authors do wonderful job first summarizing the different strands in strategy process research.  Then they present new findings on how autonomous strategic initiatives become emergent strategy. They introduce the new idea of Ephemeral Autonomous Behavior to balance out the traditional Mintzberg model of emergent strategies.  I have added the paper to my list of exemplary case studies worthy of imitation.

The core of the paper is nicely summarized in these two figures.

(Right click on each figure to open it in a larger format on a new page.)

More...

Will give two presentations at Strategic Management Conference in Madrid, Sep 21-22

1. The Strategic Process and Competitive Dynamics of Industry Convergence

Date: Sunday, September 21, 2014
Time: 11:15 – 12:30
Room: Viena
Session Co-Chairs:

Samina Karim, Boston University
John Prescott, University of Pittsburgh

Panelists:

  * Alfonso Gambardella, Bocconi University
  * Anita McGahan, University of Toronto
  * Johann Peter Murmann, University of New South Wales
  * Fernando Suarez, Boston University

Understanding how industries change has attracted considerable attention because it blurs industry boundaries, redefines the competitive landscape, creates opportunities for new strategies to emerge, destroys competitive advantages while solidifying others, challenges cognitive maps and establishes new institutional arrangements. In this session, expert panelists will bring us up-to-date on the phenomenon of industry convergence (IC) by sharing their perspectives regarding (1) the antecedents, dynamics, and consequences of IC; (2) how to conceptualize strategic management processes and how they may inform the dynamics of IC; (3) how scholars should evaluate the attractiveness of, and rivalry within, IC industries; and (4) promising research directions including theory development and empirical studies.

 

More...

Who Matters More? The Impact of Functional Background and Top Executive Mobility on Firm Survival

Do some top executives matter more than others? Integrating insights from upper echelons and executive mobility research, we suggest that the functional roles performed by top executives shape their value to the firm. We examine the effects of inter-firm executive mobility on firm survival for New York City advertising firms from 1924 to 1996. We find that, while losing any top executive is damaging, the loss of a top executive whose functional role focuses on internal firm processes is more detrimental to firm survival than losing a top executive whose functional role focuses on managing external exchange relationships. Additionally, in situations when multiple executives leave simultaneously, firms are more negatively affected when the group departing is functionally heterogeneous.

Bermiss, Y. S., & Murmann, J. P. 2014. Who Matters More? The Impact Of Functional Background And Top Executive Mobility On Firm Survival. Strategic Management Journal:

Download article here.

An earlier version that placed more emphasis on heterogeneity of top management teams influencing firm survival is available at SSRN.

Read about article on the HBR Blog.

How Fast Can Firms Grow?

Abstract: Building on recent research on dynamic, high-growth firms—so-called “gazelles”—this paper explores a simple question that is important in both theoretical and practical terms: What is the fastest rate at which firms can grow? Based on a sample of seven high-growth firms (Cisco, GM, IBM, Microsoft, Sears, Starbucks, and US Steel), we find that 162% is the maximum sales growth rate in any one year that an established company can grow without mergers and acquisitions, while the maximum rate of employee growth is approximately 115% even including some mergers and acquisitions. All of the companies in our sample attained a maximum sales growth rate of above 50%, with most hovering around 75%. Furthermore, the firms’ growth rates exhibit similar patterns. No company experienced its maximum sales growth rate toward the latter part of its history. Every company experienced its slowest employee growth rate after attaining its maximum employee growth rate, usually within a decade of one another. Most importantly, all firms show an average sales growth that exceeds the average employee growth. This finding is an indication that successful growing firms have a superior capability to continuously improve employment efficiency and adjust organizational structures to suit an increasing workforce.

Murmann, J. P., Korn, J., & Worch, H. 2014. How Fast Can Firms Grow? Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 234(2-3): 210-233.  Download Article

Another Great Example of Serendipity in Scientific Discovery

People underestimate that scientists often make progress by chance.  Here is the story of researchers studying a species that has invaded Florida’s Everglades made an unanticipated discovery: deadly Florida pythons have internal GPS.

“We found that Burmese pythons have navigational map and compass senses,” said Shannon Pitman of North Carolina’s Davidson College, the lead researcher of a team of scientists that released six captured snakes back into the wild, then tracked them through the Everglades National Park for up to nine months.

“It wasn’t what we expected. We thought we’d see a kind of aimless, wandering behaviour, but the pythons made their way pretty quickly back to where to where they were captured. It was more sophisticated in terms of movement than we’ve seen in other species of snake.”

What makes the discovery more remarkable is that it was completely accidental. Pitman’s team originally wanted to release the snakes closer to their capture points within the Everglades, as they were more interested in studying the habitat through which they were moving than the actual distances they travelled.

But wildlife officials, whose efforts to eradicate or contain the up to 100,000 non-native snakes estimated to have spread through the park’s 1.5m acres, refused permission.

That led to the team releasing the snakes at more remote locations between 13 and 23 miles away, outside the National Park’s boundaries, and then watching in amazement as one python after another made its way back “home”.

Each snake was fitted with a radio tracker and its position monitored by GPS one to three times per week. All six moved in a near-straight line towards their capture points and five ended up within a couple of miles. The snake with the longest journey took nine months to reach its destination.

Full Story: Guardian

Joel Mokyr Sees no End to Innovation

Mokyr points out the modern GDP measures are not accounting for improvements in quality of products and life.
He sees no end to innovation. Basic science needs to be funded by governments because private individuals and corporations cannot appropriate the returns from these investments. He sees culture that encourages natural skepticism of students as a key ingredient for furthering innovation of a country.

Improving Your Case Method Skills: Two Methodological Pieces by Michael Scriven

The philosopher and polymath Michael Scriven has written extensively on the logic of explanations. Here are two of his most valuable pieces. The first one is how one can make good inferences from single case studies and the second one one explanations in history.

1. Scriven, M. (1974). Maximizing the Power of Causal Investigations: The Modus Operandi Method. In W. J. Popham (Ed.), Evaluation in education: Current applications: 68-84: McCutchan Pub Corp. Download

2. Scriven, M. (1966). Causes, Connections, and Conditions in History. Philosophical Analysis and History. W. H. Dray, Harper & Row: 238-264.  Download

 

Scaffolding in Economics, Management, and the Design of Technologies

This chapter reviews the ideas that have been developed to describe the emergence and change of structures in three fields: Economics, Management, and Design of Technologies. The chapter focuses on one empirical setting, the economy, and more specifically how firms, industries, and technologies change over time. Today’s industrialized economies are very different from the economies before the industrial revolution. The chapter presents key theoretical ideas from evolutionary economics, management, and technology that try to explain why and how economy has been so dramatically transformed over the past 400 years. You can download a draft of chapter here or find the book in your library or buy it at Amazon.com or MIT Press.

Excerpts from Arthur Stinchcombe’s on “Theoretical Methods in Social History”

Ten years ago I read Stinchcombe’s “Theoretical Methods in Social History”. I recently reread the parts that I had highlighted and I thought it useful to share some key passages.[1]

One does not apply theory to history; rather ones uses history to develop theory. [2]
——
It is rather that the fashion in quantitative history has come to be that one must agree to be voluntarily ignorant of the any evidence other than numbers. [3]

As the argument develops, it will become clear why I am unenthusiastic about most quantitative history. Let me state the argument in capsule form.
For a number, say a count, to be theoretically interesting, it has to be a count of a comparable instance. What instances comparable for a scientist is that those instances have identical causal impact. Thus a count is more illuminating, the more theory and the more detailed examination of the facts went into making the instances counted comparable. But this ordinarily means that making a count should be the last stage of a scientific enterprise, a stage reached only after an extensive development of theory on what makes instances comparable. Is the proletarian in the Vyborg district of Petersburg or in the Baltic Sea Fleet equivalent in impact on the Russian Revolution to a proletarian in Moscow? Trotsky convinces me he was not (and if the proletarian was a she, in either place, she was not equivalent to a male proletarian either). Consequently, a count of proletarians in Russia in 1917 is fact of relatively little interest. [4]

More...

My Editorial Statement for Management & Organization Review

MOR is the official journal of International Association for Chinese Management Research. While the journal is focused on China, comparative studies of China and other countries are highly appropriate for the journal.

I am interested in detailed studies of how technologies, organizations, industries and supporting institutions evolve over time. Methodologically, I hope to attract comparative case studies that are rich in descriptive data that is both quantitative and qualitative.  I also hope to attract historical case studies.  Papers that feature particularly innovative companies or organizational and institutional structures are of particular interest.

Examples of papers that illustrate work of interest to this editorial area can be found here.

Collection of Research Methods articles in SO!

SO! has pulled together the collection of articles on research methods that the journal published over the years. I for one will come back to these articles. I suspect many doctoral students will find them useful.

Ann Langley: Over the years, Strategic Organization has published a number of very useful and insightful articles on research methods for studying strategy and organization. This section of the website groups together a collection of the most interesting articles of this type. Both quantitative and qualitative researchers will find ideas for novel approaches and pointers for enhancing the quality of their research among these contributions.

SO! Collection on Research Methods

AOM 2013: Two workshops I am participating in: History and Design Evolution

History and Strategy: Toward an Integration of Theory and Method History and Strategy

New Presentation Slides for Download. Click here.
Program Session #: 80 | Submission: 14401 | Sponsor(s): (BPS, MH, TIM)
Scheduled: Friday, Aug 9 2013 11:45AM - 1:45PM at WDW Swan Resort in Swan 10

Organizer: Steven Kahl; Dartmouth College (TUCK);
Organizer: Brian S. Silverman; U. of Toronto;
Participant: David A. Kirsch; U. of Maryland;
Participant: Huseyin Leblebici; U. of Illinois;
Participant: J Peter Murmann; Australian School of Business, UNSW;

While historical research has played a central role in the development of the strategy literature, it remains underrepresented in strategy journals. This PDW explores how historical analysis can inform strategy research. As the strategy field continues to develop dynamic models of strategy, the historical perspective can provide unique perspective, and could potentially even develop a history-based theory of strategy. Yet, doing historical research in strategy faces methodological challenges given its different approach to the development of theory and use of evidence. Consequently, this PDW addresses the different opportunities available to strategy scholars to engage in the historical method. The format of the PDW is a combination of 1) presentations in which scholars experienced in conducting historical analysis within the strategy and organizational fields discuss the challenges of doing this work and 2) interactive breakout sessions in which participants break into smaller groups to discuss design of a historical study in topical strategy research areas, such as dynamic capabilities and industry evolution. These breakout sessions will help identify how the historical approach can make novel theoretical contributions and reveal roadmaps for pushing this work further.

Search Terms: History/Historical Analysis , Strategy , Theory and Methods

Architectural Strategy and Design Evolution in Business Ecosystems: Opportunities and Challenges
Ecosystem Design and Strategy

Program Session #: 279 | Submission: 10331 | Sponsor(s): (TIM, BPS, ENT, OMT)
Scheduled: Saturday, Aug 10 2013 10:15AM - 12:45PM at WDW Swan Resort in Swan 3

More...

Honoring the late Steve Klepper

Steve Klepper, who has been an inspiration to so many of us, recently passed away. At the 20th anniversary of the CCC colloquium, we honored Steve Klepper. The video captures very nicely how much Steve touched an entire generation of doctoral students working on the intersection of industry evolution and technological innovation.

 

Nelson, Richard R. (born 1930)

This short article is my entry on Richard R. Nelson in the Encyclopedia of Strategic Management

Richard R. Nelson (b. 1930) is an American economist who has had a significant influence on the field of strategic management. The fundamental question driving his work is how societies can be organized to improve their material well-being. In answering this question, Nelson identifies sustained technological innovation and a diverse range of often industry-specific institutional structures as the key engines of economic growth. He sees business firms as playing a key role in the growth process because firms are the carriers of the knowledge and abilities required to produce the complex product and services that characterize modern economies.

Keywords: evolutionary theory, firms, innovation, organizational capabilities, patents, Carnegie School, RAND Corporation; science policy, tacit knowledg

More...

Touchstones: Examples of Excellent Papers

Empirical Papers
Here are examples of excellent papers that I encourage people to use as touchstones and imitate when written small-n or case study papers.

Danneels, E. (2011). “Trying to become a different type of company: dynamic capability at Smith Corona.” Strategic Management Journal 32(1): 1-31.

Mirabeau, L., & Maguire, S. (2014). From autonomous strategic behavior to emergent strategy. Strategic Management Journal, 35(8): 1202-1229.

Miller, R., M. Hobday, T. Leroux-Demers and X. Olleros (1995). “Innovation in Complex System Industries: the Case of Flight Simulation.” Industrial and Corporate Change 4(2): 363-400.

Murmann, J. P. (2013). “The Coevolution of Industries and Important Features of their Environments.” Organization Science 24(1): 58-78.

Siggelkow, N. (2002). “Evolution toward Fit.” Administrative Science Quarterly 47(1): 125-159.

On Method
Here are some methodological texts that I found particularly useful in helping me refine my case study design skills.

More...

Research Project on Innovative Firms and Sectors in China

Read

Tweets by @JPMChina