Session 86

Corporate Strategy: Expanding Understanding and Knowledge

Track F

Date: Tuesday, October 9, 2012

 

Time: 14:15 – 15:30

Common Ground

Room: Terrace 2


Facilitator:

  • Laszlo Tihanyi, Texas A&M University

Title: CEO Characteristics and Corporate Strategy – Does a Fit Matter?

Authors

  • Dirk Schneider, University of Erlangen-Nuremberg
  • Martin Weiss, University of Erlangen-Nuremberg
  • Jan Mammen, University of Erlangen-Nuremberg
  • Susanne Fleischhacker, University of Erlangen-Nuremberg

Abstract: Within the upper echelons theory, the concept of fit assumes that a fit of top managers’ characteristics and the company’s strategy has a positive performance impact. While this assumption has received empirical proof for strategies on the business level, we propose that this is also true for a fit for strategies on the corporate level. We test our hypotheses on a sample of 120 CEOs from Germany, France, and Great Britain. Our findings suggest that a fit of CEO characteristics and corporate strategy leads to superior performance. We also find that the effect of a CEO-strategy fit is moderated through its situational context, for example if the dominant types of shareholders are financial investors compared to state and private investors.

Title: Corporate Strategy at the Crossroads? Inductive Derivation of a Consensus and Comprehensive Definition

Authors

  • Sven Kunisch, University of St. Gallen
  • Markus Menz, University of Geneva

Abstract: While research in corporate strategy has generated valuable knowledge, today this sub-field of strategic management appears to be very fragmented and lacks a coherent agenda. To counter this trend, we inductively develop a consensus and comprehensive definition based on a large-scale content analysis of the abstracts of 383 articles published in the top 50 management journals from 1955 to 2008. More precisely, drawing upon a distinctive vocabulary obtained by word frequency analysis, three renowned strategic management scholars are engaged in developing the new definition. The findings indeed confirm that existing definitions are often ambiguous and too narrow. Contributing to the sub-field's advancement, the new definition serves as a framework to guide future corporate strategy research.

Title: Do Firms Really Allocate Capital So Inefficiently?

Authors

  • Carl Vieregger, Drake University

Abstract: Extensive research in both finance and strategy concludes that managers allocate capital inefficiently. I argue in this paper that extant studies may suffer from a measurement problem, which does not capture the complex, value-maximizing trade-offs faced by the top management of multidivisional firms. In the first stage of the empirical analysis, I develop a new measure of strategic capital allocation to show that managers are indeed allocating capital more than twice as efficiently than prior literature suggests. The second stage validates this new measure by demonstrating the significant association between strategic capital allocation and firm-level performance. The results from this paper strongly suggest that capital allocation is, on average, efficient, and that managers can increase firm performance through strategic capital allocation.

Title: Heavy is the Head that Wears a Crown: High Reputation Firms and their Risk Taking Behavior

Authors

  • Jerayr Haleblian, University of California, Riverside
  • Michael Pfarrer, University of Georgia
  • Jason Kiley, University of Georgia

Abstract: To meet high growth expectations under the constraints of limited strategic choice, high-reputation firms will be risk seeking. Consistent with this notion, we find high-reputation firms make more acquisitions and are more likely to make unrelated acquisitions than their counterparts. Moreover, we predict managers at high-reputation firms will leverage their firm’s high standing in their strategic behaviors. We find high-reputation firms use stock more often than other firms to finance their acquisitions. Finally, we hypothesize that the market will punish the risk-seeking behavior of these firms as they attempt to meet these expectations. We find investors bid down the value of high-reputation firms’ stock more than other firms’ in response to acquisition announcements.

Title: Strategic Complexity and Normal Accidents: Strategic Sources of Accidents in the Global Airline Industry, 1978-2000

Authors

  • Doyoon Kim, Yonsei University
  • Dongyoub Shin, Yonsei University

Abstract: We argue that certain strategies unintendedly raise the likelihood of accidents by increasing the level of strategic complexity at the implementation stage. This study also empirically examines the effects of following three popular strategic options on the likelihood of subsequent accidents: strategic alliances, merge and acquisitions, and niche changes. We suggest that the level of strategic complexity and its effects on the likelihood of accidents must be included as main factors in strategic decision making especially at high-reliability organizations and empirically examine the strategic sources of accidents using a data-set of the global airline industry, 1978-2000. The results of our empirical study on the global airline industry showed that the likelihood of accidents is positively affected by strategic alliances, merge and acquisitions, and niche changes.

Title: The Impact of Management\'s Coordination Effort on the Relatedness-Performance Relationship

Authors

  • Artur Baldauf, University of Bern
  • Jonas Patrick Koenig, University of Bern
  • Karin Tremp, University of Bern

Abstract: In this study, we argue that related diversification enhances firm performance only under circumstances of balanced coordination efforts. While the realization of synergies requires coordination of resources among different business units, a too high level of coordination effort and its corresponding costs may offset the benefits of a related diversification. Strategic relatedness and coordination effort are important theoretical constructs in strategic management. However, extant literature is characterized by both poor clarifications of the interplay between relatedness and coordination effort as well as only moderate empirical research activities. Analyzing information gathered from senior managers of stock listed companies, our findings support the moderating effect of coordination efforts on the relationship between strategic relatedness and firm performance.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 123: Capabilities and Corporate Strategy
Sun: 09:30 – 10:45
Session 124: Corporate Strategy and the Role of the Manager
Sun: 11:15 – 12:30
Session 125: Publishing Strategic Management Research
Mon: 08:00 – 09:15
Session 256: Resource Sources and Corporate Strategy: Location, Funding and Advisors
Mon: 09:30 – 10:45
Session 79: Diversification Strategy and Firm Performance
Mon: 13:30 – 14:45
Session 88: Managing Firm Boundaries: Growth, Divestitures and Networks
Mon: 16:30 – 17:45
Session 77: Transformation, Renewal and Corporate Strategy
Tue: 08:00 – 09:15
Session 80: Acquisition Experience, Intensity and Performance
Tue: 11:00 – 12:15
Session 257: Acquisition Performance
Tue: 14:15 – 15:30
Session 86: Corporate Strategy: Expanding Understanding and Knowledge
Tue: 15:45 – 17:00
Session 253: New Insights into Relatedness and Performance


Strategic Management Society

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