Catalogue Search | MBRL
Are you sure you want to remove the book from the shelf?
{{itemTitle}}
102
result(s) for
"Knott, Anne"
Sort by:
Redesigning routines for replication
One factor affecting the replicability of routines is the template of what gets replicated. There isn't much work on where this comes from. One view is that the routine is discovered over time. Another view is that in some cases firms prefer to copy the last incarnation exactly. A third view is that in completely new contexts, neither evolution nor copy-exactly is completely appropriate. In those instances firms need to redesign the routine prior to introducing it to the new context. We conduct an exploratory study of a redesign process that ends in failure. Analysis of the failure provides preliminary hypotheses about how to create theory for redesigning routines.
Journal Article
The organizational routines factor market paradox
The resource-based view (RBV) of strategy holds that superior organizational routines can be a source of value if and only if there is an isolating mechanism preventing their diffusion throughout industry. Generally this isolating mechanism is taken to be the tacitness of the routines. However, the existence of franchises, a market for organizational routines, poses a challenge to this RBV--if the routine is to be conveyed across a market, it can't be tacit. This paper examines the necessary and sufficient conditions of the RBV to find the weak link leading to the paradox of explicit, yet valuable franchise routines.
Journal Article
Time to exit: Rational, behavioral, and organizational delays
Existing studies of exit delay typically focus on rational, behavioral, or organizational explanations in isolation. We integrate these different theoretical explanations, develop testable hypotheses for each, and examine them using the population of US banks between 1984 and 1997. Banks' exit behavior is not consistent with theories emphasizing the option value of avoiding reentry costs. Patterns of exit do, however, support models of rational delay under ability uncertainty. Controlling for this source of rational delay, we find evidence of delay due to behavioral bias—firms discount negative signals of profitability relative to positive signals—and organizational considerations—delay increases with the separation of ownership and control. These results demonstrate that all three sets of theories are necessary to describe exit behavior.
Journal Article
Outside CEOs and innovation
Research summary: Innovation is the principle driver of firm and economic growth. Thus, one disturbing trend that may explain stagnant growth is a 65% decline in firms' R&D productivity. We propose that the rise of outside Chief Executive Officers (CEOs) may be partially responsible for the decline because those CEOs are more likely to lack technological domain expertise necessary to manage R&D effectively. While this proposition was motivated by interviews with Chief Technology Officers (CTOs), we test it at large scale. We find that firm R&D productivity decays during the tenure of outside CEOs relative to that of inside CEOs. We further find this effect is more pronounced for firms with high R&D intensity and for firms employing outside CEOs with more remote experience, lending circumstantial support for the underlying assumption regarding lack of expertise. Note that this is not a call for boards to avoid outside CEOs, rather it is recommendation to consider the implications for innovation. Managerial summary: While outside CEOs offer advantages over internal candidates, we argue one unintended consequence is weaker innovation. This argument was prompted by two coincident trends: a 65% decline in companies' R&D productivity and a doubling of outside Chief Executive Officers (CEOs). The argument was reinforced by interviews with Chief Technology Officers (CTOs), who recounted shifts in orientation from R&D as an investment to R&D as an expense that occurred shortly in response to a new CEO. We felt this shift was more likely with outside CEOs because they may lack technological domain expertise necessary to effectively manage R&D. Our results are consistent with the argument—company R&D productivity decreases under outside CEOs. Note, however, that we don't advocate avoiding outside CEOs, rather we recommend R&D firms consider technological domain expertise during CEO hiring.
Journal Article
Reconciling the Firm Size and Innovation Puzzle
There is a prevailing view in both the academic literature and the popular press that firms need to behave more entrepreneurially. This view is reinforced by a stylized fact in the innovation literature that research and development (R&D) productivity decreases with size. A second stylized fact in the innovation literature is that R&D investment increases with size. Taken together, these stylized facts create a puzzle of seemingly irrational behavior by large firms—they are increasing spending despite decreasing returns. There have been a number of proposals to resolve the puzzle. However, to date none of these proposals has been fully validated, so the puzzle remains. Accordingly, this paper empirically tests the proposals to see whether any resolves the puzzle. We found one proposal (use of alternative measures) was able to resolve the puzzle. When using a recent measure of firms’ R&D productivity, RQ, we found that both R&D spending and R&D productivity increase with firm size. Thus, large firms seem to be acting rationally in their increasing R&D investments, as one would expect.
Journal Article
Is failure good?
Approximately 80-90 percent of new firms ultimately fail. The tendency is to think of this failure as wasteful. We, however, examine whether there are economic benefits to offset the waste. We characterize three potential mechanisms through which excess entry affects market structure, firm behavior, and efficiency, then test them in the banking industry. Results indicate that failed firms generate externalities that significantly and substantially reduce industry cost. On average these benefits exceed the private costs of the entrants. Thus failure appears to be good for the economy.
Journal Article
RQ Innovative Efficiency and Firm Value
We introduce and test a firm-level innovation-efficiency measure new to the finance literature. The measure, termed the research quotient (RQ), defined as the firm-specific output elasticity of research and development (R&D), was first developed in the management literature. RQ has a low correlation with existing innovation input, output, and efficiency measures. We test RQ in a number of innovation tests common to the finance literature and find that RQ is robust in all tests of firm value, even after controlling for previous innovation measures. The results suggest that RQ may serve as a relevant complementary measure of a company’s innovation.
Journal Article
R&D/Returns Causality: Absorptive Capacity or Organizational IQ
Absorptive capacity is the principle that assimilating new knowledge requires prior knowledge. The attendant prescription is to invest more in R&D to derive greater benefit from the R&D of others (spillovers). Empirical tests of R&D productivity typically find absorptive capacity (R&D * rival R&D) to be significant. This result poses a puzzle, however: What can a firm conducting 50% of industry R&D learn from a set of firms each conducting 5%? Aren't the laggard firms merely playing catch-up? Yet, if this is so, why is the interaction term significant?
One possible resolution to this puzzle is that the correlation between R&D spending and returns is really about innate ability (IQ) rather than investment behavior (absorptive capacity). In this view the causality between capability and behavior is reversed. It is not that firms obtain higher returns by investing more in R it is that some firms have higher returns to R&D, thus they invest more. I conduct an empirical test of the competing views and find that (1) firms differ in the output elasticities of their own R&D (IQ) as well as the elasticities of spillovers from rivals, (2) absorptive capacity becomes insignificant when accounting for that heterogeneity, (3) R&D investment increases with IQ, but (4) R&D investment has no impact on a firm's ability to benefit from spillovers.
Journal Article
Entrepreneurial Risk and Market Entry
This paper attempts to reconcile the risk-bearing characterization of entrepreneurs with the stylized fact that entrepreneurs exhibit conventional risk-aversion profiles. We propose that the disparity arises from confounding two distinct dimensions of uncertainty: demand uncertainty and ability uncertainty. We further propose that entrepreneurs will be risk averse with respect to demand uncertainty, yet \"apparent risk seeking\" (or overconfident) with respect to ability uncertainty. To examine this view, we construct a reduced-form model of the entrepreneur's entry decision, which we aggregate to the market level, then test empirically. We find that entrepreneurs in aggregate behave as we predict. Accordingly, risk-averse entrepreneurs are willing to bear market risk when the degree of ability uncertainty is comparable to the degree of demand uncertainty. Potential market failures exist in instances where there is a high demand uncertainty but low performance dispersion (insufficient entry), or low demand uncertainty but high performance dispersion (excess entry).
Journal Article