Fading Memories: A Process Theory of Strategic Business Exit in Dynamic Environments

Burgelman, Robert A.

doi:10.2307/2393493

Cited by 814 publications

(615 citation statements)

References 40 publications

Supporting

Mentioning

586

Contrasting

Unclassified

Order By: Relevance

“…Studying qualitative accounts of decision-making can uncover organizational dynamics that were not previously part of our theories, and has expanded our understanding of such topics as strategic exit (Burgelman 1994), transfer pricing (Eccles and White 1988) and make or buy decisions (Argyres 1996). There is a risk that such qualitative analysis can reflect selfserving accounts by managers.…”

Section: Research Setting and Methodsmentioning

confidence: 99%

Politics and Firm Boundaries: How Organizational Structure, Group Interests, and Resources Affect Outsourcing

Bidwell

2012

Organization Science

View full text Add to dashboard Cite

How does managers' pursuit of their own intraorganizational interests affect decisions about what work to outsource and how to contract with vendors? I study this question using a qualitative study of outsourcing in the information technology department of a large financial services firm.Traditional transaction cost-based theories argue that decisions about which transactions to outsource should reflect the characteristics of those transactions, yet I find only a weak link between transaction characteristics and outsourcing decisions. Qualitative evidence suggests that managers' pursuit of their own intraorganizational interests helps to explain why outsourcing decisions were often divorced from transaction characteristics. I found that the consequences of outsourcing projects were consistent with the assumptions of transaction cost and capabilities-based theories: managers had less authority over outsourced projects than internal ones, those projects were subject to weaker administrative controls, and outsourced vendors provided different capabilities than internal suppliers. However, the way that those consequences were evaluated often reflected managers' own interests rather than those of the organization.I highlight three aspects of organizational structure that affected how managers evaluated outsourcing: the nature of differentiated goals and responsibilities, the administrative controls that managers faced, and the pressures caused by interdependent workflows within the organization. I also show how the distribution of authority and other resources shaped which projects were outsourced. The analysis highlights the value of understanding make-or-buy decisions as an endogenous consequence of the structure in which those decisions take place, rather than as isolated decisions that are maximized regardless of their context. Keywords: Outsourcing; Firm boundaries; make or buy; transaction cost economics; politics; resource dependence; organizational decision-making; offshoring; information technology.Acknowledgements: I am very grateful to Heski Bar-Isaac, Henrik Bresman, Forrest Briscoe, Diane Burton, Isabel Fernandez-Mateo, Martin Gargiulo, Bob Gibbons, Javier Gimeno, Adam Grant, Quy Huy, Michael Jacobides, Sarah Kaplan, Jackson Nickerson, Joanne Oxley, Sean Safford, Felipe Santos, Brian Silverman, Andrew von Nordenflycht, Christoph Zott, seminar audiences at London Business School and the Rotman School, Nick Argyres and three anonymous reviewers for their comments and suggestions on various drafts of this paper. I am particularly grateful to all of the employees of the Bank who spent so much time talking with me and sharing the data that led to this paper.

show abstract

Section: Research Setting and Methodsmentioning

confidence: 99%

Politics and Firm Boundaries: How Organizational Structure, Group Interests, and Resources Affect Outsourcing

Bidwell

2012

Organization Science

View full text Add to dashboard Cite

show abstract

“…In complementary work several scholars have suggested that organizational knowledge, structure, culture or "capabilities" may also be a unique source of advantage (Burgelman, 1994;Leonard-Barton;Nelson, 1991;Teece and Pisano, 1994). This research has focused attention on the importance of a variety of organizational mechanisms, including an organization's ability to coordinate specialized units (Lawrence and Lorsch, 1967), organizational culture (Leonard-Barton, 1992), information filters and communication channels (Arrow, 1974), and search routines and procedures (Nelson and Winter, 1992) as key determinants of organizational performance.…”

Section: Introductionmentioning

confidence: 99%

The Evolution of Integrative Capability: Innovation in Cardiovascular Drug Discovery

1994

View full text Add to dashboard Cite

Hippel for their helpful comments and suggestions. Allan Afuah provided exceptional research assistance. This research was funded by the Sloan Foundation, by the Leaders for Manufacturing Program, a consortium between 11 major U.S. manufacturing firms and M.I.T., and by four pharmaceutical firms. Their support is gratefully acknowledged. Any errors or omissions remain entirely my responsibility. AbstractRecent research has highlighted the ability to integrate fragmented knowledge across boundaries within a firm as a potentially potent source of competitive advantage. Yet this research raises a potentially puzzling question: if these capabilities are so central to competitive advantage, why do they not instantaneously diffuse across an industry?This paper draws on a detailed field study of the development of hypertensive drugs in ten major European and American firms to explore this issue. I suggest that any particular integrative competence rests on a complex set of interlinked factors that usually evolve only slowly over time. Those firms that were fortunate enough to have focused early on more "rational" modes of drug discovery have been much more successful in developing the integrative capabilities fundamental to modern drug discovery than those that initially achieved great success with the more traditional "random" method of drug discovery. The results thus speak directly to evolutionary theories of competence development. They also raise intriguing questions about the relationship between the development of competence and the larger institutional context of the industry, since both the wealth and prominence of public sector biomedical research and the use of mechanism of action as an integrative device appear to have shaped the formation of capability in the industry.

show abstract

“…For example, out of 89 studies included in recent literature reviews on divestiture and exit by Brauer (2006) and Decker and Mellewigt (2007), only seven studies examined some aspect of process. Burgelman's (1994Burgelman's ( , 1996 process models describing Intel's exit from the memory industry were the only industry exit process models introduced. While not directly examining the entire process, some theory papers have discussed the potential for sequential exit through partial ownership arrangements (e.g., Harrigan, 1980).…”

Section: Exit Process and Exit Modesmentioning

confidence: 99%

The process of industry exit in the Japanese context: Evidence from the flat panel display industry

Lehmberg

2016

Journal of Management & Organization

View full text Add to dashboard Cite

This research studies industry exit in the Japanese context, by examining the process followed five Japanese flat panel display manufacturers as they de-committed to and later exited from the industry. The five cases examine firms with systematically different exit barriers due to the presence or absence of strategic centrality and vertical integration in each firm. With one exception, all the firms followed multi-staged exit processes involving cooperative arrangements with other industry participants. Firms with middle to high levels of commitment and exit barriers went through more steps in the process than those with the lowest levels of commitment. The effect of top management succession and long-term employment upon the exit process are considered, and the role of cooperative arrangements in reducing exit barriers are discussed.

show abstract

Fading Memories: A Process Theory of Strategic Business Exit in Dynamic Environments

Cited by 814 publications

References 40 publications

Politics and Firm Boundaries: How Organizational Structure, Group Interests, and Resources Affect Outsourcing

Politics and Firm Boundaries: How Organizational Structure, Group Interests, and Resources Affect Outsourcing

The Evolution of Integrative Capability: Innovation in Cardiovascular Drug Discovery

The process of industry exit in the Japanese context: Evidence from the flat panel display industry

Contact Info

Product

Resources

About