The vanishing hand: the changing dynamics of industrial capitalism

Langlois, Richard N.

doi:10.1093/icc/12.2.351

Cited by 563 publications

(323 citation statements)

References 73 publications

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“…We relied on advertising investments because they represent a key component of a firm's marketing resources (Dutta et al 1999). A firm's advertising investments are highly related to its marketing know-how (Reuer 2001) and its ability to build and differentiate brands (Langlois 2003). Thus, marketing resources can play a critical role in a firm's ability to recognize and target customer needs and position products relative to competitors (Day 1994).…”

Section: Methodsmentioning

confidence: 99%

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

King

Slotegraaf

Kesner

2008

Organization Science

217

151

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W e explore the role of resource interactions in explaining firm performance in the context of acquisitions. Although we confirm that acquisitions do not lead to higher performance on average, we do find that complementary resource profiles in target and acquiring firms are associated with abnormal returns. Specifically, we find that acquiring firm marketing resources and target firm technology resources positively reinforce (complement) each other; meanwhile, acquiring and target firm technology resources negatively reinforce (substitute) one another. Implications for management theory and practice are identified.Key words: merger and acquisition; resource-based view; high technology History: Published online in Articles in Advance January 7, 2008. IntroductionThe value of worldwide merger and acquisition (M&A) activity set a new record in 2006 with $3.79 trillion worth of transactions-a 38% increase over 2005 (Berman 2007a). 1 The dominant rationale used to explain acquisition activity is that acquiring firms seek higher performance (Bergh 1997, Sirower 1997. However, existing M&A research has not consistently identified variables that impact acquisition performance (King et al. 2004). These mixed signals represent an apparent inconsistency or unsolved puzzle (Agrawal and Jaffe 2000), because firms continue to use acquisitions as a strategic tool with no evidence establishing that acquisitions improve firm performance. Consequently, there is a recognized need for research to identify a theoretical framework that helps to explain acquisition performance (Hitt et al. 1998, Hoskisson et al. 1994, Sirower 1997.Research on resource interdependence may offer such a framework (Barney 1988, Capron and Pistre 2002, King et al. 2004). Using resource-based theory (RBT) as a theoretical lens, research in this area suggests that, in general, acquisition performance will be higher when acquiring and target firm resources complement one another (Capron and Pistre 2002;Hitt et al. 1998Hitt et al. , 2001Puranam et al. 2006). Most extant research on resource interconnectedness (Dierickx and Cool 1989) has focused on positive reinforcement (Milgrom and Roberts 1995, Tanriverdi and Venkatraman 2005, Teece 1986) or on complements, where the marginal benefit from higher levels of one resource increases from the level of another resource (Sigglekow 2002). However, firm resource transfers may also serve as substitutes , Miller 2003 or display negative interactions (Sigglekow 2002). We examine resource interactions involving both substitutes and complements between acquiring and target firm resources.Although an acquiring firm's ability to achieve improved performance is likely to depend on interdependence between its resources and those of the target firm, there is limited research that empirically examines target and acquiring firm resource interactions on firm performance (Song et al. 2005). For example, in three different studies, Capron and her colleagues use a methodology largely reliant on survey data, showing that substantial...

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Section: Methodsmentioning

confidence: 99%

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

King

Slotegraaf

Kesner

2008

Organization Science

217

151

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“…This brings together Adam Smith's principles of specialisation and the division of labour (Smith 1776) with Herbert Simon's discussion of the decomposability of complex problems (Simon 1996(Simon , 2002. Key contributions to the theory have been made by Langlois and Robertson (1995), Baldwin and Clark (1997), Langlois (2002Langlois ( , 2003a, Marengo and Dosi (2005), and Baldwin (2007).…”

Section: Optimal Search Organisational Innovation and Outsourcingmentioning

confidence: 97%

The outsourcing productivity paradox: total outsourcing, organisational innovation, and long run productivity growth

2008

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A growing number of empirical studies find a relationship between the outsourcing of activities and a long term loss of firm productivity growth. The paper addresses this outsourcing productivity paradox by examining the connection between total outsourcing and organisational innovation. We present a model of organisational innovation in which managers raise productive efficiency by identifying organisational architectures that more effectively integrate value-adding activities and administrative routines. As part of this process, managers can internally or externally source an activity. Simulations of the model show that large scale outsourcing restricts the scope for future organisational innovation, leading to lower productivity growth. The findings accord with the empirical data and provide a salutary warning for managers and policy-makers about the long term implications of total outsourcing.

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“…Therefore, the emphasis is placed on processes. This general approach is exemplified in neo-Austrian approaches to the firm (for example Langlois, 2003;Langlois and Robertson, 1995). Here a distinction is drawn between long-run and short-run transaction costs.…”

Section: Conceptualizing Real-world Firms: Literature Reviewmentioning

confidence: 99%

Firm development as an integrated process: with evidence from the General Motors–Fisher Body case

Dietrich

Krafft

2010

J Evol Econ

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This paper argues that an adequate approach to the firm should be able to accommodate the complexities of actual firm development. The latter is conceptualized in terms of three general stages: prime movers or drivers of change, change processes, and change attractors. Furthermore, any "real-world" firm is both a technical and an institutional unit. To emphasize the importance of "real firm" analysis, the discussion presented here revolves around an understanding of the much considered case of General Motors and Fisher Body integration has developed over time. Generalization from this case suggests that an integrated view of the firm is necessary that combines the three stages and the two bases (technical and institutional). Six general perspectives on the firm are identified as having technical or institutional bases that are relevant in each of the three stages. This integrated approach to the firm is explored in terms of the general topic of firm development. It is concluded that, without an integrated approach to firm development, a potentially biased or incomplete analysis can result.

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The vanishing hand: the changing dynamics of industrial capitalism

Cited by 563 publications

References 73 publications

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

The outsourcing productivity paradox: total outsourcing, organisational innovation, and long run productivity growth

Firm development as an integrated process: with evidence from the General Motors–Fisher Body case

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