Abstract:Research summary: Two central issues in strategic management are the determination of a firm's internal delegation and its vertical boundaries. Despite the importance of these issues, there is scant analysis concerning their interaction. Using a comprehensive database of the construction industry, we show that vertical integration positively influences the centralization decision and that the main mechanism driving this relationship is an improvement in the hierarchically coordinated adaptation of firm activit… Show more
“…As a consequence, analyzing companies’ development according to an OLC perspective, we expect to recognize a sequence of temporary states of organizational stability (i.e., stages), but their duration and sequence cannot be generalized across different companies. Second, whereas the original OLC models proposed model organizational evolution according to a predetermined sequence of structural configurations, new OLC models should acknowledge that companies are characterized by a continuous search for a dynamic fit between environmental conditions and strategic and organizational choices (Soda and Furnari 2012 ), hence reducing the predictability of the resulting organizational features (Terziovski 2010 ; Brahm and Tarziján 2016 ). The outcome is not universal, but several organizational solutions are possible through an original combination of basic design elements (Sinha and Van de Ven 2005 ; Van de Ven et al 2013 ).…”
New competitive and environmental challenges have fostered renewed attention towards organizational design. This scenario calls for a significant return to organizational design studies that embrace a holistic approach, especially those focusing on the simultaneous interaction of multiple design elements. Organizational life cycle (OLC) models provide a fitting response to this call. In this paper, we review the organizational design characteristics of five seminal OLC models. We show that according to these OLC models, growth in size—which is described as unavoidable—generates business issues that firms are forced to solve by adopting only one possible organizational configuration, here following a deterministic organizational approach. We challenge this approach and propose conceiving of OLC as an evolutionary process, which calls for a variety of equifinal organizational solutions. We conclude by proposing future research avenues.
“…As a consequence, analyzing companies’ development according to an OLC perspective, we expect to recognize a sequence of temporary states of organizational stability (i.e., stages), but their duration and sequence cannot be generalized across different companies. Second, whereas the original OLC models proposed model organizational evolution according to a predetermined sequence of structural configurations, new OLC models should acknowledge that companies are characterized by a continuous search for a dynamic fit between environmental conditions and strategic and organizational choices (Soda and Furnari 2012 ), hence reducing the predictability of the resulting organizational features (Terziovski 2010 ; Brahm and Tarziján 2016 ). The outcome is not universal, but several organizational solutions are possible through an original combination of basic design elements (Sinha and Van de Ven 2005 ; Van de Ven et al 2013 ).…”
New competitive and environmental challenges have fostered renewed attention towards organizational design. This scenario calls for a significant return to organizational design studies that embrace a holistic approach, especially those focusing on the simultaneous interaction of multiple design elements. Organizational life cycle (OLC) models provide a fitting response to this call. In this paper, we review the organizational design characteristics of five seminal OLC models. We show that according to these OLC models, growth in size—which is described as unavoidable—generates business issues that firms are forced to solve by adopting only one possible organizational configuration, here following a deterministic organizational approach. We challenge this approach and propose conceiving of OLC as an evolutionary process, which calls for a variety of equifinal organizational solutions. We conclude by proposing future research avenues.
“…These are individuals who act upon personal and tacit knowledge about future products and the technological advancements required for their successful commercialization (Crossan et al, 1999;Nonaka, 1991). Our conceptual framework has outlined how the transformation of this personal and tacit knowledge into codifiable knowledge together with reduced levels of uncertainty (both among new venture members and external stakeholders) results in increasing degrees of outsourcing (Brahm & Tarziján, 2016;Weigelt & Miller, 2013).…”
Section: Discussionmentioning
confidence: 99%
“…In contrast, when none of the members of the founding team have technological backgrounds, as of their inception new high technology ventures must rely on other new venture members' technological knowledge. This fact is likely to shorten knowledge codification processes, as these new venture members are required to articulate technological frames and search heuristics that allow them to work together (Brahm & Tarziján, ). In turn, intensified knowledge codification speeds up the contraction of vertical firm boundaries pertaining to technological domains (i.e., R&D activities), where the enhanced interaction among new venture members must involve knowledge codification. Hypothesis 3 (H3) Founders with technological backgrounds negatively affect the pace of contraction of new high technology ventures' vertical boundaries, with the strongest effect on R&D.…”
Research Summary
We argue that interrelated processes of knowledge codification and uncertainty reduction lead to the contraction of vertical firm boundaries of new high technology ventures over time. Consistent with our arguments, we show that, over time, outsourcing of R&D is slower than outsourcing of manufacturing, while outsourcing of marketing and sales is the fastest. Further, we show heterogeneity in the pace of vertical boundary contraction, where new high technology ventures that engage in knowledge exploration and those whose founders have strong technological backgrounds exhibit slower vertical boundary contraction. Typically, the slowdown in the pace of outsourcing, once again, is the strongest for R&D and the weakest for marketing and sales.
Managerial Summary
Cash‐constrained managers in new high technology ventures often wish to outsource their R&D, manufacturing, and marketing and sales activities, but initially may be limited in doing so. This likely happens because these new ventures rely heavily on founders' tacit knowledge about new products and how to commercialize them and because uncertainty makes it difficult to reach contractual agreements with external partners. We show that with time, such outsourcing becomes increasingly possible, especially for marketing and sales activities but less so for R&D. Yet, when new high technology ventures experiment with new products and in new high technology ventures whose founders have technological backgrounds, the pace of outsourcing is slower.
“…Ao recorrer a estes três ramos, estabelecendo inter-relações entre os mesmos ele possui natureza integrativa (BRAHM; TARZIJÁN, 2016;SHEPHERD;SUDDABY, 2016). Com efeito, optou-se pela combinação explícita de construtos subjacentes a estas três teorias, para a obtenção de um modelo integrativo dos custos de produção na empresa e no mercado.…”
Section: Natureza Epistemológica Da Pesquisaunclassified
Resumo: Um dos dilemas fundamentais da firma reside em executar determinada atividade no mercado, ou no seu interior. Na literatura é a economia dos custos de transação (ECT) que melhor permite esta análise, apresentando a forma de governança adequada para determinada atividade. Contudo, a ECT sozinha não permite analisar completamente esta questão, por não abordar em profundidade o papel da configuração dos recursos produtivos na eficiência de determinada atividade. Duas questões a este respeito ainda são prementes: Quais os fundamentos da eficiência do mercado e das firmas que definem o custo da atividade nestes dois meios? Qual é a estrutura comparativa dos custos relativa à execução de determinada atividade nestes dois meios? Diante destas duas questões este artigo tem por objetivo propor um modelo dos custos de produção na empresa e no mercado, baseado na eficiência dos fatores de produção e nos custos de transação. Esta proposta é feita à luz dos pressupostos da ECT, da organização industrial (OI) e da visão baseada nos recursos (VBR). Como principal resultado este modelo permite compreender como os custos de transação e a eficiência dos fatores de produção determinam o desenvolvimento das empresas e do sistema econômico como um todo.Palavras-chave: Economia dos custos de transação. Visão baseada nos recursos. Organização industrial. Eficiência dos fatores de produção. Teoria da firma.
Abstract:One crucial dilemma of the firm is how to perform a given activity, on market or internally. In the literature it is the transaction costs economics (TCE) which better allows this analysis, presenting the most adequate governance form to perform a determined activity. However, only this theory by itself does not allow a complete examination of this topic, as it does not deeply address the role of configuration of productive assets in the activity efficiency. Thus, two questions still remain: What are the underpinnings of the market and firms which determine the costs of the productive activities in these two settings? What is the comparative cost framework regarding the performing of a given activity in these two settings? Referring to these two research questions, the aim of this paper is to propose a model of production costs within the firm and the market based on the efficiency of production assets and on the transaction costs. This model is presented under the lights of TCE, industrial organization (IO), and resource-based view (RBV). As the main result this model allows a better understanding about how the transaction costs and the product asset efficiency determine the development of firms and the economic system as a whole.
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