Seminar on Technology Strategy
Session 2 : Strategy formation
Planned vs. Emergent Strategy & Resources
Resource-Based View & Resource Allocation
ODI-OM 석사1학기이상민
Mintzberg, H. and J. Waters (1985). “Of Strategies, Deliberate and Emergent.” Strategic Management Journal 6
< Summary >
The paper defines two strategies,which have different characteristics relatively. After defining and explaining about the characteristics and necessary conditions of pure deliberate and pure emergent strategy, the author explains about 8 different types of strategies from empirical studies(Planned, Entrepreneurial, Ideological, Umbrella, Process, Unconnected, Consensus, Imposed strategies) According to the paper, deliberate strategies are those strategies, which are intended while emergent strategies are ones with absence of intention. With these two poles of strategy, the paper suggests a model showing how intended strategy eventually becomes a realized strategy. The author allege that understanding the connection between different types of strategies and exploring the complex characteristic of various strategy forming process by delineating the concepts of deliberate and emergent strategy could suggest one way of strategic learning.
< Critique >
After reading the paper, I learned the definition of deliberate and emergent in terms of strategy and thought that firms should consider its current situation in the market when choosing what strategy to apply. Also, the model(figure1) showing how intended strategy eventually becomes a realized strategy was very interesting as I thought that it is explaining almost all aspects of strategy in one figure.However I found that although the paper describes and highlights the difference between each strategy, the exact point of distinction is somewhat ambiguous. Also, the 8 strategies introduced in the paper, which involves the characteristics of deliberate and emergent was results of 11 intensive case studies, so I thought that the models might involve some issues with generalization.In the similar context, as the paper derived its models, hypothesis as well as its results from empirical studies, it lacks statistical evidence that it has possibility of empirical riskiness.
Peteraf, M. (1993). “The Cornerstones of Competitive Advantage: A Resource Based View.” Strategic Management Journal, 14 (3)
< Summary >
The argument of the paper is based on Resource Based View, which sees a firm’s core competency is derived from the resource that the firm possesses.The purpose of the paper was to develop a general model of firm performance attributed to the allocation of resources and provide a common ground that further work can be preceded.The author suggests that how resources are applied and combined affects the firms’ competitive advantage. To justify this claim, the author explains with 4 conditions(4 cornerstones), which have to be met to sustain the firm’s competitive advantage. That is 1) Resource heterogeneity 2) Ex post limits to competition3) Imperfect resource mobility4) Ex ante limits to competition. After the brief explanation of these 4 factors, the author discusses about the application of the resource based model in two categories ; Single business strategy and the corporate strategy.
< Critique >
The suggestion of four cornerstones that a firm must gain to sustain its competitive advantage was interesting. TheResource Based View considers the internal resource as a factor, which have great impact on firms success. While there are many different theoretical approaches to firms’ retention of competitive advantage, Resource based view takes resource and its economic effect as main contributor of gaining and sustaining the competitive advantage.I thought that the author’s work of organizing various aspects of resource in a simple framework was impressive.However, I thought that although firm retains four cornerstones, which was introduced by the paper, it is not always the main contributor of gaining competitive advantage.I thought that some cases in high technology industries it is managerial activities, especially top executive’s cognition problem is more important than the resource allocation issue. Also, incase of resource heterogeneity, I think that superior process or products that help firms to produce goods at lower cost doesn’t cover all the cause of firm’s efficiency in producing process. There might be effects of experience curve of employers or economies of scope issue in the firm. On the other hand, I thought that by considering resource allocation as factor of attaining competitive advantage might help the firm to decide on make or buy selection. Due to imperfect mobility of the resources, important resources such as tacit knowledge, organizational context, firm specific technologies could not be transferred to the other firm. So, in firm’s view, they can make better choice when they encounter make or buy decision considering R&D cost or capability issues.
Noda, T. J.L. Bower (1996). “Strategy Making as Iterated Processes of Resource Allocation.” Strategic Management Journal, 17
< Summary >
The paper suggest a extension to fill critical gap of the B-B model byinvestigating managerial activities in multiple levels of organization, which eventually produce different corporate strategy. By comparing how and why the corporate context followed by managerial activities(responses)affect two very similar firms’ strategies in similar market(BellSouth and US WEST), the paper tries to reveal the critical reason that led one firm to success and the other to failure. The research was designed in longitudinal analysis to investigate the strategy making as iterated processes of resource allocation.The paper alleges that different corporate context stimulates the firm to make different business plans for its subsidiaries followed by development of different business strategies in initial local markets. That is, different corporate context function as a selector of internal selection environment, which determines the different patterns of resource allocation, generatingthe strategy among each firms
< Critique >
After reading the paper I learned that resource allocation has great impact on the path of firm’s success. The paper alleges that as corporate context affect managerial activities of top executives in the firm, who makes great contribution on deciding firm’s strategy. I agree that corporate context(in this paper, BellSouth as conservative and long term profit as goal, and US WEST as diversification oriented, and short term profit as the goal), as organizational cultures, which cannot be easily changed, affect the whole firms’ operational mechanism. However I think that it is the environment surrounding the firm, the market trend of very time, and emergence of new technology, which brings cognitive inertia to the managers rather than corporate context are the most critical factors. The managers of both BellSouth and US WEST recognized the importance of wireless telecommunication technology, but it was the attitude of persisting the strategy(From the start to the end) they have chosen relatively at the point of starting period of industry, whichdrove BellSouth to success and US WEST to failure. Both firms had strict organizational culture but only one overcame the denial of top executives’ attitude. I think much of these phenomenaare due to the cognitive inertia among managerial activities and this might be even stronger factor than corporate context. They should have prevented group thinking by using such method as devil’s advocate. I think that if firm choose a strategy, they have strong tendency to persist same strategy until they overcome the difficulties with great belief. However, the environment in market isn’t really like that. Being consistent with the corporate context is always necessary to obtain the identity and stability of the firm but in case of danger, firms’ should try to change its strategy, which might bringless than expected outcomes.