Purpose When managers set aspirations for their firms, they typically compare their own firms' performance to past aspirations as well as to the performance of social reference groups. The authors explore how firm generic strategy affects managers' adaptation of firm aspirations in response to feedback from three social reference groups that vary in terms of breadth (population average, strategic group, and one direct rival). Design/methodology/approach The authors propose that firm generic strategy (low-cost or differentiation) functions as an organizational information filter through with managers interpret performance feedback. The authors test for whether generic strategy has a moderating effect on the influence of performance feedback from social reference groups. Findings Based on a longitudinal sample of US airlines, the study shows that all firms are influenced most strongly by their strategic groups. Low-cost and differentiation generic strategies differ in terms of which social reference group motivates a larger reaction when overperforming: low-cost firms are more influenced by the population average which is contributed to by the entire industry than are differentiating firms, while differentiating firms are more swayed by the narrow focus of their direct rivals than are low-cost firms. Originality/value Although firm strategy represents a core decision at the firm level, to the best of the authors’ knowledge, performance feedback research, surprisingly, has not yet integrated generic strategy into its models.

When adapting aspirations, managers compare their firm's performance to their own past aspirations and to performances of social reference groups. In this paper, we explore how firms adapt their aspirations in response to comparison with three social reference groups and argue that generic strategy functions as a filter in the process of interpreting performance feedback. In a longitudinal sample of U.S. airline companies, we show that low cost or differentiation strategy moderates the performance feedback process in that firms with a well-defined generic strategy are heavily influenced by their own performance feedback when underperforming and the social reference groups that most closely align with themselves when overperforming.

AbstractThere has been much research interest in the speed of innovation, although few consistent findings have emerged. In this study, we unpack the innovation process and focus on the commercialization stage to examine two questions: Which licensor and patent characteristics determine the speed of licensing? How does the speed of licensing impact the royalties and lump-sum payments to licensors? We addressed these questions by proposing that licensing speed is influenced by variables for licensor prominence (size and experience), licensor knowledge structuration (technological depth, technological breadth and experience), and patent appeal (forward citations, scope and complexity). We predict and find that these variables work to increase the size, complexity and duration of the licensing-out task, while also allowing licensors to take their time to review, negotiate and select agreements with higher royalty rates. These findings are counter to arguments for a fast-paced innovation strategy, as it suggests that for the commercialization stage of the innovation process the relationship between licensing speed and licensor royalty rates rewards a less haste, greater payoff approach.

There has been much research interest in the speed of innovation, although few consistent findings have emerged. In this study, we unpack the innovation process and focus on the commercialization stage to examine two questions: Which licensor and patent characteristics determine the speed of licensing? How does the speed of licensing impact the royalties and lump-sum payments to licensors? We addressed these questions by proposing that licensing speed is influenced by variables for licensor prominence (size and experience), licensor knowledge structuration (technological depth, technological breadth and experience), and patent appeal (forward citations, scope and complexity). We predict and find that these variables work to increase the size, complexity and duration of the licensing-out task, while also allowing licensors to take their time to review, negotiate and select agreements with higher royalty rates. These findings are counter to arguments for a fast-paced innovation strategy, as it suggests that for the commercialization stage of the innovation process the relationship between licensing speed and licensor royalty rates rewards a ‘less haste, greater payoff approach.

To understand why some patents get licensed and others do not, we estimate a portfolio of firm- and patent-level determinants for why a particular licensor's patent was licensed over all technologically similar patents held by other licensors. Using data for licensed biopharmaceutical patents, we build a set of alternate patents that could have been licensed-in using topic modeling techniques. This provides a more sophisticated way of controlling for patent characteristics and analyzing the attractiveness of a licensor and the characteristics of the patent itself. We find that patents owned by licensors with technological prestige, experience at licensing, and combined technological depth and breadth have a greater chance at being chosen by licensees. This suggests that a licensor's standing and organizational learning rather than the quality of its patent alone influence the success of outward licensing.

Information technology (IT) services vendors operate in a highly competitive but also institutional environment that render their service-line offerings mutually observable. This suggests that imitation of rivals’ decisions can be an efficient means for IT vendors when reconfiguring their service-line offerings. To explore how such imitation unfolds in this sector, we estimate a series of logistic regression models of 116 IT vendors’ service-line choices over three time periods. First, from the strategic imitation literature we identify the key imitation “referents,” which is a group of firms or a single firm with specific traits, and we test the relative influence of each referent. All of our analysis includes these referents as predictors of service-line choice. Next, we tested more nuanced models using theoretically guided subsamples as follows. One, based on information systems (IS) literature, we consider the IT vendors as embedded in three distinct “institutional spheres,” each corresponding to a knowledge domain, namely, technical, functional, and vertical industry domains. We separately examine imitation in each subsample corresponding to the three types of service lines. Two, based on strategy literature, we consider that the influence of the imitation referents differs when the choice under consideration is the addition of a new service line versus a withdrawal. Our results across all of these subsamples uncover a nuanced pattern of imitation that sometimes contrasts the full-sample results. The most prominent result is that although imitation is highly salient, the different imitation referents are not universally influential across all knowledge domains and between development versus withdrawal decisions. Specifically, the imitation of similar firms is widespread, whereas the imitation of largest firms or offering popular service-lines, which indicates bandwagon effects, are at play only selectively. This study contributes to the IS literature by laying a basis for a variety of research directions including resource spillovers and vicarious learning in IT sectors.

Purpose - The purpose of this paper is to determine what the effects of acquisition are on R&D patterns.Design/methodology/approach - This paper tests whether the actual post-acquisition R&D intensity of the combined firm deviated from the predicted R&D intensity, where the predicted amount is an asset-weighted average of pre-acquisition values.Findings - The results indicate that the combination of technology sourcing and technological relatedness have strong predictive powers for determining changes in post-acquisition R&D intensity. Technology sourcing acquisition of unrelated technologies results in an increase in post-acquisition R&D intensity, as predicted. Acquirers in this situation may be using their acquisition as a platform for research expansion.Research limitations/implications - The dataset used in this paper was restricted to public acquirers and targets for completeness of financial information. It would be useful to determine the extent to which a technology sourcing acquirer is predicted to enter into an acquisition and also whether technology sourcing can be used as a predictor for the ultimate target company out of a pool of potential targets.Practical implications - The results can be used to inform managers on a strategic level when research strategy deviates from what the theory would predict. For example, if a company that did a technology sourcing acquisition of an unrelated product subsequently decreased R&D intensity, then rival pharmaceutical firms can ascertain that the acquired research was ultimately determined to be too risky or unviable.Originality/value - The value in this paper is the unique measurement for technology sourcing.

Purpose The purpose of this paper is to determine what the effects of acquisition are on R&D patterns. Design/methodology/approach This paper tests whether the actual post‐acquisition R&D intensity of the combined firm deviated from the predicted R&D intensity, where the predicted amount is an asset‐weighted average of pre‐acquisition values. Findings The results indicate that the combination of technology sourcing and technological relatedness have strong predictive powers for determining changes in post‐acquisition R&D intensity. Technology sourcing acquisition of unrelated technologies results in an increase in post‐acquisition R&D intensity, as predicted. Acquirers in this situation may be using their acquisition as a platform for research expansion. Research limitations/implications The dataset used in this paper was restricted to public acquirers and targets for completeness of financial information. It would be useful to determine the extent to which a technology sourcing acquirer is predicted to enter into an acquisition and also whether technology sourcing can be used as a predictor for the ultimate target company out of a pool of potential targets. Practical implications The results can be used to inform managers on a strategic level when research strategy deviates from what the theory would predict. For example, if a company that did a technology sourcing acquisition of an unrelated product subsequently decreased R&D intensity, then rival pharmaceutical firms can ascertain that the acquired research was ultimately determined to be too risky or unviable. Originality/value The value in this paper is the unique measurement for technology sourcing.

A technology motivated acquirer can use a target's technology to supplement or substitute for its own internal research, The Impact of the extent of integration on post-acquisition performance is further complicated by the effects of pre-acquisition research relatedness between the target and acquirer. This study determines the integration and research relatedness of acquisitions in the US biopharmaceutical industry during the 1990s and then examines their impact on profitability. The results indicate that related research that supplements (or is integrated into) internal research increases post-acquisition profits as does unrelated research which substitutes for (or Is kept separate from) internal research.

This paper empirically investigates the profit impact of externally sourcing technology through acquisition. Specifically, it questions whether biopharmaceutical acquirers benefit from taking over technologies which are pre-marketed more than those that have already been approved for market. This paper utilizes the resource-based view to determine that the decision depends on the relative value chains of the acquirer and target. We assert that companies with lower research and development (R&D) intensity than their targets benefit from acquisitions of pre-marketed drugs more than they would with marketed drugs because of a complementary combination of competitive assets. Estimations from the U.S. biopharmaceutical sector in the 1990s show that acquirers that take over pre-marketed drugs from targets with higher R&D intensity than themselves have post-acquisition returns between 2% and 11% higher than if they took over marketed drugs.

Innovation, Strategy and Canada's Forest Products Industry Author(s): Steve Globerman, Masao Nakamura, Karen Ruckman, Ilan Vertinsky Source: Canadian Public Policy / Analyse de Politiques, Vol. 24, Special Supplement 2 on Forestry Issues in Canada (May, 1998), pp. S27-S40 Published by: University of Toronto Press on behalf of Canadian Public Policy Stable URL: http://www.jstor.org/stable/3551877 Accessed: 08/11/2008 19:57

There were a large number of US drug company takeovers in the 1990s by both foreign and domestic acquirers. Observation of the absolute difference between target and acquirer R&D intensity suggests there is no difference between foreign and domestic technology-sourcing patterns. However, a firm-level estimation of the acquirers' choice of targets reveals that foreign and domestic acquirers differ with respect to the relationship between target and acquirer R&D intensity. Foreign acquirers with low R&D intensity choose targets with high R&D intensities, which suggests technology sourcing as a motivation. Domestic acquirers prefer targets with high R&D intensities the higher their own R&D intensity, which suggests a synergy story.

U.S. mutual fund companies offer funds in Canada through two channels: foreign direct investment or trade in advisement services. The total value of U.S.-controlled funds amounts to 18% of the Canadian equity fund market. This paper investigates how the fund-level and firm-level characteristics affect the channel used to enter the Canadian market. Empirical results indicate that the funds offered through FDI are not especially successful in the U.S. market but are associated with dominant companies, whereas the funds offered through trade in advisement services are highly successful in the U.S. market and are from companies with relatively few successful funds.

The average expense ratio paid by Canadian mutual fund investors is 50% higher than that paid in the United States. This discrepancy is commonly thought to exist because Canadian funds do not take advantage of economies of scale and have less competition. A monopolistic competition framework is used to develop a model for the mutual fund industry. By allowing each fund to have different attributes, the model permits funds to charge different expense ratios in equilibrium and is found to strongly fit the North American mutual fund market. Empirical analysis indicates that these two common explanations and measurable fund attributes account for 24% of the discrepancy.

This paper investigates why Japanese investors in the United States tend to locate foreign affiliates near concentrations of U.S. and Japanese establishments in their own industry. We hypothesize that the tendency to agglomerate varies according to attributes of industries, and our empirical analysis relates various industry characteristics to the probability that a Japanese investor will locate a plant in proximity to similar firms. Our results provide evidence that agglomerative forces are stronger in natural resources industries and industries that use their own sector's output intensively. We also find that Japanese manufacturers with high transport costs displayed greater tendencies to cluster, perhaps around geographically concentrated downstream purchasers of their products.

This study identifies the changes affecting the Canadian forest products industry and relates those changes to imperatives facing Canadian firms to modify their corporate and business-level strategies. The paper investigates the role of innovation strategies and suggests changes to institutional arrangements that indirectly or directly accommodate them. More secure forestry tenure arrangements and a change in policies toward industry concentration are indirect ways of inducing innovation. The government's position in an effective innovation strategy involves research focusing on forest environment while the emphasis of cooperative labs would be on basic or precompetitive research in wood products. All the recommendations act to increase the incentives of private investors to innovate by capturing a greater share of the returns of their own innovations.