This paper responds to growing calls within the international business (IB) research community for methodological innovation to better address the field’s inherent complexity. It explores how insights drawn from complexity science—particularly the concept of complex adaptive systems—can enhance IB research. Through a review of relevant literature and case studies, the paper demonstrates how complexity theory can inform new research paradigms and schools of thought in IB. At the same time, it argues that even a basic understanding of complexity theory can help IB scholars achieve greater conceptual clarity and develop more robust theoretical explanations in their ongoing work.

Although the importance of serendipity in international entrepreneurship is well established, no one has yet inquired into what level of serendipity best enables firms to discover and exploit opportunities. This paper conceptualizes serendipity as evolutionary drift and draws on the theory of neutrality from evolutionary biology to quantify the degree of serendipity that born-global firms (BGs) adopt in pursuit of opportunities modeled as a set of performance peaks on an evolutionary performance landscape. Using an enhanced version of NKC methodology, computer simulations test variations among BGs in terms of their organizational structure, levels of complexity, and the degree of neutrality, which is used as a proxy for reliance on serendipity in opportunity search. Contrary to expectations of an inverted U-shaped relationship between serendipity and BG performance, the simulations provide strong evidence for a U-shaped relationship. In other words, performance is higher when BGs rely on either a high degree of serendipity (high neutrality, wide scope of opportunity search, high level of exploration) or a low degree of serendipity (low neutrality, narrow scope of opportunity search, low level of exploration). In more practical terms, this finding suggests that BGs can achieve high performance in their opportunity search by putting their employees or subunits either on a "tight leash" (low serendipity) or on a "loose leash" (high serendipity) in pursuit of opportunities but should avoid medium degrees of serendipity.

This paper highlights the importance of integrating complexity theory and complex adaptive systems into the study of international business. Multinational corporations have to cope with complex and rapidly changing environments, which requires implementing mechanisms for decentralized evolution of the organization so that they can adapt dynamically while maintaining coherence. Viewing multinational corporations through the lens of complexity theory provides valuable insights for managers and practitioners, equipping them to adapt to modern global business environments more effectively.

Lopsided Schumpeterian competition and the emergence of 'superstar' firms are examined in the flat-panel display industry, where the difficulty of commercialising active-matrix OLED (AMOLED) flat panels led to patterns of innovation and competition vastly dissimilar to those that had prevailed in Liquid Crystal Display (LCD) flat panels. Applying the concept of a Schumpeterian 'Ultra-Mark II' technological regime, the study sheds light on how superstar firms build industry dominance through R&D and the building of exclusive supplier networks when their industry (or a certain segment of it) morphs into a quasi-monopolistic type of arena.

This paper examines technology startups whose initial offering is not a tangible product or service, but rather a technology used in the production process of goods and services of other firms. These “process niche firms,” as we call them, represent an emerging and increasingly common feature of the digitized economy. As part of their search for a suitable business model – be it products, services, and/or outright licensing of intellectual property – process niche firms engage in early internationalization in order to gain relevant market knowledge and identify possible business partners. A framework is derived to examine the internationalization pattern of such firms. The paper draws on four illustrative case studies providing insight into how such process niche firms “prospect” in foreign markets prior to deciding on the business model that suits them best. Early in their life cycle, process niche firms may decide to locate their headquarters in a different country in closer proximity to relevant markets and partners, as their high knowledge intensity and dearth of tangible assets makes them highly movable. Later in their development, process niche firms will likely evolve into other types of firms, depending on the business model they ultimately choose and the process that they follow.

The paper models the MNE as a complex adaptive system and investigates the effects of lateral collaboration on performance at both the MNE and subsidiary level. Applying the NKC and rugged landscapes methodology, computer simulations are conducted to explore the boundary conditions governing lateral collaboration in MNEs. At the MNE level, the results show that the success of lateral collaboration across subsidiaries is related to the level of within-subsidiaries collaboration, which is a measure of internal complexity. More specifically, increasing the level of lateral collaboration above the level of internal complexity results in inferior performance and hence internal complexity represents an upper limit on productive lateral collaboration. At the subsidiary level, the results indicate that flatter structures generally outperform hierarchical ones. They also point to the advantage of concentrating the responsibilities for lateral collaboration within the subsidiary in the hands of one or few boundary spanners.

Purpose The purpose of this paper is to develop the hitherto unexplored concept of strategic discipline. Design/methodology/approach Three fairly iconic firms of the Germanic Mittelstand (ALDI, Stihl and Hipp) are examined. The meaning and relevance of strategic discipline is derived. Findings Intuitively, strategic discipline may seem like the antipode to the much-discussed concept of pivoting. In fact, strategic discipline is shown to be the natural corollary of strategic pivoting as a successive phase in a company’s development. Research limitations/implications In fast-moving or fast-changing environments, strategic discipline may be inappropriate. Furthermore, the exercise of strategic discipline can restrain growth. Once firms have attained a certain size and saturation of the market, the desire for further growth may entail a willingness to loosen the hold of strategic discipline. Practical implications Strategic discipline can enable firms to avoid falling into common strategic pitfalls. From this paper, the authors distill three basic dimensions of strategic discipline: cultivating simplicity, resisting short-term temptations and focusing on implementability. Originality/value The success of firms depends as much on the strategic choices they make as upon the strategic choices they decide not to make. Most prior research has focused on the visible strategy choices companies have made a lot more than on the practically invisible history of strategic choices that firms have not made. This contribution does the opposite, filling an evident gap.

PurposeThe paper explores the nature and facilitating conditions of “stewardship organizations,” that is, organizations in which stewardship behavior rather than principal–agent behavior defines the operative principles of management.Design/methodology/approachThe paper falls into two parts: the first part of the analysis develops a theory of the stewardship organization, and the second part develops a contingency framework concerning the feasibility of stewardship organizations.FindingsStewardship organizations are characterized by three interlocking traits: (1) the overall mission of the organization, (2) the organization's internal control systems and (3) the “motivational environment” of the stewardship organization. Since stewardship organizations cannot be identified on the basis of stated mission alone, it is necessary to determine whether the mission involves a higher calling that has been internalized by organizational members to the point of constituting a vital part of how the organization runs on a day-to-day basis.Practical implicationsOne key role of leadership in such organizations is to manage mission drift and to reduce the ambiguity of the mission and organization goals.Social implicationsLitmus tests are proposed for identifying an authentic stewardship organization in contradistinction to those whose socially minded values are ancillary or a marketing ploy.Originality/valueThis is the first systematic attempt to characterize the stewardship organization. After providing three specific examples of such organizations, the contribution identifies key markers of bona fide stewardship organizations.

PurposeThis paper aims to explore hidden wellsprings of risk-taking in family firms.Design/methodology/approachThe high tolerance for risk shown repeatedly by the famous family firm Hipp of Germany is documented. Three major risk-taking episodes at Hipp are examined.FindingsCounterintuitively, conservative values were actually a major facilitator of risk-taking at Hipp.Research limitations/implicationsThe ramifications for other family firms, especially in Germany’s so-calledMittelstand, are examined. An open question is whether the relevant scope of the foregoing analysis may be confined to national contexts like GermanMittelstandwith its highly developed sector of family firms.Practical implicationsContrary to received wisdom, family firms with conservative values may actually have certain advantages in their capacity not only to assume certain types of risks but also to mitigate such risks. Especially the communitarian embeddedness of such values may provide a layer of risk mitigation.Social implicationsAt least in some countries, such as Germany, family firms are indeed willing to engage in substantial risk-taking. With their approach of combining conservative values and risk-taking, they contribute to considerable wealth and societal development.Originality/valueConservatism in management and risk-taking propensity are usually thought of as antipodes. However, it is necessary to distinguish between conservatism (which usually equates to risk aversion) and conservative values (which, as shown, may be highly compatible with a willingness to engage and succeed in risky undertakings).

Purpose Although resource dependence theory (RDT) has substantially deepened the understanding of the function and role of boards, no systematic review of this body of work has yet been undertaken. The purpose of this paper is to synthesize prior research on the strategically relevant resources provided by board members to their organization in the light of RDT and indicate avenues for future research. Design/methodology/approach The review covers 79 research articles from 1978 to 2016 dealing with the resource provision of boards of directors. Findings Board capital research most often assumes a positive, linear relationship between board capital, resource provision and ultimately firm-level performance outcomes. This tendency tends to exclude from view the possibility of important trade-offs relevant to both theory and practice. Future research will need to incorporate more complex models that take into consideration nonlinear and curvilinear effects. The authors outline opportunities to advance board research by refining the methodological techniques employed. Originality/value By recommending investigation of the important trade-offs inherent in board composition, the authors seek to inspire future research that offers practical guidance for improving the effectiveness of corporate boards.

High-tech industries often give rise to races. This study explores the phenomenon of the technology dropout race. A dropout race occurs when many firms enter to explore a n...

In industries characterized by continual progress from lower to higher generations of technology, firms seek to solidify their competitive position by deploying technologies more advanced than their current ones. This study attempts to provide behavioral explanations for the degree of technology advancement pursued by a firm. Using data from the flat panel display industry, we find that the extent of a firm's technology advancement is largely determined by how far it falls below the industry average. Our findings complement prior research on technology races by suggesting that firms in the thin-film-transistor liquid-crystal display (TFT-LCD) industry largely attempt to run a “marathon” rather than a sprint: the degree of technology advancement is mainly guided by a desire not to fall behind the pack as opposed to trying to move ahead of the pack in order to win the race. By the same token, firms exceeding the industry average in their technology reveal little motivation even to maintain their lead, much less extend it.

The design evolution of two important process-based technologies, PCR DNA amplification and ERP software, was punctuated by discrete leaps in scale. From comparison of these technologies we distill a stage model centering on the phenomenon of increasing scale while clarifying just what the concept of scale means in the context of process-based technologies. Process-based technologies turn out to be distinctive because of the temporal aspect of scaling; although scaling up usually refers to spatial dimensions of scale, this research highlights the temporal dimension to scale. Temporal scaling can be complemented by multiplicative scaling, a design innovation enabling multiple processes to be performed in parallel. After highlighting different patterns of innovation from those that characterize manufactured products as conveyed by classic product-process lifecycle models, we reconcile our stage model with these classic lifecycle models: although the sequence of innovation phases is different, the overall evolution of the underlying economic logic motivating technology developers is actually rather similar.

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PurposeThis paper aims to provide a novel way of thinking about firm internationalization. We offer a stylized view of family firms as internationalizers who choose to engage in “boundary-spanning” across global product markets while engaging in “boundary-buffering” to insulate themselves from global financial markets.Design/methodology/approachThe case of Germany, with its large stock of internationalized family firms, shows how boundary-bufferingvis-à-visglobal capital markets can be compatible with successful and sustained internationalization and boundary-spanning in global product markets. Statistics are supplied.FindingsTo compensate for the lack of resources stemming from their abstinence from global financial markets, German family firms draw on country-specific conditions favorable to the proliferation of large internationalized family firms. Insights from the German case serve to derive propositions.Originality/valueThe developed concept of an internationalization pathway for family firms contrasts with the much more established concept of an internationalization process for family firms. The contrast between a “pathway” and a “process” amounts to the distinction between ends and means: the internationalization pathway (as defined here) has largely to do with strategic choice, whereas the internationalization process (as defined in the literature) focuses more on barriers to internationalization and means for overcoming them.

Resource-and capability-based models of firm strategy gain in analytical power by incorporating some of the organizational trade-offs that firms face in choosing between alternative capability building strategies. Based on the well-documented trade-off between flexibility and commitment inherent in social systems, this paper argues that firms must choose between evolutionary and revolutionary 'capability regimes'. Empirical evidence drawn from the race of European airlines to develop critical revenue management capabilities is cited to illustrate the theory and practical relevance of capability regimes.

Family firms dominate the German economy statistically, employing over half of all employees in the private sector. Many German family firms were quiet beneficiaries of globalization and grew substantially in the past decades. Consistent with the notion that patient capital requires certain vectors of 'engagement' to ensure it functions in ways aligned with the interests of key stakeholders, we examine how engagement works at the local level of family firms embedded in their home communities as well as at the national level: within Germany's 'coordinated' variety of capitalism the family sector maintains deep economic ties with the nonfamily sector (symbiosis) at the same time that it grows more institutionally distinct from it (bifurcation).