PurposeWhen are organizations more or less likely to acquire external knowledge through purchasing management consulting services? The author argues that the difficulty of the decision problem and the complexity of the solution landscape increase the necessity and value of external management knowledge acquisition. The purpose of this study is to examine determinants of cross-country differences in management consulting spending. The author draws from the organizational search literature, the knowledge-based theory of the firm and transaction cost economics to develop the research hypotheses.Design/methodology/approachThe author empirically investigates the effect of a country's economic complexity, knowledge economy and transaction costs on management consulting using cross-country panel data of 24 European countries between 2004 and 2011 as well as hybrid random effects generalized least squares regressions.FindingsThe author documents that organizations are more likely to buy management consulting services when they navigate a complex economic landscape or compete in a knowledge-based economy. Furthermore, the author finds support for the negative effect of transaction costs in an economy on a country's management consulting expenditures.Originality/valueThe results of this study provide contributions to the literature on business knowledge purchasing and management consulting research.

Purpose Interlocking directorates are a common phenomenon across several markets around the world. Yet, the institutional environment and the role of corporate elites in forming board networks promote some developing markets as a unique setting to understand the corporate boards network structure. This study aims to first explore the board directors’ network of all publicly listed companies in Kuwait. This paper then evaluates the effects of exogenous factors and endogenous network structural processes on the likelihood of board interlock. Design/methodology/approach This study analyzes the interlocks network structures of 167 listed companies in 13 different market sectors in Kuwait relying on hand-collected directors’ data and using four measures of network centrality: betweenness, degree, closeness and eigenvector. The authors predict board interlocks using exponential random graph models (ERGM) and firm-level information from the Bloomberg database. Findings This study observes that both the firms and directors’ networks consist of 55 components, with the largest component containing about half of the total number of firms/directors. The firm’s network consists of one giant component of 85 firms, including all but one bank. This study shows the importance of endogenous network variables, such as the number of edges, centralization and triangles on the estimation of the factors that promote the board interlocks. Highly centralized firms are less likely to interlock with other firms, while two firms that are interlocked with a common third firm are more likely to interlock. Originality/value This paper is the first to analyze in-depth the structure of the directors network of companies in Kuwait. This study illustrates the complex map of interfirm and directors social networks in Kuwait. To the best of the authors’ knowledge, this study is among the first to exploit ERGM in the context of board interlocks to account for potential cross-dependencies and emergent network structures. Managers can identify the director interlock with other firms in the network and take advantage of the connection as a source of external knowledge and influence.

PurposeThis paper aims to integrate insights from the behavioral theory of the firm and the dynamic capabilities perspective to explain how the historical and social attainment discrepancies motivate firms to change. Specifically, this paper proposes that a negative historical attainment discrepancy encourages the firm to engage in strategic change to solve its performance problems. In contrast, this paper advanced that a positive social attainment discrepancy motivates strategic change as a mechanism to bolster the firm's position within the industry. Further, this paper integrated the moderating effects of industry dynamism and industry munificence.Design/methodology/approachThis paper tests hypotheses using panel data on 2,435 US public firms over the years from 1996 to 2018. This paper uses a fixed-effects regression model to empirically test these hypotheses.FindingsThis paper finds empirical support for the effects of both the negative historical attainment discrepancy and the positive social attainment discrepancy on the firm's tendency to engage in strategic change. As for the hypothesized moderating effects, this paper finds that industry munificence accentuated the effects of both attainment discrepancies on the firm's tendency to engage in strategic change. However, the results do not support the hypothesized moderating effect of industry dynamism on either of these attainment discrepancies.Originality/valueThis paper contributes to the research on the separate effects of historical and social comparisons within the context of strategic change. Further, the paper bolsters our understanding of how performance feedback increases the firm's tendency to change. Finally, the paper integrates theoretical views from the behavioral theory of the firm and the dynamic capabilities perspective on how socially high-performing firms may build and sustain their competitive advantage through organizational change.

Purpose: The objective of this study is to investigate behavioral antecedents and performance implications of broadening and reinforcing alliances. By integrating the behavioral theory of the firm, threat rigidity theory, transaction cost economics, and social exchange theory, the study explores how firms make choices on alliance portfolio reconfiguration and how these choices affect firm profitability and growth.Study design/methodology/approach: The study applies random-effects negative binomial regressions and system Generalized Method of Moments (GMM).Sample and data: A longitudinal dataset of Fortune 500 companies between 1995 and 2015 is used as the study sample.Results: The results of the study show that CEO career horizon has a positive effect on broadening and reinforcing alliances. The closer a firm is to bankruptcy, the less likely it is to form alliances with repeated or new partners. Firm slack has a positive effect on reinforcing alliances but no effect on broadening alliances. The research findings also indicate a negative effect of broadening alliances on firm profitability. There is a positive relationship between the count of reinforcing alliances and firm profitability and growth.Originality/value: The study develops and examines an alliance portfolio reconfiguration model that encompasses behavioral antecedents and economic consequences of the alliance partner selection decision. This study highlights the importance of balancing exploration and exploitation in strategic alliances.Research limitations/ implications: The findings of the study provide insights to managers for designing a firm’s alliance partners portfolio while pointing out the need for awareness and consideration of the behavioral heuristics exhibited by CEOs.

This study explores the heterogeneity in Open Source Software (OSS) contributions across countries and identifies differences in collaboration patterns that can explain the differences in activity levels between sampled countries. We show that countries with significant user followers on GitHub exhibit a large average membership in organizations. The results also highlight the developed countries as having a higher organizations-to-developer ratio. Based on NLP analysis of the bios of developers and organizations, we observe that countries that ranked high in GitHub activity tend to ascribe to the OSS ideology and exhibit entrepreneurial spirit. Users in countries that ranked low are likely to have students, academics, or independent security specialists engaged in GitHub activity. We hope that this work is a step towards building the necessary tools to understand OSS health across countries.

Purpose Management research has emphasized the effects of slack resources on the decision-makers’ strategic choices. Behavioral theorists have argued for a positive effect of slack through encouraging search and innovation while agency theorists have emphasized that slack can accentuate the principal–agent problem, which negatively affects firm performance. This paper aims to extend this argument and empirically investigate the separate effects of three types of slack resources (i.e. available, recoverable and potential) on firm performance in an important emerging market, namely, the Gulf Cooperation Council (GCC). Design/methodology/approach The two-step system generalized method of moments (Sys-GMM) is applied to a panel of 360 firms in the six GCC countries, namely, Kuwait, Saudi Arabia, UAE, Qatar, Oman and Bahrain, over the period between 1999 and 2019. Findings The authors find that available and potential slack are both negatively associated with firm performance. The relationship between recoverable slack and performance is quadratic (inverse U-shaped) where recoverable slack improves performance only up to a specific point, but after that level, recoverable slack starts to negatively affect the performance of the firm. Originality/value This paper contributes to the literature in three important ways. First, this paper advances a first attempt to differentiate between three separate types of slack on firm performance in the context of the GCC market. Second, this paper empirically investigates the presence of the principal–agent problem in the GCC market and relates it to the ongoing debate on the agency effects of slack resources. Finally, this paper underlines the effects of institutional frameworks and environments on the relationship between slack resources and firm performance.

Purpose The purpose of this paper is to investigate two competing hypotheses about the relationship between a country’s human rights violation and social entrepreneurship entry. Design/methodology/approach Using multilevel logistic regression with random effect, this paper tested the hypotheses on a sample of 110,460 individuals in 49 countries using data from Global Entrepreneurship Monitor’s Adult Population Survey and the Survey of Social Entrepreneurship for the year 2009. This paper takes advantage of the Cingranelli-Richards Human Rights Data Project to measure a country’s level of human rights protection. Findings Human rights are positively related to social entrepreneurship entry. The findings also indicate that public sector expenditure strengthens the relationship between human rights, measured by the judiciary independence and social entrepreneurship entry. Originality/value This study contributes to the social entrepreneurship literature by conducting a novel empirical investigation of the direct relationship between a country’s human rights and social entrepreneurship entry.

Purpose While most extant research focused on different dimensions of the entrepreneurs’ social network such as the size and quality of the network, the focus of this paper is on the extent to which entrepreneurs utilize their personal network with suppliers, competitors, customers, and government officials to support the operations of their ventures. This paper also takes into account the effects of industry level determinants that can influence the relationship between entrepreneurs’ personal network usage and young firms’ performance. Design/methodology/approach The paper employs confirmatory factor analysis and moderated hierarchical multiple regressions on a sample of 246 young firms in Kuwait. Findings The results indicate that entrepreneurs' personal network usage is positively associated with young firms' performance. The results also reveal that industry dynamism strengthens this relationship, while in hostile industries the relationship between network usage and young firms' performance becomes weaker. Originality/value The present study provides insights into how the extent of utilization of an entrepreneur's personal network affects the firm's performance. Furthermore, by unpacking how industry dynamism and industry hostility influence the entrepreneurs' ability to reap benefits from their personal networks, this paper enriches the research on the role of industry factors in the performance of young firms.

PurposeHow does corporate downsizing contribute to a firm’s long-term value? While the extant empirical findings on this relationship are inconclusive, contradictory and equivocal, the answers to this question remain particularly important in today’s business environment. Considering that downsizing is often directed toward long-term growth and survival, the authors posit that scholars should account for the temporal nature of this strategic decision to understand its economic impact on the firm’s operations. Therefore, the purpose of this paper is to provide a more rigorous empirical examination of how a firm’s decision to downsize its workforce affects that firm’s long-term value.Design/methodology/approachThe authors used Wibbens and Siggelkow’s (2020) measure of long-term investor value appropriation (LIVA) to directly observe the effects of corporate downsizing on firm long-term value and growth. Using a sample of 3,149 US publicly traded manufacturing firms that operated between 2002 and 2018, the authors tested the main effect of downsizing on LIVA and three boundary condition hypotheses.FindingsThe authors found a positive relationship between corporate downsizing and a firm’s long-term value. Interestingly, this positive relationship is stronger among firms that had high human resource slack and R&D intensity. Contrary to our expectations, the authors did not find support for the moderation effect of the proximity to bankruptcy on the relationship between corporate downsizing and a firm’s long-term value.Originality/valueWith these findings, this paper sheds light on the long-term implications of a firm’s decision to downsize its workforce.

What is the career background of formal and informal entrepreneurs and does this influence their formalization decision? We employ the theory of planned behavior, social identity theory and embedded career capital framework to develop hypotheses on how the new venture formalization decision is dependent on the entrepreneur's career history. We find that employment in a family business and in the private sector is related positively to founding a formal new venture. Furthermore, our results show that a career in the same industry as the new venture increases the likelihood of formalizing the venture. These findings emphasize the role of the career background in the entrepreneur's formalization decision through building embedded-career capital, influencing the social identity and determining the attitude toward starting a formal versus informal new venture.

An industry's potential for interdependency among productive activities is one of the central concepts in strategic management. Although theoretical models have clarified how and why industry average profitability should peak at moderate levels of interdependency, the empirical evidence so far has not supported the inverted-U-shaped relationship. By developing a measure that is based on how frequently pieces of knowledge are used jointly in technological inventions, we find strong support that confirms the predicted relationship between interdependency and industry average profitability. We also find evidence supporting an inverted- U-shaped relationship between interdependency and firm profitability. Moreover, our measure captures how the potential in interdependency may change over time within an industry. The temporal variation allows us to correct omitted variable biases, which poses concerns that weren't raised in previous studies. The measure is created from more than 1.93 million technological patents that have been approved by the U.S. Patent and Trade Office between 1901 and 1996. Since patent data are available to the public, future studies can readily build on our measure of industries' potential for interdependency.

Between start-ups, de novo firms created in the focal industry context, and diversifying entrants, de alio firms with experience from other industries, who is more likely to survive? While the extant research debates about the link between entry mode (de novo vs. de alio) and firm survival, we submit that the link is moderated by two industry-level heterogeneity about the potentials for recombining productive activities: (1) the potential for interdependence among productive activities; and (2) the potential for learning from an industry’s stock of recombinant knowledge. We find strong empirical support for a three- way interaction effect (entry mode x interdependence x recombinant knowledge stock) in an analysis of 13540 entry and 5616 exit events among 5911 firms across 252 products/services in the Internet and telecommunications industries covering 22 four-digit SIC codes in the U.S. during the boom-bust period of 1990-2003. The heterogeneity between industries in the potential for recombining productive activities enriches our understanding about the industry conditions under which start-ups outperform diversifying entrants in Schumpeterian competition. Beyond implications for researchers, our findings have important implications for practitioners and educators.

This paper examines how interdependency among productive activities (IPA), a form of combinatorial complexity at the industry-level, affects industry dynamics—entry, exit, and turnover (entry + exit) starting from an industry’s beginning. We develop an empirical methodology for measuring an industry’s potential IPA, which is one of the big challenges facing the research that seeks to explain industry structure and dynamics with an industry’s IPA. More importantly, we illuminate the effects of IPA on entry, exit, and turnover by examining population-level learning as moderators. Our paper suggests that shakeout in complex industries is more severe when population-level learning reveals “recipes for success” that illuminate tried-and-true paths for imitative entry. While the recipes increase the stock of knowledge about the industry’s IPA, paradoxically, population-level learning makes subsequent survival more difficult. This paradox associated with the interplay between combinatorial complexity and population-level learning in affecting industry dynamics highlights the boundary conditions under which prior research holds true. Our findings based on a longitudinal dataset covering 267 industries in the U.S. telecommunications sector during 1990-2003 provide empirical support. Contributing toward a population-level learning perspective on the link between combinatorial complexity and industry dynamics, this paper has implications for innovation and entrepreneurship.