Strategic renewal consists of three subprocesses (competence definition, deployment, and modification). Within each subprocess, the roles of top-, middle- and operating-level managers differ in their time horizon, information requirements, and core values. Dissensus in managers' perceptions about the need for change creates strategic role conflicts within individual managers and between managerial roles. In this article we explain when and where strategic role conflict occurs and how organizational controls may be used to alleviate it.

Prior research on M&As and invention outcomes has not systematically examined the influence of two types of knowledge differences. Knowledge relatedness has typically been equated with knowledge similarity and the separate influence of knowledge complementarity has been overlooked. Similarly, studies examining innovation outcomes of M&As have typically focused on the role of technological knowledge and overlooked the influence of scientific knowledge. We develop a model of relatedness and invention performance of high-technology M&As that considers science and technology similarity and complementarity as important drivers of invention. We test the model using a sample of M&As from the drug, chemical, and electronics industries and a fine-grained measure of knowledge relatedness that distinguishes between science and technology relatedness. We find that complementary scientific knowledge and complementary technological knowledge both contribute to post-merger invention performance by stimulating higher quality and more novel inventions. This suggests that high-technology firms seeking acquisitions should search for, identify, and acquire businesses that have scientific and technological knowledge that is complementary to their own. Our results also suggest that similarities in knowledge facilitate incremental renewal, while complementarities would make discontinuous strategic transformations more likely, and that absorptive capacity research should be expanded to consider complementarities as well as similarities.

We use the term ‘strategic renewal’ to refer to an evolutionary view of strategic change (Barnett and Burgelman, 1996; Burgelman, 1983; Huff et al., 1992; Nelson and Winter, 1982). It is an iterative process of belief, action and learning that can align the organisation’s strategy with changing environmental circumstances (Doz, 1996; Huff et al., 1992; Johnson, 1988). Long periods of incremental adjustment (single loop learning) are broken by bursts of revolutionary change (double loop learning) (Argyris, 1976; Gersick, 1991; Tushman and Anderson, 1986). Successful strategic renewal overcomes the inertial forces embodied in the organisation’s established strategy and closes the gap between its existing core competencies and the evolving basis of competitive advantage in the industry (Agarwal and Helfat, 2009; Burgelman, 1991, 1994; Huff et al., 1992; Hurst et al., 1989).

Prior research on M&As and invention outcomes has not systematically examined the influence of two types of knowledge differences. Knowledge relatedness has typically been equated with knowledge similarity and the separate influence of knowledge complementarity has been overlooked. Similarly, studies examining innovation outcomes of M&As have typically focused on the role of technological knowledge and overlooked the influence of scientific knowledge. We develop a model of relatedness and invention performance of high-technology M&As that considers science and technology similarity and complementarity as important drivers of invention. We test the model using a sample of M&As from the drug, chemical, and electronics industries and a fine-grained measure of knowledge relatedness that distinguishes between science and technology relatedness. We find that complementary scientific knowledge and complementary technological knowledge both contribute to post-merger invention performance by stimulating higher quality and more novel inventions. This suggests that high-technology firms seeking acquisitions should search for, identify, and acquire businesses that have scientific and technological knowledge that is complementary to their own. Our results also suggest that similarities in knowledge facilitate incremental renewal, while complementarities would make discontinuous strategic transformations more likely, and that absorptive capacity research should be expanded to consider complementarities as well as similarities. Copyright  2010 John Wiley & Sons, Ltd.

The purpose of this study is to test the argument that a technological community responds to technological maturity by increasing its use of science in innovation. This prediction is tested via panel data analysis of 32 technology communities drawn from US manufacturing industries during 1985–1997. Results support a positive association between a community's technological maturity and its use of science in innovation three to five years later. Post-hoc analyses forecast when 23 US communities may become dominated by science-based innovation.

Building on macroeconomic research on technology searches in response to diminishing technological opportunities, we develop an industry‐level search theoretic model of productivity, knowledge sources, and innovation. We argue that increasing the use of science in technology development increases the novelty of ideas in the innovation search distribution and thus increases the likelihood of finding productivity improvements. We also propose that this relationship will hold outside the traditional science‐based industries (pharmaceuticals, chemicals), and that there is no similar relationship between productivity and non‐science patents. Random effect analyses of 32 US manufacturing industries during 1985–1997 support these hypotheses.

Building on the agency view of corporate governance, we propose that technology-intensive firms use both outcome and behavior-based performance criteria for rewarding CEOs. Using a sample of 206 firms from 12 U.S. manufacturing industries, we find that as technological intensity increases CEO bonuses are more closely linked to financial results and that total CEO incentives are associated with two indicators of desirable innovation behaviors: invention resonance and science harvesting. Invention resonance refers to the impact a firm's inventions have on other firms' inventions, while science harvesting reflects a firm's commitment to scientific research. As technological intensity increases, aligning bonus with financial results, total incentives with invention resonance, and total incentives with science harvesting predict firm market performance. Copyright (c) 2006 John Wiley & Sons, Ltd.

We conduct a detailed analysis of 289 absorptive capacity papers from 14 journals to assess how the construct has been utilized, examine the key papers in the field, and identify the substantive contributions to the broader literature using a thematic analysis. We argue that research in this area is fundamentally driven by five critical assumptions that we conclude have led to its reification and that this reification has led to stifling of research in this area. To address this, we propose a model of absorptive capacity processes, antecedents, and outcomes.

This study examines the link between a firm's science intelligence capability, and the quantity and value of the patents that it produces. Modelling absorptive capacity as an innovation knowledge funnel, we propose that a firm's science intelligence capability rests on two sets of processes: managing its potential absorptive capacity (PACAP) and managing its realised absorptive capacity (RACAP). Measuring PACAP as the breadth of a firm's scientific activities and RACAP as its ability to identify and abandon poor performing areas of science, we test our theory using a sample of US and non-US firms in the chemical, electronics, and pharmaceutical industries. Moderate to strong support is found for our hypotheses.

We propose a model of cultural differences and international alliance performance to explain the ambiguous findings regarding the influence of national culture differences on alliance performance. Building on research on national, organizational, and professional cultures, we argue that the closer the domain of a social group is to the value-creating activities of an alliance, the more disruptive cultural differences between the partners' members of that social group will be. Organizational culture differences will tend to be more disruptive than national culture differences, and differences in the professional culture most relevant to alliance value creation typically will be the most disruptive. Implications for research and managerial practice are discussed, and the model's relevance for international R&D alliances is highlighted.

This article describes how shared mental models influence the strategic management of firms. Research has identified several types of shared mental models that influence how managers perform their strategic roles and make decisions. While this stream of research has provided new insights into the context for strategic roles and decisions, it has two major limitations. This article attempts to address these limitations. The researchers begin by reviewing the strategy research on shared mental models (national culture, administrative heritage, dominant logic, communities of practice). To this set the researchers add another type of shared mental model that has received less attention from strategy research--the routines that guide the productive activities of functional or professional units. The researchers suggest that these mental models form two sets of partially nested influences. At the macro level, a firm's dominant logic is influenced by its administrative heritage, which is itself a function of the national culture. At a micro level, a unit's routines are influenced by the perceptions, beliefs, and norms of the community of practice to which its most influential members belong. Next, the researchers argue that within a firm the greatest risk of mental model conflict occurs at the intersection of the macro and micro sets of models.

Absorptive capacity is one of the most important constructs to emerge in organizational research over the past decade. It has led to a stream of over 200 papers covering many contexts. This paper assesses the content and contributions of absorptive capacity research to date and explores its future directions. It begins by briefly summarizing Cohen and Levinthal's discussions of absorptive capacity in their 1989, 1990 and 1994 papers. Next, it presents a thematic analysis of absorptive capacity research. 189 papers from 12 leading journals and two recent conferences were coded and classified using an iterative process until agreement was reached among all three authors. This identified seven major themes in absorptive capacity research: definitions of absorptive capacity, knowledge characteristics, knowledge transfers, organizational learning, innovation, corporate scope, and alliances. The theory, methods and findings of key papers within each theme are then briefly discussed and three major problems with absorptive capacity research identified. First, the construct's assumptions are no longer being acknowledged, let alone questioned, and there have been few efforts to refine Cohen and Levinthal's definition. Second, it is increasingly used as a convenient catch-all-phrase to capture anything within the firm that relates to the acquisition, assimilation, or integration of knowledge. Third, there have been few efforts to explore the organizational processes which underlie each dimension of absorptive capacity (identifying, assimilating, and applying external knowledge). The paper closes with a discussion of future research that is needed to address these problems and to exploit emerging opportunities in absorptive capacity research.

Research on international alliances has identified the compatibility of alliance partners’ national cultures as a critical success factor. National culture is believed to matter as it helps shape the dominant logic that each firm uses to identify, frame, and respond to internal and external cues. We extend that perspective beyond national culture by looking at the ways in which a firm’s communities of practice can influence its dominant logic and, hence, its potential fit with alliance partners. Focusing on international research and development intensive (RDI) alliances, we propose that a subset of a dominant logic, research logic, can be as important a factor as national culture in determining alliance success. Simply put, cross-lab bench fit matters as much as cross-cultural fit in international RDI alliances.

Executive Summary Mergers are back! The 1990s are witnessing a wave of mergers that rivals the size of those of the 1980s and 1960s. Proponents whisper that these mergers are fundamentally different from the earlier waves, that managers have learned their lessons, and that the underlying logic has fundamentally changed. But are they really that different? Do the mergers of the 1990s represent a new and improved approach to corporate strategy, or are executives and deal-makers simply rationalizing old habits? We contend it is useful to review the misinformed beliefs that drove mergers in past decades, and as these “merger myths” continue to influence managers today. It is our intent to dispel some of the myths surrounding mergers and provide a useful set of recommendations to effectively plan and execute mergers in a manner which creates enduring value.