Abstract

Research Summary Activist hedge funds are the new breed of corporate raiders, yet we know little about how the management and board of target firms respond to activist investors. Using a behavioral perspective, we propose that an activist's reputation for being confrontational conveys information to the target company as to what they are likely to encounter in an activist campaign. To avoid the potential adverse consequences of engaging in such a contest, we propose and find that target companies are more likely to settle with an activist known for being confrontational. Our study contributes to corporate governance research by providing insight into the importance of the social context surrounding activist campaigns and the role of reputation in influencing how companies respond to activist investors. Managerial Summary Given that hedge fund activism is having a major impact on firm's strategic and financial decision-making, it is important to understand how these activist investors influence companies. An activist campaign is a highly disruptive event leading to considerable ambiguity and uncertainty as to what is likely to transpire. Given this information void, our study finds that the board and management respond based on the reputation of the activist investor that has taken a stake in the company. That activist investors with a reputation for being hostile are more successful may be a defensive response on the part of management in order to avoid the potential adverse consequences of a hostile campaign. This has implications for corporate governance and the fiduciary duty of the board. Keywords

Keyword

activist hedge funds ;  corporate governance ;  executive decision-making ;  market signaling ;  reputation

Abstract

We investigate the role of high distance in trust erosion between small partners. High distance is known to hinder the formation of trust between potential partners, but its role in trust erosion in established partnerships is less understood by international business scholars. Through a qualitative longitudinal study, we extend current theory of how high distance affects the trust dynamics between cross-border partners. Specifically, we unearth three interrelated mechanisms that together explain how and why trust can erode due to high distance. We show that, before a partnership is formed, high distance can lead partners to erroneously attribute cues to a potential partner's high quality, leading to over-expectations of partner performance. Once the partnership is operational, high distance hinders actors' ability to understand situational factors associated with disappointing outcomes, and so they are attributed to failings of the partner. At the same time, distance-related challenges of bounded reliability render partners reluctant to discuss partnership outcomes. This can result in a vicious cycle of inertia as partners strive to protect goodwill while abandoning efforts to produce partnership outcomes because of doubts of the other's quality. Thus, our theoretical model illustrates the limitations of trust and explains how, paradoxically, high distance can facilitate both trust formation and trust erosion.

Keyword

Case theoretic approaches ;  China ;  Longitudinal ;  Process model ;  Small and medium-sized enterprises ;  Trust ;  Trust erosion

Abstract

Using survey data from China and India, we explore the impact of network strategy of new ventures in emerging markets. We focus on two critical dimensions of network strategy, namely, broadening and deepening the network and two types of knowledge: market knowledge and technological knowledge. We find that proactive network deepening is associated with market knowledge and network broadening with technological knowledge. From a network perspective, our work highlights the counterintuitive outcomes of breadth versus depth orientation in network strategy, highlighting differences between advanced and emerging economies. We use a post-hoc multi-group analysis to show the differences even within the two emerging markets: India and China. The direct effect of partnering proactiveness on market knowledge in India is significantly higher than that in China but there is no significant difference as to the effect of technological knowledge. We use this exploratory study to highlight the opportunities for network and entrepreneurship scholars to study emerging markets and, in particular, undertake comparative studies between new ventures in China and India.

Keyword

China ;  emerging market ;  entrepreneurship ;  India ;  knowledge ;  networks ;  new venture

Abstract

Although international business scholars have begun to recognize the division of entrepreneurial labor between MNEs and SMEs, there is a fragmented understanding of the different forms MNE–SME cooperation can take. We develop a typology that takes into account not only complementarity of capabilities but also, crucially, the compatibility of intent between MNEs (exploration vs. exploitation) and SMEs (international vs. domestic orientation). The framework offers a novel way to understand the forms and dynamics of MNE–SME cooperation. We also show how it can be applied more broadly, by considering its application to societal challenges, such as achieving the United Nations’ Sustainable Development Goals.

Keyword

global innovation ;  global value chain ;  interorganizational relationships ;  MNE-SME cooperation ;  SME internationalization ;  Sustainable Development Goals

Abstract

Should innovation come from within the company or from without? The answer is both.

Keyword

Collaboration ;  Employees ;  Empowerment ;  Entrepreneurs ;  Innovations ;  Intrapreneurs ;  Partnering ;  Startups

Abstract

Despite their prevalence and significance, competitive wars have received limited attention from the strategy literature. Our knowledge of how inter-organizational linkages influence competitive wars is particularly lacking. Drawing on the social embeddedness perspective, we argue that both direct linkages (i.e., strategic alliances) and indirect linkages (i.e., common ownership ties and common analyst ties) reduce the likelihood of war, thereby functioning as the glue that binds firms together. Yet once competitive wars are launched in related markets, indirect linkages through common third parties may continuously function as glue, reducing the likelihood of war spillover, whereas direct linkages, such as strategic alliances, may facilitate the spillover of competitive wars, akin to adding gasoline to a fire. Using data from the U.S. domestic airline industry between 1991 and 2010, our empirical evidence offers strong support for our predictions.

Keyword

Competitive Strategy ;  Competitive dynamics ;  Topic Areas ;  Strategic Management

Abstract

Keyword

Abstract

Purpose This study aims to answer two unique related questions on the overarching relationship between a CEO's personal religious affiliation, the firm's advertising spending decision and its shareholder value. First, does the CEO's religious affiliation, a proxy for risk taking, influence the firm's advertising spending decision? Second, does the advertising spending decision mediate the relationship between the CEO's religious affiliation and the firm's shareholder value? Design/methodology/approach This study uses data on the religious affiliations of CEOs of publicly listed US firms, 1992-2014, from Marquis Who's Who; advertising spending and shareholder value from Compustat, and panel data-based regression models including CEO characteristics from ExecuComp, and firm-, industry- and time-based controls. Findings We find higher advertising spending levels for Protestant over Catholic-led firms, and advertising spending mediates the relationship between a CEO's religious affiliation and the firm's shareholder value. Research limitations/implications Marketing theory needs to incorporate the missing but fundamental effect of the CEO's religious affiliation-based values on decisions and outcomes. Practical implications Boards of Directors may need to align the CEO's and their firm's spending goals. Originality/value While previous studies focused on the influence of religious affiliation on consumers' attitudes and behavior, and executives' financial and R&D spending decisions, this study, to the best of the authors' knowledge, is the first to investigate the effect of a CEO's religious affiliation on the firm's advertising spending decision and its shareholder value.

Keyword

Advertising spending ;  CEO religion ;  Risk taking ;  Shareholder value

Abstract

This case describes the process of entering the Chinese market by Capillary Technologies, an Indian software company that provides cloud-based omnichannel customer engagement and related services for retailers and brands. Capillary represents a high level of ambition: in a country that was well known for software service companies (based primarily on labor cost advantages), it was founded as a business-to-business (B2B) software product company (thus one developing intellectual property). After entering several Western markets, which was consistent with the venture's lofty aspirations, the venture's leadership came to the view that the firm was better placed to pursue Asian markets. The new venture relocated its headquarters from India to Singapore, and made strong efforts to gain revenue in the Asia region — including the large but intensely competitive Chinese market. The case describes how, under the leadership of its China General Manager based in Shanghai, Capillary Technologies started off by working with Western multinationals that were its customers in other markets, then began attracting local customers as it established a Chinese technology team to cater to the unique technological ecosystems prevalent in China. Over a three-year period, Capillary achieved 200% growth per annum. The case concludes by noting the opening of a new office in Guangzhou as Capillary seeks to further deepen its presence in the Chinese market.

Keyword

Chinese market ;  Customer Relationship Management System ;  indian startup ;  learning orientation ;  Localization

Abstract

本案例讲述了私募基金分析师杨成在2018年2月15日的时间节点，整理投资分析报告，向投资经理推荐来年的通信行业投资机会。杨成将5G作为主推的板块——5G的技术变革将催生更多颠覆性应用，中国已将5G产业上升到国家战略层面。但当前5G行业投资存在很多不确定因素：一、5G标准尚未确定，世界各国都在积极研发5G核心技术，争取占据先机；如果标准押错，容易满盘皆输。二、通信行业周期明显，当前正处在4G基建高峰已过，5G启动尚早的寒冬期，过早投资可能会面对企业业绩兑现不及时的风险。三、5G对于各国而言都是涉及国家安全的战略级技术，在国际政治局势充满变化的环境下，中兴通讯等通信公司可能存在被国外市场禁入的风险。此时，如果你是杨成，是否应该推荐中国5G产业板块和中兴通讯给基金的投资经理？为什么？如果投资的话，应该如何应对上述风险？

Keyword

5G ;  产业投资 ;  企业投资 ;  投资决策 ;  通信行业