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Qualitative Comparative Analysis in Business and Management Research  

Johannes Meuer and Peer C. Fiss

During the last decade, qualitative comparative analysis (QCA) has become an increasingly popular research approach in the management and business literature. As an approach, QCA consists of both a set of analytical techniques and a conceptual perspective, and the origins of QCA as an analytical technique lie outside the management and business literature. In the 1980s, Charles Ragin, a sociologist and political scientist, developed a systematic, comparative methodology as an alternative to qualitative, case-oriented approaches and to quantitative, variable-oriented approaches. Whereas the analytical technique of QCA was developed outside the management literature, the conceptual perspective underlying QCA has a long history in the management literature, in particular in the form of contingency and configurational theory that have played an important role in management theories since the late 1960s. Until the 2000s, management researchers only sporadically used QCA as an analytical technique. Between 2007 and 2008, a series of seminal articles in leading management journals laid the conceptual, methodological, and empirical foundations for QCA as a promising research approach in business and management. These articles led to a “first” wave of QCA research in management. During the first wave—occurring between approximately 2008 and 2014—researchers successfully published QCA-based studies in leading management journals and triggered important methodological debates, ultimately leading to a revival of the configurational perspective in the management literature. Following the first wave, a “second” wave—between 2014 and 2018—saw a rapid increase in QCA publications across several subfields in management research, the development of methodological applications of QCA, and an expansion of scholarly debates around the nature, opportunities, and future of QCA as a research approach. The second wave of QCA research in business and management concluded with researchers’ taking stock of the plethora of empirical studies using QCA for identifying best practice guidelines and advocating for the rise of a “neo-configurational” perspective, a perspective drawing on set-theoretic logic, causal complexity, and counterfactual analysis. Nowadays, QCA is an established approach in some research areas (e.g., organization theory, strategic management) and is diffusing into several adjacent areas (e.g., entrepreneurship, marketing, and accounting), a situation that promises new opportunities for advancing the analytical technique of QCA as well as configurational thinking and theorizing in the business and management literature. To advance the analytical foundations of QCA, researchers may, for example, advance robustness tests for QCA or focus on issues of endogeneity and omitted variables in QCA. To advance the conceptual foundations of QCA, researchers may, for example, clarify the links between configurational theory and related theoretical perspectives, such as systems theory or complexity theory, or develop theories on the temporal dynamics of configurations and configurational change. Ultimately, after a decade of growing use and interest in QCA and given the unique strengths of this approach for addressing questions relevant to management research, QCA will continue to influence research in business and management.

Article

Qualitative Designs and Methodologies for Business, Management, and Organizational Research  

Robert P. Gephart and Rohny Saylors

Qualitative research designs provide future-oriented plans for undertaking research. Designs should describe how to effectively address and answer a specific research question using qualitative data and qualitative analysis techniques. Designs connect research objectives to observations, data, methods, interpretations, and research outcomes. Qualitative research designs focus initially on collecting data to provide a naturalistic view of social phenomena and understand the meaning the social world holds from the point of view of social actors in real settings. The outcomes of qualitative research designs are situated narratives of peoples’ activities in real settings, reasoned explanations of behavior, discoveries of new phenomena, and creating and testing of theories. A three-level framework can be used to describe the layers of qualitative research design and conceptualize its multifaceted nature. Note, however, that qualitative research is a flexible and not fixed process, unlike conventional positivist research designs that are unchanged after data collection commences. Flexibility provides qualitative research with the capacity to alter foci during the research process and make new and emerging discoveries. The first or methods layer of the research design process uses social science methods to rigorously describe organizational phenomena and provide evidence that is useful for explaining phenomena and developing theory. Description is done using empirical research methods for data collection including case studies, interviews, participant observation, ethnography, and collection of texts, records, and documents. The second or methodological layer of research design offers three formal logical strategies to analyze data and address research questions: (a) induction to answer descriptive “what” questions; (b) deduction and hypothesis testing to address theory oriented “why” questions; and (c) abduction to understand questions about what, how, and why phenomena occur. The third or social science paradigm layer of research design is formed by broad social science traditions and approaches that reflect distinct theoretical epistemologies—theories of knowledge—and diverse empirical research practices. These perspectives include positivism, interpretive induction, and interpretive abduction (interpretive science). There are also scholarly research perspectives that reflect on and challenge or seek to change management thinking and practice, rather than producing rigorous empirical research or evidence based findings. These perspectives include critical research, postmodern research, and organization development. Three additional issues are important to future qualitative research designs. First, there is renewed interest in the value of covert research undertaken without the informed consent of participants. Second, there is an ongoing discussion of the best style to use for reporting qualitative research. Third, there are new ways to integrate qualitative and quantitative data. These are needed to better address the interplay of qualitative and quantitative phenomena that are both found in everyday discourse, a phenomenon that has been overlooked.

Article

Recontextualization in International Business  

Mary Yoko Brannen

Recontextualization in international business (IB) refers to the transformation of meaning of firm offerings (technologies, work practices, products, etc.) as they are uprooted from one context and transplanted into another. The question of whether transferred firm assets will fit into receiving contexts abroad is one of the biggest concerns of multinational enterprises in the internationalization process. Whether a firm internationalizes by means of an international joint- venture, merger or acquisition, or a wholly owned subsidiary, this potential lack of strategic fit of firm assets is considered a major contributor to a firm’s liability of foreignness and ultimate lack of success abroad. As such, much research has been conducted in the field of IB to shed light on understanding the causes, implications, and recommendations for managing strategic fit in the internationalization process. Most IB research has focused on the tangible, explicit, and codifiable aspects of lack of fit, such as differences in technology, metrics, and labor regulations, which are relatively easy to discern. Often overlooked are the more subtle, less visible, tacit differences between sending and receiving contexts that affect how firm offerings are understood in the new organizational environments. Organizational contexts are embedded in multiple and intersecting cultural environments, including the organizational culture internal to the firm and the larger, societal culture external to the firm, as well as the smaller, more particular work group environments within a firm characterized by disparate functional or expert practices. Every cultural environment is embedded with its own meaning system involving distinct work-related assumptions, behaviors, and norms. Given this, unforeseen misalignments easily occur between the sender and receiver contexts stemming from disparities or divergences in meaning systems attributed to the transferred firm offerings, which can significantly affect a firm’s global strategic success. Such are the misalignments that stem from recontextualization. Firm offerings go through a preliminary round of recipient cultural sense-making in which they are assimilated into pre-existing meanings. Then, as they are implemented, acted on, and interacted with, they continue to undergo recontextualization. Language is the vehicle by which firm offerings are transferred (with the rare exception of digital code or numerical formulas), and through which sense-making is processed by individuals in the receiving contexts, thus making semantic fit a necessary complement to strategic fit in elucidating the process of recontextualization. Research in a variety of industries—from highly culturally sensitive ones such as entertainment, to seemingly culture-free, automated industrial contexts such as automotive—has shown that recontextualization will always happen no matter what the industry. This is because sending and receiving contexts can never be the same, so firm offerings will always undergo a certain amount of recontextualization to adjust to the new operating environment. Recontextualization can have positive or negative effects on a firm’s internationalization. Positive recontextualization, if the process is properly understood, can become a source of ongoing organizational learning and, in turn, become a valuable source of competitive advantage. Negative recontextualization, on the other hand, can result in lost opportunities for site-specific learning and strategic realignment, and, in the most severe cases, may seriously hinder transnational transfer and global integration efforts. Yet planning for and monitoring recontextualization are not simple matters. In most cases, managers are initially unaware of all but the most obvious sources of recontextualization, such as differences in language, metrics, organizational structure, or shop-floor layout. However, much of recontextualization happens in situ and cannot be planned for. At best, managers can opine where recontextualization might occur by utilizing industry-specific, cross-cultural consultants or internal boundary-spanners such as bilingual or bicultural employees. In some fortunate cases, managers may become aware of recontextualization early on in transfer efforts as they are confronted with organizational barriers to implementation such as significant differences in industrial and supplier relations. But, for the most part, recontextualization goes unrecognized until productivity plummets and financial goals go unmet without readily identifiable economic or other such quantifiable causes.

Article

The Role of the Media in Corporate Governance  

Michael K. Bednar

Corporate governance scholars have long been interested in understanding the mechanisms through which firms and their leaders are held accountable for their actions. Recently, there has been increased interest in viewing the media as a type of corporate governance mechanism. Because the media makes evaluations of firms and leaders, and can broadcast information to a wide audience, it has the potential to influence the reputation of firms and firm leaders in both positive and negative ways and thereby play a role in corporate governance. The media can play a governance role and even influence firm outcomes by simply reporting about firm actions, giving stakeholders a larger voice with which to exert influence, and through independent investigation. However, despite the potential for the media to play a significant governance role, several barriers limit its effectiveness in this capacity. For example, media outlets have their own set of interests that they must strive to fulfill, and journalists often succumb to several cognitive biases that could limit their ability to successfully hold leaders accountable. While significant progress has been made in understanding the governance role of the media, future research is needed to better understand the specific conditions in which the media is effective in this role. Understanding how social media is changing the nature of journalism is just one example of the many exciting avenues for future research in this area.

Article

Social Capital and Founder, Team, and Firm Networks in Entrepreneurship  

Ha Hoang

Entrepreneurial activity is facilitated by the ties that connect founders and their venture to a broader network of actors. This insight on the value of social capital has been enriched by a large body of research that builds on core concepts of network content, governance, and structure. Network content refers to the resources, information and social support that is exchanged or flows between actors. Governance encompasses the mechanisms that organize and regulate the exchange. Network structure refers to broader patterns created from the relationships between actors. With these building blocks, key findings that have emerged over 30 years of research can be organized into two domains: how networks influence entrepreneurial outcomes and how networks develop over the entrepreneurial process. Core findings regarding the performance consequences of social capital underscore its benefits while identifying limitations due to decreasing returns to growing and maintaining a large network or to contingencies tied to the stage of the venture’s growth. Our understanding of the sources of network evolution and the resulting patterns have also developed significantly. As a motor of network change, scholars have emphasized the goal-oriented behavior of the entrepreneur, but recognize social relationships also engender mutual concern, obligation, and emotional attachment. From a focus on founder and founding team ties to start-up, small firm networks, the literature now spans multiple levels and accounts for contextual variation between industries and institutional environments. Advances within each of these domains of inquiry have led to rich insights and greater conceptual complexity. Future research opportunities will arise that leverage cross-fertilization of the process and performance research streams.

Article

Social Movements and Their Impact on Business and Management  

Sarah A. Soule

Do the activities of social movements (e.g., public protest, shareholder activism, boycotts, and sabotage) impact businesses, and if so, how do they impact businesses? When confronted by activist demands, how do firms respond, and does this response vary depending on who the activists are and what their relationship is to the firm? Answering these questions is critical for businesses and activists alike, as we move into an era of heightened activism directed at firms. A growing area of research that is situated at the intersection of economic and political sociology, social movement studies, history, and organizational theory, tackles these questions, in an increasingly methodologically sophisticated and nuanced manner. As a result, a number of important articles and books have been published, and several high-profile, interdisciplinary conferences have been held. This body of research shows that social movements have both direct and indirect effects on businesses, and that these effects are amplified by media attention to activism. For example, we know that activism impacts the financial performance of firms, as well as their reputation. And, we know that the activities of social movements have consequences on firm policies and practices. In turn, businesses have developed a varied repertoire of ways to respond to activist demands. While some businesses ignore activists, others decide to retaliate against activists. Increasingly, businesses concede to the demands of activists in material ways by changing policies and practices that are criticized, while others devise symbolic ways to respond to activist demands, thereby preserving their reputation without necessarily changing their activities.

Article

Stakeholder Engagement in Management Studies: Current and Future Debates  

Sybille Sachs and Johanna Kujala

Stakeholder engagement refers to the aims, practices, and impacts of stakeholder relations in businesses and other organizations. According to a general framework, stakeholder engagement has four dimensions: examining stakeholder relations, communicating with stakeholders, learning with (and from) stakeholders, and integrative stakeholder engagement. Stakeholder engagement is increasingly used in areas like strategic management, corporate social responsibility (CSR), and sustainability management, while stakeholder-engagement research in marketing, finance, and human resources (HR) is still less common. Two main camps in the stakeholder-engagement literature exist: the strategic and the normative. To foster an inclusive understanding of stakeholder engagement, future research in both camps is needed. While the strategic camp necessitates a relational view, including both the firm and the stakeholder perspectives, the normative camp requires novel philosophical underpinnings, such as humanism and ecocentrism. Furthermore, there is constant debate about the argument that stakeholder engagement is, and should be, most importantly, practical. Stakeholder-engagement research should focus on solving real-life problems with practical consequences intended to make people’s lives better.

Article

Strategic Empowerment in Human Resource Management  

M. Taner Albayrak and Alper Ertürk

Empowerment is considered one of the best managerial approaches to foster employees’ effectiveness, creativity, commitment, performance, and other positive work-related attitudes and behaviors while providing an essential tool for leadership development and succession planning. Empowerment involves delegation of authority, sharing of information and resources, and allowing employees to participate in decision-making processes. Empowerment practices result in positive outcomes through psychological empowerment, which comprises meaning, impact, self-determination, and competence. However, empowerment should be exercised with care, and before doing so, leaders should understand their employees’ competences, willingness, and characteristics, as well as the organizational culture and industrial dynamics. With the increasing use of information and communication technologies, inevitable influence of globalization, and continuously changing dynamics of interconnectedness among industries, the business environment has become more volatile, uncertain, complex, and ambiguous (VUCA). In order to survive in this environment, companies try to increase diversity in their workforce to make the best use of a broad variety of skills, experiences, and opinions, thus boosting creativity and innovativeness, which makes leadership more difficult than ever. With empowerment, the concept of delegation of power is important. Therefore, comparing the concept of personal empowerment with managerial empowerment helps in understanding that these concepts are different, although interconnected. Delegation of authority ensures that the manager transfers decision-making authority to subordinates under certain conditions. In delegation, authority is retained by the manager, who has the ultimate responsibility. On the other hand, in empowerment, authority is fully transferred to the person who is already doing the job, with all the rights and responsibilities to take the initiative as necessary. Empowerment is also closely related but different from the concept of motivation. In motivation, decision-making authority and control stays with the manager. Empowerment, on the other hand, gives employees the opportunity to participate in management, solve problems, and participate in decision-making processes. In this context, the concepts of delegation of authority, motivation, participation in management, and job enrichment are the domain dimensions of personal empowerment, and thus they are interrelated, yet different. It is important to create a common vision and to have common values in order to establish the empowerment process. Subordinates and supervisors need to trust each other, and empowerment needs to be seen as a philosophy, not a technique. It is necessary to create business conditions that enable the development of knowledge and skills in personnel empowerment. These conditions affect the perceptions and attitudes of the staff, such as, support, loyalty, identification, and trust. Empowering employees promotes organizational commitment, increases engagement, and reduces turnover intentions of key personnel. Because empowerment involves encouraging participation of subordinates in the decision-making process, it also helps to enhance the effectiveness of the decisions and reduce decision-making time. In the VUCA world, limited decision making could be a critical obstacle to establish and maintain sustainability in highly competitive business environments.

Article

Subsidiary Governance and Strategy in the Multinational Enterprise  

Niall O'Riordan, Paul Ryan, and Ulf Andersson

Corporate governance is concerned with how firm performance may be affected by how the organization is governed. Corporate governance is a multifaceted concept that ranges in scholarly interest from the composition of boards to ownership and relational issues of power dependency, control, and decision-making within an organization. International business (IB) researchers have employed multiple theoretical lenses across institutional, resource dependency, and agency theories to examine corporate governance in the multinational enterprise (MNE). As the organizational form of the MNE shifted from hierarchical to heterarchical, and responsibility for sourcing market and innovation knowledge was increasingly devolved to competent subsidiaries, governance arrangements in the MNE came under increased scrutiny. Much IB research into corporate governance examined the balance of power within the MNE and how decision making is influenced by both headquarters (HQ) and its subsidiaries. A parent-subsidiary governance dilemma became apparent around the degree of freedom and control that HQ should leverage over its foreign subsidiaries to maximize the survival and performance of these economically, culturally, and politically dispersed units. Agency theory and resource dependence theory were to the fore in examining the parent-subsidiary dilemma around how control over decision-making scope and processes shaped subsidiary governance around the strategies and operations with the MNE governance architecture. In essence, subsidiary governance and strategy can be seen to represent two sides of the same coin. Subsidiary governance and strategy become complex issues the minute we step outside the hierarchical domain and allow for subsidiaries to have a greater contributory role in the MNE. As a subsidiary is mandated to pursue certain activities in the environment where it has been located, it also is granted some autonomy to strategize around its assigned activities and responsibilities. Opportunities may surface through the embeddedness of its activities in the local environment and the resources this can provide to the subsidiary and MNE. Acting on these opportunities by taking initiatives can result in increased influence and an elevated role in terms of mandate gain and enlarged responsibilities. The issue of subsidiary governance first emerges in relation to how the subsidiary strategy is aligned or not aligned with HQ strategy. Subsidiary managers can decide to solely perform their assigned mandate, or they can choose to generate a resource endowment that may help them become indispensable for HQ, but crucially to guarantee their own survival. The mechanisms available to subsidiaries to achieve this strategic aim are evidenced via initiative taking, seeking autonomy, increasing their role, appropriating power and influence, and embedding themselves in the local and internal environments. In this chapter we approach corporate governance from the perspective of the subsidiary (subsidiary governance) and examine the relationship between subsidiary governance and what we determine to be the prime elements of subsidiary strategy. We respectively define subsidiary governance as the gamut and interplay of control and operations around which management strategize and subsidiary strategy as a process of continuous, deliberate upgrading of knowledge and capabilities to thrive and survive. IB literature on MNE subsidiary governance and strategy to date is incomplete insofar as there are disparate steams of research that warrant integration into a grand theory of subsidiary governance and strategy.

Article

The Personality Underpinnings of Strategic Leadership: The CEO, TMT, and Board of Directors  

Bret Bradley, Sam Matthews, and Thomas Kelemen

“Strategic leadership” is the umbrella term used to describe the study of an organization’s top leaders—what they do, their interactions, and how they influence important organizational outcomes. The three major areas of focus within this field are the chief executive officer (CEO), the top management team (TMT), and the board of directors. Although each area has vibrant bodies of literature on important topics of inquiry, the integration of research findings, frameworks, and insights across the three areas remains underdeveloped. For example, the study of leader personality is a rich line of inquiry within the broader management literature, and all three areas are developing, albeit at different rates and with little integration across the three areas. The work on CEO personality is the most developed, and the work on board personality is the least developed. CEOs personality traits that have been studied include the Big Five personality traits (conscientiousness, extraversion, agreeableness, openness to experience, and emotional stability), locus of control, core self-evaluations, narcissism, overconfidence, hubris, humility and regulatory focus (a person’s general approach to goals as either promotion focused or prevention focused). TMT personality traits that have been studied include the Big Five, trait positive affect, propensity to innovate, and competitive aggressiveness. Finally, board of directors’ personality traits that have been studied include only personality diversity.

Article

The Role of Board Leadership Structure in Firm Governance  

Danuse Bement and Ryan Krause

Boards of directors are governing bodies that reside at the apex of the modern corporation. Boards monitor the behavior of firm management, provide managers access to knowledge, expertise, and external networks, and serve as advisors and sounding boards for the CEO. Board attributes such as board size and independence, director demographics, and firm ownership have all been studied as antecedents of effective board functioning and, ultimately, firm performance. Steady progress has been made toward understanding how boards influence firm outcomes, but several key questions about board leadership structure remain unresolved. Research on board leadership structure encompasses the study of board chairs, lead independent directors, and board committees. Board chair research indicates that when held by competent individuals, this key leadership position has the potential to contribute to efficient board functioning and firm performance. Researchers have found conflicting evidence regarding CEO duality, the practice of the CEO also serving as the board chair. The effect of this phenomenon—once ubiquitous among U.S. boards—ranges widely based on circumstances such as board independence, CEO power, and/or environmental conditions. Progressively, however, potential negative consequences of CEO duality proposed by agency theory appear to be counterbalanced by other governance mechanisms and regulatory changes. A popular mechanism for a compromise between the benefits of CEO duality and independent monitoring is to establish the role of a lead independent director. Although research on this role is in its early stage, results suggest that when implemented properly, the lead independent director can aid board monitoring without adding confusion to a unified chain of command. Board oversight committees, another key board leadership mechanism, improve directors’ access to information, enhance decision-making quality by allowing directors to focus on specialized topics outside of board meetings, and increase the speed of response to critical matters. Future research on the governance roles of boards, leadership configurations, and board committees is likely to explore theories beyond agency and resource dependence, as well as rely less on collecting archival data and more on finding creative ways to access rarely examined board interactions, such as board and committee meetings and executive sessions.

Article

Transaction Cost Economics as a Theory of the Firm, Management, and Governance  

Mikko Ketokivi and Joseph T. Mahoney

Which components should a manufacturing firm make in-house, which should it co-produce, and which should it outsource? Who should sit on the firm’s board of directors? What is the right balance between debt and equity financing? These questions may appear different on the surface, but they are all variations on the same theme: how should a complex contractual relationship be governed to avoid waste and to create transaction value? Transaction Cost Economics (TCE) is one of the most established theories to address this fundamental question. Ronald H. Coase, in 1937, was the first to highlight the importance of understanding the costs of transacting, but TCE as a formal theory started in earnest in the late 1960s and early 1970s as an attempt to understand and to make empirical predictions about vertical integration (“the make-or-buy decision”). In its history spanning now over five decades, TCE has expanded to become one of the most influential management theories, addressing not only the scale and scope of the firm but also many aspects of its internal workings, most notably corporate governance and organization design. TCE is therefore not only a theory of the firm, but also a theory of management and of governance. At its foundation, TCE is a theory of organizational efficiency: how should a complex transaction be structured and governed so as to minimize waste? The efficiency objective calls for identifying the comparatively better organizational arrangement, the alternative that best matches the key features of the transaction. For example, a complex, risky, and recurring transaction may be very expensive to manage through a buyer-supplier contract; internalizing the transaction through vertical integration offers an economically more efficient approach than market exchange. TCE seeks to describe and to understand two kinds of heterogeneity. The first kind is the diversity of transactions: what are the relevant dimensions with respect to which transactions differ from one another? The second kind is the diversity of organizations: what are the relevant alternatives in which organizational responses to transaction governance differ from one another? The ultimate objective in TCE is to understand discriminating alignment: which organizational response offers the feasible least-cost solution to govern a given transaction? Understanding discriminating alignment is also the main source of prescription derived from TCE. The key points to be made when examining the logic and applicability of TCE are: (1) The first phenomenon TCE sought to address was vertical integration, sometimes dubbed “the canonical TCE case.” But TCE has broader applicability to the examination of complex transactions and contracts more generally. (2) TCE could be described as a constructive stakeholder theory where the primary objective is to ensure efficient transactions and avoidance of waste. TCE shares many features with contemporary stakeholder management principles. (3) TCE offers a useful contrast and counterpoint to other organization theories, such as competence- and power-based theories of the firm. These other theories, of course, symmetrically inform TCE.

Article

Trust and Trustworthiness in Business  

Richard Coughlan

Trust is a relatively complex psychological state that arises in relationships characterized by dependence and risk. It has both cognitive and emotional elements that can be linked to certain actions made by parties involved in exchange relationships. The relationships of interest include some level of uncertainty, both about the motives and future actions of other parties and about the potential outcomes of engaging in cooperative behavior with those parties. Each party involved in an exchange relationship has a certain propensity to trust, a baseline shaped by various factors including previous relationships. An individual’s propensity to trust is viewed to be relatively stable over time and is most important in the earliest stages of a relationship when a leap of faith is required to enter the relationship because firsthand evidence about the other party is scant. During a relationship, a party’s propensity to trust serves as a filter through which the other party’s actions are judged. A party’s trustworthiness is shaped by views on the degree to which the potential trustee has (a) an ability to fulfill its duties, (b) a sincere concern about the welfare of the trusting party and a willingness to sacrifice its own outcomes, and (c) a commitment to abide by prevailing ethical norms. The relative importance of each component—ability, benevolence, and integrity—is likely to change over the course of a relationship. Trust may exist between two individuals in a dyad, among several individuals in a work group, between an individual and a firm, and between one organization and another. The last of these categories has been described as interorganizational trust, an important component in the relationships between firms and their stakeholders. When trust exists between firms, formal governance mechanisms, such as contracts and monitoring systems, will be less necessary, reducing transaction costs in the relationship. At the interpersonal level, trust in a relationship has been tied to many positive outcomes, including greater sharing of more accurate information and more frequent displays of organizational citizenship behavior. It has also shown a connection to higher levels of job satisfaction, creativity, cooperation, and productivity. When trust in leaders is higher, subordinates’ intention to quit is lower.

Article

Vertical Integration and the Theory of the Firm  

Jongwook Kim

How do firms organize economic transactions? This question can be thought of as a question of firm boundaries or as a decision about a firm’s scope, encompassing the choice along a continuum of governance structures, including spot markets, short-term contracts, long-term contracts, franchising, licensing, joint ventures, and hierarchy (integration). Although there is no unified theory of vertical integration, transaction cost economics, agency theory, and more recently property rights theory have been influential not only in analyzing make-or-buy decisions but also in understanding “hybrid forms” or inter-firm alliances, such as technology licensing contracts, equity alliances, joint ventures, and the like. Before Coase’s work became widely known, whatever theoretical underpinnings there were of vertical integration were provided by applications of neoclassical theory. Here, the firm was viewed as a production function that utilized the most technologically efficient way to convert input into output. In particular, neoclassical theory was concerned primarily with market power and the distortions that it created in markets for inputs or outputs as the main driver of vertical integration. Hence, the boundaries of the firm—that is, where to draw the line between transactions that occur within the firm and those outside the firm—were irrelevant within this framework. It was Coase’s question “Why is there any organization?” that first suggested that price mechanisms in the market and managerial coordination within firms were alternative governance mechanisms. That is, the choice between these alternative mechanisms was driven by a comparative analysis of the costs of implementing either mechanism. Oliver Williamson built on Coase to provide the theoretical foundations for vertical integration by joining uncertainty and small numbers with opportunism in defining exchange hazards, and consequently established comparative analysis of alternative governance forms as the way to analyze vertical integration. More recently, property rights theory brought attention to ownership of key assets as a way to distinguish between the governance of internal organizations and those of market transactions, where ownership confers the authority to determine how these assets will be utilized. And lastly, agency theory also provides important building blocks for understanding contractual choice by placing the emphasis on the different incentives that vary with different contractual arrangements between a principal and its agent. Transaction cost economics, property rights theory, and agency cost theory complement one another well in explaining vertical integration in terms of alternative governance forms in a world of asymmetric information, bounded rationality, and opportunism. These theories have also been utilized in analyzing “hybrid” organizational forms, in particular strategic alliances and joint ventures. Together, vertical integration and alliances account for a significant part of corporate strategy decisions, and more research on the theoretical foundations as well as novel ways to apply these theories in empirical analyses will be productive avenues for a better understanding of firm behavior.

Article

White Supremacy in Business Practices  

Helena Liu

Contrary to its popular use to refer to racially violent extremism, white supremacy in the tradition of critical race studies describes the normalized ideologies, structures, and conventions through which whiteness is constructed as biologically, intellectually, culturally, and morally superior. This socially constituted racial hierarchy was developed through European colonialism to justify the acts of genocide and slavery that extracted resources from “non-white” lands and bodies to enrich “white” elites. Despite prevailing myths that colonialism and racism are artifacts of the past, the cultural hegemony of white power and privilege remain enduring pillars of contemporary business and society. White supremacy inextricably shapes business practices. Indeed, our current practices of business administration and management are themselves modeled on slavery—the possession, extraction, and control of human “resources.” White supremacist ideologies and structures can also be found in the highly romanticized discourses of leadership that continue to rely on imperialist myths that white people are more fit to govern. They likewise surface in entrepreneurship and innovation where white people are overwhelmingly cast in the glorified roles of geniuses and pioneers. Even diversity management, which purports to nurture inclusive organizations, ironically reinforces white supremacy, treating workers of color as commodities to exploit. Within liberal logics of multicultural tolerance, workers of color are often tokenistically hired, expected to assimilate to white structures and cultures, and used as alibis against racism. White supremacy is an integral (and often invisible) dimension of work, organizations, society, and everyday life. Challenging white supremacy requires that we engage in frank, honest conversations about race and racism, and the brutal legacy of European colonialism that maintains these constructs and practices. The path ahead requires the relinquishment of beliefs that race is an immutable, primordial essence and recognize it instead as a socially constructed and politically contested identification that has been used for white gain. Two ways that white supremacy may be dismantled in our cultures include redoing whiteness and abolishing whiteness. Redoing whiteness requires collectively understanding the mundane cultural practices of whiteness and choosing to do otherwise. Abolishing whiteness calls for a more absolute rejection of whiteness and what it has come to represent in various cultures. Antiracist resistance demands people of all racial identifications to commit to thinking, doing, and being beyond the existing racial hierarchy.