Building on the resource‐based view (RBV) and competitive dynamics literatures, this paper proposes that considering resources or actions independently offers an incomplete understanding of the drivers of superior performance. Instead, we hypothesize that resources enable competitive actions and that when these actions leverage the firm's resources, superior performance results. We tested these hypotheses with panelized data on the technological resources and competitive actions of firms in the in‐vitro medical diagnostic substance manufacturing industry. The results provide substantial support for our hypotheses, specifically with respect to mediation. Our theory and results underscore how the integration of the competitive dynamics and RBV literatures can significantly improve our understanding of firm performance. Copyright © 2011 John Wiley & Sons, Ltd.

No abstract

In the 20 years since the last review on organizational decline and turnaround, the scope of turnaround research has expanded dramatically; however, research on this phenomenon remains empirically and theoretically fragmented. Recent research has incorporated managerial cognition, strategic leadership, and stakeholder management and has identified simultaneous and complex resource-based actions beyond the two-stage model developed in the last review by Pearce and Robbins two decades ago. Thus, herein we build from Pearce and Robbins’ review by cataloguing the past 20 years of empirical evidence related to turnaround, developing a descriptive model of organizational decline and turnaround, and concluding with a theory-based research agenda for organizational decline and turnaround. In doing so, this article summarizes what we know about organizational decline and turnaround, and proposes what we need to study, while providing a theoretical road map to guide this future research.

Upper echelons research has emphasized decision making either by individual CEOs or by teams of top managers. The authors introduce the CEO-Adviser model as an intermediate model of strategic decision making. The CEO-Adviser model leads to new propositions that have not been explored through the individual CEO or top management team models concerning how context affects the use of formal versus informal advisory systems and how advisers are selected.

While theory and evidence show that firms' competitive actions mediate the resource-performance relationship, details of top managements' roles in shaping resource utilization choices have been underemphasized. We address this oversight by integrating top management team heterogeneity and any resulting faultline strength with the resource-action-performance model to investigate how TMT composition differentially affects the model's two linkages. Specifically, we argue that TMT heterogeneity positively affects the resource-action linkage, yet negatively affects the action-performance linkage. Moreover, when heterogeneity begets strong faultlines, all such positive effect is lost. Supportive evidence from the in-vitro medical diagnostic substance manufacturing industry allows us to discuss how our findings contribute to upper echelons theory, as well as the emerging stream on resource utilization.

Investigations into management actions that reverse organizational decline have produced inconsistent findings. Prior studies have focused on the value of retrenchment actions versus strategic actions to engineer a performance turnaround. These studies, however, have generally not controlled for the cause of firm decline, overlooking a major theoretical contingency. Examining prepackaged software firms in the 1990s, we test the association of strategic and retrenchment actions in facilitating turnarounds in a munificent industry. The results show that measures of strategic actions—new product introductions, strategic alliances, and acquisitions—were positively associated with turnarounds. Conversely, measures of retrenchment actions—layoffs, asset reductions, and product withdrawals—were negatively associated with performance recovery. Our results suggest declining firms in munificent industries cannot retrench their way back to prosperity. Copyright © 2013 John Wiley & Sons, Ltd.

Firms competing primarily on knowledge resources face problems in informing relevant external stakeholders about the value of that knowledge without losing its value. This knowledge may be transferred to stakeholders only at great expense, or that transfer of knowledge to stakeholders may simultaneously promote its transfer to competitors. By conceptualizing firms and the environments within which they compete to differ in levels of uncertainty, this paper develops a framework to examine signaling mechanisms firms can use to effectively signal the value of their knowledge to two key stakeholder groups, the capital and labor markets, while avoiding associated transfer problems.

This study argues that first- and second-generation immigrant entrepreneurs’ endowments of economic, human, and social capital, together with their degrees of social identification with their ethnic community, affect their elemental strategic choice to pursue a venture strategy focused either on their ethnic enclave or the dominant market. The authors then propose that this choice affects venture performance indirectly, depending on how well the entrepreneur’s capital endowment allows the chosen strategy to be executed. The authors test these ideas via a field study of 103 first- and second-generation immigrant-owned ventures in a U.S. Midwest state. The findings indicate that immigrant entrepreneurs’ capital endowments and social identities influence their choice of an enclave versus dominant market venture strategy. Moreover, it is the particular alignment of entrepreneurial capital and strategy that ultimately shapes venture performance.