This paper investigates interrelationships of product design, organization design, processes for learning and managing knowledge, and competitive strategy. This paper uses the principles of nearly decomposable systems to investigate the ability of standardized interfaces between components in a product design to embed coordination of product development processes. Embedded coordination creates 'hierarchical coordination' without the need to continually exercise authority-enabling effective coordination of processes without the tight coupling of organizational structures. We develop concepts of modularity in product and organization designs based on standardized component and organization interfaces. Modular product architectures create information structures that provide the 'glue' that holds together the loosely coupled parts of a modular organization design. By facilitating loose coupling, modularity can also reduce the cost and difficulty of adaptive coordination, thereby increasing the strategic flexibility of firms to respond to environmental change. Modularity in product and organization designs therefore enables a new strategic approach to the management of knowledge based on an intentional, carefully managed loose coupling of a firm's learning processes at architectural and component levels of product creation processes.
The resource-based approach is an emerging framework that has stimulated discussion between scholars from three research perspectives. First , 1989) .
This paper argues that the resource-based approach of deductive economics, the dynamic capabilities approach of strategy process, and organization theory research on organizational learning need to be joined in the next generation of resource-based research. This suggested redirection of resourcebased research implies a return to a "resource-learning" theory of the firm begun by Penrose (1959).A synthesis of resource-based theory and learning theory allows us to examine how two sources of firm heterogeneity (resources and mental models) are intertwined. THE MANAGEMENT OF RESOURCES AND THE RESOURCE OF MANAGEMENTA consensus is beginning to emerge in strategic management that calls for an active attempt to increase the dialogue between behavioral and economic approaches to strategy issues (Amit and Schoemaker, 1993;Barney, 1992;Eisenhardt, 1989;Mahoney, 1992b;Schoemaker, 1993;Zajac, 1992). In the spirit of this pluralistic and balanced approach (Bowman, 1990;Rumelt, Schendel and Teece, 1991), it is suggested that the literature on organizational learning (behavioral literature) can and should be united with the emerging resource-based view of the firm (a more economic approach).Specifically, this paper argues that a holistic approach which combines behavioral logic with economic logic is necessary for advancing the theory of invisible assets (Itami and Roehl, 1987) and sustainable competitive advantage. Williamson (1991) notes the uncertainty of whether the dynamic capabilities approach (Nelson and Winter, 1982;Prahalad and Hamel, 1990;Rumelt, 1984; Teece, 1990) --in which organizational learning should certainly be a part --and the resource-based approach (Barney, 1991;Conner, 1991;Peteraf, 1993;Wernerfelt, 1984) will play out individually or in combination. The argument here is that communication can and should flow freely between participants of the two approaches. In fact, the two approaches naturally blend into each other (Mahoney and Pandian, 1992 (Collis, 1991;Tallman, 1991). In the resource-based view, the concept of strategy is considered as a "continuing search for rent" (Bowman, 1974, p. 47) (Penrose, 1959).In contrast to (strong form) efficient market theorists, most resource-based theorists insist that short-term economic rents are possible (Schoemaker, 1990 (Conner, 1991). Third, entrepreneurial (Schumpeterian) rent may be achieved by risk-taking and entrepreneurial insight in an uncertain/complex environment (Rumelt, 1987;Schumpeter, 1934).Fourth, the firm may be able to appropriate rents when resources are firm-specific (Aharoni, 1993 (Andrews, 1980, pp. 63-71; Ansoff, 1965, pp. 90-102; Hofer and Schendel, 3 1978, pp. 144-153; Selznick, 1957, pp. 42-56 (Barney, 1991;Demsetz, 1973;Powell, 1992b productive services from existing resources present a "jig-saw puzzle" for balancing processes (Penrose, 1959, p. 70). Excess capacity due to indivisibilities, and cyclical demand, to a large extent drives the diversification process (Chandler, 1962;Farjoun, 1993 At all times there exists w...
To help understand how firms develop and maintain dynamic capabilities, we examine the effects of the dynamics, management, and governance of R&D and marketing resource deployments on firm-level economic performance. In a sample of technology-based entrepreneurial firms, we find that a history of increased investments in marketing is an enduring source of competitive advantage. We also find that managers' firm-specific experience positively moderates the relationship between R&D deployment intensity and economic returns. In addition, institutional ownership boosts economic returns from marketing deployments by subjecting these deployments to increased scrutiny and by sending positive signals to the market about the firm.
This article maintains that the consistent application of subjectivism helps reconcile contemporary entrepreneurship theory with the strategic management literature, particularly the resource-based view of the fi rm. The article synthesizes theoretical insights from Austrian economics, Penrose's (1959) resources approach, and modern resource-based theory, focusing on the essential subjectivity of the entrepreneurial process. This new synthesis describes entrepreneurship as a creative team act in which heterogeneous managerial mental models interact to create and arrange resources to produce a collective output that is creatively superior to individual output.
We review and develop a subjectivist theory of entrepreneurship that focuses on individuals, their knowledge, resources and skills, and the processes of discovery and creativity, which constitute the heart of entrepreneurship. First, we establish the fundamental importance of subjectivity in entrepreneurial discovery and creativity. Second, we build on Penrose (1959) to elaborate how entrepreneurs' perceptions and personal knowledge shape a firm's subjective productive opportunity set. Third, we explain that entrepreneurial perceptions and knowledge partly originate from entrepreneurs' experiences in specific business settings such as the firm, the management team, and the industry. Fourth, we highlight the causal connections between subjectivity in entrepreneurship and observed heterogeneity in firm-level economic performance. Lastly, we suggest directions for further advancing a subjectivist resource-based approach to future entrepreneurship research.
This paper explores innovation, experimentation, and creativity in the public domain and in the public interest. Researchers in various disciplines have studied public entrepreneurship, but there is little work in management and economics on the nature, incentives, constraints, and boundaries of entrepreneurship directed to public ends. We identify a framework for analyzing public entrepreneurship and its relationship to private entrepreneurial behavior. We submit that public and private entrepreneurship share essential features but differ critically regarding the definition and measurement of objectives, the nature of the selection environment, and the opportunities for rent seeking. We describe four levels of analysis for studying public entrepreneurship, provide examples, and suggest new research directions.
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