Corporate Strategy
and
Organizational Design
Articles
1
MD
,Inhoudsopgave
Week 1: Corporate Strategy & Diversification (4)..................................................................................................................... 4
Feldman, ER (2021). The corporate parenting advantage.............................................................................................................4
Goold, M., & Luchs, K. (1993).Why diversify? Four decades of management thinking .................................................................4
Montgomery, C.A. 1994. Corporate diversification.........................................................................................................................7
Palich, L. E., Cardinal, L. B., & Miller, C. C. (2000). Curvilinearity in the diversification performance linkage: An examination of
over three decades of research........................................................................................................................................................8
Week 2 - Ownership of the firm (5).......................................................................................................................................... 9
Hansmann H, Kraakman R (2001) The end of history for corporate law.........................................................................................9
Williamson, O.E. (1999). Strategy Research: Governance and Competence Perspectives............................................................10
Hansmann, H. 1988. Ownership of the Firm..................................................................................................................................12
Fama & Jensen, 1983. Separation of Ownership and Control.......................................................................................................14
Fama & Jensen, 1983. Agency Problems and Residual Claims......................................................................................................16
Week 3: Managing for stakeholders (5).................................................................................................................................. 18
Hansmann, H. 1988. Ownership of the Firm. (Part 2)....................................................................................................................18
Jensen, M.C. 2002. Value Maximization, Stakeholder Theory, and the Corporate Objective Function.........................................20
Sundaram A.K., Inkpen, A.C. 2004. The corporate objective revisited...........................................................................................23
Jones, J.M. 1995. Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics..........................................................24
Vishwanathan, P., van Oosterhout, H., Heugens, P. P., Duran, P., & van Essen, M. 2019. Strategic CSR: A concept building
meta-analysis.................................................................................................................................................................................26
Week 4: Choosing the firm’s vertical boundaries: vertical (dis)integration (5).........................................................................27
Leiblein, M. 2003. The choice of organizational governance form and performance: Predictions from transaction cost,
resource-based, and real options theories.....................................................................................................................................27
Gilley, K. M. and Rasheed, A. 2000. Making more by doing less: An analysis of outsourcing and its effects on firm performance.
........................................................................................................................................................................................................31
Nooteboom. B. 2004. Governance and competence: How can they be combined?......................................................................34
Husted, B.W., and Folger, R. 2004. Fairness and transaction costs: The contribution of organizational justice theory to an
integrative model of economic organization.................................................................................................................................36
Mahnke, V. 2001. The process of vertical dis-integration: An evolutionary perspective on outsourcing. J..................................40
Langfield-Smith, K., and Smith, D. 2003. Management control systems and trust in outsourcing relationships.........................45
Week 5: Horizontal growth: M&As and Alliances (5)............................................................................................................... 49
Barkema HG, Schijven M. (2008). How Do Firms Learn to Make Acquisitions? A Review of Past Research and an Agenda for
the Future.......................................................................................................................................................................................49
Barringer, B. R., & Harrison, J. S. (2000). Walking a tightrope: Creating value through interorganizational relationships.........51
Capron, L., & Mitchell, W. (2010). Finding the right path.............................................................................................................53
Dyer, J. H., Kale, P., & Singh, H. (2004). When to ally and when to acquire.................................................................................53
Prashant, K., & Harbir, S. (2009). Managing strategic alliances: what do we know now, and where do we go from here?.......53
Week 6: Organizational structure and strategy execution (5).................................................................................................. 54
Amburgey and Dacin, 1994. As the left foot follows the right? The dynamics of strategic and structural change......................54
2
MD
, Kim, W. Chan, and Renee Mauborgne. How Strategy Shapes Structure. Harvard Business Review 87.9 (2009): 72–80 (8 pages,
reading time approx. 30 minutes)..................................................................................................................................................55
Porter, M. (1987) From Competitive Advantage to Corporate Strategy.......................................................................................55
Sull, D., Turconi, S., Sull, C., & Yoder, D. (2018). Four logics of corporate strategy.......................................................................59
Zenger, T. R., Felin, T., & Bigelow, L. (2011). Theories of the firm–market boundary...................................................................60
Red = not included
3
MD
, Week 1: Corporate Strategy & Diversification (4)
Articles week 1
Feldman, ER (2021). The corporate parenting advantage
how certain corporate parents might improve the performance of their subsidiaries, in the following four ways:
- The first, stand-alone influence, refers to the possibility that some corporate parents may be better than
others at selecting, appointing, and developing key subsidiary executives; approving or rejecting subsidiary
budgets, strategic plans, and proposals for capital expenditures; or providing advice and policy guidance to
their subsidiaries.
- Second, linkage influence refers to the possibility that some corporate parents may be better than others
at enhancing the linkages among their businesses by sharing activities or exploiting synergies; sharing skills
and resources; or implementing transfer pricing mechanisms across subsidiaries.
o ○ fulfilling a knowledge direction - meaning that a corporate parent's knowledge can substitute for
that of the subsidiary.
o ○ flexibility function for their subsidiaries - meaning that the corporate parent has greater flexibility
in responding to unexpected developments and new learning.
- Third, functional and services influence refers to the possibility that some corporate parents may be
better than others at centralizing functions (such as finance, marketing, or human resources) and services
(such as administration, catering, or security) to facilitate cost sharing. By doing this, corporate parents may
be able to pass on cost savings to their subsidiaries (Goold et al., 1994; Porter, 1987).
- Fourth, corporate development influence refers to the possibility that some corporate parents may be
better than others at selecting which businesses to enter or exit and when and how to do so, as well as
nurturing new businesses or integrating acquired businesses.
Goold, M., & Luchs, K. (1993).Why diversify? Four decades of
management thinking
Should chief executives in the 1990s aim to focus only on a few closely related businesses? Or should they aim to
exploit synergies, or core skills, across a variety of businesses? Just how important are the managerial approaches of
top executives in adding value to different businesses? These are the critical questions for corporate strategy today.
Diversification and Corporate Strategy in the 1950s and 1960s An important and enduring justification for the
diversified company is the argument that the managers of these companies possess general management skills that
contribute to the overall performance of a company. The idea that professional managers possessed skills that could
be put to good use across different businesses rested on the assumption that different businesses nevertheless
required similar managerial skills.
During the 1960s, the growth of conglomerates, with their numerous acquisitions of unrelated businesses across
different industries, provided almost laboratory conditions in which to test out the idea that professional managers
could apply their skills to many different businesses. The conglomerate movement of the 1960s, involving extensive
diversification across a wide variety of industries, seemed to demonstrate that the specialized skills and practices of
corporate general managers enabled them to manage ever greater complexity and diversity.
For more than twenty years, faith in general management skills seemed to justify a kind of virtuous circle of
corporate growth and diversification.
But by the late 1960s, conglomerates were encountering performance problems. What became apparent was that
sound principles of organization and financial control, coupled with a corporate objective of growth, were not, alone,
sufficient to ensure satisfactory performance in highly diversified companies. General Electric, found by the early
4
MD
and
Organizational Design
Articles
1
MD
,Inhoudsopgave
Week 1: Corporate Strategy & Diversification (4)..................................................................................................................... 4
Feldman, ER (2021). The corporate parenting advantage.............................................................................................................4
Goold, M., & Luchs, K. (1993).Why diversify? Four decades of management thinking .................................................................4
Montgomery, C.A. 1994. Corporate diversification.........................................................................................................................7
Palich, L. E., Cardinal, L. B., & Miller, C. C. (2000). Curvilinearity in the diversification performance linkage: An examination of
over three decades of research........................................................................................................................................................8
Week 2 - Ownership of the firm (5).......................................................................................................................................... 9
Hansmann H, Kraakman R (2001) The end of history for corporate law.........................................................................................9
Williamson, O.E. (1999). Strategy Research: Governance and Competence Perspectives............................................................10
Hansmann, H. 1988. Ownership of the Firm..................................................................................................................................12
Fama & Jensen, 1983. Separation of Ownership and Control.......................................................................................................14
Fama & Jensen, 1983. Agency Problems and Residual Claims......................................................................................................16
Week 3: Managing for stakeholders (5).................................................................................................................................. 18
Hansmann, H. 1988. Ownership of the Firm. (Part 2)....................................................................................................................18
Jensen, M.C. 2002. Value Maximization, Stakeholder Theory, and the Corporate Objective Function.........................................20
Sundaram A.K., Inkpen, A.C. 2004. The corporate objective revisited...........................................................................................23
Jones, J.M. 1995. Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics..........................................................24
Vishwanathan, P., van Oosterhout, H., Heugens, P. P., Duran, P., & van Essen, M. 2019. Strategic CSR: A concept building
meta-analysis.................................................................................................................................................................................26
Week 4: Choosing the firm’s vertical boundaries: vertical (dis)integration (5).........................................................................27
Leiblein, M. 2003. The choice of organizational governance form and performance: Predictions from transaction cost,
resource-based, and real options theories.....................................................................................................................................27
Gilley, K. M. and Rasheed, A. 2000. Making more by doing less: An analysis of outsourcing and its effects on firm performance.
........................................................................................................................................................................................................31
Nooteboom. B. 2004. Governance and competence: How can they be combined?......................................................................34
Husted, B.W., and Folger, R. 2004. Fairness and transaction costs: The contribution of organizational justice theory to an
integrative model of economic organization.................................................................................................................................36
Mahnke, V. 2001. The process of vertical dis-integration: An evolutionary perspective on outsourcing. J..................................40
Langfield-Smith, K., and Smith, D. 2003. Management control systems and trust in outsourcing relationships.........................45
Week 5: Horizontal growth: M&As and Alliances (5)............................................................................................................... 49
Barkema HG, Schijven M. (2008). How Do Firms Learn to Make Acquisitions? A Review of Past Research and an Agenda for
the Future.......................................................................................................................................................................................49
Barringer, B. R., & Harrison, J. S. (2000). Walking a tightrope: Creating value through interorganizational relationships.........51
Capron, L., & Mitchell, W. (2010). Finding the right path.............................................................................................................53
Dyer, J. H., Kale, P., & Singh, H. (2004). When to ally and when to acquire.................................................................................53
Prashant, K., & Harbir, S. (2009). Managing strategic alliances: what do we know now, and where do we go from here?.......53
Week 6: Organizational structure and strategy execution (5).................................................................................................. 54
Amburgey and Dacin, 1994. As the left foot follows the right? The dynamics of strategic and structural change......................54
2
MD
, Kim, W. Chan, and Renee Mauborgne. How Strategy Shapes Structure. Harvard Business Review 87.9 (2009): 72–80 (8 pages,
reading time approx. 30 minutes)..................................................................................................................................................55
Porter, M. (1987) From Competitive Advantage to Corporate Strategy.......................................................................................55
Sull, D., Turconi, S., Sull, C., & Yoder, D. (2018). Four logics of corporate strategy.......................................................................59
Zenger, T. R., Felin, T., & Bigelow, L. (2011). Theories of the firm–market boundary...................................................................60
Red = not included
3
MD
, Week 1: Corporate Strategy & Diversification (4)
Articles week 1
Feldman, ER (2021). The corporate parenting advantage
how certain corporate parents might improve the performance of their subsidiaries, in the following four ways:
- The first, stand-alone influence, refers to the possibility that some corporate parents may be better than
others at selecting, appointing, and developing key subsidiary executives; approving or rejecting subsidiary
budgets, strategic plans, and proposals for capital expenditures; or providing advice and policy guidance to
their subsidiaries.
- Second, linkage influence refers to the possibility that some corporate parents may be better than others
at enhancing the linkages among their businesses by sharing activities or exploiting synergies; sharing skills
and resources; or implementing transfer pricing mechanisms across subsidiaries.
o ○ fulfilling a knowledge direction - meaning that a corporate parent's knowledge can substitute for
that of the subsidiary.
o ○ flexibility function for their subsidiaries - meaning that the corporate parent has greater flexibility
in responding to unexpected developments and new learning.
- Third, functional and services influence refers to the possibility that some corporate parents may be
better than others at centralizing functions (such as finance, marketing, or human resources) and services
(such as administration, catering, or security) to facilitate cost sharing. By doing this, corporate parents may
be able to pass on cost savings to their subsidiaries (Goold et al., 1994; Porter, 1987).
- Fourth, corporate development influence refers to the possibility that some corporate parents may be
better than others at selecting which businesses to enter or exit and when and how to do so, as well as
nurturing new businesses or integrating acquired businesses.
Goold, M., & Luchs, K. (1993).Why diversify? Four decades of
management thinking
Should chief executives in the 1990s aim to focus only on a few closely related businesses? Or should they aim to
exploit synergies, or core skills, across a variety of businesses? Just how important are the managerial approaches of
top executives in adding value to different businesses? These are the critical questions for corporate strategy today.
Diversification and Corporate Strategy in the 1950s and 1960s An important and enduring justification for the
diversified company is the argument that the managers of these companies possess general management skills that
contribute to the overall performance of a company. The idea that professional managers possessed skills that could
be put to good use across different businesses rested on the assumption that different businesses nevertheless
required similar managerial skills.
During the 1960s, the growth of conglomerates, with their numerous acquisitions of unrelated businesses across
different industries, provided almost laboratory conditions in which to test out the idea that professional managers
could apply their skills to many different businesses. The conglomerate movement of the 1960s, involving extensive
diversification across a wide variety of industries, seemed to demonstrate that the specialized skills and practices of
corporate general managers enabled them to manage ever greater complexity and diversity.
For more than twenty years, faith in general management skills seemed to justify a kind of virtuous circle of
corporate growth and diversification.
But by the late 1960s, conglomerates were encountering performance problems. What became apparent was that
sound principles of organization and financial control, coupled with a corporate objective of growth, were not, alone,
sufficient to ensure satisfactory performance in highly diversified companies. General Electric, found by the early
4
MD
