Charlotte R. Ren, Louis Mulotte, Pierre Dussauge and Jay Anand
ABSTRACT. We examine how a firm’s performance when implementing a given strategy drives it to persist with the same strategy or switch to a different one. We consider this question in the context of make-or-ally choices for new product introductions (NPIs). Drawing on performance feedback theory, we argue that a firm’s performance in the alliance mode has a U-shaped effect on its likelihood of switching to independent operations in the subsequent NPI and that competitive intensity strengthens this U-shaped relationship. We also predict that firms with above-aspiration alliance performance are more likely to achieve breakthrough performance in a subsequent NPI if they switch to independent operations. Data on NPIs in the global aircraft manufacturing industry support our hypotheses. Our study extends the alliance literature and contributes to research on how firm performance influences subsequent strategic choices.
Acceptance, Strategic Management Journal.
Gregory D. Saxton, Charlotte R. Ren and Chao Guo
Abstract. Social media offers a platform for diffused stakeholders to interact with firms—alternatively praising, questioning, and chastising businesses for their CSR performance and seeking to engage in two-way dialogue. In 2014, 163,402 public messages were sent to Fortune 200 firms’ CSR-focused Twitter accounts, each of which was either shared, replied to, “liked,” or ignored by the targeted firm. This paper examines firm reactions to these messages, building a model of firm response to stakeholders that combines the notions of CSR communication and stakeholder salience. Our findings show that firm response to a stakeholder on social media is positively and most significantly associated with what we refer to as the stakeholder’s connective power but negatively associated with the firm’s own connective power. To a lesser extent, firm response is positively associated with the stakeholder’s normative power but negatively associated with the firm’s own normative power. Firm response is also shown to be positively associated with stakeholder urgency in terms of both the originality of a stakeholder message and the expression of positive sentiment.
Journal of Business Ethics. 2021, 172: 229–252.
Available at: https://doi.org/10.1007/s10551-020-04472-x.
Charlotte R. Ren, Ye Hu and Tony H. Cui
Research Summary. This study investigates incumbent responses to a main rival’s exit. We argue that long‐time rivals have developed an equilibrium by offering a mix of overlapping and unique products and by choosing geographic proximity to each other. A rival’s exit, however, disrupts this equilibrium and motivates surviving firms to expand in both product and geographic spaces to seek a new equilibrium. Using data from all U.S. Best Buy stores before and after the exit of Circuit City, we find that Best Buy uses product variety expansion as its major response in markets where Circuit City was colocated, but it more often responds by opening new stores in non‐colocated markets. Regardless of preexisting market structures, the magnitude of product variety expansion decreases with the opening of new stores.
Managerial Summary. How do surviving firms respond to a major rival’s exit? By studying Best Buy’s responses to Circuit City’s withdrawal, we find the survivor expands in both product space (increasing product variety) and geographic space (opening new stores), due to two motives. First, the survivor strives to fill in “holes” left in the market. Second, the survivor experiences uncertainty in the post‐exit world wherein its reference point is gone, threat of potential entry looms, and it lacks information about new entrants. Thus, it must deter potential entry ex ante by preempting many prime product and geographic locations. Best Buy also responds according to preexisting market structures, primarily through product variety expansion in markets wherein Circuit City was colocated and through opening new stores in non‐colocated markets.
Strategic Management Journal. 2019, 40(2): 253-276.
Click here for the Ren.Hu.Cui 2019 SMJ Paper.
Louis Mulotte, Charlotte R. Ren, Pierre Dussauge and Jay Anand
Abstract. Previous literature on inter-firm collaborations has documented how firms can learn from their partners with experience and eventually develop adequate capabilities to go it alone. On the other hand, some literature also suggests that firms are less likely to switch from previously successful strategies, so firms with successful collaborative experience may persist with further collaborations. We identify these strands of literature as the “learning” and “selection” views, and develop propositions on the implications of the two alternative views. We conduct preliminary tests of our propositions using data on new product introductions in the aircraft industry. Our theoretical and empirical analyses help in integrating of these seemingly opposing views and allow for the development of theoretical and managerial implications.
In F. Contractor and J. Reuer (Eds). Frontiers of Strategic Alliance Research. Cambridge University Press. 2019 (pp. 423-436).
Jay Anand, Louis Mulotte and Charlotte R. Ren
Abstract. Strategic management research traditionally uses experiential learning arguments to explain the existence of a positive relationship between repetition of an activity and superior performance. We propose an alternative interpretation of this relationship in the context of discrete corporate development activities, which are generally self-selected on the basis of superior performance expectations. We argue that firms are likely to choose to repeat successful activities, thereby accumulating high experience with them. To demonstrate this ‘self-selection’ effect, we examine the performance of 437 aircraft projects launched through three introduction modes. We show that the positive performance effect of the firm’s experience with the focal mode vanishes after accounting for experience endogeneity. We suggest that in a general case, experience with corporate development activities may be tinged with both learning as well as selection effects. Therefore, omitting experience endogeneity may lead researchers to draw incorrect conclusions from an “empirically observed” positive experience-performance relationship.
Strategic Management Journal. 2016, 37(7): 1395-1412.
Click here for the paper: Anand-Mulotte-Ren_2016 SMJ
Valerie Moatti, Charlotte R. Ren, Jay Anand and Pierre Dussauge
Abstract. M&A and organic growth are two common strategies for firms to achieve horizontal growth. In this study, we disentangle two distinct sources of firm performance corresponding to different theoretical perspectives on firm size: firms’ bargaining power with respect to suppliers and customers, and operating efficiency arising from scale economies. We conceptually argue and empirically show that relatively, M&A enhance bargaining power while organic growth enhances operating efficiency. We also find that M&A’s disadvantage on operating efficiency persists over time. In order to disaggregate these effects, we use accounting rather than financial or managerial data and test our predictions in the global retail industry over a 20 year period. We examine implications of these results for sustainability of size-based competitive advantages.
Strategic Management Journal. 2015, 36(5): 745-757.
Click here for the paper: Moatti-Ren-Anand-Dussauge 2015SMJ
Charlotte R. Ren and Chao Guo
Abstract. This article examines the strategic role of middle managers in the corporate entrepreneurial process from an attention-based perspective. By integrating literature from multiple disciplines, the authors delineate the attention-based effects on how middle managers provide the impetus for different types of entrepreneurial opportunities (i.e., exploratory vs. exploitative initiatives). Specifically, middle managers, constrained by the attention structures of the firm, likely pre-screen entrepreneurial opportunities from lower organizational levels and attend primarily to those that align with the strategic orientation of the firm. This tendency may be moderated by the presence of other players, middle managers’ structural positions, and the availability of slack resources. Moreover, in their efforts to sell initiatives to top management, middle managers may leverage “policy windows”—patterned regularities and irregularities in and around the organization—to exploit existing attention structures to their advantage or perhaps to dismantle those structures.
Journal of Management. 2011, 37(6): 1586-1610
Click here for the paper: Ren&Guo_2011JOM Online Pub
- An earlier version of this manuscript received the 2008 IDEA Award (Research Promise) from the AOM’s Entrepreneurship Division.
Charlotte R. Ren, Ye Hu, Yu (Jeffrey) Hu and Jerry Hausman
Abstract. Product variety is an important strategic tool that firms can use to attract customers and respond to competition. This study focuses on the retail industry and investigates how stores manage their product variety, contingent on the presence of competition and their actual distance from rivals. Using a unique data set that contains all Best Buy and Circuit City stores in the United States, the authors find that a store’s product variety (i.e., number of stock-keeping units) increases if a rival store exists in its market but, in the presence of such competition, decreases when the rival store is collocated (within one mile of the focal store). Moreover, collocated rival stores tend to differentiate themselves by overlapping less in product range than do non-collocated rivals. This smaller and more differentiated product variety may be because of coordinated interactions between collocated stores. In summary, this paper presents evidence of both coordination and competition in retailers’ use of product variety.
Management Science. 2011, 57(6): 1009-1024.
Click here for the paper: Ren-Hu-Hu-Hausman 2011MS (SSRN Version).
Olav Sorenson, Susan McEvily, Charlotte R. Ren and Raja Roy
Abstract. Although strategy research typically regards firm scope as a positional characteristic associated with performance differences, we propose that broad contemporary scope also provides insight into the routines that govern firm behavior. To attain broad scope, firms must repeatedly explore outside the boundaries of their current niche. Firms with broad niches therefore operate under a set of routines that repeatedly propel them into new market segments, expanding their niche. These niche expansions, however, involve risky organizational changes, behavior that disadvantages generalists relative to specialists, despite the positional value of broad scope. Empirical analyses of machine tool manufacturers and computer workstation manufacturers support this conjecture: (i) generalists introduce new products at a higher than optimal rate, thereby increasing their exit rates; and (ii) generalists also more frequently launch new models with novel features or targeted at new consumer segments rather than improving only incrementally on existing products, further accelerating their odds of failure. After adjusting for these behavioral differences, broad niche widths reduce exit rates, suggesting that they provide positional advantages. The paper discusses how this phenomenon may help to explain the diversification and multi-nationality discounts.
Strategic Management Journal. 2006, 27(10): 915-936.
Click here for the paper: Sorenson-McEvily-Ren-Roy_2006SMJ