IDEAS home Printed from https://ideas.repec.org/p/ebg/iesewp/d-0621.html
   My bibliography  Save this paper

A formal evaluation of the performance of different corporate styles in stable and turbulent environments

Author

Listed:
  • Caldart, Adrian A.

    (Warwick Business School)

  • Ricart, Joan E.

    (IESE Business School)

Abstract

The notion of "parenting styles", introduced by Goold, Campbell and Alexander, has been widely acknowledged by the Corporate Strategy literature as a good broad description of the different ways in which corporate managers choose to manage and organize multibusiness firms. The purpose of this paper is to present a formal test of the relationship between parenting style and performance. For this test, we developed a set of agent-based simulations using the Performance Landscapes framework, which captures and describes the evolution of firms led by different parenting styles in business environments with different levels of complexity and dynamism. We found that the relative performance of each style is contingent upon the characteristics of the environment in which the firm operates. In less complex business environments, the Strategic Planning style outperforms the Strategic Control and Financial Control styles. In highly complex and highly dynamic environments, by contrast, the Strategic Control style performs best. Our results also demonstrate the importance of planning and flexibility at the corporate level and so contribute to the wider debate on Strategic Planning vs. Emergent Strategies.

Suggested Citation

  • Caldart, Adrian A. & Ricart, Joan E., 2006. "A formal evaluation of the performance of different corporate styles in stable and turbulent environments," IESE Research Papers D/621, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0621
    as

    Download full text from publisher

    File URL: http://www.iese.edu/research/pdfs/DI-0621-E.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anita M. McGahan & Michael E. Porter, 2002. "What Do We Know About Variance in Accounting Profitability?," Management Science, INFORMS, vol. 48(7), pages 834-851, July.
    2. Bill McKelvey, 1999. "Avoiding Complexity Catastrophe in Coevolutionary Pockets: Strategies for Rugged Landscapes," Organization Science, INFORMS, vol. 10(3), pages 294-321, June.
    3. Henry Mintzberg, 1990. "The design school: Reconsidering the basic premises of strategic management," Strategic Management Journal, Wiley Blackwell, vol. 11(3), pages 171-195, March.
    4. Nicolaj Siggelkow & Jan W. Rivkin, 2005. "Speed and Search: Designing Organizations for Turbulence and Complexity," Organization Science, INFORMS, vol. 16(2), pages 101-122, April.
    5. Peter J. Brews & Michelle R. Hunt, 1999. "Learning to plan and planning to learn: resolving the planning school/learning school debate," Strategic Management Journal, Wiley Blackwell, vol. 20(10), pages 889-913, October.
    6. Jan W. Rivkin, 2000. "Imitation of Complex Strategies," Management Science, INFORMS, vol. 46(6), pages 824-844, June.
    7. Daniel A. Levinthal, 1997. "Adaptation on Rugged Landscapes," Management Science, INFORMS, vol. 43(7), pages 934-950, July.
    8. Hill, Charles W L, 1988. "Internal Capital Market Controls and Financial Performance in Multidivisional Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 37(1), pages 67-83, September.
    9. Timothy W. Ruefli & Robert R. Wiggins, 2003. "Industry, corporate, and segment effects and business performance: a non‐parametric approach," Strategic Management Journal, Wiley Blackwell, vol. 24(9), pages 861-879, September.
    10. Edward H. Bowman & Constance E. Helfat, 2001. "Does corporate strategy matter?," Strategic Management Journal, Wiley Blackwell, vol. 22(1), pages 1-23, January.
    11. Constance E. Helfat & Kathleen M. Eisenhardt, 2004. "Inter‐temporal economies of scope, organizational modularity, and the dynamics of diversification," Strategic Management Journal, Wiley Blackwell, vol. 25(13), pages 1217-1232, December.
    12. Sea‐Jin Chang & Harbir Singh, 2000. "Corporate and industry effects on business unit competitive position," Strategic Management Journal, Wiley Blackwell, vol. 21(7), pages 739-752, July.
    13. Constantinos C. Markides & Peter J. Williamson, 1994. "Related diversification, core competences and corporate performance," Strategic Management Journal, Wiley Blackwell, vol. 15(S2), pages 149-165, June.
    14. Herbert A. Simon, 1996. "The Sciences of the Artificial, 3rd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691914, December.
    15. Thomas H. Brush & Philip Bromiley, 1997. "What does a small corporate effect mean? A variance components simulation of corporate and business effects," Strategic Management Journal, Wiley Blackwell, vol. 18(10), pages 825-835, November.
    16. C. K. Prahalad & Richard A. Bettis, 1986. "The dominant logic: A new linkage between diversity and performance," Strategic Management Journal, Wiley Blackwell, vol. 7(6), pages 485-501, November.
    17. Daniel A. Levinthal & Massimo Warglien, 1999. "Landscape Design: Designing for Local Action in Complex Worlds," Organization Science, INFORMS, vol. 10(3), pages 342-357, June.
    18. Nicolaj Siggelkow & Daniel A. Levinthal, 2003. "Temporarily Divide to Conquer: Centralized, Decentralized, and Reintegrated Organizational Approaches to Exploration and Adaptation," Organization Science, INFORMS, vol. 14(6), pages 650-669, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Caldart, Adrian A. & Ricart, Joan E., 2006. "Corporate strategy in turbulent environments: Key roles of the corporate level," IESE Research Papers D/623, IESE Business School.
    2. Caldart, Adrian & Ricart, Joan E., 2003. "Corporate strategy revisited: A view from complexity theory," IESE Research Papers D/528, IESE Business School.
    3. Jan W. Rivkin & Nicolaj Siggelkow, 2007. "Patterned Interactions in Complex Systems: Implications for Exploration," Management Science, INFORMS, vol. 53(7), pages 1068-1085, July.
    4. Canales, J. Ignacio & Caldart, Adrián, 2017. "Encouraging emergence of cross-business strategic initiatives," European Management Journal, Elsevier, vol. 35(3), pages 300-313.
    5. Frenken, Koen, 2006. "A fitness landscape approach to technological complexity, modularity, and vertical disintegration," Structural Change and Economic Dynamics, Elsevier, vol. 17(3), pages 288-305, September.
    6. Oliver Baumann, 2015. "Models of complex adaptive systems in strategy and organization research," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 14(2), pages 169-183, November.
    7. Mo Chen & Aseem Kaul & Brian Wu, 2019. "Adaptation across multiple landscapes: Relatedness, complexity, and the long run effects of coordination in diversified firms," Strategic Management Journal, Wiley Blackwell, vol. 40(11), pages 1791-1821, November.
    8. Oliver Baumann & Nicolaj Siggelkow, 2013. "Dealing with Complexity: Integrated vs. Chunky Search Processes," Organization Science, INFORMS, vol. 24(1), pages 116-132, February.
    9. Cha Li & Felipe A. Csaszar, 2019. "Government as Landscape Designer: A Behavioral View of Industrial Policy," Strategy Science, INFORMS, vol. 4(3), pages 175-192, September.
    10. Pankaj Kumar & Xiaojin Liu & Akbar Zaheer, 2022. "How much does the firm's alliance network matter?," Strategic Management Journal, Wiley Blackwell, vol. 43(8), pages 1433-1468, August.
    11. Jan W. Rivkin & Nicolaj Siggelkow, 2003. "Balancing Search and Stability: Interdependencies Among Elements of Organizational Design," Management Science, INFORMS, vol. 49(3), pages 290-311, March.
    12. Bart S. Vanneste, 2017. "How Much Do Industry, Corporation, and Business Matter, Really? A Meta-Analysis," Strategy Science, INFORMS, vol. 2(2), pages 121-139, June.
    13. Helmut M. Dietl & Markus Lang & Eric Lucas & Dirk Martignoni, 2012. "Learning Through Inaccurate Replication," Working Papers 312, University of Zurich, Department of Business Administration (IBW).
    14. Felipe A. Csaszar, 2018. "A note on how NK landscapes work," Journal of Organization Design, Springer;Organizational Design Community, vol. 7(1), pages 1-6, December.
    15. Dooms, E., 2005. "Control in multidivisional firms : Levels issues and internal differentiation," Other publications TiSEM bc7c1906-d54c-46e5-9d8e-1, Tilburg University, School of Economics and Management.
    16. Giovanni Gavetti & Constance E. Helfat & Luigi Marengo, 2017. "Searching, Shaping, and the Quest for Superior Performance," Strategy Science, INFORMS, vol. 2(3), pages 194-209, September.
    17. Sai Yayavaram & Wei-Ru Chen, 2015. "Changes in firm knowledge couplings and firm innovation performance: The moderating role of technological complexity," Strategic Management Journal, Wiley Blackwell, vol. 36(3), pages 377-396, March.
    18. Karén Hovhannissian & Marco Valente, 2004. "Modeling Directed Local Search Strategies on Technology Landscapes: Depth and Breadth," ROCK Working Papers 028, Department of Computer and Management Sciences, University of Trento, Italy, revised 17 Jun 2008.
    19. Kingshuk K. Sinha & Andrew H. Van de Ven, 2005. "Designing Work Within and Between Organizations," Organization Science, INFORMS, vol. 16(4), pages 389-408, August.
    20. Markus A. Fitza, 2014. "The use of variance decomposition in the investigation of CEO effects: How large must the CEO effect be to rule out chance?," Strategic Management Journal, Wiley Blackwell, vol. 35(12), pages 1839-1852, December.

    More about this item

    Keywords

    Corporate strategy; Parenting styles; Agent-based models;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebg:iesewp:d-0621. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Noelia Romero (email available below). General contact details of provider: https://edirc.repec.org/data/ienaves.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.