Session 185

New Forms and Governance Modes for Coping with Uncertainty

Track C

Date: Monday, October 12, 2009


Time: 17:15 – 18:30

Common Ground

Room: Meeting Room 11

Edward Zajac, Northwestern University

Title: Exploring Plural Governance: The Role and Interplay of Ambiguity, Volatility and Governance Mechanisms


  • Anna Krzeminska, The University of Queensland
  • Jochen Schweitzer, University of Technology, Sydney

Abstract: This research aims to develop a new concept for understanding different types of uncertainty and a firm’s subsequent governance choices. We frame uncertainty in terms of causal ambiguity, relational ambiguity, behavioral volatility and environmental volatility and discuss their impact on plural forms of governance as a function of governance mechanisms like control and monitoring, incentive and reward intensity, or coordination and adaptation. The conceptual framework builds on the behavioral theory of the firm and transaction cost economics. This research contributes to managerial theory and practice in that it helps understanding the effects of different types of uncertainty, the implications of certain governance choices in response to uncertainties and the appropriate use of governance mechanisms. A multi method research approach is suggested.

Title: Governance Costs in Headquarter-Subsidiary Relationships


  • Sverre Tomassen, BI Norwegian Business School
  • Gabriel R G Benito, BI Norwegian Business School

Abstract: Using foreign direct investments as a governance mechanism has a cost side that goes beyond mere production and input costs. The governance costs of foreign operations are often vague and underestimated, and sometimes even overlooked by companies when they set up a subsidiary in a foreign market. This article examines the nature of such costs within the context of MNC headquarters-subsidiary relationships. Our emphasis is on discussing how they vary and how they can be measured. Governance costs influence the performance of foreign operations, and our discussion demonstrates that managers in multinationals companies should be aware of governance costs and gain knowledge of how to deal with them.

Title: Heterarchies as a Solution for Environmental Uncertainties and Ambiguities


  • Tomislav Rimac, Autonomous University of Barcelona
  • Johanna Mair, Stanford University

Abstract: We draw attention to cross-sector business groups (CSBGs), a nascent organizational form in the domain created by the blurring of the dividing line between private and public sectors. We argue that as sites of competing and coexisting value systems, CSBGs adopt heterarchical mode of organizing in order to enhance their ability to respond to unpredictable changes in their environments and modify these environments. Based on CSBGs’ heterarchical attributes we develop a typology of CSBGs. Furthermore, due to their social missions, repertoires of employed collaborative strategies, strong sense of collective identity, and high members´ interdependencies, we conceptualize CSBGs as social movement organizations. Using two-level theorizing, we present a theoretical framework linking the CSBGs’ resource attributes, level of resource control and capabilities with the CSBGs´ viability.

Title: In Sight but Out of Mind: Strategic Thinking on Firms' Physical Organization


  • Linda M Cohen, University of Hartford

Abstract: Offshoring and outsourcing are two examples of trends that are reshaping the physical boundaries of firms. What ideas can we draw on to understand the strategic relevance of new physical forms? And, has our strategy theory about firms’ physical organization evolved over time? This paper explores how ideas about the strategic role of physical organization have evolved since the mid-twentieth century: while ‘physical organization’ was considered fundamentally strategic in early- and mid-twentieth century management theory, these ideas have been largely abandoned in contemporary mainstream management discourse. This paper revisits early ideas about firms’ physical organization (e.g., Chandler, Simon, Penrose), which can help us to better understand the strategic implications of today’s shifting organizational forms.

Title: Managing Uncertainty with Fuzzy Time-Series Strategic Neuron


  • Phannaphatr Savetpanuvong, King Mongkut's University of Technology Thonburi
  • Uthai Tanlamai, Chulalongkorn University

Abstract: This paper proposes an artificial intelligent tool in managing global uncertainties called Fuzzy Time-series Strategic Neuron®. Uncertainties, with unknown probabilities of relevant variables in strategic decision making, can be handled with fuzzy logic and time-series forecasting. Fuzzy logic provides flexible levels of truth more than yes and no. Time-series data of those possible external and internal variables help managers and strategists in select the most robust strategic alternatives by using pattern recognition of the analogous change. Fuzzy Time-series Strategic Neuron® can learn unpredictable nonlinear behavior of global business systems. It is expected to be the next generation strategic planning platform.

Title: Ownership and Performance of Italian NTBFs: A Methodological Approach


  • Samuele Murtinu, University of Groningen
  • Massimo Colombo, Polytechnic University of Milan
  • Annalisa Croce, Polytechnic University of Milan

Abstract: It is widely accepted that NTBFs lack the financial means and managerial expertise to acquire the resources and develop the capabilities they need in order to exploit the commercial potential of their technologies. Poor access to external financing may limit the performance and even threaten their survival. This is worrisome because of the key role these firms play in assuring dynamic efficiency in the economic system. We argue that agency problems can arise in raising external capital because of separation between ownership and control. We distinguish between “hands-off” investors (providing only financial resources) and “hands-on” investors (also providing managing or monitoring activities). While the entry of active investors produces positive effects on firm’s productivity, hands-off investors generate agency costs that result higher than benefits provided.

All Sessions in Track C...

Mon: 12:45 – 14:00
Session 173: Proactive Strategies to Manage an Uncertain World
Session 181: Sustaining Innovation
Mon: 15:45 – 17:00
Session 174: The Effect of Environmental Conditions on Organizational Reconfiguration
Session 183: Managing Collective Emotions under Strategic Uncertainty
Mon: 17:15 – 18:30
Session 175: The Influence of Uncertainty on Investment Behaviour of Firms
Session 185: New Forms and Governance Modes for Coping with Uncertainty
Tue: 10:00 – 11:15
Session 176: The Influence of External Uncertainty on Capability Development
Tue: 11:30 – 12:45
Session 177: How to Make the Right Decisions During Uncertain Times?
Tue: 14:30 – 15:45
Session 178: Does the Past Predict Future Exploratory or Exploitative Innovative Behaviour?
Wed: 10:00 – 11:15
Session 179: Environmental Dynamism and Firm Behavior
Session 182: Cognitive Processs under Uncertainty
Wed: 11:30 – 12:45
Session 180: The Dynamics of Top Management Team in Achieving Long Term Performance
Session 184: Value Creation Under Uncertainty

Strategic Management Society

Washington DC