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    Strategic Management iiKent Springda l

    With Contributions by:

    Patrick ThurbinSid LoweMartha Mador

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    Strategic Management II

    First Edition January 2003Second Edition June 2009 Kingston University 2010

    Published by

    Kingston Business School

    Kingston University

    Kingston Hill

    Kingston upon Thames

    Surrey KT2 7LB

    All rights reserved. No part of this work may be reproduced, stored in a retrievalsystem or transmitted, in any form, or by any means, without permission from thepublisher.

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    STRATEGIC MANAGEMENT IICONTENTS

    Unit 1: Strategic Decision Making

    1. Objectives 1.1

    2. Constraints for managers 1.1

    3. Influences on decision making 1.2

    4. Decision making models 1.2

    5. Exploring key themes 1.4

    References and further reading 1.5

    Essential Reading:

    Mintzberg, H., and Waters, J., (1998) Of Strategies, Deliberate and Emergent

    in Segal-Horn, (ed.) The Strategy Reader, OU/Blackwell

    Eisenhardt, K.M. (1999) Strategy as Strategic Decision Making,

    Sloan Management Review,Vol. 40, Issue 3

    Hendry, J. (2000) Strategic Decision Making, Discourse, and Strategy as

    SocialPractice,Journal of Management Studies,Vol. 37, No. 7.

    Jarzabkowski, P. & Wilson, D.C. (2006) Actionable Strategy Knowledge:

    A Practice Perspective, European Management Journal, Vol. 24, No. 5.

    Unit 2: Organisational Learning and Entrepreneurship

    1. Objectives 2.1

    2. Introduction 2.1

    3. Learning organisations 2.5

    4. Competitiveness and innovation 2.6

    5. Corporate entrepreneurship 2.8

    6. Exploring key themes 2.9

    References and further reading 2.10

    Essential Reading:

    March, J.G. (1989) Exploration and Exploitation in Organizational

    Learning,Organization Science,Vol. 2, No. 1.

    Crossman & Berdrow (2003), Orgnizational Learning and Strategic Renewal,

    2Strategic Management Journal,Vol. 24, No. 11.

    Teece, D.J., Pisano, G., and Shuen, A., 1997, Dynamic Capabilities and Strategic

    Management, Strategic Management Journal,Vol.18, No. 7.

    strategic management II contents 1

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    Stopford, J M and Baden-Fuller, C (1994) Creating Corporate

    Entrepreneurship, Strategic Management Journal,Vol. 15, No. 7.

    Unit 3:Alliances

    1. Objectives 3.1

    2. The impetus for alliances 3.1

    3. Development of strategic alliances 3.2

    4. Purposes and types of alliances 3.2

    5. Managing alliances 3.3

    6. Relational quality and trust 3.5

    7. Alliances and networks 3.5

    8. Conclusions 3.6

    9. Exploring key themes 3.6References and further reading 3.7

    Essential Reading:

    Grant, R.M. and Baden-Fuller, C. (2004) A Knowledge Accessing Theory

    of Strategic Alliances,Journal of Management Studies,Vol. 41, No. 1.

    Arino, A., de Ia Torre, J., Ring, P. (2001) Relational Quality: Managing Trust

    in corporate Alliances, California Management Review,Vol. 44, No. 1.

    Ferlie, E. and Pettigrew, A., (1996) Managing Through Networks: Someissues and Implications for the NHS, British Journal of Management,Vol. 7.

    Unit 4: Organisational Culture and Image

    1. Objectives 4.1

    2. Organisational culture themes within management literature 4.1

    3. Culture as something an organisation has 4.1

    4. Culture as something an organisation is 4.3

    5. Culture as socially constructed reality 4.4

    6. Artefacts and characteristics of culture 4.57. The cultural dynamics of organisations 4.6

    8. The case for organisational identity 4.7

    9. Cultures consequences for management 4.8

    10. Exploring key themes 4.8

    References and further reading 4.9

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    Essential Reading:

    Hatch, M. J. (1993) The Dynamics of Organisational Culture,

    Academy of Management Review,Vol. 18, No. 4.

    Hatch, M.J. & Schultz, M. (2002), The dynamics of organizational identity,

    Human Relations,Vol. 55, No. 8.

    Dunford, R. & Jones, D. (2000), Narrative in strategic change,

    Human Relations,Vol 53, No. 9.

    Unit 5: Corporations and Social Responsibility

    1. Objectives 5.1

    2. Arguments for-and-against Corporate Social Responsibility (CSR) 5.13. Operationalising the concept of social responsibility 5.1

    4. How firms could manage their interactions with the society 5.4

    5. Exploring key themes 5.5

    References and further reading 5.6

    Essential Reading:

    Schwartz, M.S. and Caroll, A.B. (2003) Corporate Social Responsibility:

    A Three-Domain Approach, Business Ethics Quarterly,Vol. 13, No. 4.

    Matten, D. and Crane, A. (2005). Corporate citizenship: towards an extended

    5.theoretical conceptualization, Academy of Management Review,

    Vol. 30, No. 1.

    Kaufman, A. and Englander, E. (2005). A team production model of

    corporate governance, Academy of Management Executive,Vol. 19, No. 3.

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    UNIT 1STRATEGIC DECISION MAKING

    1. Objectives

    q to develop understanding of how decisions are made in organisations

    q to develop an understanding of some of the constraints upon decision makers

    q to consider some approaches to facilitating and improving decision making

    processes

    2. Constraints for managers

    Managers make decisions, and these are influential in determining the futures of

    organisations. They do this despite the constraints placed upon them by, inter alia,

    factors in the external business environment, like government policies and trade

    cycles, and specific local factors like the culture of their organisations. For example:

    q decisions made by many UK and US bank executives in the years preceding the

    current financial meltdown led to the collapse of their banks, while other financial

    organisations operating more prudently and using more conventional strategies in

    the same industry achieved more sustained success.

    q decisions made by executives at Easyjet and Ryanair, two short-haul budget

    airlines based in the UK, led to differential competitive postures from more

    traditional airlines offering a comprehensive range of services, like British Airways.

    These smaller airlines have shown greater resilience in weathering oil price

    fluctuations and have managed to sustain their level of profitability in comparison

    to the larger airlines.

    q the decision made by Glaxo Wellcome and Smith Kline Beecham to merge was

    initially taken in 1998. This decision was changed in the same year, apparently

    because the two chief executives could not agree on who would run the newly

    merged giant. The merger finally went ahead two years later, creating GSK.

    These examples suggest that managers can, and do, make decisions. Who the people

    are making the decisions - and how they make them - has been the subject of

    considerable debate over many years.

    Some researchers see managers as fundamentally constrained - by, for instance, their

    mental processes and biases, the limitations of the information to which they have

    access, or the political and social contexts in which they work. Some have seen

    decisions as emerging from organisational processes and routines.

    However, it remains the case that decisions are made one way or another, so the study

    of decisions and decision makers has been an important strand in strategic research.

    strategic management II 1.1

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    3. Influences on decision making

    There is now a growing and bulky literature on strategic decision making. The view

    that decision making processes are guided by rationality has for long been central instrategic decision making theory and practice (Papadakis and Barwise, 1997). It has

    also for long been recognised that strategic decision making is very much influenced

    by the political behaviour of decision-makers (e.g. Child and Tsai, 2005; Wilson, 2003)

    and has consequently been conceptually treated by many researchers (Schwenk,

    1995).

    More recently, the notion that intuition is also a viable source of decision making has

    received attention in the strategic decision making literature, though little empirical

    evidence has been furnished to support the extent that decision making is indeed

    influenced by it (Miller and Ireland, 2005; Sadler- Smith and Shefy, 2004).

    In an empirically rich piece of work, Eisenhardt & Zbaracki (1992) noted three

    paradigms, explored over the preceding 15 years, which attempted to describe the

    nature of strategic decision making:

    q rationality or bounded rationality - rational actors gather information, analyse it

    without bias, and make decisions aimed at known goals - like profitability

    q politics & power - managers pursue their own interests, or the interests of

    coalitions, in order to make decisions; rationality is subjugated to the individual

    needs of powerful people

    q garbage can- chance - for instance, who showed up at any given meeting - has asignificant impact on decisions.

    These authors conclude that, while each of these was presented as a definitive model

    for describing the nature of strategic decision making processes, the empirical

    evidence suggests that all of these paradigms co-exist - often in the same organisation.

    There are lessons to be learned about each one. Indeed, later developments in the

    literature do show that some convergence has occurred and it has now been

    recognised that the complexity of realistic strategic decision making processes could

    be best unravelled if they are understood as the product of intuitive and political

    processes, combined with rational methods of decision making (Butler, 2002).

    4. Decision making models

    Elsewhere in the literature, researchers have attempted to develop models of decision

    making. Importantly, McGrath (1964) identified that decision making is a process with

    input and outcomes. His process model is shown in Figure 1.

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    Figure 1: Interaction process model

    Source: McGrath (1964)

    Inputs have been studied at all levels, for instance, at the:

    q individual level- demographics and psychographics of the decision makers (e.g.

    Hambrick and Mason, 1984)

    q group level- the routines, relationships and heuristics employed by the group (e.g.

    Eisenhardt, 1989)

    q environmental level - the economic and social context of the organisation (e.g.

    Mintzberg, 1979).

    Researchers have examined the process itself, trying to understand whether and how the

    nature of process is linked to performance (Elbana, 2006). Dean and Sharfman (1996)

    collected data on 61 decisions, using interviews with senior managers to investigate the

    effectiveness of strategic decision making processes. Their conclusion was that:

    decision processes influence the strategic choices managers make, which

    in turn influence the outcomes affecting a firm.

    Dean and Sharfman, 1996, p389

    They also note that:

    managers who collected information and used analytical techniques

    made decisions that were more effective than those who did not. Those

    who engaged in the use of power or pushed hidden agendas were less

    effective than those who did not

    Dean and Sharfman, 1996, p389

    Using a different methodology, Eisenhardt (1989) also examined decision cases, inwhat she termed High Velocity Environments, where changes in the business context

    were rapid, frequent and discontinuous. Her findings also highlighted performance

    strategic management II 1.3

    Individual

    level

    Input Process Outcome

    Group

    level

    Environmental

    level

    Interaction

    process

    Performance

    outcomes

    Other

    outcomes

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    problems associated with the use of power and political behaviour in decision making.

    In addition, she identified how managers speed their cognition in these difficult

    contexts and still maintain decision quality.

    If decision process is linked to outcomes, then how to improve processes in order to

    improve performance becomes a critical issue. The literature is full of suggestions,

    ranging from team building interventions, through to the use of complex software to

    enable the modelling of decision problems (Eden, 1992).

    Scenario planning is a further approach to strategy development which is widely used.

    It aims to improve performance by facilitating the development of a wider view of

    possible strategic outcomes on the one hand, and an expanded and shared model of

    strategy within teams on the other.

    5. Exploring key themes

    The four articles in this section have been chosen to explore certain recurring themes

    in the literature.

    q Mintzberg & Waters (1998) is a seminal article. It proposes a typology of strategy

    making contexts, identifying the constraints and opportunities for strategy making

    present in each one. These contexts articulate many of the environmental and

    organisational level inputs to strategic decision making processes.

    qEisenhardt (1999) represents many earlier findings on strategic decision makingprocesses. Her focus is the Top Management Team which actually makes the

    decisions, how they operate and how they maintain decision quality.

    q Hendry (2000) makes a case for seeing strategic decision making as social practice,

    in which strategic discourse (including the discourse of strategic decisions)

    provides the loose coupling that mediates between cognition and action in the

    structuring of change process.

    q Jarzabkowski & Wilson (2006) offer a pragmatic approach to how various strategic

    management concepts and models should be used by practitioners of strategy. In

    their view, it is an examination of practice rather than theorizing about practice

    that might yield insight into how strategic theory and practice are inter-related.

    strategic management II1.4

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    References and further reading

    Butler, R. (2002) Decision making. In Sorge, A.(ed.), Organisation. London, Thomson

    Learning, pp. 224-251.

    Child, J. and Tsai, T. (2005) The dynamic between firms environmental strategies and

    institutional constraints in emerging economies: evidence from China and Taiwan,

    Journal of Management Studies,Vol 42, 95-125.

    Dean, J. & Sharfman, M. (1996) Does Decision Process Matter? A Study of Strategic

    Decision-Making Effectiveness, Academy of Management Journal,Vol. 39, No 2, pp.

    368-396.

    Eden, C. (1992) Strategy Development as a Social Process, Journal of Management

    Studies,Vol. 29, Issue 6, pp. 799-812.

    Eden, C. and Ackermann, F. (2002) A Mapping Framework for Strategy Making. In

    Huff, A.S. and Jenkins, M. (2002) Mapping Strategic Knowledge, London, Sage, pp.173-

    195.

    Eisenhardt, K.M. (1989) Making Fast Strategic Decisions in High Velocity

    Environments, Academy of Management Journal,Vol. 32, No. 3, pp 543-576.

    Eisenhardt, K.M. (1999) Strategy as Strategic Decision Making, Sloan Management

    Review, Spring 99, Vol. 40, Issue 3.

    Eisenhardt, K. & Zharacki, M. (1992) Strategic Decision Making, StrategicManagement Journal,Vol. 13 pp.17-37.

    Elbana, S. (2006) Strategic Decision Making - Process Perspectives, International

    Journal of Management Reviews,Vol 8, No.1 pp. 1-20.

    Hambrick, D.C. & Mason, P. (1984) Upper Echelons: The Organization as a Reflection

    of its Top Managers, Academy of Management Review,Vol. 9, pp.193-206.

    Hendry, J. (2000) Strategic Decision Making, Discourse, and Strategy as Social

    Practice,Journal of Management Studies,Vol. 37, No. 7, pp.955-977.

    Jarzabkowski, P. & Wilson, D.C. (2006) Actionable Strategy Knowledge: A PracticePerspective, European Management Journal,Vol. 24, No. 5, pp. 348-367.

    Miller, C.C. and Ireland, R.D. (2005) Intuition in strategic decision making: friend or

    foe in the fast-paced 21st century, Academy of Management Executive,Vol 19, pp.19-

    30.

    Mintzberg, H. and Waters, J., (1998) Of Strategies, Deliberate and Emergent. In Segal-

    Horn, S. (ed.), The Strategy Reader. Milton Keynes/Oxford, OU/Blackwell.

    Mintzberg, H. (1979) The Structuring of Organisations. Englewood Cliffs, NJ, Prentice-

    Hall.

    McGrath (1964) Social Psychology - A Brief Introduction. New York, Holt.

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    Papadakis, V.M. and Barwise, P. (1997) What can we tell managers about making

    strategic decisions? In Papadakis, V.M. and Barwise, P. (eds), Strategic Decisions.

    London, Kluwer: pp. 267-287.

    Sadler-Smith, E. and Shefy, E. (2004) The intuitive executive: understanding and

    applying gut feel in decision-making. Academy of Management Executive,Vol 18, 76-

    91.

    Schwenk, C.R. (1988) The Essence of Strategic Decision Making. Lexington, MA,

    Lexington Books.

    van der Heijden, K. and Eden, C. The Theory and Praxis of Reflective Learning in

    Strategy Making in Eden, C. and Spender, J.C., Managerial Cognition &

    Organizational Cognition, Sage, London, pp 58-75.

    Wilson, D. (2003) Strategy as decision making. In Cummings, S. and Wilson, D. (eds),

    Images of Strategy. Oxford, Blackwell, pp. 383-410.

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    Of Strategies, Deliberate and EmergentHENRY MINTZBERG; JAMES A WATERSStrategic Management Journal (pre-1986); Jul-Sep 1985; 6, 3; ABI/INFORM Global

    pg. 257

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    UNIT 2ORGANISATIONAL LEARNING AND

    ENTREPRENEURSHIP

    1. Objectives

    q to understand how organisational learning is taking place and having an impact

    on strategic management performance at all levels

    q to develop an understanding of how organisations and individuals leverage their

    learning in the pursuit of competitive advantage

    q to grasp the notion of corporate entrepreneurship as a strategic management

    approach to creating an enhanced competitive position in the marketplace.

    2. Introduction

    Many authors and academics have written about how organisations learn and how

    small to medium-sized companies are the places where entrepreneurs can be found at

    work. It all seems familiar enough, but once you start to think a little more about these

    terms then they appear rather broad and vague. They mean different things to different

    people.

    In conventional strategic management thinking and theorising (e.g. Porters five forcesanalysis, the product portfolio matrix and investment appraisal techniques), factors

    such as the individuals values, meanings and experiences are essentially excluded

    from analytical and decision making processes. Furthermore, even in-depth studies of

    organisational culture tend to minimise the importance of the individual and groups of

    individuals as sources of knowledge creation and the ability of organisations to use

    new knowledge to shape and influence markets, products and service provision.

    Hence, the notion of an organisation having the ability to learn does require a leap of

    the mind. But it becomes more manageable if we ask ourselves what it is that the

    organisation needs to be able to do well. Some initial suggestions as to these abilities

    might include:

    q interfacing to the external environment in a way that satisfies the stakeholders

    q being efficient and effective in conducting its internal operations using structures

    and processes that deliver outputs which meet performance requirements

    q creating a work environment in which people can be effective in pursuing the

    purpose of the organisation.

    These abilities are an outcome of the combined effort of all those within the

    organisation and can be seen to manifest organisational learning. Some manage this

    learning very well, others less so.

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    There is a second level of learning - that of groups and teams. What does the group

    have to learn to do well? Here are some suggestions:

    q managing its interface to other internal groups while discharging its responsibilityto the organisation

    q contributing to the satisfaction of customers and stakeholders

    q turning tacit knowledge into explicit knowledge and making this available to other

    groups.

    Up to this point, it is likely that you would agree that these are abilities that are

    recognised and, although perhaps not often spelt out in this way, are the very nature

    of organisational life.

    The final level of organisational learning is the individual. Everyone is quite happy

    with this, but many find it easier to provide descriptions rather than definitions. For

    example:

    q learning to understand oneself and set about mastering the local environment

    (politics, decision making, communicating and networking etc.)

    q being able to contribute to the team, either from a knowledge base or using a

    personal style approach

    q being able to recognise and create opportunities for personal development and

    growth.

    The drivers that stimulate individual behaviour and the determination to seek new

    knowledge - and hence learning - stem from a variety of sources. These would

    typically include:

    q directives from senior management

    q the individuals perception of where the pressure for performance is coming from

    and what is expected in terms of behaviour

    q experiences gained from tackling work problems

    q formal training events provided by the organisation.

    This mixture of drivers and the resulting learning that is manifested in behaviour at

    these three levels all contribute to what some call the organisations climate. This

    climate is recognisable by the competences and the behaviour norms displayed,

    creating in effect an ever-changing culture or set of subcultures. Figure 1 provides a

    model for interpreting these sources of organisational learning.

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    Figure 1: Model for interpreting sources of organisational learning

    Source: Adapted from P.J. Thurbin (1994) Leveraging Knowledge, London,

    Pitman/Financial Times

    To be of value to the organisation, this learning needs to be leveraged for competitive

    advantage. Organisational processes that demonstrate this leverage rely heavily on

    what is known as entrepreneurial behaviour.

    In the early stages of forming an organisation, the founder or partners strive to create

    an enterprise which, if successful, becomes labelled as a dynamic entrepreneurial

    company. These are value-laden descriptors, but most of us would envisage such a

    company growing at a rate that was far above the average and demonstrating a high

    level of creativity and follow-through innovations by the partners.

    The standards of behaviour and performance are clearly set by the founders but, as

    the enterprise matures, its environment changes and the founders often become

    remote from the daily action. The organisational culture then becomes separated outfrom the organisational forms and personal systems that the founders created. The

    original culture will continue until it clashes with the demands of the way in which

    strategic management II 2.3

    Directivesfrom

    Corporate andsenior levels

    Drivers of Individual Learning

    Explicit and Tacit Learning

    Organisational Climate and Culture

    Explicit and Tacit Learning

    Planned Organisational Drivers of Learning

    Perceptions ofsources of

    pressure andperformancerequirements

    Actionssurrounding

    workitself

    Ambitionsand

    personality

    ChangeProgrammes

    Trainingand

    DevelopmentActivities

    Appraisaland

    RewardSystems

    ControlSystems

    Managementand

    LeadershipStyles

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    the new structures have to operate. At this point, the founders either break the

    enterprise up into smaller parts and start again, or seek new managers who can drive

    the growing enterprise while they take a back seat.

    Promoting entrepreneurship in large companies is a much more complex issue. Large

    organisations often implement flat organisational structures to encourage the freedom

    of local decision making that the entrepreneurial approach is assumed to require. By

    adopting this approach new businesses are created within the existing corporation.

    This is sometimes described as corporate venturing or intrapreneurship.

    An alternative and much loved approach is to attempt to transform the climate of the

    whole organisation into one that supports creativity and idea generation, rewarding

    those who are able to drive the process of innovation. Companies such as 3M, Kodak,

    Canon and Matsushita are promoted as exemplars of this quest to encourage

    entrepreneurial activity that results in a form of continuous innovation and competitiveperformance.

    In trying to understand past and present organisational strategies and outcomes, as a

    step in being able to suggest future actions, we need to grasp the mental models used

    by those who have tried to shape the present organisational capabilities and

    performance. An obvious mental model to explore is that used by the founder or

    entrepreneur in setting up the business enterprise. Kees van der Heijden (1996) has

    described this mental model as representing the business idea - an idea that aimed

    to discover a new way of creating value for customers by bringing together a

    combination of competences that creates this value.

    The business idea can be captured in the form of a statement or business proposition.

    Such a statement describes the value of the offering to the customer or market, how

    it is supported by the sellers distinctive competencies and can be integrated into the

    buyers value system. In developing understanding of the mental models or learning

    that enabled the business idea to he implemented, the elements of a business model

    then evolve. (Osterwalder et al, 2005)

    Over time, the business model used by an organisation and interpretations of the daily

    operations and changes in the external environment create what Spender (1989)

    describes as the industry recipe. This recipe or business logic is then used by

    decision makers and managers as the lingua franca that drives all actions and

    evaluations of investment, operational and strategic decisions. It also determines the

    language and framework within which evaluations of past and predictions of future

    performance are made.

    3. Learning organisations

    Previous studies will have made you familiar with the classical divisions of

    management literature - the scientific line from Taylor (1911) to Simon (1945), with a

    focus on the objectivity or science approach to management, and the humanistic line

    from Weick (1979) to Mayo (1993), with the growing focus on culture and the use of

    metaphors and language as a way of interpreting how organisations really work.

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    Most pragmatists are happy to take both of these lines of thought on board when

    attempting to make sense of a complex set of realities. But the problem with that

    approach is that neither of these schools of thought faces the problem of how to

    convert organisational members knowledge into organisational knowledge - and thenhow to leverage this knowledge to achieve superior performance.

    March (1989) points out that there is a difference between the processes involved in

    acquiring and utilising existing knowledge (exploitation of old certainties) and those

    involved in creating new knowledge (exploration of new possibilities).

    It is the continuous development of this new knowledge that creates the organisational

    dynamism necessary for organisations to compete in environments that are becoming

    increasingly chaotic and unpredictable.

    Creating a balance between exploitation and exploration of knowledge is essential tothe success of an organisation.

    The context in which this learning is taking place is never static - it is in a constant state

    of change as competitors, pressure groups, society, national and global economies alter

    and interact. In a similar way, organisations are not static - as strategies aimed at matching

    the organisation to that environment and positioning it relative to the competitors and

    building competences that will drive capabilities are pursued. Like a sports player, the

    moves may be preplanned but when the game is in progress the reactions to an

    opponents moves are spontaneous and represent the dynamic of the players.

    Organisations attempt to manage the dynamic that has been created by setting up

    corporate, business and operational management processes within which decisions

    can be made and the resulting problems and outcomes evaluated.

    The first observation to make is that organisational learning is taking place and having

    an impact on strategic management performance at all levels. Organisations use a

    range of measures and metrics to measure performance. Both formal and informal

    measures of organisational performance can trigger opportunities for organisational

    learning. By formal, we mean those measures that are made explicit and used for control

    purposes - whereas informal suggests more tacit or culture-based measures.

    Some of this learning may be restricting management performance. For example, where

    managers have learned that risk taking followed by lack of success leads to punishment,then there will be a tendency to regress to a more bureaucratic set of responses. Also,

    where managers are primarily rewarded if short-term business performance targets are

    met, then the tendency will be to hedge against making decisions that may be vital for

    the longer term.

    Many writers on organisational learning have attempted to define the progressive stages

    through which organisations may be moving in order to reach the final accolade of being

    a learning organisation.

    Swieringa and Wierdsma (1992) suggest that organisations can be identified as either

    demonstrating early entrepreneurial characteristics of learning, those reflectingprescriptions and those that are truly learning organisations. They use the criteria of

    strategy, structure, culture and systems to illustrate the differences. You may see some

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    parallels here to the McKinsey 7S approach to strategy implementation covered in

    Strategic Management I, i.e. the so-called hard aspects, such as strategy and structure and

    the softer aspects of skills, staff, systems, style and shared values. Remember that the

    McKinsey model states that all these aspects are important for successful implementation,but that in some contexts the weightings and emphasis between them may need to be

    varied.

    There is plenty of formal learning going on, but one wonders how responsive these

    organisations can be to changes in their environment. They are usually plagued with

    constant change programmes as managers attempt to influence both the knowledge

    being used and the explicit behaviours.

    The learning organisation is obviously problem focused. Learning takes place as problems

    are tackled and explicit knowledge captured and tested. Once again, we are faced with

    the problem that no one organisation exhibits these characteristics in a clear way, but atleast now we have some guides as to the extremes.

    4. Competitiveness and innovation

    Creativity and innovation are not the same thing. Creativity is about generating novel

    ideas and innovation is the total process that converts these ideas into tangible benefits

    for customers and users. Moving an idea through the innovation process requires

    coordination and cooperation from a host of players who have access to the resources

    and support essential to success.

    At one level, it would seem obvious that all organisations are in some way or other

    permanently engaged in innovating as a fundamental strategic activity. What we are

    looking at here is the extent to which continuous innovation needs to be made into a

    formal and, thus explicit, organisational activity.

    One of the questions that large - and, increasingly, medium-sized - organisations have

    to address concerns their ability to continue to produce domestically in an

    environment where capital, labour, safety and environmental costs are many times

    higher than the costs of major foreign competitors. Such concerns point to the need

    to focus on innovation as a source of competitiveness.

    For many organisations, the notion of competing through innovation is often seen assomething to do with capitalising on breakthroughs - whereas for others, it is about

    improving on what is already working, but finding cheaper or more efficient ways of

    obtaining the outcomes.

    The notion of breakpoints existing in the competitive cycle that then stimulate a rush

    for innovation has gained popularity in the literature. First there are divergent points

    where organisations attempt to compete by innovating to give customers variety and

    value and exploring the boundaries of the opportunity. The other breakpoint is

    labelled convergent and occurs when the divergence is spent - here processes are

    utilised that focus on cost reduction and delivery.

    Anticipating these breakpoints obviously requires a deep understanding of the industry

    and an organisation that pursues and leverages knowledge as a strategic activity. For

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    some organisations the sources of innovation are seen as being internal, and hence a

    great deal of emphasis is given to the capture and development of local knowledge as

    a way of competing.

    For large, particularly multinational, corporations the innovation process becomes both

    crucial and complex. The need emerges for an organisation that values diverse

    perspectives and capabilities, while being able to link and leverage the learning that

    takes place. For most organisations this creates a paradox, where legitimising local

    diversity may well clash with the need for control and the reward of performance.

    An organisation that has achieved a position of competitive advantage is under

    constant threat. Having the largest market share is no longer a guarantee of continuing

    success for the firm. Existing competitors will be seeking ways of either copying or

    finding alternatives to the way you do business.

    Imitation is not always a case of the small copying the large. British Airways attempt

    to imitate the start-ups, Easyjet and Ryanair, was a clear example of imitation - and in

    BAs case, it was one that failed.

    Maintaining secrecy about a new product, service, capability or technological

    breakthrough is becoming increasingly difficult. Relying on patents to deter imitation

    has always been a high-risk approach, as imitation is less expensive than a research

    and development based strategy and usually a lot quicker.

    Dysons investment in the bag-less vacuum cleaner shows how patents can be

    attacked and, although high prices were charged for the initial models, competitors

    have now closed the gap with equivalent devices. Gillette provides another example

    of how the process used to manufacture their Mach 3 blade has been kept a secret.

    Coca Cola have never patented their formula and can therefore argue that it has never

    been replicated.

    5. Corporate entrepreneurship

    The individual entrepreneur is often portrayed as the champion and leader, engaging

    in what might be seen as self-centred or isolated behaviour. Alternatively, the

    entrepreneur is seen as promoting the entrepreneurial team or an entrepreneurial

    network. Entrepreneurial firms, on the other hand, are those in which the top

    managers have entrepreneurial management styles, as evidenced by strategic decisions

    and operating philosophies.

    Companies in the early stages of growth have been categorised as entrepreneurial,

    then growing into vertically integrated and diversified organisations. As the

    organisation grows, the role of the entrepreneur needs to change - as the requirement

    is now for a product champion or change manager. A growing focus in both research

    and the literature has been on the need for organisations to build entrepreneurial

    networks that lead to radical change being identified, then authorised and supported

    by the chief executive.

    Corporate entrepreneurship, by its very name, implies an organisation-wide set of

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    behaviours that are normally attributed to individuals who exhibit an entrepreneurial

    style as described above. The argument being promoted here is that an organisation

    is able to make a conscious decision to behave in an entrepreneurial manner.

    Corporate entrepreneurship is a strategic management approach to creating anenhanced competitive position in the marketplace. The three forms of this approach

    are:

    q where organisations create a new business within the existing organisation

    (Burgelman, 1983; Block and MacMillan, 1993)

    q where organisations attempt to transform or renew their very nature (Moss Kanter,

    1983)

    q where organisations attempt to change the rules of the industry in which they

    compete (Stevenson and Gumpert, 1985).

    Competition between firms in dynamic industries is based on capabilities. These are

    sets of business processes that are used strategically to deliver customer value and

    grow the business.

    Transforming a set of business processes into a capability depends on being able to

    work back from an identified set of customer needs. This can involve new product

    development and how to get that product to the customer consistently and at the

    required quality and price. Having an effective set of processes that result in a

    capability creates a situation that competitors find difficult to imitate.

    Competing on capabilities relies on understanding the industry value chain andmaking certain that the firms business processes take every advantage of the links in

    that chain. For example, although Ford Motor Company now outsource much of their

    manufacture and assembly, they have business processes that ensure that design is

    controlled by Ford and suppliers work to tight specifications and delivery

    requirements. The penalties attached to failing to capture and defend a capability are

    enormous.

    6. Exploring key themes

    The five articles in this section have been chosen to explore some recurring themes in

    the literature.

    q March (1989) is a seminal paper. It examines the explicit and implicit choices that

    organisations face in refining forms, routines, or practices that are essential to their

    survival (exploitation) and in generating new alternative practices (exploration)

    particularly in a changing environment. How organisations learn to find an

    appropriate balance between the two is key to their survival and competitive

    advantage.

    q Crossan & Berdrow (2003) offer a way to link organisational learning and strategic

    renewal. They have developed a framework to address the tension betweenexploration and exploitation. In this framework, four associated micro processes -

    intuiting, interpreting, integrating and institutionalising - serve to link individual,

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    group and organisational levels of learning within organisations. They argue that

    management needs to be cognisant that strategic renewal encompasses a

    multilevel process that spans from individual intuitive insights through to major

    resource allocation that institutionalise learning.

    q The article by Teece, Pisano and Shuen (1997) provides an appropriate link

    between all four topics that have been covered in this Unit. It highlights the ways

    in which strategic thinking has been pursued and researched over the past 40

    years - a pursuit focused on providing explanations for outcomes of the actions of

    actors in organisations aimed at adding shareholder value and wealth generation.

    The reading focuses on the issue of developing and using organisational

    capabilities in a dynamic business environment as a means of creating added value

    and sustainable competitive advantage.

    q The material presented by Stopford and Baden-Fuller (1994) presents detailedarguments suggesting that the three stages of corporate entrepreneurship -

    individual sensing, organisational renewal and industry rule or frame breaking -

    are sequential and dependent on five organisational attributes. These attributes are

    identified as team orientation, aspirations beyond current resources, proactiveness,

    learning capability and capability to resolve dilemmas. The extent to which these

    are fully developed in an organisation appears to have a significant influence on

    the implementation of these strategies. Two interesting findings from these

    authors work are that the changes in organisational behaviour required to move

    between the stages took many years to acquire - and that the five attributes were

    noticeable in each of the stages.

    q Finally, the article by Koch (2008) is an interesting and detailed case study that

    illustrates the concept of strategic path and how the interplay of different

    components of strategic processes condition the dynamic capabilities of a firm to

    act and to react to changing environment. The evolution of media organisations in

    the market of national daily produced high quality newspapers in Germany is

    examined in this regard.

    There is also a wealth of interesting case studies on The UK Work Organisation

    Network (UKWON) website - http://www.ukwon.net/. UKWON is a network of

    institutions, practitioners and individuals researching and developing new ways of

    organising work that meet the competitive challenges of contemporary economic,

    technological and cultural change. You are encouraged to read through some of the

    materials on its website.

    References and further reading

    Block, Z. and MacMillan, J.C. (1993) Corporate Venturing, Boston, Harvard Business

    School Press.

    Burgelman, R.A. (1983) Corporate Entrepreneurship and Strategic Management,

    Management Science,Vol. 29, No. 12, pp. 1349-64.

    Crossman & Berdrow (2003), Organizational Learning and Strategic Renewal,

    Strategic Management Journal,Vol. 24, No. 11, pp. 1087-1105.

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    van der Weijden, K. (1996), Scenarios, The Art of Strategic Conversation, John Wiley

    and Sons Ltd.

    Koch, J. (2008), Strategic Paths and Media Management - A Path Dependency Analysisof German Newspaper Branch of Quality Journalism, Schmalenbach Business Review

    (SBR), Vol. 60, pp. 50-73.

    March, J.G. (1989) Exploration and Exploitation in Organizational Learning,

    Organization Science,Vol. 2, No. 1, pp. 71-87.

    Mayo, E. (1933) The Human Problems of an Industrial Civilization, New York, Simon

    and Schuster.

    Moss Kanter, R. (1983) The Change Masters, New York, Simon and Schuster.

    Osterwalder, A., Pigneur, Y. and Tucci, C. (2005) Clarifying Business Models: Origins,

    Present, and Future of the Concept, Communications of the Associations for

    Information Systems, 16: 1-25.

    Simon, H.A. (1945) Administrative Behaviour, New York, Macmillan.

    Stevenson, H.H. and Gumpert, D.D. (1985) The Heart of Entrepreneurship, Harvard

    Business Review, March-April.

    Stopford, J. M. and Baden-Fuller, C. (1994) Creating Corporate Entrepreneurship,

    Strategic Management Journal,Vol. 15, pp. 521-36.

    Sweiringa, J. and Wierdsma, A. (1992) Becoming a Learning Organisation, Reading,

    Addison Wesley.

    Taylor, F.W. (1911) The Principles of Scientific Management, New York, Harper.

    Teece, D.J., Pisano, G. and Shuen, A. (1997) Dynamic Capabilities and Strategic

    Management, Strategic Management Journal,Vol.18 No. 7, pp.509-533.

    Thurbin, P.J. (1994) Leveraging Knowledge, London, Pitman/Financial Times.

    Weick, K.E. (1979) The Social Psychology of Organizing, 2nd Edition, New York,

    Random House.

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    UNIT 3STRATEGIC ALLIANCES

    1. Objectives

    q to introduce some of the main concepts and concerns in the field of strategic

    alliances

    q to enable students to conceptualise better the nature of the inter-firm relationships

    with which they may engage.

    While the study of Mergers & Acquisitions has a long history - and is well articulated

    in economic, finance and organisational theory - that of Alliances is less so. However,

    alliances are an extremely common strategic choice made by organisations acrosssectors. This section explores some of the issues of importance to managers engaged

    in strategic alliances.

    2.The impetus for alliances

    The business environment provides numerous reasons for increasing frequency of

    alliance behaviour. Industry regulation and deregulation, the internationalisation of

    business, and the speed at which change may occur internationally are all major

    factors with significant impact.

    In order to move into different sectors and industries, or into new markets,

    organisations need to be able to act quickly and manage risk. This may mean, for

    instance:

    q testing the water - rather than committing to major production or distribution

    investments

    q working with local knowledge - rather than trying to purchase it outright or develop

    it from scratch

    q developing relationships - which are flexible and can respond to change.

    Alliances seem to offer managers the means of working in this way.

    In addition, mergers and acquisitions are expensive, require extensive regulatory

    approval, due diligence and expose the organisation to intensive scrutiny from

    shareholders and markets. Not all of these factors are likely to be present in the case

    of alliances.

    Finally, alliances and other business relationships are often imposed by government or

    other key stakeholders. For instance in the UK, the relationships between medical

    providers (hospitals, general practitioners and social service organisations) are to a

    great extent determined and controlled by government or governmental agencies.Similarly, the requirement to outsource production capacity in some industries (for

    instance, in the tax-funded UK state broadcaster, the BBC) is a statutory one.

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    3. Development of strategic alliances

    There have been a number of detailed and interesting researches on the development

    of strategic alliances. Of more recent works, one could mention the paper by Butler,Kenny and Anchor (2000) who provide an overview of the strategic reasons for

    alliances and contextualise these into the European defence industry. This industry is

    of course dominated by national governments, the key customers. Internationally,

    competition between defence contractors is intense. The European industry is moving

    toward closer cooperation, to reduce costs, increase competitiveness and mirror

    increasing cooperation between nations on defence.

    In a rather extensive work, Oum, Park and Zhang (2000) have comprehensively

    treated strategic alliances in the airline industry. They examine how globalisation has

    contributed to the development of strategic alliances in this industry and what the

    effects of these alliances have been on productivity, pricing, branding and profitabilityof airlines. In the past decades, the global airline industry has clearly moved in the

    direction of capacity rationalisation, improved productivity and the maintenance of

    existing service levels.

    4. Purposes and types of alliances

    Within the wider context of increasing interfirm cooperation, individual organisations

    cite a wide range of specific strategic objectives for alliances. For instance:

    q Sharing - costs, knowledge, expertise, or risk in parts of the value chain

    q Cost Savings - through economies of scale or scope; improved stock positions;

    moving parts of the value chain to lower cost locations

    q Time - shorter investment returns time horizons; speed for new market entry or

    new product development.

    These can also be linked to the depth of alliance chosen, for instance Kaplan and Hurd

    (2002) provide this broad typology of alliances:

    q Promotional - joining brands or products for joint promotion on a campaign basis,

    for convenience

    q Operational- in supply chain management, production, distribution or sales, often

    for reasons of efficiency

    q Relationship - sharing knowledge, infrastructure, or some other asset, perhaps

    through licensing or joint ventures, in order to leverage value from existing assets

    q Strategic - joint ventures and more large scale objectives, similar to mergers and

    acquisitions, creating new organisations and new value as a result.

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    5. Managing alliances

    There are at least three different approaches to understanding the process dynamics

    and evolution of alliances based on numerous empirical researches that have beencarried out in the past decade or so. Here is a brief summary of each of these

    approaches:

    5.1 Life-cycle approach

    Attempts to rationalise the dynamics of alliances have tended to conceptualise them as

    a predictable, linear sequence of life-cycle stages. The underlying assumption in such

    understanding is that effective strategic alliances move smoothly from one phase to the

    next, as a function of rational planning and execution by those in charge. The key

    premise of the life-cycle model is the attribution of the central role in the developmentof alliances to management, a factor that certainly explains why this approach is so

    popular in consulting and managerial circles.

    DAunno and Zuckerman (1987) proposed four developmental stages in such

    collaborations - emergence, transition, maturity and critical crossroads. Likewise,

    Achrol et al (1990) also presented four stages - entrepreneurship, collectivity,

    formalization and domain elaboration. Forrest and Martin (1992) too named four -

    courtship, negotiation, implementation, and operation. However, Murray and Mahon

    (1993) prescribed that all alliances proceed through FIVE stages - courtship,

    negotiation, start-up, maintenance and ending. Finally, Kanter (1994) compared an

    alliance to a marriage, identifying different stages of development:

    1. Courtship - discovering compatibility

    2. Engagement - closing the deal, going public, meeting the family of stakeholders

    3. Setting up house together - discovering differences

    4. Devising mechanisms for bridging those differences - getting along

    5. As old-marrieds - discovering internal changes as a result of accommodation &

    collaboration

    While this romantic metaphor is helpful for conceptualising stages of development, it

    should of course be challenged and explored. For instance, many alliances are

    polygamous - as in the complex network arrangements that exist in many industries.

    Similarly, the notion of choice may need to be challenged, as many alliances are the

    result of imposed strategies - as in public sector risk management meetings in the UK.

    5.2 Process approach

    The works of Ring and Van de Ven (1994) and Doz (1996) are good examples of this

    process approach to alliance building - the core idea is to view alliance building as aprocess of collaborations which can neither be fully specified in advance nor

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    controlled by the partners prior to their execution. Thus in this model, the formation

    of an alliance is viewed as a recurring sequence of negotiation, commitment and

    execution (Rond & Bouchikhi, 2004). Each phase is in turn governed by a series of

    formal, legal and informal social and psychological processes which aim to arrive atefficient and equitable outcomes.

    So, alliances are perceived to develop as a consequence of a repetitive series of three

    identifiable stages - negotiation, commitment and execution which are also mediated

    by a fourth stage - namely, achievement of fairness and efficiency. In contrast to life-

    cycle approach then, the process model does not consider alliance building as a series

    of uniform and predictable sequences of events or stages. However, like the life-cycle

    approach, it retains a sense of purpose for alliance building - namely, fairness and

    efficiency which would allow for the progress of the alliance to be assessed and re-

    evaluated.

    The process view of alliances thus recognises that they are prone to unplanned events,

    unexpected results and conflicting interpretations and interests can and do happen.

    Consequently, the management can neither plan nor control the sequence of events,

    but it is supposed to develop the ability to learn and adapt as the process of alliance

    building progresses. This requires that the managers involved in alliance building

    should constantly monitor events, use their leverage to adapt their design and

    governance, ensure that they are constantly moving towards greater fairness and

    efficiency for partners and eventually terminate them should it fail to meet its

    objectives.

    5.3 Evolutionary Approach

    This perspective on alliance building is Darwinian in the sense that it views

    organisations as entities which must continuously compete for survival due to the

    availability of scarce resources and the occurrence of a series of chance variations.

    So, in contrast to the life-cycle or process models, the evolutionary approach lays

    emphasis on the environments as the principal motor of change which would only

    allow those entities to remain that are best fit to survive (Van de Ven & Poole, 1995;

    Koza & Lewin, 1998; Reuer et al., 2002).

    Implicit in this approach is the notion that alliance evolution - even at the level of

    individual alliances - is driven predominantly by the forces that operate at the

    population level of an industry or sector. Consequently, the evolutionary approach of

    alliances does not seek to offer managerial prescriptions - for it assumes that the

    diffusion of alliances across sectors, driven by the quest of organisations to compete

    for scarce resources, would ultimately lead to collective learning by organisations from

    their own and others experiences and this would bring about ever more sophisticated

    and fitter alliances over time.

    So, whilst individual managers cannot shape evolutionary processes at the population

    level, they should try to align their alliances with the prevailing trend and not attempt

    to swim against the evolutionary current in their sectors.

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    6. Relational quality and trust

    The notion that organisations change over time - and are changed by the relationships

    into which they enter - is nevertheless important. It implies that management needs tobe aware of change as a continuing factor in alliances. How to develop an alliance,

    what skills and competences are needed, what systems and protocols and what

    particular issues are important at any given point in time, all become significant.

    As the relationship develops, the development of trust is a significant issue. Trust is a

    multi-faceted concept and its development depends on - and is a result of - effective

    management. Alliances are often specifically entered into to gain new knowledge - for

    instance, of technology or markets - and an area in which trust becomes significant is

    that of sharing and preserving assets and knowledge.

    Arino, de la Torre and Ring (2001) offer some suggestions about how to develop whatthey call relational quality and provide a list of normative suggestions for how best

    to manage inter-firm relationships. They contend that trust is like a reservoir that the

    partners must manage. Their proposals address the various stages of relationship

    building.

    7.Alliances and networks

    While strategic alliances are often perceived as being single relationships with external

    organisations - as in the marriage metaphor - in practice, organisations frequently are

    part of industry networks.

    Ferlie and Pettigrew (1996) investigate the case of a large organisation with around a

    million employees - the UK NHS (National Health Service) which is really a dense

    network of organisations rather than a single large one. At the time of the study,

    managers within the NHS were engaged in intensive development of relationships

    between organisations. The study highlights several key managerial problems

    associated with managing such a network:

    q performance assessment and management

    q sustaining the network

    q dealing with change

    q dealing with uncertainty

    q developing staff competence in managing alliances.

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    8. Conclusions

    As a major strategic choice being pursued by firms and as an imposed strategy in many

    contexts, strategic alliances and networks deserve extensive study.

    The motivations for alliances, the processes through which they are managed and

    developed and the managerial competences required to ensure their success are all

    critical issues.

    9. Exploring key themes

    The three articles in this section have been chosen as they explore most of the key

    themes in the literature.

    q Grant and Baden-Fuller (2004) is a knowledge-based view of the firm which offers

    new insight into the causes and management of interfirm alliances. They argue that

    the primary advantage of alliances over both firms and markets is in accessing

    rather than acquiring knowledge. Building upon the distinction that March (1991)

    has made between the knowledge generation (exploration) and knowledge

    application (exploitation) - see Unit 2 - they show that alliances contribute to the

    efficiency in the application of knowledge. They do this, firstly, by improving the

    efficiency with which knowledge is integrated into the production of complex

    goods and services, and secondly, by increasing the efficiency with which

    knowledge is utilised.

    q Arino, de la Torre and Ring (2001) fill a gap in the alliance literature. Whilst the

    bulk of the research on this subject appears to have converged on alliance design,

    regulation and performance, they have examined the process dynamics and

    evolution of alliance building. For them, an important factor that accounts for the

    differences in the success of alliances is trust. This article explains that reliance

    on trust is a complex probabilistic decision, and management must focus on a

    broader concept - the quality of inter-partner relationship - as a critical determinant

    of alliance success.

    q Ferlie & Pettigrew (1996) deal with the important issue of forging alliances through

    networks and they highlight some of the key managerial issues for dealing with

    these complex organisational settings.

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    References and further reading

    Achrol, R.S., Scheer, L.K. and Stern, L.W. (1990) Designing Successful

    Transorganizational Marketing Alliances. Marketing Science Institute, Cambridge, MA.

    Arino, A., de la Torre, J., Ring, P. (2001) Relational Quality: Managing Trust in

    Corporate Alliances, California Management Review,Vol. 44, No. 1 pp 109-131.

    Butler, C., Kenny, B., Anchor, J. (2000) Strategic Alliances in the European Defence

    Industry, European Business Review, Vol 12, No. 6 pp. 308-321.

    DAunno, T.A. and Zuckerman, H.S. (1987). A life cycle model of organizational

    federations: The case of hospitals. Academy Management Review,Vol. 12, pp. 534-545.

    Das, T.K., & Teng, B-S. (2000) A Resource-Based Theory of Strategic AlliancesJournal

    of ManagementVol. 26, No. 1, pp. 31-61.

    de Rond, M. and Bouchikhi, H. (2004). On the Dialectics of Strategic Alliances,

    Organization Science,Vol. 15, No. 1, pp. 56-69.

    Doz, Y.L. (1996) The evolution of cooperation in strategic alliances: Initial Conditions

    or Learning Processes? Strategic Management JournalVol. 17 Supplement pp. 55-79.

    Ferlie, E. and Pettigrew, A., (1996) Managing Through Networks: Some issues and

    Implications for the NHS, British Journal of Management,Vol. 7, March, pp. S81-S99.

    Forrest, J.E. and Martin, M.J.C. (1992) Strategic alliances between large and smallresearch intensive organizations: Experiences in the biotechnology industry. R&D

    Management,Vol. 22, No.1, pp. 41-54.

    Grant, R.M. and Baden-Fuller, C. (2004) A Knowledge Accessing Theory of Strategic

    Alliances,Journal of Management Studies.Vol. 41, No. 1, pp. 61-84.

    Kaplan, N.J. and Hurd, J. (2002) Realizing the Promise of Partnerships, Journal of

    Business Strategy, May/June.

    Koza, M.P. and Lewin, A.Y. (1998). The co-evolution of strategic alliances,

    Organization Science,Vol. 9, pp. 255-264.

    Lorange, P. and Roos, J. (1993) Strategic Alliances: Formation, Implementation and

    Evolution. Basil Blackwell, Oxford.

    Moss Kanter, R. (1994) Collaborative Advantage: The Art of Alliances, Harvard Business

    Review, July/August, pp. 96-108.

    Murray, E.A., Jr. and Mahon, J.F. (1993). Strategic alliances: Gateway to the new

    Europe? Long Range Planning.Vol 26, pp. 102-111.

    Oum, T., Park, J-H., Zhang, A. (2000) Globalization and Strategic Alliances: The Case

    of the Airline Industry. New York, Elsevier-Science.

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    Reuer, J.J., Zollo, M. and Singh, H. (2002) Post-formation dynamics in strategic

    alliances, Strategic Management Journal,Vol. 23, No. 2, pp. 135-152.

    Ring, P.S. and Van de Ven, A.H.(1994). Developmental processes of cooperativeinterorganisational relationships, Academy Management Review,Vol. 19, pp. 90-118.

    Saxton, T. (1997) The Effects of Partner and Relationship Characteristics on Alliance

    Outcomes Academy of Management JournalVol. 40, No. 2 pp. 443-461.

    Spekman, R.E., Isabella L.A., MacAvoy T.C. & Forbes III, T. (1996) Creating Strategic

    Alliances which Endure Long Range PlanningVol. 20, No. 3 pp. 346-357.

    Van de Ven, A.H. and Poole, M.S. (1995). Explaining development and change in

    organizations, Academy Management Review,Vol. 19, pp.510-540.

    Varadarajan, P.R. and Cunningham M.H. (1995) Strategic Alliances: A Synthesis of

    Conceptual Foundations Academy of Marketing Science Journal, Vol 23, No. 4, pp.

    282-297.

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    UNIT 4ORGANISATIONAL CULTURE & IMAGE

    1. Objectives

    q to understand the variety of conceptualisations of culture and image

    q to understand the different applications and operationalisational consequences of

    these different approaches

    q to understand the basic implications of different approaches for strategy

    q to use different approaches in the context of your own and other organisations.

    2. Organisational culture themes within managementliterature

    Management theorists approach the problem of organisational culture in numerous

    ways, the underlying reason is that culture - whether in an organisational context or

    not - is an ill-defined term and so many interpretations of it exist.

    The assumptions about culture and reality that any management theorist adopts

    dominate and transcend through their whole theory (Smircich, 1983). One core

    problem related to organisational culture is ascertaining whether culture is somethingan organisation has or something it is (Hofstede, 1991; Smircich, 1983). Each of these

    two assumptions produces different ways to approach the problem of organisational

    culture.

    This Unit presents the main arguments and problems relating to each of these views.

    The accompanying articles explore these arguments in greater depth.

    3. Culture as something an organisation has

    The primary assumption, surrounding culture as something an organisation has, is thenotion that culture is a critical variable that can be manipulated and measured

    (Smircich, 1983). Smircichs (1983) review of management approaches to

    organisational culture details two frequently used approaches that treat culture as

    something an organisation has.

    3.1 Mechanistic approach

    The first approach views culture under a machine metaphor - therefore the

    organisation is a vehicle for accomplishing a task. It has multiple parts that are

    designed, coordinated and fine tuned with each other with the quest of becoming anefficient organisation (Smircich, 1983). This type of metaphor can be seen in classical

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    management literature such as Crozier (1964) who describes bureaucracies under the

    machine metaphor, it is also a foundation for Taylors (1911) task-centred approach of

    Scientific Management.

    This mechanistic approach has the underlying assumption that culture is a real and

    functional instrument that serves the biological and psychological needs of humans