Management Online REview

10 March 2010 | Home

ISSN 1996-3300

Strategy

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Reconciling Managerial and Economic Views in Competitive Advantage Research

Daniel Prior

Competitive advantage is a seemingly ubiquitous concept in business research. Its association with extraordinary firm performance results in interest from managerial audiences, as well as from economists, who hope to explain extraordinary value creation and appropriation. These two groups hold different assumptions about the relevance of competitive advantage and the desired outcomes of research in this domain. This tension underpins many of the currently unresolved issues within competitive advantage research. This paper presents a synthesis of both the managerial and economic perspectives of competitive advantage research, highlights several of the areas where both paradigms overlap and suggests some avenues for further research.

Non-executive Directors in the Profit and Non-profit Sector: A Different Approach Towards Governance?

Luckerath-Rovers, M

Quadackers, L

De Bos, A

After the recent scandals and the introduction of new corporate governance codes, non-executive directors (NED's) and supervisors have started playing an increasingly important role in providing the ‘checks and balances’ of organizations. Little is known about the way in which NED's fulfill their supervisory role. This article compares NED's in profit organizations to those in non-profit organizations. The underlying research is only exploratory. The article is a closer analysis of the results obtained from the Dutch Non-executive Directors Survey 2007 . The results show that significant differences exist between NED's in profit and non-profit organizations. The practical relevance of this study is that it aims to highlight the differences of NED's within non-profit and profit organizations. An analysis of the differences may lead to a debate within society.

Corporate Strategy Analysis: General Electric Co. (1981-2008) - A Case Study

Stanislav Bucifal

The General Electric Company (GE) is widely regarded as one of the world’s most successful corporations of the 20th century. This paper aims to analyse critically the corporate strategy of GE during the period from 1981 to 2008 under the leadership of two very different but equally influential CEOs—Jack Welch and Jeff Immelt. The paper is organised in four sections. The first section describes GE’s corporate strategy from 1981 to 2001 with Jack Welch as CEO, followed immediately by a critical analysis of Welch’s strategic approach in the second section. The third section then describes GE’s corporate strategy from 2001 to 2008 with Jeff Immelt as CEO, followed again by a critical analysis of Immelt’s strategic approach in section four.

Economists' Hubris - The Case of Mergers and Acquisitions

Shahin Shojai

This paper is the first in a series of articles that look at the practical benefits of economics/finance literature to the world of business and policymakers and critically examines whether there is any relationship between academic thought and business or policy application. In this article, I review some key studies of mergers and acquisitions that are representative for this field of study and assess their practical value for making business or policy decisions. I conclude that while this literature does provide a reasonable aggregate of what the markets are doing, they form no basis whatsoever upon which judgments are made about acquisitions or mergers and they certainly are of little or no value when it comes to the strategic issues that are essential to the management. Consequently, this academic literature adds very little to our knowledge of how each specific case is to be handled. More specifically, I find very few papers from the world of economics/finance that are actually able to suggest how business combinations can be integrated post-merger, which is what seems to be of greatest value to business managers. This area has largely been left to strategy consultants and a handful of applied (business) economists. Before critically reviewing the academic literature on mergers and acquisitions, I shall argue that academic finance/economics has systematically neglected the implications of the nature and limitations of economics as a social science. This is an important reason why academic economic models systematically fail to account for real-world phenomena, which in turn has led to the quite common situation where the empirical results of similar studies, like the M&A studies assessed in this paper, have very wide range of values, without a convincing explanation why this is so. To put it differently, the empirical content of economic theories is typically very low but economists usually act as if this is not the case.

Business and Cimate Change: Key Challenges in the Face of Policy Uncertainty and Economic Recession

Kolk, Ans

Climate change is seen as the most pressing environmental problem of our time by many companies, policymakers and other stakeholders. It is currently also at the forefront of attention in view of attempts to conclude a successor to the Kyoto Protocol that expires in 2012. In bail-out plans and policies to address the economic recession and credit crisis, climate aspects have figured prominently as well. This article examines recent policy and economic developments and their relevance for business and climate change, considering the implications of the economic slowdown, declining oil prices and bail-outs. Dilemmas in the economy-climate-policy nexus in the current setting are also placed in the broader context related to innovating for climate change, to highlight some of the competitive, technological and market issues that need to be taken into account to break the present dead-lock that hinder radical moves to a low-carbon economy.

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