CEO's COGNITION, KNOWLEDGE ACQUISITION AND BUSINESS MODEL INNOVATION IN FACE ...

536 Pages·2014·4.5 MB·English

LEADING GROWTH: CEO’s COGNITION,
KNOWLEDGE ACQUISITION AND BUSINESS
MODEL INNOVATION IN FACE OF
DYNAMISM

“A Mixed-Methods Study of Australian SMEs”

Arash Najmaei
Bachelor of Science in Civil Engineering (BSCE)
Master of Business Administration (MBA), Strategic Management
Specialization

Macquarie Graduate School of Management
Macquarie University
Sydney, NSW 2109, Australia

August 2013

Submitted in partial requirement for the degree of Doctor of Philosophy
In Management Science

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Copyright by
Arash Najmaei

ALL RIGHTS RESERVED

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DECLARATION OF ORIGINALITY OF RESEARCH

I certify that the research described in this dissertation has not already been
submitted for any other degree.
I certify that to the best of my knowledge all sources used and any help received
in the preparation of this dissertation have been acknowledged.

Signature……………………………………….

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DEDICATIONS
To my family; mother Shahin, father Mohammad and sister Dellaram who have always
been there for me, have never doubted my dreams and I have been blessed with their
endless moral support. They taught me patience, commitment, courage, caring and
thoughtful reflection. They are the true reason why I am here.

And to my love Zahra without whom I would not have been able to complete this work; I
owe so much to her. She has been a guiding force and a source of constant love and
compassion.

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ACKNOWLEDGEMENTS
Completing this doctoral dissertation was a great, wonderful and amazing three-
year journey- overwhelming at many times yet very rewarding in the end. I have many
people to thank on my journey to writing this thesis. Without the support and help from
them, this journey might never have been completed. I am truly indebted to all of them
and have been blessed in many ways to have them along the way, to whom I give my
deepest and most sincere gratitude.
First of all, I would like to thank my wonderful supervisory team; Dr. Jo Rhodes
and Associate Professor Dr. Peter Lok for the countless hours spent guiding me through
the intricacies of molding my ideas into a research project. Their influences go far beyond
this journey. I consider myself extremely fortunate to have them and am most
appreciative of their patience and caring nature. Without their intellectual and moral
support I would not have been able to arrive at the end of my doctoral journey.
I am thankful to Professor Francis Buttle from MGSM and Professor Bo Nielsen
and Professor Sabina Nielsen from Copenhagen Business School for their immeasurable
intellectual support. I also wish to thank Jennifer Martin, Kerry Daniel, Stefanie Jreige
and Anne Matheson for their invaluable help and support throughout this journey.
Finally, I must acknowledge all of the participants in MGSM research seminars ,
Australia and New Zealand Academy of Marketing Conference (ANZMAC, 2011) ,
Australia and New Zealand Academy of Management Conference (ANZAM, 2012) and
European Academy of Management Conference (EURAM 2013) who provided me with
their valuable and constructive comments.

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Table of Contents
List of Figures ............................................................................................................................... xiv
List of Tables .................................................................................................................................. xv
List of Abbreviations ..................................................................................................................... xvii
Publications Based On This Research ............................................................................................ xxi
Peer-Reviewed Journal Articles ........................................................................................................ xxi
Peer-Reviewed Conference Papers ................................................................................................... xxii
Edited Book Chapters ...................................................................................................................... xxiii
Working Papers ............................................................................................................................... xxiv
Abstract ......................................................................................................................................... xxv
-Introduction- ................................................................................................................................ - 1 -
1.1 Background and Overview .................................................................................................. - 1 -
1.2 Rationale .............................................................................................................................. - 3 -
1.3 Knowledge Gaps Within the Existing Literature ................................................................ - 9 -
1.4 Significance of the Research ............................................................................................. - 10 -
1.4.1 Contribution to the Growth Literature ........................................................................... - 10 -
1.4.2 Contribution to the Resource-Based Theories ............................................................... - 10 -
1.4.3 Contribution to the Strategic Cognition Literature ........................................................ - 11 -
1.4.4 Contribution to the Business Model Literature .............................................................. - 11 -
1.4.5 Contribution to the Small Business Literature ............................................................... - 12 -
1.4.6 Managerial Contributions .............................................................................................. - 13 -
1.5 Research Questions ........................................................................................................... - 14 -
1.6 Overview of the Research Design and Methods ............................................................... - 14 -
1.7 Organization and Outline of the Thesis ............................................................................. - 15 -
1.8 Summary of the Chapter .................................................................................................... - 16 -
Review of the Literature ............................................................................................................. - 17 -
2.1 Introduction ....................................................................................................................... - 17 -
2.2 Growth of the Firm ............................................................................................................ - 18 -
2.2.1 Definition of growth: Growth versus Performance & Profitability ............................... - 19 -
2.2.2 Dimensions of Growth ................................................................................................... - 21 -
2.2.3 Absolute Versus Relative Growth ................................................................................. - 22 -
2.2.4 Endogenous Versus Exogenous Theories of Growth .................................................... - 23 -
2.2.5 Theory of the Growth of the Firm ................................................................................. - 24 -
2.2.6 Growth of Small Businesses .......................................................................................... - 26 -
2.2.7 Strategic Leadership and Strategic Choice View of Small Firm Growth ...................... - 33 -
2.3 Emphasis on Business Model Innovation .......................................................................... - 35 -
2.3.1 Definition: What Really is a Business Model? .............................................................. - 35 -
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2.3.2 Genesis of Business Model ........................................................................................... - 36 -
2.3.3 Business Model and the Theory of Value: Value Creation and Value Capture ............ - 40 -
2.3.4 Creating and Capturing Value: Design and Resource Perspectives .............................. - 42 -
2.3.5 Business Model Versus Strategy ................................................................................... - 46 -
2.3.6 Business Model and Strategic Positioning of the Firm ................................................. - 48 -
2.3.7 Business Model Innovation, Reinvention, Transformation ........................................... - 49 -
2.3.8 Strategic Emphasis on Business Model Innovation ...................................................... - 60 -
2.3.9 Business Model Innovation and Growth of the Firm .................................................... - 63 -
2.4 Executives’ Acquisition of Knowledge ............................................................................ - 64 -
2.4.1 Knowledge As a Resource and Resource-Based Theories of the Firm ......................... - 64 -
2.4.2 Defining Knowledge as a Resource .............................................................................. - 66 -
2.4.3 Market and Technological Knowledge ......................................................................... - 73 -
2.4.4 Knowledge Acquisition ................................................................................................. - 78 -
2.4.5 Executives’ Acquisition of Knowledge and Business Model Innovation ..................... - 86 -
2.5 Executives’ Cognition and Cognitive Style ...................................................................... - 87 -
2.5.1 Executives’ Cognition in Strategic Management of Today’s Firms ............................. - 89 -
2.5.2 From Cognition to Cognitive Style ............................................................................... - 90 -
2.5.3 Theories of Cognitive Style ........................................................................................... - 93 -
2.5.4 Overview of Six Measures of Cognitive Style .............................................................. - 95 -
2.5.5 Executives’ Cognitive Styles in Strategy Versus Entrepreneurship .............................. - 98 -
2.5.6 Executives’ Cognitive Style and Acquisition of Knowledge ...................................... - 102 -
2.6 Perception of Environmental Dynamism ........................................................................ - 103 -
2.6.1 External Environment and Its Characteristics ............................................................. - 103 -
2.6.2 Environmental Dynamism ........................................................................................... - 106 -
2.6.3 Executives’ Cognition and Perceived Environmental Dynamism .............................. - 107 -
2.7 Summary of the Chapter ................................................................................................. - 109 -
-Research Questions, Conceptual Framework and Hypotheses- ............................................. - 111 -
3.1 Introduction .................................................................................................................... - 111 -
3.2 Developing a Conceptual Framework ............................................................................. - 111 -
3.2.1 Cognitive Style and Growth of the Firm ..................................................................... - 112 -
3.2.2 The Mediating Roles of Executives’ Knowledge Acquisition and Emphasis on
Business Model Innovation Strategy ............................................................................................ - 113 -
3.2.3 The Moderating Role of Environmental Dynamism ................................................... - 119 -
3.3 Research Hypotheses ...................................................................................................... - 120 -
3.3.1 Hypotheses 1 and 2: Dynamism, Cognitive Style and Growth of the Firm ................ - 121 -
3.3.2 Hypotheses 3 and 4: Dynamism, Intuitive Style and the Degree of Knowledge
Acquisition .................................................................................................................................... - 122 -
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3.3.3 Hypotheses 5 and 6: Dynamism, Analytic style and the Degree of Knowledge
Acquisition .................................................................................................................................... - 123 -
3.3.4 Hypotheses 7 and 8: Degree of Market and Technological Knowledge Acquisition
and Degree of emphasis on Business Model Innovation ............................................................... - 124 -
3.3.5 Hypotheses 9: Degree of Emphasis on Business Model Innovation and Growth of
the Firm .................................................................................................................................... - 128 -
3.3.6 Hypotheses 10 and 11: Dynamism, Cognitive Style and the Degree of Emphasis
on Business Model Innovation ...................................................................................................... - 129 -
3.3.7 Hypotheses 12 and 13: Degree of Market and Technological Knowledge
Acquisition and Growth of the Firm ............................................................................................. - 132 -
3.4 Summary of the Chapter .................................................................................................. - 136 -
-Research Design and Methods- ............................................................................................... - 139 -
4.1 Introduction ..................................................................................................................... - 139 -
4.1.1 Mixed-Methods Rationale and Design ........................................................................ - 139 -
4.1.2 Concurrent Mixed-Methods Design : Definition and Rationale .................................. - 140 -
4.2 Design of the Quantitative Phase of the Study ................................................................ - 144 -
4.2.1 Research Variables and their Measures ....................................................................... - 144 -
4.2.2 Sample ......................................................................................................................... - 150 -
4.2.3 Data Collection and Operationalization of the Survey ................................................ - 157 -
4.2.4 Quantitative Ethical Considerations ............................................................................ - 163 -
4.2.5 Biases and Neutralizing Techniques ............................................................................ - 163 -
4.2.6 Common-Method Variance (Bias) ............................................................................... - 163 -
4.2.7 Overview of Statistical Analytic Techniques .............................................................. - 164 -
4.2.8 Construct Specification ................................................................................................ - 165 -
4.2.9 Modeling Equivalency and Clarifying a Model’s Causal Directions .......................... - 165 -
4.2.10 Methodological Robustness ......................................................................................... - 166 -
4.3 Design of the Qualitative Phase of the Study .................................................................. - 166 -
4.3.1 Instrumentation: Design of the Interview Protocol ...................................................... - 166 -
4.3.2 Piloting and Expert Judgment Testing ......................................................................... - 169 -
4.3.3 Sampling: Unit, Approach and Process ....................................................................... - 170 -
4.3.4 Data Collection ............................................................................................................ - 171 -
4.3.5 Overview of Qualitative Data Analysis ....................................................................... - 172 -
4.3.6 Validity and Reliability Concerns in the Qualitative Phase ......................................... - 174 -
4.3.7 Qualitative Ethical Considerations .............................................................................. - 174 -
4.4 Summary of the Chapter .................................................................................................. - 174 -
-Results of Quantitative and Qualitative Data Analysis- .......................................................... - 175 -
5.1 Introduction ..................................................................................................................... - 175 -
5.2 Quantitative Analysis ...................................................................................................... - 175 -
5.2.1 Results of Pretest Studies ............................................................................................. - 175 -
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5.2.2 Entering Data from the Main Survey .......................................................................... - 177 -
5.2.3 Descriptive Analysis ................................................................................................... - 178 -
5.2.4 Screening and Preparing Data for Hypotheses Testing ............................................... - 179 -
5.2.5 Analysis of Discriminant and Convergent Validity .................................................... - 182 -
5.2.6 Power Analysis ............................................................................................................ - 183 -
5.2.7 Structural Modeling Procedure ................................................................................... - 184 -
5.2.8 Test of Hypotheses ...................................................................................................... - 191 -
5.2.9 Examining Mediation effects ...................................................................................... - 205 -
5.2.10 Interpreting Results of Mediation Analysis ................................................................. - 209 -
5.2.11 Ad Hoc Analyses ......................................................................................................... - 212 -
5.3 Qualitative Analysis ........................................................................................................ - 219 -
5.3.1 Outline of the Procedure ............................................................................................. - 219 -
5.3.2 Description of the Data ............................................................................................... - 219 -
5.3.3 An Overview of Interviews ......................................................................................... - 221 -
5.3.4 Process of Coding and Analysis .................................................................................. - 224 -
5.3.5 Findings Related to Research Hypotheses .................................................................. - 227 -
5.3.6 Results of Unitizing, Categorizing and Classifying (UCC) Approach ........................ - 231 -
5.3.7 Additional Findings ..................................................................................................... - 234 -
5.4 Summary of Qualitative and Quantitative Findings ........................................................ - 238 -
5.5 Summary of the Chapter ................................................................................................. - 240 -
-Discussion of Findings- .......................................................................................................... - 241 -
6.1 Introduction ..................................................................................................................... - 241 -
6.2 Synthesis of Qualitative and Quantitative Findings Related to Research Hypotheses ... - 242 -
6.2.1 Dual Cognitive Style of the CEO and Growth of the Firm ......................................... - 246 -
6.2.2 Dual Cognitive Style and Acquisition of Knowledge ................................................. - 250 -
6.2.3 Dual Cognitive Style and Emphasis on Business Model Innovation .......................... - 254 -
6.2.4 Acquisition of Knowledge and Growth of the Firm .................................................... - 258 -
6.2.5 Acquisition of Knowledge and Emphasis on Business Model Innovation ................. - 263 -
6.2.6 Emphasis on Business Model Innovation and Growth of the Firm ............................. - 265 -
6.2.7 Discussing the Intervening Mechanisms ..................................................................... - 267 -
6.3 Discussing Additional Interesting Quantitative Findings ............................................... - 275 -
6.4 Discussing Additional Interesting Qualitative Findings ................................................. - 285 -
6.4.1 Discussing Modes of Knowledge Acquisition ............................................................ - 285 -
6.4.2 Discussing Pre- and Post-Ideation Knowledge Acquisition ........................................ - 289 -
6.4.3 Discussing Heterogeneity in Forms of Business Model Innovation ........................... - 292 -
6.5 Discussing Contextual Relevance of the Findings .......................................................... - 294 -
6.6 Summary of the Chapter ................................................................................................. - 296 -
-Conclusion- ............................................................................................................................. - 297 -
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