Table Of ContentKarolin Marx
The Role of the Social Context for Strategy-Making
GABLER EDITION WISSENSCHAFT
Karolin Marx
The Role of the
Socia"1 Context for
Strategy-Making
Examining the impact of embeddedness
on the performance of strategic initiatives
With a foreword by Prof. Dr. Gunter Muller-Stewens
Deutscher UniversiHits-Verlag
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Dissertation Universitat St. Gallen, 2004
1. Auflage Oktober 2004
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Gedruckt auf saurefreiem und chlorfrei gebleichtem Papier
ISBN-13: 978-3-8244-8211-5 e-ISBN-13: 978-3-322-81847-8
DOl: 10.1007/978-3-322-81847-8
Foreword v
Foreword
Over the years strategic initiatives have received increasing importance as core vehicles for
strategy-making. These coordinated undertakings enable firms to reinforce the current
strategy or alter it in order to realign the organization in accordance with changed
environmental conditions. Despite the growing importance of strategic initiatives the overall
understanding of their professional management is still limited. While previous research has
acknowledged the importance of the organizational context for the successful development of
strategic initiatives, so far only little research has focused on this important link. Especially
the social side of the organizational context has remained under-investigated.
Karolin Marx addresses this shortcoming and analyzes the role of the social context,
represented by the embeddedness of the initiative team in the intrafirm network, for strategy
making. As initiatives are pursued by teams, it is reasonable to assume that the type and
quality of the team's social relations to other organizational units impacts the thinking and
behavior within the team and thus the performance of the initiative.
Based on an extensive literature review the author makes an interesting argument, as she
argues that the effects of social relationships on the performance of strategic initiatives are not
only positive but may also include negative aspects, which impede the success of the
initiative. More specifically, Karolin Marx outlines two things: First, building upon the
distinctions between relational, structural, positional and cognitive embeddedness, she
discusses the effects of these four dimensions of network embeddedness on initiative
performance. She argues that each type of embeddedness has a curvilinear, inverted u-shaped
relationship with initiative performance. While the benefits of embeddedness increase at
lower levels, the costs increase at higher levels. Second, she extends this argument and
integrates the degree of exploration as a key contingency. Based on the distinction between
exploration and exploitation, she argues that exploratory undertakings require a different
social setting and therefore a different management approach than their exploitive
counterparts to develop and survive within the organization.
The established hypotheses are tested using data collected from 54 corporate strategic
initiatives - both successful and unsuccessful - and their social networks in four multinational
companies in various industries. The author uses a unique methodological approach, which
VI Foreword
combines social network analysis and multiple regression analysis. The results support the
significance of the social context for strategy-making. They partly support the negative effects
of embeddedness on the success of strategic initiatives and they provide evidence for the fact
that exploratory initiatives prosper in another social context than exploitive initiatives.
This work advances theory on strategy process by introducing social relations as an
additional, so far under-researched aspect of the organizational context that is relevant to the
success of initiatives. Moreover, by elaborating the contingencies between context, type of
initiative and performance, this research points towards certain optimal combinations across
these factors. This work is also interesting for social network theory as it confutes the
conventional wisdom on the sole positive effects of intrafirm networks. Finally, this work has
major implications for managerial practice as it implies the necessity for regarding the
intrafirm network structure as an additional strategic "lever". By creating a balanced
environment managers can actively foster the development and survival of exploratory and
exploitive initiatives, which are both crucial for the long-term survival of the firm.
Overall, research on the social context of strategy processes is just in the beginning. The work
of Karolin Marx has outlined many interesting issues and it forms a valuable basis for future
research endeavors.
Prof. Dr. GUnter MUller-Stewens
Preface VII
Preface
The period of time spent writing my dissertation has been extremely enriching, both
personally and academically. I am indebted to many people who have contributed in various
ways to the completion of this work.
First, I would like to thank my doctoral advisor, Prof. Dr. Giinter Miiller-Stewens, who
guided me academically and personally during this period of my life. He provided me with
enough space to develop my own ideas but at the same time he was always there when
support and direction were needed. Working with him has been both professionally and
personally very rewarding. I would also like to thank Prof. Dr. Andreas Herrmann, who
kindly agreed to become co-advisor of my dissertation.
I am deeply indebted to Prof. Dr. Christoph Lechner, who played an enormous role in my
academic and personal development. Christoph offered me an outstanding academic
education and always impressed me with the different facets of his personality. I am very
grateful to him for sharing his enthusiasm for scientific work, and for showing me how much
fun research can be. Christoph has been a great academic teacher and friend.
I would like to thank the University of St. Gallen and the Swiss National Science Foundation
for their generous assistance in providing me with the opportunity to carry out research at the
University of Connecticut and the Harvard Business School.
At the University of Connecticut I am particularly grateful to Prof. Dr. Steven W. Floyd, who
took a real interest in my work and acted as my advisor during my stay in Connecticut.
Steve's constructive and detailed feedback and his willingness to invest time in helping me to
improve my dissertation have left me in his debt. In addition, I would like to thank the faculty
and students of the School of Business at the University of Connecticut for their assistance,
namely Dr. Harald Fischer, Melissa Foreman, Dr. Franz Willi Kellermanns, Prof. Dr. Michael
Lubatkin, Dr. Zeki Simsek, and Prof. Dr. Jack Veiga.
During my time at Harvard Business School lowe considerable gratitude to Prof. Dr. Tiziana
Casciaro, who showed great interest in my research and discussed it with me in various
meetings. I am deeply grateful for Tiziana's commitment, constructive feedback, and
VITI Preface
encouragement during the final stage of my dissertation. I would also like to thank the other
faculty members at Harvard Business School for many enriching exchanges throughout my
stay.
I am also very thankful to the numerous respondents from the following four companies:
Lufthansa Cargo AG, Infineon Technologies AG, EvoBus GmbH and Balzers AG. Without
their commitment and support, this dissertation would not have been possible. I especially
thank Frank Haupenthal and Dr. Klaus Sieger from Lufthansa Cargo AG; Jens Milnikel and
Dr. Andreas Schumacher from Infineon Technologies AG; Dietmar Kopp and Wolfgang
Musiolik from EvoBus GmbH; and Dr. Hans Schulz and Dr. Peter Hubner from Balzers AG.
My friends inside and outside the doctoral program have provided me with the perfect mix of
intellectual input, personal support, and leisurely relief. Therefore, I would like to thank
Rainer Bizenberger, Berislav Gaso, Michael Hoi, Kathrin Kopp, Gernot Lenz, Maria
Rumyantseva, Manuel Seyferth, Monica Simsek, Andreas SHirr, Matthaus Urwyler, Dr.
Hendrik Vater, Jorge Walter, and Carolin Wolff. I also want to thank Michaela Solterbeck,
who made my life during my doctoral program much easier.
There is one person who deserves my deepest thanks and respect for his unconditional support
and commitment during the writing of this dissertation: my boyfriend, Sebastian
Frankenberger. I would not have gotten through some of the rougher times during this journey
without him. His love, understanding, and encouragement have given me the strength crucial
for the success of this endeavor.
Finally, I thank my parents, Karin and Eberhard Marx, and my sisters, Dr. Stefanie
Gonnenwein and Andrea Marx, for their crucial support over the years. I am deeply indebted
to my parents, who fully supported me throughout my years of study and research and who
never lost faith in me. Their love, trust, and support have brought me to where I am today. As
this was the basis for everything, I dedicate this dissertation to them.
St. Gallen, July 2004 Karolin Marx
Table of contents IX
Table of contents
List offigures _________________________. XIII
List of abbreviations ________________________ XV
1 INTRODUCTION
1.1 Research objective and research question
1.2 Theoretical relevance and contribution 4
1.3 Practical relevance and contribution 8
1.4 Outline ofthe dissertation 9
2 THEORETICAL BACKGROUND 13
2.1 Strategy process research: Developing a basic understanding of the field __1 4
2.1.1 Conceptualization of strategy and process ______________ 15
2.1.2 Critical discussion of relevant strategy process models 17
2.1.3 Comparison of the strategy process models and implications for
the dissertation _______________________ 25
2.2 Evolutionary theory: The social context as internal selection mechanism __3 1
2.2.1 The population ecology approach ________________ 32
2.2.2 Intraorganizational ecology theory of strategy-making 35
2.2.3 Introducing the social context as internal selection mechanism 37
2.3 Exploring strategic initiatives: The core vehicles for strategy-making ___4 1
2.3.1 Characteristics of strategic initiatives _______________4 1
2.3.2 Types of strategic initiatives 46
2.3.3 Factors influencing the performance of strategic initiatives 48
2.4 The social context of strategic initiatives: An embeddedness perspective_ _5 3
2.4.1 Basics and definitions of embeddedness ______________ 53
2.4.2 The complex effects of embeddedness 57
2.4.3 Dimensions of embeddedness 63
2.4.4 Social networks as underlying basis 71
2.5 Summary and discussion ___________________ 74
X Table of contents
3 THEORETICAL MODEL 78
3.1 The core model: The impact of embeddedness on the performance of
strategic initiatives 80
3.1.1 The impact of tie strength (relational embeddedness) 81
3.1.2 The impact of structural autonomy (structural embeddedness) 84
3.1.3 The impact of centrality (positional embeddedness) 87
3.1.4 The impact of shared vision (cognitive embeddedness) 90
3.2 The extended model: Degree of exploration as a key contingency 92
3.2.1 Characteristics of exploratory and exploitive initiatives 93
3.2.2 Different embeddedness configurations for exploratory and
exploitive initiatives 95
3.3 Summary and discussion 99
4 METHODOLOGY 101
4.1 Methodological approach 102
4.1.1 The fit between research problem and quantitative methodology 103
4.1.2 Methodological approaches to studying strategic initiatives 104
4.1.3 Methodological approaches to studying intrafirm network embeddedness __ 10 7
4.1.4 The dissertation's specific methodological approach 112
4.1.5 Evaluation of the dissertation's specific methodological approach liS
4.2 Research sites 117
4.2.1 Lufthansa Cargo AG 118
4.2.2 Infineon Technologies AG 119
4.2.3 EvoBus GmbH 121
4.2.4 Balzers AG 123
4.3 Data collection and sample 124
4.3.1 Data collection process 124
4.3.2 Characteristics of the strategic initiatives 127
4.3.3 Characteristics of the underlying social networks 129
4.3.4 Examining potential biases of the sample 131
