Witmeur and Fayolle - Growth configurations - AoM2010

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Information about Witmeur and Fayolle - Growth configurations - AoM2010
Business & Mgmt

Published on August 18, 2010

Author: olivierwitmeur

Source: slideshare.net

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Support for one reserach Paper presented durin the Annual Meeting of the Academy of Management

DEVELOPPING AND TESTING A TYPOLOGY OF GROWTH STRATEGIES: A CONFIGURATIONAL APPROACH Olivier Witmeur (B), Solvay Brussels School, Université libre de Bruxelles Alain Fayolle (F), EM Lyon Academy of Management Annual Meeting ENT Division – Paper Session 1307 Montreal, Augustus 10th, 2010

Agenda Context and Objectives Research Design & Methods Findings Data Analysis & Discussion Conclusions AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Context and Objectives

Research Design & Methods

Findings

Data Analysis & Discussion

Conclusions

1. Context and objectives

What do we know about growth? Quite a lot with multiple approaches… … but lack of integration, low connection with theory, need to be more longitudinal. (e.g. Davidsson, Delmar & Wiklund, 2006; Garnsey, Stam & Hefferman, 2006) Focus on growth measurement rather than mode. (McKelvey & Wiklund, 2010) Growth is multidimentional and complex. Unability to explain heterogeneity in growth patterns even if we know they are not idosyncratic. (Delmar, Gartner & Davidsson , 2003; Levie & Lichtenstein , 2010) AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Quite a lot with multiple approaches…

… but lack of integration, low connection with theory, need to be more longitudinal.

(e.g. Davidsson, Delmar & Wiklund, 2006; Garnsey, Stam & Hefferman, 2006)

Focus on growth measurement rather than mode.

(McKelvey & Wiklund, 2010)

Growth is multidimentional and complex.

Unability to explain heterogeneity in growth patterns even if we know they are not idosyncratic.

(Delmar, Gartner & Davidsson , 2003; Levie & Lichtenstein , 2010)

The configurational approach as a solution? The configurational approach is quite old. (e..g. Mintzberg , 1978; Miller & Friesen, 1984; Miller, 1986) It has almost been abandoned during one decade. (Miller, 1996) It has been regularly advocated and is now adopted by multiple entrepreneurship scholars. (e.g. Dess, Lumpkin & Covin, 1997; Bantel, 1998, Heirman & Clarysse, 2004; Wiklund & Shepherd, 2005, Harms, Krauss & Schwartz, 2009) AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

The configurational approach is quite old.

(e..g. Mintzberg , 1978; Miller & Friesen, 1984; Miller, 1986)

It has almost been abandoned during one decade. (Miller, 1996)

It has been regularly advocated and is now adopted by multiple entrepreneurship scholars.

(e.g. Dess, Lumpkin & Covin, 1997; Bantel, 1998, Heirman & Clarysse, 2004; Wiklund & Shepherd, 2005, Harms, Krauss & Schwartz, 2009)

About ‘configurations’ (e..g. Miller , 1981-1986; Miller & Mintzberg, 1983 ; Ketchen, Thomas & Snow, 1993) Configuration = coherent, commonly occurring cluster of attributes related to strategy, organizational structure and environment. Existence of a minimum level of fit between the attributes Supposed to be stable over time and associated with ‘second-order’ change when modified (Levy , 1986) Strengths of the configurational approach: Restriction of the scope of analysis to a limited number of coherent configurations rather than reviewing all possibilities Integrated system with static & dynamic view 2 methodological options: Taxonomy ‘vs’ Typology AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Configuration = coherent, commonly occurring cluster of attributes related to strategy, organizational structure and environment.

Existence of a minimum level of fit between the attributes

Supposed to be stable over time and associated with ‘second-order’ change when modified (Levy , 1986)

Strengths of the configurational approach:

Restriction of the scope of analysis to a limited number of coherent configurations rather than reviewing all possibilities

Integrated system with static & dynamic view

2 methodological options: Taxonomy ‘vs’ Typology

About ‘typologies’ Typologies are theoretically deducted. “ Typologies are based on a unique form of theory building that is intuitively appealing and holds considerable promise for helping management researchers to understand complex, holistic phenomenon […]” Doty & Glick (1994, p.248) AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Typologies are theoretically deducted.

“ Typologies are based on a unique form of theory building that is intuitively appealing and holds considerable promise for helping management researchers to understand complex, holistic phenomenon […]” Doty & Glick (1994, p.248)

Objectives of the paper Challenge the relevance of the configurational approach Developing and testing one typology of growth strategies (or modes) Exploratory paper Longitudinal Qualitative AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Challenge the relevance of the configurational approach

Developing and testing one typology of growth strategies (or modes)

Exploratory paper

Longitudinal

Qualitative

2. Research Design & Method

Experimental setting: IT ventures Entrepreneurial IT service firms (EISF) Entrepreneurial Software Ventures (ESV) Typical growth options (adapted from Ansoff, 1965/1988; Robert, 2003) : Internationalisation Offering diversification Focus In addition: Product- and/or Service- business model ( Nambisan, 2001) IT Consulting Software Products Mixed business models AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Entrepreneurial IT service firms (EISF)

Entrepreneurial Software Ventures (ESV)

Typical growth options (adapted from Ansoff, 1965/1988; Robert, 2003) :

Internationalisation

Offering diversification

Focus

In addition: Product- and/or Service- business model ( Nambisan, 2001)

IT Consulting

Software Products

Mixed business models

Design of the research AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Building the typology AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

The case method AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology Time ordered matrix

3. Findings

The typology uses 23 items to describe 6 constructs that are typical to entrepreneurship Entrepeneur(s): Management experience Technical experience Willingness to grow Activities: R&D Service delivery Indirect sales Direct sales Resources: Self financing External investors Middle management Senior management IP Organization: Central decision making Formalization Vertical specialization Horizontal specialization Company size Environment: Type of customers Pattern of conditions change Competition intensity Strategy: Deepening / Focus Offering diversification Internationalization AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Entrepeneur(s):

Management experience

Technical experience

Willingness to grow

Activities:

R&D

Service delivery

Indirect sales

Direct sales

Resources:

Self financing

External investors

Middle management

Senior management

IP

Organization:

Central decision making

Formalization

Vertical specialization

Horizontal specialization

Company size

Environment:

Type of customers

Pattern of conditions change

Competition intensity

Strategy:

Deepening / Focus

Offering diversification

Internationalization

The typology includes 7 ideal-types Service firms: S1= The Expert S2= Local Player S3= Diversified Firm Software firms: P0= The Lab P1= The Workshop P2= The Specialist P3= The Reference AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Service firms:

S1= The Expert

S2= Local Player

S3= Diversified Firm

Software firms:

P0= The Lab

P1= The Workshop

P2= The Specialist

P3= The Reference

 

The 4 cases allow for the analysis of 15 configurations AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology A1 A2 A3 + F1 C1 C2 C3 M1 M2 M3 W1 W2 W3 W4 W5

4. Data Analysis & Discussion

Comparing the ideal-types and the configurations 1/2 Step 1: Coding using a scoring gridline AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Step 1: Coding using a scoring gridline

AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Comparing the Ideal Types and the Configurations 2/2 Step 2: Calculating ‘differences’ Between ideal types Between successive configurations Bertween ideal-type and configurations AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Step 2: Calculating ‘differences’

Between ideal types

Between successive configurations

Bertween ideal-type and configurations

 

Ideal-types vs configurations AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Main findings Possibility to isolate ideal types (theorical) and stable configurations (empirical) Significant differences between idealtypes, i.e. between: Supposed successive ideal types Same stage but different business model orientation Significant differences between successive configurations for each firm Many configurations ‘fit’ with one ideal type … … except when firms changed their business model (unstable ‘hybrid’ configurations) Growth patterns appeared AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Possibility to isolate ideal types (theorical) and stable configurations (empirical)

Significant differences between idealtypes, i.e. between:

Supposed successive ideal types

Same stage but different business model orientation

Significant differences between successive configurations for each firm

Many configurations ‘fit’ with one ideal type …

… except when firms changed their business model (unstable ‘hybrid’ configurations)

Growth patterns appeared

Stylized Growth Patterns AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology P0 P1 P3 P2 S1 S3 S2 A1 A2 A3 W1 W2 W3 W4 W5 C1 C2 C3 M1 M2 M3

Limitations Typology development method Typical issues associated with the case method: sampling, reinterpretation, theoretical saturation? Retrospective and long observation period  Nothing about incremental changes No consideration for growth through acquisition AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Typology development method

Typical issues associated with the case method: sampling, reinterpretation, theoretical saturation?

Retrospective and long observation period  Nothing about incremental changes

No consideration for growth through acquisition

5. Conclusions

Future research Grounded typology e.g. recoding the material from the cases Correlation between ‘fit’ and performance is (theoretically) assumed but not tested here Combining typological and taxonomical works Other industry Further work on the processes that drive configuration changes i.e. the complementarities between configuration- and process- approaches AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Grounded typology

e.g. recoding the material from the cases

Correlation between ‘fit’ and performance

is (theoretically) assumed but not tested here

Combining typological and taxonomical works

Other industry

Further work on the processes that drive configuration changes

i.e. the complementarities between configuration- and process- approaches

Explaining configuration changes… … was not the purpose of the research but … … we speculate that it can be analyzed as a multi-motor process. (Van de Ven & Poole, 1995) Where: Market acceptance (Evolutionary) Investor acceptance (Evolutionary) Willingness to grow (Dialectical) Organizational structuring (Staged) Strategic planning (Teleological) … seem to be the dominant processes. AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

… was not the purpose of the research but …

… we speculate that it can be analyzed as a multi-motor process. (Van de Ven & Poole, 1995)

Where:

Market acceptance (Evolutionary)

Investor acceptance (Evolutionary)

Willingness to grow (Dialectical)

Organizational structuring (Staged)

Strategic planning (Teleological)

… seem to be the dominant processes.

Main implications AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology Relevance of the configuration approach to deal with the complexity of growth Typology Development + Test Conditions and implications of different growth strategies for EISF and ESV

Thank you! Q&A Olivier Witmeur [email_address] Alain Fayolle [email_address] AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

Olivier Witmeur

[email_address]

Alain Fayolle

[email_address]

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