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Long Range Planning

34/2 April 2001

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Charles Baden-Fuller Editorial

Executive Summaries

Knowlegde Management

George H. Stonehouse, Johnathan D. Pemberton and Claire E. Barber The Role of Knowledge Facilitators and Inhibitors: Lessons from Airline Reservation Systems jon.pemberton@unn.ac.uk

    Strategic frameworks seeking to explain how an organisation may generate superior performance are numerous. Earlier approaches centred on the competitive position of an organisation within its industry, with subsequent attention focused on an organisation's core competences. More recently, research has concentrated on knowledge and organisational learning. By reference to a study of airline-developed computer reservation systems (CRSs), this article explores the strategic importance of information in creating knowledge to generate superior performance. By examining developments in the use, management and control of information derived from CRSs, evidence is presented to explain how CRS-owning airlines have circumvented regulatory controls and increasingly competition to sustain competitive advantage through the development of their information and knowledge systems. This research demonstrates the need for organisations to develop ‘knowledge facilitators' that foster the creation of new knowledge. Equally, managers must develop ‘knowledge inhibitors' that help to sustain competitive advantage by limiting the abilities of competitors to create knowledge themselves.

Eugene Sadler-Smith and Ian Chaston Learning Orientations and Growth in Smaller Firms eugine.sadler-smith@pbs.plym.ac.uk

    Organisational learning is often presented as one way in which firms may respond to increasingly competitive market conditions by managing their knowledge assets in more effective ways. Although theoretically and conceptually plausible, there is limited empirical evidence, particularly from smaller firms, in support of this view. This study aims to provide some evidence that links organisational learning and performance. Extant theory suggests that organisational learning may range from a passive orientation (working within a current paradigm) to an active orientation (questioning a current paradigm) at both the individual and the collective levels. This study examines the learning orientations of 300 smaller manufacturing and service firms in terms of an active–passive learning construct. The results suggest that higher-growth manufacturing firms have a more active learning orientation. These firms make greater use of knowledge assets than do their lower growth counterparts, and this may have important implications for the management of learning in smaller manufacturing firms.

Strategic Renewal: Lessons from European Financial Services

Manuel Hensmans, Frans A. J. van den Bosch and Henk W. Volberda Clicks versus Bricks in the Emerging On-Line Financial Services Industry m.hensmans@fac.fbk.eur.nl

    The emergance of electronic commerce industries raises important questions about legitimacy building and leveraging for both practitioners and scholars of strategy. New entrant´s click-and-mortar or click-and-click business models are challenging the legitimacy of large and mature brick-and-mortar incumbents. The implications of this challenge for the financial services industry - as for many other industries - are only starting to become clear. This paper contributes to these initial understandings by developing a conceptual framework that considers which e-strategies Bricks (incumbent organisations such as ABN AMRO Bank and Prudential Banking), and Clicks (new-entrants such as KPN and First-e) adopt to improve their competitiveness. Four relevant organisational types in the emerging on-line financial services industry are identified, and ties to legitimacy-providing organisations are assessed for their potential both as buffers against environmental turbulence and bridges towards chaning stakeholder perspectives.

Bert Flier, Frans A. J. van den Bosch, Henk W. Volberda, Carlo Carnevale, Neil Tomkin, Leif Melin, Bertrand Quelin and Mark Kriger The Changing Landscape of the European Financial Services Sector bflier@fbk.eur.nl

    The European financial servies sector is confronted with major forces that have changed its competitive dynamics and therefore the strategic renewal context. The purpose of this paper is threefold. Frist, to investigate the pace of diffusion of two of these strategic renewal-enabling forces over time. Second to assess whether the pace of diffusion across countries became increasingly similar. Third, to assess the impact of these developments on the European financial landscape. The focus will be on five European Union countries during the period 1990-1999. The changing strategic renewal context is assessed by looking at the pace of diffusion of technological innovations in providing bank services and EU banking regulations. The impact these two forces have on privitisation processes of two later mover countries and on the industry structure will be analysed as well. The preliminary findings suggest that country-specific patterns of diffusion have decreased substantially over time, which indicates the emergence of industry-generic patterns of diffusion. The increasing speed of diffusion within the European financial services sector will give rise to a hyper-competitive landscape in the beginning of the 21st century. Understanding the emergence of such landscapes creates important managerial challenges for both the strategic renewal journeys of incumbent firms, and for new entrants, either in the financial services sector or in sectors that are or will be confronted with similar developments.

Bert Flier, Frans A. J. van den Bosch, Henk W. Volberda and Eric Gedajlovic Following the Herd or Being Different? bflier@fbk.eur.nl

    How do large firms conduct their renewal journeys in an increasingly turbulent environment? Are there generic industry patterns of strategic renewal or are these journeys country- or firm-specific? To answer these questions, we examine the relative incidence of external vs. internal and explorative vs. exploitive renewal actions as well as the speed of renewal actions, in leading Dutch and UK financial service companies, using longitudinal data spanning the fiscal years 1990-1997. The context, content and process dimensions of strategic renewal are distinguished, and research questions about these atributes are formulated and investigated using a methodology that incorporates new metrics. Findings show that while exploration/exploitaion ratios are fairly similar for firms across the entire industry, systematic differences are evident between the external/internal renewal ratios of Dutch and UK firms, and that speed of renewal is largely determined at the firm level. Thus we find that industry-, country- and firm-specific factors all influence journeys of strategic renewal in distinctive and complementary ways.

Henk W. Volberda, Charles Baden-Fuller and Frans A. J. van den Bosch Mastering Strategic Renewal: Mobilising Journeys of Change in Multi-Unit Firms hvolberda@fac.fbk.eur.nl

    How do large multi-unit firms in a deconstructing world reconcile the conflicting forces of profits for today and flexibility to adapt for tomrrow? Profits for today require order, control and stability. Adaption for tomorrow requires flexibility and creativity in the value-added system. Large firms in many industries are confronted with this challenge of exploration and exploitation. In the European financial services industries these conflicting tendencies are more and more evident. Notwithstanding the increased need to acheive higher levels of exploration and exploitation, the opportunities and constraints on how to renew in the financial service sector are underresearched. There are diverging views as to how financials should behave when confronted with change. From a selection perspective, existing large financial players are well placed to exploit the present but ill suited to adapt to the future. Other adaptation perspectives do suggest that these financial institutions can purposefully change. Considering extreme selection and adaptation perspectives, we examine four ideal kinds of journeys that organisations can adopt as a way of coping with increasing environmental pressures: emergent journeys, facilitated journeys, directed journeys and transformational journeys. We show how these ideal types represent the solution to choices offered to top managers versus frontline and middle managers, and how each type is different in its capacity to cope with the changing environment. We also suggest a managerial agenda for mastering strategic renewal in financial institutions. We illustrate the various items on this agenda by referring to incumbent firms such as universal banks that operate in the changing context of the European financial services sector.

David van der Zande Financial Services: An Industry Perspective

CEO Perspective

H. N. J. Smits and J. M. Groenveld Reflections on Strategic Renewal at Rabobank: A CEO Perspective

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