The number 1 strategic mistake that companies make:

“The biggest mistake companies make is that they fail to make choices”

Costas Markides explains that strategy is about making choices. But choices about what?

Managing Firms in an Emerging Economy: Evidence from the Time Use of Indian CEOs

by Raffaella Sadun, Assistant Professor of Businesss Administration, Harvard Business School 

The success or failure of a company is often ascribed to the behaviour of its CEO. Yet little is known about what top managers actually do, whether this matters for firm performance and why it differs across firms.  We provide some answers by developing a new survey instrument to collect data on CEO time use in the Indian manufacturing sector, where the productivity dispersion across firms is substantial. Time use analysis of 354 CEOs of listed firms yields three sets of findings. First, there is substantial heterogeneity in total hours worked (“labor supply”) and the allocation of time across different activities, constituencies,  and modes of interaction (“style”). Second, both labor supply and style are strongly correlated with firm productivity and profitability. Third, controlling for state and industry traits, family CEOs work fewer hours and adopt a less productive style. Using differences in exposure to competition and weather shocks, we argue that the behavioral differences between family and professional CEOs are easier to explain as differences in the preferences or skills of CEOs rather than optimal responses to different organizational structures.

“The Vectors of Corporate Social Responsibility”

Timothy Devinney,  Professor of Strategy, University of Technology, Sydney

It is common to believe that there is a link between corporate social responsibility and performance, yet no studies have examined the operative mechanisms by which this might occur.  In a series of experiments we have examined the degree to which CSR and CSR-like factors influence the decisions of consumers, workers and investors as well as whether or not employees even know and understand what their companies are doing.  The results are rather disheartening in that all of the studies reveal a very limited degree to which these activities meet the criteria by which they would be considered an effective performance vector.

“Do Managers Face a Uniqueness Paradox in Crafting Corporate Strategy? Evidence from Mergers and Acquisitions”

Todd Zenger, Robert and Barbara Frick Professor of Business Strategy,Washington University, St Louis

Using mergers and acquisitions as a testing ground we examine whether managers face conflicting incentives in selecting the uniqueness of their corporate strategy. We argue that firms that pursue strategies which assemble commonly-bundled assets may pay more for these assets, perhaps as a reflection of the greater degree of competition among rivals for them. On the other hand, firms that pursue common business strategies may receive more favorable stock market response to these asset acquisitions, as market participants may possess greater information about the value to assign to these asset acquisitions. We find that acquirers, who at the time of an announced acquisition are more similar to their rivals, receive a significantly higher positive announcement return. A decrease from the top to the bottom decile of the measure of uniqueness of the corporate strategy of the post-merger company is associated with an increase in abnormal announcement returns (within -1 to +1 days around the announcement) of 1.01%. At the same time acquirers in the bottom decile of our uniqueness measure pay on average 13.6% more for their targets than acquirers in the top decile; they also have subsequent one-year-post-merger-closing profitability which is about 1.25% lower than their peer group with more unique corporate strategy. These findings are stronger for a measure of uniqueness that compares the post-merger company to the primary industry rivals that are covered by analysts. Overall we interpret our results to suggest a managerial paradox in selecting strategy between unique strategies that permit a discounted acquisition of assets and high long run performance, but poor market response, and more common strategies that enjoy strong short run market performance, but elevated acquisition prices and[…]

“Social networks and Social Clubs”

by Professor Chaim Fershtman, Tel Aviv University

Social networks play an important role in our business environment. While there is an extensive literature that focus on the formation of such networks our focus is on the formation of social clubs and the role of such clubs in the formation of social networks. We present a strategic network formation model which is based on club memberships. Individuals choose the set of clubs with which they want to be affiliated. This club memberships structure induces a social network where two agents are directly connected if they share a club. Two agents may also be indirectly connected using multiple memberships of third parties. A social environment is clubwise stable if no agent wants to leave one of his clubs, no agent wants to join an existing club and no subset of agents wants to form a new club. While indirect connections suffer from depreciation, large clubs are prone to congestion. This model provides a general framework to discuss network formation issues as heterogeneity, depreciation, congestion, evolution etc.

Seminar announcement: Örjan Sölvell, Professor Department of Marketing and Strategy, Stockholm School of Economics:

“Competitiveness, Innovation and Clusters”

This paper draws together theory on spatial agglomeration of economic activity, innovation processes, and international business to address the phenomena of spatial clustering, accumulation of knowledge in local milieux and firm competitiveness. It builds a conceptual model explaining the process of local knowledge accumulation and why there are important barriers to the diffusion of knowledge from one local milieu to another. The role of transnational corporations (TNCs) in linking together localized processes of knowledge accumulation is discussed, and it is argued that the actions of TNCs do not in any fundamental way alter our understanding of the localized process of knowledge accumulation.


This week’s speaker in the seminar series in Strategy and Entrepreneurship at the London Business School is Mihaela Stan, Assistant Professor of Strategy in the Department of Management Science and Innovation at University College London

“Taking Time to Do it Right: The Impact of Time-Compressing Experience Accumulation on Organizational Quality Outcomes” (with Kannan Srikanth)

Organizations develop new capabilities through “learning by doing”. As firms accumulate more experience with production, their productivity increases at a decreasing rate. However, prior work has not examined how speed in experience accumulation (as opposed to the volume of accumulated experience) impacts the organizations’ learning curve. We analyze this question using data from fertility clinics in the UK. We show that faster experience accumulation is associated with lower birth rates. We also show that the impact of time compression is exacerbated for clinics that mainly treat complex cases and is mitigated for clinics that employ an integrator to coordinate across the different specialist functions involved in the treatment process. Our results empirically show one mechanism – shallower learning curves – that gives rise to time compression diseconomies.

This week’s speaker in the seminar series in Strategy and Entrepreneurship at the London Business School is Professor Erkko Autio, Chair in Technology Venturing and Entrepreneurship, Imperial College London

“Consequences of Cultural Practices for Entrepreneurial Behaviors”

Abstract. Although national culture is an important regulator of entrepreneurship, there is a dearth of studies that (i) explore the effects of national cultural practices on entrepreneurial behaviors by individuals; (ii) use appropriate multi-level research designs; (iii) consider the effects of culture on different entrepreneurial behaviors such as entry and post-entry growth aspirations. We combined Global Entrepreneurship Monitor (GEM) and Global Leadership and Organizational Behavior Effectiveness (GLOBE) data from 42 countries for 2005 – 2008 to address these gaps using a multi-level design. We found societal institutional collectivism practices negatively associated with entrepreneurial entry but positively associated with entrepreneurial growth aspirations. Uncertainty avoidance practices were negatively associated with entry but not with growth aspirations, while performance orientation practices were positively associated with entry. This highlights the differential effects of cultural practices on entrepreneurial entry and growth aspirations, demonstrating the value of multi-level techniques in analyzing the effect of culture on entrepreneurship.

The Sumantra Ghoshal Strategy Conference
on Managerially Relevant Research
June 2-3, 2013 London, United Kingdom
Deadline for submissions: 31st  January 2013

The Department of Strategy and Entrepreneurship at the LondonBusinessSchool invites you to submit research papers for presentation at the seventh annual Sumantra Ghoshal Strategy Conference on Managerially Relevant Research, to be held on campus on June 2nd – 3rd 2013.

In keeping with the spirit of the late Sumantra Ghoshal’s research philosophy, our aim is to invite research presentations that not only meet the highest standards of academic rigour but also create insights that are of value to practitioners – managers, consultants and policy makers. LondonBusinessSchool faculty will select a mix of papers that complement each other, and a panel of distinguished scholars and practitioners will serve as discussants.

The purpose of the conference is threefold:

  • To honour the late Sumantra Ghoshal.
  • To stimulate bridges between management research and practice (with the aim of making management research more relevant and help the practice of management to be more rigorous).
  • To build a community of scholars interested in relevant management research.


The keynote speaker for the conference will be David Teece (UC Berkeley).

Other confirmed participants include: Gautam Ahuja (University of Michigan); Ramón Casadesus-Masanell (Harvard Business School); Laurence Capron (INSEAD); Henry Chesbrough (UC Berkeley); Gerry George (Imperial College); Martin Kilduff (University College London); Martha Mangelsdorf (MIT, editor of Sloan Management Review); Anita McGahan (University of Toronto); Phanish Puranam (INSEAD).

Type of sessions and invitation

There are two types of sessions at the Ghoshal conference:

  • Academic paper presentations. There are three tracks of academic papers: 1) Competing on Innovation, Data