Management & Organization

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Start date: 2020Subject: search.filters.subject.Strategy

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    MONEY MATTERS: PIONEERING OF PLATFORMS UNDER INSTITUTIONAL UNCERTAINTY IN THE GLOBAL MOBILE MONEY INDUSTRY
    (2022) Wormald, Audra; Agarwal, Rajshree; Braguinsky, Serguey; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation seeks to better understand the phenomenon of industry emergence in settings characterized by high uncertainty. To examine mechanisms underlying industry emergence and growth, I compiled a unique, hand-collected, comprehensive quantitative and qualitative dataset of the global mobile money industry. The first study examines variation in pioneering firm characteristics on choices to integrate capabilities within or across firm boundaries and to create network externalities through open or closed end user access to the mobile money platform. An analysis of the census of mobile money pioneering firms extends theories developed in traditional industrial settings by showing that pioneers were equally likely to engage in external and internal integration, with diversifying entrants less likely to internally integrate than startups. A deep data dive reveals how capabilities and motivations can be brought together to understand heterogeneity in firm choices for platform ecosystem development and underscores the importance of experimentation to resolve demand and ecosystem uncertainty to generate direct and indirect network effects. This study unpacks the relationship between institutional uncertainty and industry emergence by examining two sources of institutional uncertainty: pre-existing market institutions (e.g., impersonal rule of law) and industry-specific institutions (e.g., regulations). As more industries of today are emerging globally, additional research is needed to understand how industry emergence may be affected by institutional uncertainty that differs from one country context to the next. This study examines the emergence of the mobile money industry across the African continent to understand 1) how variation in market institutions across countries influences firm entry and 2) the ways in which market institutions influence the regulatory approach for developing industry-specific institutions. My findings reveal that pre-existing market institutions related to colonial history are associated with variations in both entry patterns and approaches to developing industry-specific institutions. This study sheds light on the path dependencies at play across these two types of institutions, industry emergence, and innovation diffusion, enhancing our theoretical understanding of industry emergence across countries that vary in market-supporting institutions. Together, this body of research underscores the importance of uncertainty reduction and experimentation for innovative solutions that provide a sustained solution to thorny societal problems. This is particularly critical in the poorest nations in the world, where underlying market institutions may be missing or inadequate, but can emerge and grow with industries.
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    Innovation Strategies for Digital Assets & Wealth Management
    (2021-12) Shorter, Charles; Taylor, James; Jones, Jessica; Sanford, Kevin; Kobloth, Nicholas; Dastidar, Protiti
    The University of Maryland ALP team serves as an independent research body to the Wealth ecosystem to explore Innovation Strategies for Digital Assets & Wealth Management. During the consult the team conducted a comprehensive case study to identify key data points for solution development which would support the incorporation of Cryptocurrencies into ‘traditional' financial advisory segments. The research is built in conjunction with industry leader Envestnet which specializes in the B2B FinTech, Wealth & Financial Advisory segments for independent advisors and high net worth individuals. The authors presents the essentials of the Wealth Management industry from the perspective of Registered Independent Advisor (RIA) firms that provide financial advice and planning for clients.
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    The Impact of Earnings Manipulation on the Science and Practice of Strategic Management
    (2021) Gibbs, Ralph Anthony; Waguespack, David; Agarwal, Rajshree; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Strategic management research frequently seeks to explain variation in organizational performance using metrics such as accounting profits scaled by firm assets (ROA). Essay 1 addresses a concern with such accrual-based accounting methods—perhaps best illustrated by a large discontinuity in the distribution of ROA around zero for U.S. public firms—that operational and accounting practices will artificially inflate/deflate accounting profit. The essay establishes that such earnings management is common, introduces non-classical noise, and distorts our understanding of broad drivers of firm performance. It concludes with an analysis showing that an alternative performance measure, Cash Flows from Operations on Assets (OCFOA), offers a robust vehicle for checking results using accounting profits. Essay 2 addresses a core prediction of the behavioral theory of the firm—that a firm is more likely to engage in strategic change when its performance falls short of its aspirations. If a firm manipulates income to report above aspirations when otherwise it would have fallen short, this creates a theoretical tension—does the firm engage in strategic change or not? This study utilizes two instrumental variables for a firm’s capability to smooth earnings to analyze the linkage between earnings smoothing and strategic change. The results suggest that public firms actively smoothing earnings have a lower propensity to subsequently change the firm’s major resource allocations, and that avoiding reporting performance below aspirations is a mechanism through which this may occur.
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    ESSAYS ON TECHNOLOGY CHANGE AND FIRM CAPABILITIES IN NASCENT MARKETS: EVIDENCE FROM THE BIONIC PROSTHETIC INDUSTRY
    (2021) Kim, Seojin; Agarwal, Rajshree; Goldfarb, Brent; Business and Management: Management & Organization; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    My first essay examines how radical technological systems are created by economic actors that are heterogeneous in both their prior history and their experimentation efforts, and the implications for their value capture strategies. Defining radical technologies based on their effect on existing technological regimes, scholars have studied incumbent-entrant dynamics based on whether incumbents can offset the obsolescence of their technological capabilities by utilizing complementary capabilities or by adapting to technological change. I identify important limitations stemming from such a definition of radical technologies and utilize the alternative definition of radical technology as a technological system that utilizes new base principles at either component or system level. We utilize historical methodology to analyze rich quantitative and qualitative data on the incubation and commercialization of bionic prosthetics. We show that the component knowledge for the new technological system was created by diverse firms—startups, conventional prosthetic incumbents, and established firms in other industries. However, incumbents who invested in the new technology system were key to creating an integrated system for bionic prosthetics and dominated in commercialization efforts in the nascent industry. Startups captured value through licensing or being acquired by incumbents, and established firms in other industries were knowledge spillover conduits, given their focus on alternative nascent downstream markets to capitalize on their existing capabilities. The second essay examines how and why the sources of entrepreneurial knowledge, namely prior experience that founders gained in academic, user, and employee settings, may affect market strategies of new ventures. While prior studies did not examine the heterogeneity of pre-entry knowledge in predicting strategy and performance of startups, I argue that each firm type possesses a distinct comparative knowledge advantage regarding key elements of the industry’s technological system, thereby leading to firm differences in technological and value chain positioning. I assembled the quantitative and qualitative data of 106 prosthetic startups created between 1991-2017. My results indicate that academic startups were likely to choose component-level products based on nascent technology, while employee startups were likely to choose finished products based on established technology. Also, user startups were likely to choose niche, component-level products leveraging established technology. Through qualitative data, I interpret my findings to suggest that entrepreneurs’ strategic choices are constrained by their initial strengths and the cost of acquiring additional resources. Together, I suggest that entrepreneurial strategy can be better understood by considering the interaction of the types of entrepreneurial knowledge and the industry’s technological system.