Witmeur and Fayolle - Growth configurations - AoM2010

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Witmeur and Fayolle - Growth configurations - AoM2010

  1. 1. 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
  2. 2. Agenda <ul><li>Context and Objectives </li></ul><ul><li>Research Design & Methods </li></ul><ul><li>Findings </li></ul><ul><li>Data Analysis & Discussion </li></ul><ul><li>Conclusions </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  3. 3. 1. Context and objectives
  4. 4. What do we know about growth? <ul><li>Quite a lot with multiple approaches… </li></ul><ul><li>… but lack of integration, low connection with theory, need to be more longitudinal. </li></ul><ul><ul><li>(e.g. Davidsson, Delmar & Wiklund, 2006; Garnsey, Stam & Hefferman, 2006) </li></ul></ul><ul><li>Focus on growth measurement rather than mode. </li></ul><ul><ul><ul><ul><ul><li>(McKelvey & Wiklund, 2010) </li></ul></ul></ul></ul></ul><ul><li>Growth is multidimentional and complex. </li></ul><ul><li>Unability to explain heterogeneity in growth patterns even if we know they are not idosyncratic. </li></ul><ul><ul><ul><ul><ul><li>(Delmar, Gartner & Davidsson , 2003; Levie & Lichtenstein , 2010) </li></ul></ul></ul></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  5. 5. The configurational approach as a solution? <ul><li>The configurational approach is quite old. </li></ul><ul><li>(e..g. Mintzberg , 1978; Miller & Friesen, 1984; Miller, 1986) </li></ul><ul><li>It has almost been abandoned during one decade. (Miller, 1996) </li></ul><ul><li>It has been regularly advocated and is now adopted by multiple entrepreneurship scholars. </li></ul><ul><li>(e.g. Dess, Lumpkin & Covin, 1997; Bantel, 1998, Heirman & Clarysse, 2004; Wiklund & Shepherd, 2005, Harms, Krauss & Schwartz, 2009) </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  6. 6. About ‘configurations’ (e..g. Miller , 1981-1986; Miller & Mintzberg, 1983 ; Ketchen, Thomas & Snow, 1993) <ul><li>Configuration = coherent, commonly occurring cluster of attributes related to strategy, organizational structure and environment. </li></ul><ul><li>Existence of a minimum level of fit between the attributes </li></ul><ul><li>Supposed to be stable over time and associated with ‘second-order’ change when modified (Levy , 1986) </li></ul><ul><li>Strengths of the configurational approach: </li></ul><ul><ul><li>Restriction of the scope of analysis to a limited number of coherent configurations rather than reviewing all possibilities </li></ul></ul><ul><ul><li>Integrated system with static & dynamic view </li></ul></ul><ul><li>2 methodological options: Taxonomy ‘vs’ Typology </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  7. 7. About ‘typologies’ <ul><li>Typologies are theoretically deducted. </li></ul><ul><li>“ 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) </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  8. 8. Objectives of the paper <ul><li>Challenge the relevance of the configurational approach </li></ul><ul><li>Developing and testing one typology of growth strategies (or modes) </li></ul><ul><li>Exploratory paper </li></ul><ul><li>Longitudinal </li></ul><ul><li>Qualitative </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  9. 9. 2. Research Design & Method
  10. 10. Experimental setting: IT ventures <ul><li>Entrepreneurial IT service firms (EISF) </li></ul><ul><li>Entrepreneurial Software Ventures (ESV) </li></ul><ul><li>Typical growth options (adapted from Ansoff, 1965/1988; Robert, 2003) : </li></ul><ul><ul><li>Internationalisation </li></ul></ul><ul><ul><li>Offering diversification </li></ul></ul><ul><ul><li>Focus </li></ul></ul><ul><li>In addition: Product- and/or Service- business model ( Nambisan, 2001) </li></ul><ul><ul><li>IT Consulting </li></ul></ul><ul><ul><li>Software Products </li></ul></ul><ul><ul><li>Mixed business models </li></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  11. 11. Design of the research AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  12. 12. Building the typology AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  13. 13. The case method AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology Time ordered matrix
  14. 14. 3. Findings
  15. 15. The typology uses 23 items to describe 6 constructs that are typical to entrepreneurship <ul><li>Entrepeneur(s): </li></ul><ul><ul><li>Management experience </li></ul></ul><ul><ul><li>Technical experience </li></ul></ul><ul><ul><li>Willingness to grow </li></ul></ul><ul><li>Activities: </li></ul><ul><ul><li>R&D </li></ul></ul><ul><ul><li>Service delivery </li></ul></ul><ul><ul><li>Indirect sales </li></ul></ul><ul><ul><li>Direct sales </li></ul></ul><ul><li>Resources: </li></ul><ul><ul><li>Self financing </li></ul></ul><ul><ul><li>External investors </li></ul></ul><ul><ul><li>Middle management </li></ul></ul><ul><ul><li>Senior management </li></ul></ul><ul><ul><li>IP </li></ul></ul><ul><li>Organization: </li></ul><ul><ul><li>Central decision making </li></ul></ul><ul><ul><li>Formalization </li></ul></ul><ul><ul><li>Vertical specialization </li></ul></ul><ul><ul><li>Horizontal specialization </li></ul></ul><ul><ul><li>Company size </li></ul></ul><ul><li>Environment: </li></ul><ul><ul><li>Type of customers </li></ul></ul><ul><ul><li>Pattern of conditions change </li></ul></ul><ul><ul><li>Competition intensity </li></ul></ul><ul><li>Strategy: </li></ul><ul><ul><li>Deepening / Focus </li></ul></ul><ul><ul><li>Offering diversification </li></ul></ul><ul><ul><li>Internationalization </li></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  16. 16. The typology includes 7 ideal-types <ul><li>Service firms: </li></ul><ul><ul><li>S1= The Expert </li></ul></ul><ul><ul><li>S2= Local Player </li></ul></ul><ul><ul><li>S3= Diversified Firm </li></ul></ul><ul><li>Software firms: </li></ul><ul><ul><li>P0= The Lab </li></ul></ul><ul><ul><li>P1= The Workshop </li></ul></ul><ul><ul><li>P2= The Specialist </li></ul></ul><ul><ul><li>P3= The Reference </li></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  17. 18. 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
  18. 19. 4. Data Analysis & Discussion
  19. 20. Comparing the ideal-types and the configurations 1/2 <ul><li>Step 1: Coding using a scoring gridline </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  20. 21. AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  21. 22. Comparing the Ideal Types and the Configurations 2/2 <ul><li>Step 2: Calculating ‘differences’ </li></ul><ul><ul><li>Between ideal types </li></ul></ul><ul><ul><li>Between successive configurations </li></ul></ul><ul><ul><li>Bertween ideal-type and configurations </li></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  22. 24. Ideal-types vs configurations AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  23. 25. Main findings <ul><li>Possibility to isolate ideal types (theorical) and stable configurations (empirical) </li></ul><ul><li>Significant differences between idealtypes, i.e. between: </li></ul><ul><ul><li>Supposed successive ideal types </li></ul></ul><ul><ul><li>Same stage but different business model orientation </li></ul></ul><ul><li>Significant differences between successive configurations for each firm </li></ul><ul><li>Many configurations ‘fit’ with one ideal type … </li></ul><ul><li>… except when firms changed their business model (unstable ‘hybrid’ configurations) </li></ul><ul><li>Growth patterns appeared </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  24. 26. 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
  25. 27. Limitations <ul><li>Typology development method </li></ul><ul><li>Typical issues associated with the case method: sampling, reinterpretation, theoretical saturation? </li></ul><ul><li>Retrospective and long observation period  Nothing about incremental changes </li></ul><ul><li>No consideration for growth through acquisition </li></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  26. 28. 5. Conclusions
  27. 29. Future research <ul><li>Grounded typology </li></ul><ul><ul><li>e.g. recoding the material from the cases </li></ul></ul><ul><li>Correlation between ‘fit’ and performance </li></ul><ul><ul><li>is (theoretically) assumed but not tested here </li></ul></ul><ul><li>Combining typological and taxonomical works </li></ul><ul><li>Other industry </li></ul><ul><li>Further work on the processes that drive configuration changes </li></ul><ul><ul><li>i.e. the complementarities between configuration- and process- approaches </li></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  28. 30. Explaining configuration changes… <ul><li>… was not the purpose of the research but … </li></ul><ul><li>… we speculate that it can be analyzed as a multi-motor process. (Van de Ven & Poole, 1995) </li></ul><ul><ul><li>Where: </li></ul></ul><ul><ul><li>Market acceptance (Evolutionary) </li></ul></ul><ul><ul><li>Investor acceptance (Evolutionary) </li></ul></ul><ul><ul><li>Willingness to grow (Dialectical) </li></ul></ul><ul><ul><li>Organizational structuring (Staged) </li></ul></ul><ul><ul><li>Strategic planning (Teleological) </li></ul></ul><ul><ul><li>… seem to be the dominant processes. </li></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology
  29. 31. 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
  30. 32. Thank you! Q&A <ul><li>Olivier Witmeur </li></ul><ul><ul><li>[email_address] </li></ul></ul><ul><li>Alain Fayolle </li></ul><ul><ul><li>[email_address] </li></ul></ul>AoM 2010 - Witmeur & Fayolle - Growth Configurations Typology

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