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Carleton University School of Business

Corporate and Business Strategy 42.590/42.683 Fall, 2001 PROFESSOR: Ian Lee, Ph.D CLASS SCHEDULE: Monday, 2.30 PM - 5.30 PM CLASSROOM: Room 906, Dunton Tower OFFICE HOURS: Email: ian_lee@carleton.ca

Office Phone: 520-2600 x 2375 PREREQUISITE: Graduate business students TEXTS (ON RESERVE AT LIBRARY) Nicolai Foss ed., Resources, Firms & Strategies, Oxford U Press, 1998 (PB) Richard Rumelt, Dan Schendel & David Teece, eds., Fundamental Issues in Strategy, Harvard Business School Press, 1994 (PB) Susan Segal-Horn, ed. The Strategy Reader, Blackwell, 1998 (PB) SUPPLEMENTARY (on reserve) Harry Costin, Readings in Strategy and Strategic Planning, Dryden, 1998 (PB) C. Montgomery & M. Porter, Strategy, Harvard Business Review Book, 1991 Thompson & Strickland, Reader in Strategic Management, 10th Ed. McGraw-Hill, 1998 P. McKiernan, ed. Historical Evolution of Strategic Management, Ashgate, 1996

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COURSE DESCRIPTION Strategic Management, often called “policy” or nowadays simply “strategy”, is about the direction of organizations. It includes those subjects of primary concern to senior management, or to anyone seeking reasons for success and failure among organizations. Firms, if not all organizations, are in competition - competition for factor inputs, competition for customers, and ultimately, competition for revenues that cover the costs of their chosen manner of surviving. Because of competition, firms have choices to make if they are to survive. Those that are strategic include: the selection of goals; the choice of products and services to offer; the design and configuration of policies determining how the firm positions itself to compete in product markets (e.g. competitive strategy); the choice of an appropriate level of scope and diversity; and the design of organization structure, administrative systems, and policies used to define and coordinate work. It is a basic proposition of the strategy field that these choices have critical influence on the success or failure of the enterprise, and that they must be integrated. It is the integration (or reinforcing pattern) among these choices that makes the set a strategy. R. Rumelt, D. Schendel & D. Teece, Fundamental Issues in Strategy, p.9 COURSE OBJECTIVES 1. To develop a comprehensive understanding of the seminal contributions to

strategy and the major research issues thereto. 2. To develop an understanding of the debate between the "environmentalists" and

the resource-based theorists within the strategy field 3. To provide a theoretical context for the functional areas of business ASSIGNMENTS Each student is expected to read the assigned readings each week and prepare a written synopsis of the assigned readings for each week for discussion in class. As the class is small, each of us are dependent on each other to complete the readings if learning and understanding is to occur. This is worth 50% of the final mark. Each student is required to complete a comprehensive review of the readings from the course in the form of a literature review paper that synthesizes and integrates the readings with the literature from the student's major functional area e.g. marketing. This assignment is worth 50% of the final mark and id due two weeks after the end of term.

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COURSE OUTLINE Week 1: Introduction - What is Strategy *H. Mintzberg, Ch. 1: Planning and strategy, in Rise & Fall of Strategic Planning *R. Rumelt et al, Ch. 1: Fundamental issues in strategy, 1-54 in Rumelt et al *C. Lindblom, The science of muddling through, in McKiernan *A. Wildavsky, If planning is everything, maybe it’s nothing, in McKiernan *M. Porter, What is strategy?, Segal-Horn Reader *H. Mintzberg, Models of strategic planning, Rise and Fall, 1-90 P. Selznick, Leadership in administration, Mintzberg & Quinn H. Mintzberg, "5 Ps for strategy", Costin Reader B. Quinn, "Logical incrementalism", McKiernan; Costin H. Mintzberg, Of strategies deliberate and emergent, Segal-Horn & McKiernan *K. Andrews, Concept of Corporate Strategy, Ch 1-3; McKiernan; Foss, *H.I. Ansoff, Concept of strategy, in Mintzberg & Quinn; McKiernan Montgomery & Porter, "Introduction", Montgomery & Porter Reader B. Henderson, "The origin of strategy", Montgomery & Porter Reader *A. Chandler, "Strategy and structure", Foss Reader Week 2: Historical Roots of Strategy: Institutionalism, Evolutionary Theory and Industrial Organization Economics *N. Foss, "Exploration of Common Ground: Integrating Evolutionary and strategic

theories of the firm", in C. Montgomery, ed., Resource-Based and Evolutionary Theories of the Firm.

*M. Porter, "Contributions of industrial organization to strategic management", AMR, 6, 1981, 609-620

W. Powell & P. Dimaggio, "Introduction", in W. Powell & P. Dimaggio, eds. The New Institutionalism.

*R. Nelson & S.Winter, An Evolutionary Theory of Economic Change; Foss Reader *Douglas North, Institutions, Institutional Change and Economic Performance, Introductory chapter Malcolm Rutherford, Institutions in Economics: The Old and New Institutionalism James March and Johan Olson, Rediscovering Institutions Oliver Williamson, The Mechanisms of Governance *Oliver, Christine (1997) Sustainable competitive advantage: Combining institutional and resource-based views. Strategic Management Journal, 18(9): 697-713.

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Week 3: The Nature of the Firm *A. Chandler, Scale, scope & organizational capabilities, Scale and Scope, 1-46 *R. Coase, The Nature of the firm, 1-33 & 48-74, Williamson, Nature of the Firm *O. Williamson, The logic of economic organization, in Williamson, Nature ... *H. Demsetz, The nature of the firm revisited, Williamson, Nature ... *S. Winter, On Coase, competence and the corporation, in Williamson, Nature *E. Penrose, "The Theory of the Growth of the Firm", Foss Reader D. Teece, Economies of Scope and the Scope of the Enterprise”, McKiernan D.Teece, Contributions and impediments of economic analysis to the study of strategic management, in Fredrickson *O. Hart, An economist’s perspective on the theory of the firm, O. Williamson, ed., Organization Theory: From Bernard to the Present J. Williams, "Strategy and the search for rents", Rumelt G. Carroll, "A sociological view on why firms differ", Rumelt R. Nelson, Why do firms differ & how does it matter, Rumelt M. Ricketts, The Economics of Business Enterprise D. Besanko et al, "Ch. 1: Evolution of modern firm", Economics of Strategy A.Chandler, Ch. 9: Coming of the modern industrial corporation, The Visible Hand Week 4: Environmental Analysis: External and Internal *J. Bain, Relation of market structure to market performance, McKiernan R. Caves, "Identifying mobility barriers", SMJ, 13, 1992, 1-12 *R. Caves & M. Porter, From entry barriers to mobility barriers, McKiernan R. Rumelt, How much does industry matter?, Segal-Horn Reader *H. Demsetz, "Industry structure", Foss Reader *G. Richardson, "The Organization of Industry", Foss Reader *M. Porter, "How competitive forces shape strategy", Costin; Montgomery *M. Porter, "Ch. 1: Structural analysis of industries", Competitive Strategy, 3-33 *M. Porter, "Ch. 3:Framework for competitor analysis", Competitive Strategy 46-74 M. Porter, "Ch.7: Structural analysis within industries", Competitive Strategy, 126-155 S. Oster, "Part I: Competitive Environment", Modern Competitive Analysis S. Oster, "Part II: Inside the Organization", Modern Competitive Analysis S. Oster, "Part III: Rivalry", Modern Competitive Analysis R. Lenz, "Environmental analysis: applicability of current theory", SMJ, 7-4,

1986, 329-346 E. Zajac, "Blind spots in industry and competitor analysis", AMR, 16, 1991, 37-56 K. Cool, "Rivalry, strategic groups & firm profitability", SMJ, V.14, 1993, 47- J. Bourgeois, "Strategy and environment", AMR, 5-1, 1980, 25-39

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Week 5: Corporate Strategy: Economies of Scope & Corporate Governance *D. Collis & C. Montgomery, "Creating corporate advantage", HBR, M-J, 1998, 70-83 *D. Teece, Towards an economic theory of the multi-product firm", J.Econ Behav M. Porter, "Ch. 9: Corporate strategy", Competitive Advantage, 317-363 M. Porter, "Ch. 10: Horizontal strategy", Competitive Advantage, 364-382 M. Porter, "Ch.11:Achieving Interrelationships", Competitive Advantage, 383-415 *M.Porter, "Ch.14: Vertical Integration", Competitive Strategy, 300-324 O. Williamson, Ch 11 & 12: in Williamson, Economic Institutions of Capitalism O. Williamson, Chapter 4 & 5: Vertical integration, in Williamson, Governance C. Markides, "Related Diversification, Core competences", Foss Reader *D. Besanko et al, "Ch. 2: Vertical boundaries of the firm", Economics of Strategy *D. Besanko et al, "Ch. 4: Organizing vertical boundaries", Economics of Strategy *D. Besanko, "Ch.5:Horizontal boundaries: Scale & Scope", Economics of Strategy R. Caves, "Industrial organization, corporate strategy and structure", J of

Economic Literature, 18, 1980, 64-92 *O. Williamson, Strategizing, economizing & economic organization, in Rumelt A. Brugamin, "A hierarchy of corporate resources", in P. Shrivastava, eds.

Advances in Strategic Management. Markides, Constantinos C; Williamson, Peter J. (1996) Corporate diversification and organizational structure: A resource-based view”, Academy of Management Journal, 39(2): 340-367. *M. Porter, "From Competitive Advantage to Corp. Strategy", Montgomery Reader *Chandler, Role of HQ unit in the multi divisional firm, Rumelt Chandler, Ch 6: Organizational Innovation, in Strategy and Structure * Chandler, Ch 7: Spread of M divisional structure, Strategy & Structure Chandler, Chapter 11: Integration completed, The Visible Hand Week 6: Corporate Strategy (Continued) H. Mintzberg, "Generic corporate strategies", Mintzberg & Quinn, 3rd ed M. Goold et al, Corporate Strategy, HBR, M-A, 1995 M. Goold et al, Corporate-Level Strategy

* Part I: Corporate Strategy and Parenting Advantage Part II: Successful Corporate Strategies Part III: Developing a Corporate Strategy

B. Quinn, "Intellectual holding company", Mintzberg & Quinn * M. Goold and K. Luchs, "Why diversify: Four decades of management thinking", Thompson Reader *M. Goold & A. Campbell, Desperately Seeking Synergy, HBR, S-O, 1998

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*Markides, To Diversify or not to Diversify, HBR, N-D, 1997 * Campbell, Goold & Alexander, Corporate Strategy, HBR, M-A, 1995 Week 7: Business Strategy: Sustainable Competitive Advantage *M. Porter, "Ch. 1: Generic competitive strategies", Competitive Advantage, 11-25 M. Porter, "Ch. 4: Differentiation", Competitive Advantage, 119-163 M. Porter, "Ch. 7: Industry segmentation & CA", Competitive Advantage, 231-272 M. Porter, "Ch. 8: Substitution", Competitive Advantage, 273-316 * M. Porter, "Generic competitive strategies", Competitive Strategy, 34-46 *M. Porter, Competitive Advantage, 33-61 (value chain) F.A.J. van den Bosch, & A.P.de Man, Perspectives on Strategy: Contributions of Michael Porter Aharoni, Yair (1993) In search for the unique: Can firm-specific advantages be evaluated? Journal of Management Studies, 30 (1): 31-49. *P. Ghemawat, "Sustainable advantage", McKiernan; Montgomery & Porter K. Coyne, Achieving sustainable competitive advantage, Thompson Reader J. Williams, "How sustainable is your compet advan", CMR, Spr, 1992, 29-51 H. Mintzberg, Generic business strategies, Mintzberg & Quinn, 3rd ed. V. Govindarajan, "Decentralization, strategy and effectiveness of SBUs ..", AMR,

II, 1986, 844-856 *S. Winter, "Four Rs of profitability: in Montgomery, Resource-Based …" R. Hall, "Strategic analysis of intangible resources", SMJ, Vol. 13, 1992, 135-144 R. Rumelt, Evaluating business strategies, Mintzberg & Quinn, 3rd ed. Week 8: Resource-Based Theory: Return of the Economists N. Foss, "Resources and strategy: An Overview", Foss Reader * Wernerfeldt, A resource-based view of the firm, Foss Reader R. Rumelt, "Towards a strategic theory of the firm", Foss Reader J.Barney, "Strategic factor markets: Expectations...", Foss Reader Teece, "Dynamic Capabilities & Strategic Management", Foss Reader de Gregori, "Resources are not; they become", JEI, 21, 1987, 1241-1263 Dierickx, "Asset stock accumulation & sustainability of CA", Foss Reader *Prahalad & Hamel, "Core competence of the corporation", Foss; McKiernan * K.Connor, "An historical comparison of resource-based theory and five schools of

thought within industrial organization economics: ... a new theory of the firm?", JM, 17, 1991, 121-154

*R.M. Grant, "Resource-based theory of competitive advantage”, Foss; McKiernan J. Barney, "Firm resources & sustained comp advan", JM, 17, 1991, 99-120 J. Mahoney & J.Pandian, "Resource based view ...", Foss Reader

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*M. Peteraf, "The Cornerstones of Competitive Advantage", Foss Reader R. Amit, "Strategic assets and organizational rent", Foss Reader *D Collins & C. Montgomery, Competing on resources, Thompson Reader Wernerfelt, Birger (1995) The resource-based view of the firm: Ten years after. Strategic Management Journal, 16 (3): 171-174. Barney, Jay B. (1986) Organizational culture: Can it be a source of competitive advantage. Academy of Management Review, 11(3): 656-665. *Barney, Jay B (1996) The resource-based theory of the firm. Organization Science, 7(5): 469- Conner, Kathleen R; Prahalad, C K (1996) A resource-based theory of the firm: Knowledge versus opportunism. Organization Science, 7(5): 477-501. Week 9: Resource-Based Theory: Competency Based A.Heene & R.Sanchez, Competence-Based Strategic Management N.Foss & C.Knudson, Towards a Competence Theory of the Firm G. Hamel & A. Heene, Competence-Based Competition

*Section I: Towards a Theory of Strategic Management from a Core Competence Point of View *Section II: Linking Competitive Advantage and Core Competence Section III: Strategic Management Practice from a Core Competence Point of View

*G. Stalk et al Competing on capabilities, Thompson Lado, Augustine A; Boyd, Nancy G; Wright, Peter (1992), A Competency-Based Model of Sustainable Competitive Advantage: Toward a Conceptual Integration. Journal of Management, 18 (1): 77-91. M. Porter on Competition, (HBS) M. Porter, "Location, clusters and the "new" Microeconomics of Competition",

Journal of Business Economics M. Porter, "The role of location in competition", Journal of the Economics of

Business, Vol. 1-1, 1994. J. Dunning, Multinational Enterprises and the Global Economy, 1993 Week 10: Strategy and the New Economy *Philip Evans and T. Wurster, Blown to Bits: How the New Economics of Information Transforms Strategy, Harvard Bus School Publishing, 2000 * John Hagel III and Marc Singer, Net Worth: Emerging Role of the Infomediary, Harvard Bus School Publishing, 2000

* Carl Shapiro and Hal Varian, Information Rules: Strategic Guide to the Network Economy, Harvard Biz School Publishing, 2000

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* Geoffrey Moore, Living on the Fault Line, Harper Business, 2000 G. Moore, the Gorilla Game, Harper Business, 1998 G. Moore, Inside the Tornado, Harper Business, 1997 G. Moore, Crossing the Chasm, Harper Business, 1996 Don Tapscott, Digital Capital, Harvard Bus School Publishing, 2000 Week 11: Knowledge Management and the Learning Organization Hansen, Morten T. et al (1999) “What’s Your Strategy for Managing Knowledge?” Harvard Business Review, March-April 1999 McDermott, Richard (1999) “Why Information Technology Inspired But Cannot Deliver Knowledge Management” California Management Review, Vol. 41 No. 4, Summer 1999 Pfeffer, Jeffrey, Sutton, Robert, (1999) “Knowing “What” to Do Is Not Enough: Turning Knowledge into Action, California Management Review, Vol. 42, No. 1, 83 – 107 Schein, Edgar H. (1996) Three Cultures of Management: The Key to Organizational Learning, Sloan Managment Review, Fall 1996 Scott, W. Richard (1998) Organizations – Rational, Natural and Open Systems, 4ed. New Jersey: Prentice Hall. Zack, Michael H. (1999) “Developing a Knowledge Strategy” California Management Review, Vol. 41, No. 3, Spring 1999, 125-145 Zack, Michael H. (1999) “Managing Codified Knowledge” Sloan Management Review, Vol. 40, No. 4, Summer 1999, 45 - 57 *Davenport, Thomas H. and Prusak Laurence. “Working Knowledge: How Organizations Manage What They Know.” Harvard Business School Press. Boston. (1998). Brown, John Seely and Paul Duguid, "Organizational Learning and Communities of Practice: Toward a Unified View of Working, Learning and Innovation", Organization Science, 2: 40-57, 1991. DiBella, Anthony J., Edwin C. Nevis and Janet M. Gould, "Understanding Organizational Learning Capability", Journal of Management Studies, 33: 361-379, 1996. Gherardi, Sylvia, "Learning as Proble-driven or Learning in the Face of Mystery?", Organization Studies, 20: 101-124, 1999. Huber, George P., "Organizational Learning: The Contributing Processes and the Literatures", Organization Science, 2: 88-115, 1991. Nicolini, Davide and Martin B.Meznar, "The Social Construction of Organizational Learning: Conceptual and Practical Issues in the Field", Human Relations, 48: 727-746, 1995. *Nonaka, I. “A Dynamic Theory of Organizational Knowledge Creation.” Organizational Science. 5(1). (1994). Nonaka, I. and Takeuchi, H. “The Knowledge Creating Company.” Oxford University Press. New York. (1995). Polanyi, M. “The Tacit Dimension.” Doubleday. New York. (1957).

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Polanyi M. “Personal Knowledge.” University of Chicago Press. Chicago. (1984). *Teece, D.J., Pisano, G. and Shuen, A. “Dynamic Capabilities and Strategic Management” in in Resources, Firms, and Strategies – A Reader in the Resource-Based Perspective. (Foss, N. ed.) Oxford University Press. (1997) *O’Dell, Carla and Grayson, C. Jackson Jr. “If Only we Knew What We Know: The Transfer of Internal Knowledge and Best Practice.” The Free Press. New York. (1998). Week 12: Future Directions in Strategy *N.Foss, "Resources & Strategy: Problems, Issues and Ways Ahead", Foss Reader *N. Foss, "Whither the competence perspective", in Towards a Competence Theory of the Firm by N. Foss and C. Knudsen *R. Rumelt et al, "Fundamental Issues in Strategy: A Research Agenda" in Rumelt R. Daft, Past & future of strategic management research, Fredrickson *M Porter, Towards a dynamic theory of strategy, Rumelt Hamel & Prahalad, "How competition for the future is different", Costin Reader H. Mintzberg, Planning, plan, planners, Mintzberg, Rise and Fall, 323-416 *G. Jones, "Perspectives on strategy" in Segal-Horn Reader Academy of Management 1997 Conference Video: Knowledge Capitalism:

Competitiveness Reevaluated, Boston, 1997 (Porter, Dunning, Teece, Kogut, Bartlett)

BIBLIOGRAPHY D. Besanko, D. Dranove, M. Shanley, Economics of Strategy, Wiley, 1996 A. Chandler, Strategy and Structure, MIT Press, 1993 A. Chandler, The Visible Hand, Harvard University Press, 1977 A. Chandler, Scale and Scope, Harvard University Press, 1990 B. Collis & C. Montgomery, Corporate Strategy, Irwin, 1997 C. Costin, Readings in Strategy and Strategic Planning, Dryden, 1998 D. Foss, Resources, Firms and Strategies, Oxford U Press, 1998 N.Foss & C.Knudson, Towards a Competence Theory of the Firm, Routledge,

1996 M. Goold et al, Corporate-Level Strategy, Wiley & Sons, 1994 R. Grant, Contemporary Strategic Analysis, 3rd Ed., Basic Blackwell, 1998 G. Hamel & A. Heene, eds., Competence-Based Competition, Wiley & Sons, 1994 Harvard Business School, Strategies for Growth, Harvard Bus School Press, 1998 Harvard Business School Review, Making Strategy Work, HBR, Product 49567 Harvard Business School Review, The State of Strategy, HBR, 1991

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Harvard Business School Review, Competitive Strategy, HBS Publishing, #39101 Harvard Business School Review, Classics in Competitive Strategy, HBS, 49537 Harvard Business School Review, Are You Ready to Compete, HBS, 49523 A. Heene & R. Sanchez, Competence-Based Strategic Management, Elsevier, 1998 P. McKiernan, ed. Historical Evolution of Strategic Management, Ashgate, 1996 H. Mintzberg & B. Quinn, eds., The Strategy Process, 3rd Ed, Prentice-Hall, 1996 H. Mintzberg, The Rise and Fall of Strategic Planning, Free Press, 1995 James March and Johan Olson, Rediscovering Institutions, Free Press, 1989 C. Montgomery, Resource-Based & Evolutionary Theories of Firm, Kluwer, 1996 C. Montgomery & M. Porter, Strategy, HBS Press, 1991 R.Nelson & S.Winter, Evolutionary Theory of Economic Change, Belknap, 1982 Douglas North, Institutions, Institutional Change and Economic Performance,

Cambridge University Press, 1990 Sharon Oster, Modern Competitive Analysis, 2nd Ed., Oxford U Press, 1994 Edith Penrose, The Theory of the Growth of the Firm, Oxford U Press, 1995 M. Porter, Competitive Strategy, Free Press, 1980 M. Porter, Competitive Advantage, Free Press, 1985 W. Powell & P. DiMaggio, The New Institutionalism in Organizational Analysis,

Chicago, 1991 R. Rumelt et al, Fundamental Issues in Strategy, Harvard Business School, 1994 Malcolm Rutherford, Institutions in Economics: The Old and New

Institutionalism, Cambridge University Press, 1994 Andrew Schotter, Economic Theory of Social Institutions, Cambridge University

Press, 1981 Susan Segal-Horn, The Strategy Reader, Blackwell Business, 1998 P. Shrivastava et al., Advances in Strategic Management, JAI Press, 1994 B. Stern and G. Stalk, Perspectives on Strategy, Wiley Publications, 1998 F.A.J. van den Bosch, & A.P.de Man, Perspectives on Strategy: Contributions of Michael Porter, Kluwer, 1997 O. Williamson, The Mechanisms of Governance, Oxford U Press, 1996 O. Williamson & S. Winter, The Nature of the Firm, Oxford U Press, 1993 O. Williamson, The Economic Institutions of Capitalism, Free Press, 1987