Comments for Mobilizing the right resources: Who and how much? DE POTTER D'INDOYE Séverine; GILSON Marie; NAMORADO ROSA Pedro; SCHOCKAERT Evrard. 15 December 2019 (Article) Ardichvili, A., Harmon, B., Cardozo, R. N., Reynolds, P. D., & Williams, M. L. (1998). The new venture growth: Functional differentiation and the need for human resource development interventions. Human Resource Development Quarterly, 9(1), 55-70. Key Insights : This text aims to understand how small growing ventures delegate business-related functions such as marketing, planning, production, financial planning, accounting, shipping, etc. It divides the life a small enterprise into three phases according to their yearly sales: early stages (sales under 300k (service industry) and 1 million (manufacturing industry)), growth (sales between 300k and 3 million (service…Read moreKey Insights : This text aims to understand how small growing ventures delegate business-related functions such as marketing, planning, production, financial planning, accounting, shipping, etc. It divides the life a small enterprise into three phases according to their yearly sales: early stages (sales under 300k (service industry) and 1 million (manufacturing industry)), growth (sales between 300k and 3 million (service industry) and between 1 and 10 million (manufacturing industry)) and maturity (sales over 3 million (service industry) and 10 million (manufacturing industry)). The first stage is characterized by no real separation of different function. The start-up team performs everything except for accounting that is sometimes outsourced. In the second phase, the start-up team starts to delegate the production-related functions such as production management, computer system, purchasing and warehousing-shipping). They keep all the strategic like the development of new products or marketing. Finally, in the last stage, the start-up team delegate every function except from the strategic planning. Implications : This study has important implications for professionals who provide HRD services to growing companies. First, the results highlight those functions where the need for training and development appears sooner rather than later. Of course, training is not the only possible solution in this situation. An alternative is to hire people with the necessary skills and talents. Second, the study shows that some functions tend to be delegated in groups at about the same time. More specifically, once a company has left the initial stage where none of the functions (except accounting) are delegated, the start-up team tends to delegate several internal functions related to production. At the beginning of the development of a new business, they are generally so small that differentiation is not likely to involve formal bureaucratic procedures (such as the creation of separate departments or profit centers) but involves much simpler ways of “relieving” the start-up team of the burden of having to perform all the company’s functions by themselves. Models generally fall into two groups: growth model stages and organizational development models. These models involve a progression through a number of stages from beginning to maturity and, in some cases, decrease. At one stage, some of the first members or employees of the founding team will find themselves managing people for the first time after having been mainly technical or functional specialists. Based on the results of the evaluation, a structured series of leadership development and team-building exercises could be implemented to address any identified gaps. At later stages, there is a need for marketing and sales training. In addition, as the organization grows, and new people are added to perform some of the functions, a new set of problems and needs for HRD activities arises. These include developing an optimal combination of knowledge and skills between management and employees; creating flexible organizational systems that allow new employees to be easily assimilated and quickly adapted to a rapidly changing environment; and sowing the seeds of an organizational culture that will become a major asset for the organization at later stages of development. Limitations : For an optimal combination of knowledge and skills between managers and employees, a company needs to have a human resources team to always measure the trade-off between, for example, hiring new managers or training current employees. As we know, startups have not a lot of workers and those that are already working have a lot to do. It is not probably to give them this extra responsibility, because that will lead to over-work. For that reason and also because it is unlikely for a startup to have a human resources team, it is not very to implement this measure. HR makes sure the team is aligned with the company’s goals. At a startup, if someone isn’t pulling their weight everyone immediately notices. It took five years at Work Market to hire their first HR employee. In this article, we can also remark that with the increasing of the company size, the tendency is to outsource more functions. They delegate more and more, especially production, accounting and HR. This can lead to a loss of the core essence, values and culture of the company, once there are lot of employees entering with no relation with the company. And, as we know, employees are more efficient and committed to the company when they have a relation with it. Company culture is also important to employees because workers are more likely to enjoy their time in the workplace when they fit in with the company culture and stay in the company for more years. And we can see, for example, consulting companies, firms in which is very hard to apply their cultures, employees are always entering and leaving the company, there is a big rotation. Further References : Cooney, T (2012) Entrepreneurship Skills for Growth-Orientated Businesses : http://www.oecd.org/cfe/leed/cooney_entrepreneurship_skills_HGF.pdf Ted talk : HR lessons from the world of Silicon Valley start-ups by Patty McCord (june 2015) : https://www.ted.com/talks/patty_mccord_hr_lessons_from_the_world_of_silicon_valley_start_ups Hull, J (2016) How Your Leadership Has to Change as Your Startup Scales, Harvard Business Review : https://hbr.org/2016/05/how-your-leadership-has-to-change-as-your-startup-scales Show less Reply Florine Nicaise, Gauthier Corbeau, Manuel Martins da Silva, Guillaume Nicolas, Maria Mercredes Catolino 14 December 2019 (Article) Hoecht, A., & Trott, P. (2006). Innovation risks of strategic outsourcing. Technovation, 26(5-6), 672-681. This article presents the innovation risks of strategic outsourcing. Before talking about the key points, managerial implications and limitations, we would like to introduce the concept of strategic outsourcing. Traditional outsourcing focuses on peripheric activities and involve a small number of stakeholders for a long period of time. Strategic outsourcing, on the opposite, will include core business activities with more…Read moreThis article presents the innovation risks of strategic outsourcing. Before talking about the key points, managerial implications and limitations, we would like to introduce the concept of strategic outsourcing. Traditional outsourcing focuses on peripheric activities and involve a small number of stakeholders for a long period of time. Strategic outsourcing, on the opposite, will include core business activities with more people involved for many short periods. Now that the context is settled, we will talk about the insights highlighted in the article. The first one mentions that there is a paradox around strategic outsourcing. Indeed, strategic outsourcing implies a big amount of trust between the company and the enterprises they outsource to. However, the contracts being short-term; the trust relationship is harder to build. The company that chooses to outsource must be careful to trust the right people and what knowledge is shared with them. Another insight is that there is a double risk linked to strategic outsourcing. Firs, the knowledge a company has, in the wrong hands, could end up being leaked to competitors and therefore undermine the company’s competitive advantage. Second, there might be a third-party involved that could try to benefit from the outsourcing company’s knowledge. For example, they could hire the same enterprise to manage a similar project. These insights lead us to three managerial implications: interest in repeat dealing, acquiring partial ownership and tighten legal contracts. Repeat dealing means that the company should screen the service providers’ past contracts. That way, the potential betrayers could be found more easily. Another option is acquiring part of the company that provides the service; that way there will be a strong incentive to stay loyal. The last approach would be to make sure the legal contracts are strong enough to be able to sue the company if any leakage or betrayal happened. The article being already about some limitations of strategic outsourcing, we tried to go further in that direction and found three more limitations. The first one concerns the final consumer. Indeed, if a company outsource everything, even basic services, your costumer might find it non-professional and might have to deal with different actors for different things instead of having one centralised service. Employees are the second perspective we considered: outsourcing usually means that the company does not need a certain department or service anymore and will therefore fire people. That could break the employees’ trust and create uncertainties in the workplace. Finally, the enterprise has to find a way to ensure they are the priority for the service provider and that the job will be done the right way. If the subject of strategic outsourcing interests you, we found two more resources that could be of help. Find the full references below. (Article) Feng K. et al. (2013) « Outsourcing CO2 within China », PNAS, Vol. 110, No. 28, pp. 11654-11659 (Article) Tjader Y. et al. (2014), « Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model », International Journal of Production Economics, Vol. 147, Part C, pp. 614-623 Show less Reply Bardellin, Aurore; Clerbois, Louis; Germeau, Jean; Goosse, Floriane; Torres Rodrigo, Beatriz 12 December 2019 Ernst, H., & Vitt, J. (2000). The influence of corporate acquisitions on the behaviour of key inventors. R&D Management, 30(2), 105-120. Key insights: The article aims to analyse the influence of an acquisition on the behaviour of key inventors. From patent data about 43 German companies in mechanical engineering, electrical or chemical industry, 61 key inventors are identified. The key inventors represent the talents of researchers and developers which determine the value of an acquired company. In fact, key inventors contribute to the inventive performance of…Read moreKey insights: The article aims to analyse the influence of an acquisition on the behaviour of key inventors. From patent data about 43 German companies in mechanical engineering, electrical or chemical industry, 61 key inventors are identified. The key inventors represent the talents of researchers and developers which determine the value of an acquired company. In fact, key inventors contribute to the inventive performance of their R&D department and account for many of their company’s patents. The findings expose an influence on the behaviour of key inventors in terms of fluctuation and performance modification after the acquisition. Fluctuation refers to employees leaving the firm. Indeed, one-third of the key inventors left their company. Half of those key inventors who remained in their company changed their position, they significantly reduce their inventive performance after the acquisition. Moreover, different factors are identified as influencing their behaviour like the size of acquired company, the cultural differences between R&D departments and the complementarity of technological companies. Managerial implications: First of all, the article proposes a classification of the inventors depending on the quality of their patent and their patent activity. The patent activity means identify all the patent where the person is named as an inventor, and the quality of a patent is recognized thanks to several indicators like its sharing ratio or its number of sharing. The key inventors are described as provider of high-quality patents and with high patent activity and they are the key for a company to stay active and competitive on the market. As mention earlier, several factors can influence the fluctuations and the performance modifications of key inventors. A large cultural difference between R&D department of both firms can explain a high fluctuation while a low fluctuation can be explained by a high degree of proximity between technological position of both firms. The performance can be impacted by the size of the acquired company. If it is a smaller firm, it has positive effect on the performance of the key investors, and the opposite happens with bigger firm. Therefore, there are 2 ways to integrate them into your firm: 1. The first way is by acquiring the firm where is the key inventor. Unfortunately, it is not enough to integrate them, it is also essential to keep them within you. So, we have identified some relevant steps to follow that help managers to succeed: • Identify key innovators prior, in order to be worth doing this acquisition. • Keep them motivate after the acquisition. It can be done by taking care about the four factors which determines the behaviour of a key inventors before, or by integrating them into the acquisition process, which is easier in a smaller firm. • Be also sur that the acquisition is not too expensive for the owner company. If it is necessary to further restructure the activities, it can have negative effect on the performance of the key inventors, and also for all the employees. 2. An alternative to acquiring a new company is to capture the key innovators through headhunting. This solution can provide more advantages to the company since it is quicker, cheaper and less complicated. • Use of number of patents and reference value to identify key investor candidate in a particular company, industry or field research. Limitations: When interpreting the managerial implications, some limitations must be mentioned. Regarding the first managerial implication, it is essential to highlight that when a firm is making a technology acquisition, it is purchasing the talent as much as the technology itself. When a company acquires 100% of the shares of a startup, this can lead that the owners, usually the key inventors, leave the company and start a new one, and then the loss of technological knowledge might be enormous, as well as hard and expensive to regain. While when the company invests only, for example 20%, in the startup, is stimulating them to continue working and innovating. Further, concerning the second managerial implication, the company must consider the possibility that the performance of the key inventor won’t be equal as in the former company. Besides, in this scenario, the key inventor has the decision power if he wants to accept the job offering or not. Further references: • Upton, K. (2018, June). Investor Relations Role in Merger and Acquisition Activity. Quarterly Journal of Finance. DOI: 10.1142/S2010139218500064 • Georgiades, G., Georgiades, S. (2014, January). The Impact of an Acquisition on the Employees of the Acquired Company. Journal of Business and Economics. Show less Reply Shimazaki Kensuke 12 December 2018 (Article) Shrader, R., & Siegel, D. S. (2007). Assessing the Relationship between Human Capital and Firm Performance: Evidence from Technology–Based New Ventures. Entrepreneurship Theory and Practice, 31(6), 893-908. INTRODUCTION This paper assesses the role of human capital in the development of new technology-based ventures and try to address 2 research questions: do the entrepreneurial team attributes have a relation with the strategy…Read more(Article) Shrader, R., & Siegel, D. S. (2007). Assessing the Relationship between Human Capital and Firm Performance: Evidence from Technology–Based New Ventures. Entrepreneurship Theory and Practice, 31(6), 893-908. INTRODUCTION This paper assesses the role of human capital in the development of new technology-based ventures and try to address 2 research questions: do the entrepreneurial team attributes have a relation with the strategy adopted by technology-based new ventures? Is the adequacy between venture team characteristics and strategy actually reflects the financial performance of technology-based? In their empirical analysis, the authors considered 5 types of strategies: low cost, differentiation, strategic aggressiveness, strategic breadth and internationalization. As for the characteristics, they focused on the team experience and distinct 3 types of experiences: technical, marketing and financial experience. Key Insights The article turns over the Upper Echelons theory, which was created in 1986 in the US. The theory states that organizational strategic choices and performance levels are partially predicted by managerial background characteristics. This means that the theory attempts to reveal how observable characteristics and strategic choices affect the performance. Then, the article shows that the authors focus on three hypotheses among high-performing, technology-based ventures. These hypotheses are: Hypothesis 1: Entrepreneurial team experience is strongly related to the strategies. Hypothesis 2: Entrepreneurial team experience is directly related to the performance. Hypothesis 3: The fit between entrepreneurial team experience and strategy is significantly related to the performance. The results imply a strong connection between team experience and strategy. But there is a weak relationship between team experience and the performance. In addition, the fit between team experience and strategy is a key determinant of the long-term performance. Implications 1) Proyect Managers/HR managers should build heterogeneous teams with not only the right technical skills but appropriate technical experience, corresponding to the industry characteristics. 2) Managers should know about their coworkers through a skill profile and evaluation system, in order to execute an effectively team building and manage people the best way possible. If you can’t measure human capital, you can’t manage it. 3) Managers should share customer’s feedback with the technical team because even if the team performs well, it’s important to be customer-oriented and not only problem-driven/solution-oriented. Limitations While applying the managerial implications that we suggest, managers should take into account the conflicts in heterogeneous team, the fairness of negative feedback and the failure of incentives. Even though a heterogeneous team can benefit from a strong dynamic within a group, it’s important to emphasize that the individuals’ characteristics can shock with each other. Seeing that by mixing different learnings styles and abilities, group members can find it difficult to communicate and understand each others ideas. This can lead to conflicts and disagreements inside the team creating an unhealthy working environment. In addition, managers should be aware that using the consumers’ feedback to evaluate the performance of employees is not a fair measure. Managers should first have a big sample of feedbacks before jump into conclusions, also that negative feedbacks do not represent the entire work done for the employees. Therefore, a misunderstanding by both parts can demotivate the workers and consequently lower productivity. Lastly, when managers apply an incentive strategy in the company, especially a monetary incentive, employees can become really competitive among each others, cross ethical boundaries and encourage isolating inside the company. Conclusion As a conclusion, we wanted to use a Steve Job’s quote saying “The great things in business are never done by one person. They’re done by a team of people”. Further References Trading on Talent: Human Capital and Firm Performance (2017): Anastassia Fedyk and James Hodson Does Human Capital Matter?A Meta-Analysis of the Relationship Between Human Capital and Firm Performance (2011): T. Russell Crook, Samuel Y. Todd, James G. Combs and David J. Woehr Show less Reply ALEXANDRE Charline, BLANCKAERT Lucie, DEKIMPE Emilie, GENIN Alix 10 December 2018 Wasserman, N. (2017). The throne vs. the kingdom: Founder control and value creation in startups. Strategic Management Journal, 38(2), 255-277. Workshop 5 : executive summary “THE THRONE VS. THE KINGDOM: FOUNDER CONTROL AND VALUE CREATION IN STARTUPS” Through this article we discuss the “control dilemma” that is to say the choice for a founder of a firm to keep control or to delegate to make grown his start-up. Indeed, the founder has to find a tradeoff between attracting the resources required to…Read moreWorkshop 5 : executive summary “THE THRONE VS. THE KINGDOM: FOUNDER CONTROL AND VALUE CREATION IN STARTUPS” Through this article we discuss the “control dilemma” that is to say the choice for a founder of a firm to keep control or to delegate to make grown his start-up. Indeed, the founder has to find a tradeoff between attracting the resources required to build company value and being able to retain control of decision making. This dilemma highlights how founders, despite their best intentions, can make decisions that limit the value of the companies they created, or else can risk losing control of their companies. For the key insights, we develop hypothesis about this tradeoff between value and control. The first hypothesis is the following: “The analyses show that, ceteris paribus, startups in which the founder is still in control of the board of directors and/or the CEO position are significantly less valuable than those in which the founder has given up a level of control”. This is particularly observable in the more than three-year-old companies. Furthermore, the second key insight concerns the ressources acquirement of the company. We can see that by raising capital from capitalist ventures, founders will retain less control. Otherwise, founders who raise capital from business angels keep more influence in their company. Finally, the third insight is about value creation. It shows that founders who want to keep control of the direction by refusing co founders have more difficulties to attract investors. Moreover, it blocks the value creation as the growth of the company is decreasing drastically. Concerning the first implication, managers can hire experienced executives, build a team of employee, find people ready to finance and give them seats in the board of directors, but mainly they have to enhance business and finance skills in this board. Indeed, founders have technical knowledge and creativity which are fundamental for the launch, but they may sometimes miss business skills. Furthermore, as seen in the second implication, one solution for the managers could be to develop a Work Breakdown Structure to divide each task in subtasks so that the project is more easily understandable and the founder can keep a close look at the project’s progress without controlling it entirely. This article highlights also some limits. First, founders and investors can have divergent interests. One might think that the first motivation of everyone is the profit. Although managers have to maximize the company’s capital and and increase its pace of growth, entrepreneurs might have broader interests such as a wish for personal fulfillment, a desire to improve the quality of life of some, or a personal motivation. Another limit will be that a process of decentralization or delegation can lead to Agency Cost. This cost is the sum of control expenses by the principal, the expenditures by the liaison agent and the residual loss. Intangible soft skills must also to be take into account. Indeed, the founder has acquired non-pecuniary aspects and communication skills that aren’t easy to duplicate and to pass on the successors. The last limit is the subjectivity of the entrepreneurs. Many entrepreneurs are overconfident about their prospects and naive about the problems they will face. Founders’ attachment, overconfidence, and naivete may be necessary to get new ventures up and running, but it can later lead to problems. Many founders believe that if they’ve successfully led the development of the organization’s first new offering, that’s ample proof of their management prowess. They think investors should have no cause for complaint and should continue to back their leadership. After all, concerning the further references we learn that entrepreneurs face a new dilemma : starting a business whose main goal is to make money and another factor which motivates them : the drive to create and lead an organization. The surprising thing is that trying to maximize one imperils achievement of the other.  Sources:  Feng, L., Suraj, S., “Corporate governance when founders are directors” in Journal of Financial Economics, Volume 102, Issue 2 (2011), pp. 454-469. https://ac.els-cdn.com/S0304405X11001462/1-s2.0-S0304405X11001462-main.pdf?_tid=03ecaa3e-8e00-4f70-8ba4-46447c047bdc&acdnat=1543828357_038f4db0ede7ba244aa11723247d44b3 consulted the 29.11.2018.  Wasserman, N., “The Founder’s Dilemma” in Harvard Business Review (2008). Online: https://hbr.org/2008/02/the-founders-dilemma consulted the 28.11.2018.  Investopedia “What is the role of agency theory in corporate governance ?” (2015) Online: https://www.investopedia.com/ask/answers/031815/what-role-agency-theory-corporate-governance.asp consulted the 30.11.2018  Wikiquote “Agency Theory” (2016) Online: https://en.wikiquote.org/wiki/Agency_theory consulted the 30.11.2018  Beattie, A. “Steve Jobs and the Apple story” (Aug 2018) Online: https://www.investopedia.com/articles/fundamental-analysis/12/steve-jobs-apple-story.asp consulted the 30.11.2018 Show less Reply virgile vandeput 10 December 2018 This executive summary talks about the paper called « Reconfiguring the value network ». The aims of the article is to develop the questions: " how value is created and where does it come from ? Key points The key business question in the knowledge economy is, as we have seen, "How is value created?" The traditional answer is, "Through the…Read moreThis executive summary talks about the paper called « Reconfiguring the value network ». The aims of the article is to develop the questions: ” how value is created and where does it come from ? Key points The key business question in the knowledge economy is, as we have seen, “How is value created?” The traditional answer is, “Through the value chain” that were given by Porter. But in the new firms model, this has been replaced by the value network or value web. The second key point goes with the fact that to if you want to be able to have a good understanding of the knowledge economy, you need to keep in mind the three currencies of value. 1) Goods, services and revenue : exchanges for services and goods, transactions, contracts, requests for proposals, confirmation, payments, etc. 2) Knowledge : exchange of strategic information, planning knowledge, process knowledge, technical knowledge, collaborative design, etc. 3) Intangible benefits : exchange of value and benefits that goes beyond the actual service and can’t be accounted in traditional measures. Implications The first implication is the fact that we can “map” these value exchanges as a flow diagram showing goods, services, and revenue (GSR), knowledge flow… With this level of detail we can outline value creation from multiple perspectives such as time, goals, resources, results, costs, or value added. Thereafter, it is also important to analyse this diagram and spot where value is. Then the second implication puts in light the e-commerce. Actually, managers shouldn’t always seek for financial apport but could also work in collaboration with their concurrents in order to increase their knowledge. So this case is a form of coopetition (mix between cooperation and competition). The idea is to bound you website with the one of your concurrents (to have direct links through theirs, etc). The benefit is to collect informations about your concurrents and their clients in order to increase your knowledge and have an advantage on this. This increase of knowledge can have more value than a direct financial gain. Limitations We understood that that knowledge is something very important. It can create a real competitive advantage. However, it is important to show some nuances. Indeed, everybody knows that having the knowledge is useful but you can’t do anything without the proper financial support, sometimes without the help of shareholders etc. Therefore, an equilibrium between these three types of value has to be found. One of the other limitation would be the perception of the shareholders. Many shareholders focus their attention on 2 points: a good financial return and a short payback period. Therefor, there is a conflict between a long term strategy of the company based on intangible assets and the strategy from some shareholders based on short term view. The third limitation a question relative to the second implication about the coopetition that managers can develop with competitors in order to collect data and improve knowledge. Coopetition can be beneficial for companies but we don’t have to forget and think about threats and risks relative to those kinds of situations. The coopetition between competitors can generate some advantages as : learning from allies, reduction of costs, stimulation of innovation,… But it exists also limitations, threats and risks. In our case, one can be the occurrence of opportunistic behavior. Opportunism often leads to unethical behavior, as companies break the rules of the market game. Probable consequences are a leakage of information and economic espionage so a risk of loss of control. It’s important that managers consider those limitations Further Ref Heiens, R., Leach, T., Mcgrath, C. (2007). The contribution of intangible assets and expenditures to shareholder value. Journal of Strategic Marketing, 15:2-3, 149-159. Cygler, J., & Wlodzimierz, S. (2017). Coopetition Disadvantages: The Case of the High Tech Companies. Engineering Economics 28(5). Linden, G., Kraemer, K. L., & Dedrick, J. (2009). Who captures value in a global innovation network?: the case of Apple’s iPod. Communications of the ACM, 52(3), 140-144. 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