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ORI GIN AL PA PER
On dominant logic: review and synthesis
Tim Franke • Dodo zu Knyphausen-Aufsess
Published online: 11 September 2013
� Springer-Verlag Berlin Heidelberg 2013
Abstract Building on the idea of managerial relatedness among businesses, the
concept of ‘‘Dominant Logic’’ (DL) was developed to provide insights into what the
determinants for successful diversification and organizational adaptation may be.
Since Prahalad and Bettis’ seminal article (Strateg Manag J 7(6):485–450, 1986),
management scholars have drawn on the concept of DL for almost 25 years and
applied it to various strategic management contexts. However, the lack of a sys-
tematic review that integrates the past decades’ fragmented research on DL and
resolves its conceptual inconsistencies hinders the purposeful application of the
concept and its further development. Hence, we seek to contribute to the literature
by addressing this substantial gap. Developing an integrated framework, we provide
an overview of DL research concentrating on (1) the antecedents of DL formation
and adaptation, (2) the DL commonality-performance linkage, and (3) the dynamics
of DL. By introducing the distinction between absolute and relative dominance, we
offer a more precise definition of DL that clarifies and theoretically distinguishes the
concept. We conclude by highlighting salient research gaps and identifying prom-
ising areas for future research efforts.
Keywords Diversification � Dominant logic �Multi-business firm � Synergy �Top management team
JEL classification M00 � M10
T. Franke (&) � D. zu Knyphausen-Aufsess
Chair of Strategic Leadership and Global Management, Technische Universitat Berlin,
Straße des 17. Juni 135, 10623 Berlin, Germany
e-mail: [email protected]
D. zu Knyphausen-Aufsess
e-mail: [email protected]
123
J Bus Econ (2014) 84:27–70
DOI 10.1007/s11573-013-0690-4
1 Introduction
The concept of ‘‘Dominant Logic’’ (DL) was developed to provide insights into
what the determinants for successful diversification and organizational adaptation
may be. Since Prahalad and Bettis’ seminal article (1986), management scholars
have applied the concept to various strategic management contexts, such as joint
ventures (e.g., Guidice and Mero 2007; Lampel and Shamsie 2000), entrepreneur-
ship and new ventures (e.g., Kuratko and Audretsch 2009; Lumpkin and Brigham
2011; Obloj et al. 2010), (international) mergers and acquisitions (e.g., Cote et al.
1999; Weber and Camerer 2003; Weber and Shenkar 1996; Chatterjee et al. 1992;
Verbeke 2010), international management (e.g., Vora and Kostova 2007; Kostova
and Roth 2002; Kostova 1999), and strategic change, as well as renewal and
adaptation (e.g., Gilbert 2005; Ginsberg and Venkatraman 1992; Hodgkinson 1997;
Prahalad 2004).
However, the literature’s continuous growth but largely fragmented nature
prevent scholars from convincingly applying and enhancing the concept (e.g., Bettis
and Prahalad 1995; Grant 1988; Stimpert and Duhaime 1997; von Krogh and Roos
1996; Verbeke 2010). There is neither a solid knowledge base regarding what the
antecedents of DL formation and adaptation may be, nor a consensus on how DL
commonality between businesses may drive the management of a multi-business
firm or merger and acquisition decisions and processes, nor is there certainty
regarding how DLs may alter over time. Therefore, there is a need for a systematic
literature review that sets the foundation for the purposeful application of the
concept highlighting salient research gaps and identifying promising areas for future
research efforts.
The aim of our review is to contribute to strategic management literature by
closing this substantial gap. Having conducted a systematic review of the DL
literature from 1986 to date (including articles available up to May 2012), we
provide a comprehensive overview of the research on the concept of DL concerning
(1) the antecedents of DL formation and adaptation, (2) the DL commonality-
performance linkage (in the diversified firm), and (3) the dynamics of DL. Using
qualitative meta-analysis, we synthesize the fragmented research found across levels
of analysis and applied contexts into an integrated framework and offer a more
precise definition of DL; we thereby introduce the distinction between absolute and
relative dominance, clarifying and theoretically distinguishing the concept to enable
its promising future application. Finally, we discuss the implications of our findings,
and highlight important directions for future research efforts.
2 The concept of dominant logic
DL ‘‘is defined as the way in which managers conceptualize the business and make
critical resource allocation decisions’’ (Prahalad and Bettis 1986, p. 490). It acts as
an ‘‘information filter…[which focuses organizational attention]’’ (Bettis and
Prahalad 1995, p. 7) and is ‘‘in essence, the DNA of the organization’’ (Prahalad
2004, p. 172). As such, an organization’s DL is determined by the experiences of its
28 T. Franke, D. zu Knyphausen-Aufsess
123
top management group and typically influenced by its ‘‘largest business or the ‘core
business’ which was the historical basis for the firm’s growth’’ (Prahalad and Bettis
1986, p. 490–491; see also Dess et al. 1990). Following this conceptualization of
DL, at a given point in time a particular DL is appropriate to a business or a
portfolio of businesses that are strategically similar if it is appropriate to the external
environment.
However, over time, strategic similarity in a diversified firm can vary due to (1)
‘‘changes in the mix of businesses caused by acquisitions or internal development,’’
or (2) ‘‘changes in the structural characteristics of the existing mix of businesses’’
(Prahalad and Bettis 1986, p. 495). Hence, the primary managerial challenge is to
decide whether the currently applied DL is likely to also be appropriate to a newly
acquired business (e.g., Prahalad and Bettis 1986; Cote et al. 1999; Weber and
Camerer 2003; Weber and Shenkar 1996; Chatterjee et al. 1992; Verbeke 2010) or,
for example, a newly created joint venture (e.g., Guidice and Mero 2007; Lampel
and Shamsie 2000). Fit and consistency from the bottom to the top are further
important prerequisites for successful cross-unit collaboration within diversified
firms (Martin and Eisenhardt 2010).
Subsequently, managers must continuously judge whether their current DL
requires adaptation or has even become entirely obsolete, for example, due to recent
changes in the organization’s environment (e.g., Bettis and Prahalad 1995; Miller
1993; Prahalad 2004; Sirmon et al. 2007; Tripsas and Gavetti 2000; von Krogh et al.
2000). The latter is probably one of the most challenging tasks in management because
‘‘if the ‘machine’ is beautifully tuned and aligned with its environment, it can beat
everything in sight’’ and ‘‘these stellar successes are impossible to forget. They tempt
and tantalize managers to go just a little bit further’’ (Miller 1993, p. 134).
Hence, on the one hand, a DL can be seen as an important (intangible) resource,
which is valuable, rare, and difficult to imitate (Amit and Schoemaker 1993; Barney
1991; Ilinitch and Zeithaml 1995; Obloj et al. 2010), but on the other hand, managers
need to be aware of the blinders of their current DL, which can be a significant source
of inertia (e.g. Gilbert 2005; Ginsberg and Venkatraman 1992; Hodgkinson 1997;
Prahalad 2004). Given this double-edged character of a DL, it is the responsibility of
corporate managers to distinguish between these two edges and to develop the
capability for continuously adapting the DL as a specific dynamic core competence
(Lei et al. 1996). This would facilitate the preservation of competitive advantages on
the business-level, the reduction of uncertainty and path dependency (Hatum and
Pettigrew 2006; Lei et al. 1996; Sydow et al. 2009), and most importantly, the
avoidance of ‘‘hidden costs of diversification’’ (Prahalad and Bettis 1986, p. 497).
These costs can be caused by (a) the corporate headquarters’ inadequate oversight of
the business units or (b) slow and inadequate responses to environmental changes
(e.g., crises), both of which may be due to the application of an inappropriate DL.
3 Study overview and review methodology
To ensure rigor in the pursuit of our research objectives, the relevant literature on
DL was identified using an adapted version of the approaches developed by David
On dominant logic: review and synthesis 29
123
and Han (2004) and Newbert (2007). In the interests of the qualitative and
conceptual aims of our review, we adapt these approaches according to Tranfield
et al. (2003), who focus on a more qualitative but systematic management review
approach. As we review a concept rather than a theory, our review has to consider
the routes of the concept, that is, the original article where it was developed, as well
as its core tenets, as they have become apparent in the literature over the last
25 years. We aim to enable a literature-based synthesis of the respective dimensions
of DL research conducted to date. Thus, in the light of the exploratory nature of our
analysis, we used the following procedure:
1. Search for published journal articles only.
2. Search the Business Source Complete, EconLit, ABI/INFORM, and the Web
of Science databases.
3. Conduct scoping study (i.e., most relevant articles on DL with DL in title or
abstract in high-impact journals) to assess the relevance and amount of
literature, and derive search terms and review themes for a systematic search.
4. Again search the Business Source Complete, EconLit, ABI/INFORM, and the
Web of Science databases.
5. Search the articles from the citation reports of the original article by Prahalad
and Bettis (1986) and the revised interpretation of DL by Bettis and Prahalad
(1995).
6. Search references from the articles retrieved from steps 4) and 5), which were
assumed to be relevant according to the review themes defined in step 3).
7. Ensure substantive relevance by requiring that selected articles contribute to
one or more of the review themes.
8. Conduct article quality assessment (i.e., impact factor assessment) to ensure
high impact of conceptual and empirical works included.1
9. Ensure substantive relevance by analyzing all remaining abstracts for
substantive context (i.e., discussion of the core tenets of DL according to
the defined review themes).
10. Further ensure substantive relevance by reading all remaining articles in their
entirety for substantive context and conducting qualitative data extraction.
11. Consolidate results and eliminate duplicate articles.
First, in our scoping study (see steps 1–3 above) a preliminary database search
revealed a large but fragmented body of literature including more than 500 citations
of the two fundamental works of Prahalad and Bettis, and a multiplicity of current
articles from major management journals (e.g., Nadkarni and Barr 2008; Nadkarni
and Narayanan 2007; Obloj et al. 2010; Prahalad 2004; Purdy and Gray 2009;
Verbeke 2010). Search terms to narrow this large amount of work and guide the
systematic review were derived and improved by iterative modification until
promising search matches reached saturation (see Appendix 1). We derived three
themes from the scoping study that guided our systematic review. These themes
were (1) antecedents of DL, (2) the DL commonality-performance linkage (e.g., in
1 Only high-impact journals may qualify as sources for deriving a consensual conceptualization and
definition of DL, acceptable to the research community.
30 T. Franke, D. zu Knyphausen-Aufsess
123
the diversified firm), and (3) the dynamics of DL. The first theme, antecedents of
DL, incorporates literature that looks into the question ‘‘what determines and
influences a specific DL?’’ Different theoretical foundations, contextual research
settings, and respective levels of analysis provide multiple dimensions, each
incorporating several antecedents of DL. These deserve consolidation and
integration. Having clarified what determines a DL leads to the question ‘‘what
distinguishes two (or more) DLs and how does DL commonality constitute strategic
similarity and thereby drive the performance of a portfolio of businesses?’’ Hence,
the second theme encompasses literature investigating DL commonality and
respective implications. Besides internal changes concerning the mix of businesses,
every organization is confronted with the challenge of either proactive or reactive
adaptation to structural changes in its external environment in order to maintain
fitness (e.g., Siggelkow 2001, 2002; Sydow et al. 2009). The final and third theme
consolidates and integrates the literature examining the dynamics of DL and the
determinants of its adaptation and rigidity.
Second, we started a triangulated search process to find relevant work on DL (see
steps 4–6 above) by (1) employing database searches via the derived keywords (175
articles), (2) using articles from the citation reports of the original article by
Prahalad and Bettis (1986) (393 articles) as well as the revised interpretation of DL
by Bettis and Prahalad (1995) (117 articles), and, finally, (3) including references
from the articles retrieved from steps (1) and (2) that were assumed to be relevant to
the review themes as defined in stage 1 (105 articles). The databases used were
Business Source Complete (and EconLit) via EBSCO Webhost, ABI/INFORM
Complete via Proquest, and the Web of Science via ISI Web of Knowledge. After
the exclusion of doublings from different search strategies, ‘‘false positives,’’ and
most importantly, the screening of abstracts pertaining to the articles’ contribution
to the search themes, this procedure yielded 49 conceptual and 80 empirical efforts.
The total of 36 academic journals publishing relevant works were predominantly
high-impact management journals. The majority of articles were found in Strategic
Management Journal (34; 27 %), Journal of Management Studies (14; 11 %),
Academy of Management Journal (12; 9 %), Academy of Management Review (9;
7 %), Organization Science (6; 5 %), Administrative Science Quarterly (5; 4 %),
Management Science (4; 3 %) and Journal of Management (3; 2.4 %). Overall,
these 8 outlets accounted for 70 % of the works on the concept of DL. An additional
12 % were distributed throughout different management disciplines and published
as follows: Entrepreneurship Theory & Practice (4; 2.4 %), Journal of Interna-
tional Business Studies (3; 2.4 %), Journal of Organizational Behavior (3; 2.4 %),
British Journal of Management (2; 1.6 %), Harvard Business Review (HBR) (2;
1.6 %), and Long Range Planning (LRP) (2; 1.6 %). The concentration of articles in
high-impact journals underlines the academic importance of the concept of DL; the
surrounding more practitioner-oriented journals, such as HBR or LRP, support its
managerial relevance. The remaining 18 % of works were spread over 21 journals
from different management disciplines and the Academy of Management Proceed-
ings. To precisely determine the impact and quality of the work used in our review,
we employed the Thompson Reuters impact factor and 5-year impact factor
rankings (see step 8 above). We note that 80 % of the relevant works exhibit an
On dominant logic: review and synthesis 31
123
impact factor above 2.9 and a 5-year impact factor above 4.6 (for complete
overview of articles and impact factor rankings see Appendix 2).
The 49 conceptual and 80 empirical articles were subjected to explorative in-
depth review and qualitative meta-analysis with special attention to the aspect of
multilateral confirmation concerning attributes of the research themes (1) to (3) (see
step 7 and steps 9–11 above). Qualitative data extraction of research findings is
representatively documented in Appendix 3. These findings were integrated into a
consolidated and comprehensive ‘‘Dominant Logic Research Framework’’ and
summary tables. Findings and synthesis are presented and discussed in the following
section.
4 Results
4.1 Overview and definition of DL
Without doubt, it is a challenging task to provide a clear picture of how a DL
may evolve, what determines it, and how a DL may adapt over time. However,
we argue that an integrated view on the last 25 years of theoretical and empirical
research in this field is a promising pathway to form a coherent conceptual-
ization of DL and a first step to approach the prevailing research gaps mentioned
above.
Our review revealed the challenge that there is still no consensus on how a DL
should be operationalized and measured. That, in turn, means that there may be no
common understanding of what a DL actually is. Thus, though not intended as the
focus of our work, after extensively reviewing research on the concept, we start with
providing an enhanced definition of how ‘‘Dominant Logic’’ can actually be
conceptualized in order to clarify and theoretically distinguish the concept. As this
wording already implies a complex composition of two conceptual elements, that is,
a (managerial) ‘‘logic’’ that has become ‘‘dominant’’ within a certain context, we
provide definitions for each of these elements separately before bringing them
together again. This, we hope, will clarify what a DL actually is. Moreover, such
clarity is fundamental to pursuing further integration efforts.
The concept of what we refer to as ‘‘managerial logic’’ (or mental model, mental
map, cognitive map, schema, or knowledge structure) lies at the heart of information
processing theory. Building on Walsh’s outstanding review effort on managerial and
organizational cognition, ‘‘managerial logic’’ can be defined as a ‘‘mental template
that individuals impose on an information environment to give it form and
meaning’’ (Walsh 1995, p. 281). Managers operate on the basis of these mental
templates or representations of the world they have accumulated in their memory
over time (Prahalad and Bettis 1986; Walsh 1995). Theses templates are a learned
filter on the flood of information individuals (e.g., managers) have to deal with. This
stored, organized knowledge about an information domain enables subsequent
interpretation and action (Bettis and Prahalad 1995; Walsh 1995). Hence, mental
templates are ‘‘expressed as a learned problem solving behavior’’ (Prahalad and
Bettis 1986, p. 491). Such templates first occur on the individual level, but
32 T. Franke, D. zu Knyphausen-Aufsess
123
accumulate through complex processes of interaction and diffusion into shared
mental templates on group-level (i.e., the ‘‘dominant coalition’’ or top management
team in Prahalad and Bettis 1986), on organizational-level (i.e., as an ‘‘emergent
property of complex adaptive systems’’; Bettis and Prahalad 1995), and even on
industry-level (see e.g., Reger and Huff 1993 or Walsh 1995 for a detailed
discussion). However, as the overall concept of DL is an organizational concept and
our review addresses the field of organizational rather than industry studies, we
define the organization including its members (individuals and groups) as the unit of
analysis.
Thus, a ‘‘managerial logic’’ (in the concept of DL) can be defined as the shared
mental template an organization as a whole employs and acts upon. This higher
order template might be shaped by the top management team, highly charismatic
individuals (e.g., CEO, founder, or owner), or other interest groups according to the
mental templates developed (Bettis and Prahalad 1995; Prahalad and Bettis 1986;
Walsh 1995). However, aggregation is a complex interaction rather than a simple
addition process and the overall logic of an organization cannot be interpreted as the
sum of its partial mental templates (Walsh 1995). Nevertheless, and as reflected in
the following sections, we absolutely follow Walsh that the study of managerial
logics, its antecedents and, organizational consequences has to consider the
interdependencies at all levels of analysis (Walsh 1995).
Second, the notion of ‘‘Dominance’’ has to be clarified. Drawing on the works of
Prahalad and Bettis (1986) and Bettis and Prahalad (1995), we argue that dominance
actually has two dimensions. The first dimension we term ‘‘absolute dominance’’. It
refers to the maturity and stability of a certain logic (i.e., a certain mental template)
that increases through reinforcement processes (e.g., success and persistence) over
time. It focuses on the organizational learning rather than the corporate management
facets of the concept of DL, already mentioned in Prahalad and Bettis’ 1986 article
(i.e., operant conditioning), but much more prominent in the 1995 revision (Bettis
and Prahalad 1995; Prahalad and Bettis 1986). In consequence, every single
business firm will develop a DL over time. The second dimension we term ‘‘relative
dominance.’’ It refers to the diversification and corporate management facets of DL.
Relative dominance is defined as the relative power distribution among the
businesses that represent the relative strength of the shared mental templates of the
businesses rather than as the (absolute) dominance of the logics themselves. This
idea corresponds to Prahalad and Bettis’ explanations concerning the role of the
‘‘core business’’ and its impact on ‘‘strategic variety’’ in the diversified corporation;
that is, the core business’ logic (which may exhibit different levels of absolute
dominance) is likely to dominate the overall DL of the diversified firm (Prahalad
and Bettis 1986). However, this is just a simplification of how logics may interact
and diffuse within complex power structures (e.g., Purdy and Gray 2009) as seen in
the power distribution that may arise among the businesses of a diversified
corporation due to their size in terms of revenues, profits, and number of
employees.2
2 Since we define DL as an organizational concept, we will not segment logics down to the group or even
individual level.
On dominant logic: review and synthesis 33
123
The overall dominance of a managerial logic in a multi-business firm (MBF) can
finally be defined as the product of its absolute and relative dominance. The hitherto
missed distinction between absolute and relative dominance provides an explanation
as to why the concept of DL in general is claimed to be applied ‘‘successfully’’ on
the business level (e.g., Obloj et al. 2010; Bettis and Prahalad 1995) as well as on
the corporate level (e.g., Cote et al. 1999; Lampel and Shamsie 2000; Prahalad and
Bettis 1986), leading to theoretical inconsistencies when trying to define what a DL
actually may be.
To prevent such inconsistencies in our review as well as in future works, we
define a ‘‘DL’’ (on the corporate level) as a shared (i.e., organizational) mental
template that has reached a certain level of maturity and stability (i.e., absolute
dominance) and is highly (relatively) dominant across a defined set of businesses of
the corporate portfolio, thus dominating the logics of the businesses within this set.3
This understanding of a corporate ‘‘dominant logic’’ is illustrated by the upper right
sector in Fig. 1 below. However, ‘‘strong niche logic’’ refers to logics that are very
mature and stable, but represent a minority within the corporation (strong niche
businesses, with niche logics). ‘‘Fuzzy novice logics’’ refers to businesses with very
young and still fuzzy logics that may have just entered the boundaries of a
diversified corporation, whereas ‘‘incumbent turnaround logics’’ represents logics of
large businesses within the portfolio that may have undergone recent changes and
thus exhibit low levels of stability (e.g., Bettis and Prahalad 1995). Although all
these sectors may be possible combinations along the two dimensions, a
convergence between long-term success and stability (i.e., absolute dominance)
and power, for example, in terms of revenue size (i.e., relative dominance), is likely.
However, the conceptualization of different dimensions of dominance that the
hitherto abstract managerial logics may exhibit do not allow for any statements
Fig. 1 Four types of managerial (dominant) logic
3 A ‘‘set of businesses’’ could be a sector within a diversified conglomerate (Prahalad/Bettis 1986).
34 T. Franke, D. zu Knyphausen-Aufsess
123
about the commonality (or variety) of such logics or the respective potential
conflicts or managerial synergies between them culminating in impacts on
organizational performance. Thus, we synthesize the findings of our review
structured as follows:
According to the above mentioned research themes we first have to understand
what may determine a certain managerial logic, that is, identify its antecedents
across all levels of analysis (see Sect. 4.2). This is the baseline we build on to learn
more about the discriminating effects of different configurations of this set of
antecedents, the commonality between different configurations, and finally, the
performance impact arising from the different levels of relative and absolute
dominance of such configurations within the diversified (or diversifying) firm,
namely the DL-commonality-performance linkage (see Sect. 4.3). Understanding
how the complex interplay between antecedents, power distribution, and perfor-
mance may influence the development of a DL over time, i.e. its dynamics, is the
keystone of our appraisal (see Sect. 4.4).
Figure 2 displays our ‘‘Dominant Logic Research Framework’’ that integrates our
findings on 25 years of DL research concerning our research themes reflecting the
structure elucidated above.
4.2 Antecedents of dominant logic formation and adaptation
First, the ‘‘antecedents of (dominant) logic formation and adaptation’’ are held at
individual, top management team (TMT) (i.e., group-level), organizational, and
Fig. 2 Dominant Logic Research Framework
On dominant logic: review and synthesis 35
123
environmental (industry) level. The formation of a specific managerial logic (that
may become dominant over time and/or within a conglomerate) is determined by
the specification of each antecedent as well as the configuration of all of them.
Especially with respect to the dynamics of a (dominant) managerial logic and the
processes of adaptation, one has to distinguish between internal factors and external
factors. Internal factors and their configuration refer to the organization and its
members/elements, whereas external factors and their configuration are predeter-
mined by the organizations’ environment. Hence, the challenge of successful
adaptation of (dominant) managerial logics can be described as that of the
maintenance of a fit between the configuration of its internal and external elements
(e.g., Bettis and Prahalad 1995; Prahalad and Bettis 1986; Siggelkow 2001, 2002).
The majority of the literature reviewed provides insights regarding the
antecedents of (dominant) logic formation and adaptation (103 articles). Table 1
provides an overview of the antecedents derived from conceptual and empirical
efforts by their level of analysis in order to supplement the textual integration and
discussion of our findings.
4.2.1 Individual level antecedents
Following Prahalad and Bettis (1986), we distinguish between cognitive simplifi-
cations and cognitive biases as elements of complex problem-solving behavior, and
personal background, experience, and orientation as sources of (dominant)
managerial logics at the individual level.
Cognitive simplifications affect heuristics concerning information gathering,
processing, and decision making. Information-gathering heuristics are determined
by attention pattern and scanning behavior (e.g., Ocasio 1997; Dane and Pratt 2007;
Garg et al. 2003; Nadkarni and Barr 2008). Information processing is determined by
issue categorization according to learned individual cognitive taxonomies (of the
competitive environment) (e.g., Stubbart 1989; Walton 1986; Stimpert and Duhaime
1997) facilitating epistemic heterogeneity (Boisot and Li 2005) and cognitive
boundaries of an organization’s competitive space (Porac and Thomas 1990; Santos
and Eisenhardt 2005). Over time, these configurations of information gathering and
processing become the ‘‘automatic mode’’, that is, they become (absolute)
dominant, and systematically affect decision making (e.g., Dutton 1993; Louis
and Sutton 1991). Furthermore, analogical reasoning, that is, the transfer of those
dominant heuristics to new and complex settings as they are best available and most
promising with respect to past experience, is likely to guide managers through novel
and complex environments (Gavetti et al. 2005).
Cognitive biases are concomitant effects of the above-mentioned information
retrieval, processing, and decision-making processes. The predominant bias is the
self-serving attribution bias, that is, individuals tend to blame the ‘‘ungovernable’’
external environment for performance decrease and failure, whereas success is
attributed to internal elements and decisions that are subject to managerial
competence (e.g., Clapham and Schwenk 1991; Lant and Milliken 1992; Barr et al.
1992). The self-serving attribution bias may cause a somehow distorted represen-
tation of one’s environment, facilitating a (somehow inappropriate) managerial
36 T. Franke, D. zu Knyphausen-Aufsess
123
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Zei
tham
l(1
98
9),
Cla
ph
aman
dS
chw
enk
(19
91),
Bar
ret
al.
(19
92),
Hau
ked
alan
dG
ron
hau
g(1
99
4),
Lan
tan
dM
illi
ken
(19
92)
Per
sonal
bac
kg
roun
d,
exp
erie
nce
,an
do
rien
tati
on
E.g
.,ed
uca
tion,
funct
ion/t
asks,
dep
artm
ent/
com
pan
y/i
nd
ust
rym
emb
ersh
ip,
entr
epre
neu
rial
ori
enta
tion/t
echnic
alo
rien
tati
on
vo
nK
rog
han
dR
oo
s(1
99
6),
Lan
ean
dS
irm
on
(20
03),
Dan
ean
dP
ratt
(20
07),
Irel
and
etal
.(2
00
9),
An
sari
etal
.2
01
0
Wal
sh(1
98
8),
Th
om
aset
al.
(19
93),
Dan
iels
etal
.(1
99
4),
Hau
ked
alan
dG
ron
hau
g(1
99
4),
Su
tcli
ffe
and
Hu
ber
(19
98)
TM
TT
MT
char
acte
rist
ics
E.g
.,d
emo
gra
phic
s,co
mp
osi
tio
n/d
iver
sity
,p
ow
erst
ruct
ure
,si
zeG
insb
erg
(19
90),
Kli
mosk
ian
dM
oham
med
(19
94),
Mil
ler
(19
96),
Lan
ean
dS
irm
on
(20
03),
Th
om
as(2
00
5),
An
sari
etal
.(2
01
0)
Lan
tan
dM
illi
ken
(19
92),
Ho
ug
hto
net
al.
(19
94),
Kn
igh
tet
al.
19
99,
Tri
psa
san
dG
avet
ti(2
00
0),
No
da
and
Coll
is(2
00
1),
Ch
oan
dH
ambri
ck(2
00
6),
Pan
agio
tou
(20
06)
Gro
up
pro
cess
esE
.g.,
soci
o-c
ognit
ive
com
ple
xit
y/c
apac
ity/
cov
erag
e,co
hes
ion
/co
nse
nsu
s/co
nfl
ict
Gin
sber
g(1
99
0),
Ly
les
and
Sch
wen
k(1
99
2),
Kli
mo
ski
and
Mo
ham
med
(19
94),
San
tos
and
Eis
enh
ard
t(2
00
5),
An
sari
etal
.(2
01
0)
Lan
gfi
eld
-Sm
ith
(19
92),
Ho
ug
hto
net
al.
19
94;
Su
tcli
ffe
and
Hu
ber
(19
98),
Tri
psa
san
dG
avet
ti(2
00
0),
Kn
igh
tet
al.
(19
99),
En
sley
and
Pea
rce
(20
01),
Lev
y(2
00
5)
On dominant logic: review and synthesis 37
123
Ta
ble
1co
nti
nu
ed
Lev
elo
fan
alysi
sA
nte
ceden
tsC
once
ptu
alw
ork
sE
mpir
ical
evid
ence
Org
aniz
atio
nB
usi
nes
sm
od
elE
.g.,
val
ue
pro
posi
tion
(pro
du
ct/s
erv
ice-
mar
ket
com
bin
atio
n),
val
ue
crea
tio
nan
dv
alue
chai
n(v
erti
cal
po
siti
on
),v
alu
eca
ptu
re/r
even
ue
model
(dir
ect
vs.
ind
irec
t)
Do
zan
dP
rah
alad
(19
86),
Pra
hal
adan
dB
etti
s(1
98
6),
Hit
tan
dIr
elan
d(1
98
7),
Ulr
ich
and
Wie
rsem
a(1
98
9),
Gin
sber
g(1
99
0),
Tik
kan
enet
al.(2
00
5),
Mil
ler
and
Flo
rice
l(2
00
7),
Sir
mo
net
al.
(20
07)
Wal
ton
(19
86),
Fo
mbru
nan
dZ
ajac
(19
87),
Po
rac
etal
.(1
98
9),
Reg
eran
dH
uff
(19
93),
Cal
ori
etal
.(1
99
4),
Day
and
Ned
un
gad
i(1
99
4),
Ilin
itch
and
Zei
tham
l(1
99
5),
Ram
asw
amy
(19
97),
Sti
mp
ert
and
Du
hai
me
(19
97),
Cote
etal
.(1
99
9),
No
da
and
Co
llis
(20
01),
Osb
orn
eet
al.
(20
01),
Sig
gel
ko
w(2
00
2),
Peh
rsso
n(2
00
6),
Kei
let
al.(2
00
8),
Pu
rdy
and
Gra
y(2
00
9)
Str
ateg
y/
stra
teg
ico
rien
tati
on
E.g
.,p
rosp
ecto
rsv
s.d
efen
der
s,en
tre-
pre
neu
rial
(in
nov
atio
nan
do
pp
ort
un
ity
focu
s)v
s.en
gin
eeri
ng
(in
tern
alef
fici
ency
)lo
gic
/ori
enta
tion,
ST
RO
BE
,o
rgan
izat
ion
alb
ou
nd
arie
s
Pra
hal
adan
dB
etti
s(1
98
6),
Ulr
ich
and
Wie
rsem
a(1
98
9),
Mil
ler
(19
96),
San
tos
and
Eis
enh
ard
t(2
00
5),
Irel
and
etal
.(2
00
6),
Irel
and
etal
.(2
00
9),
Ku
ratk
oan
dA
ud
rets
ch(2
00
9)
Fio
l(1
98
9),
Ven
kat
ram
an(1
98
9),
Reg
eran
dH
uff
(19
93),
Do
tyet
al.
(19
93),
Ram
asw
amy
(19
97),
En
sley
and
Pea
rce
(20
01),
No
da
and
Co
llis
(20
01),
Gar
get
al.
(20
03),
Cho
and
Ham
bri
ck(2
00
6),
San
tos
and
Eis
enh
ard
t(2
00
9),
Lu
mp
kin
and
Bri
gh
am(2
01
1)
Str
uct
ure
san
dp
roce
sses
E.g
.,o
rgan
izat
ion
alar
chit
ectu
re,
ow
ner
ship
,(s
ize)
,re
sou
rce
allo
cati
on
/st
rate
gic
pla
nn
ing
/rew
ard
/co
ntr
ol
fun
ctio
ns
and
syst
ems,
(sca
nn
ing
),ex
per
imen
tati
on
,(d
yn
amic
)ro
uti
nes
Du
tto
nan
dD
un
can
(19
87b),
Gra
nt
(19
88),
Lev
inth
alan
dM
arch
(19
93),
Lei
etal
.(1
99
6),
Oca
sio
(19
97),
Mil
ler
(19
96),
Vo
raan
dK
ost
ov
a(2
00
7),
Irel
and
etal
.(2
00
9),
Kura
tko
and
Audre
tsch
(20
09),
An
sari
etal
.(2
01
0)
Wal
ton
(19
86),
Fo
mbru
nan
dZ
ajac
(19
87),
Jack
son
and
Du
tto
n(1
98
8),
Th
om
aset
al.
(19
93),
Mu
rth
aet
al.
(19
98),
Cote
etal
.(1
99
9)
Org
aniz
atio
nal
cult
ure
E.g
.,id
eolo
gy
,h
isto
rica
ln
orm
s,b
elie
fst
ruct
ure
and
val
ues
,in
no
vat
iven
ess/
op
ennes
s,fo
rmal
and
info
rmal
po
wer
stru
cture
/inte
rnal
soci
alnet
work
s,em
plo
yee
s’p
rofe
ssio
nal
cult
ure
s(e
.g.,
engin
eeri
ng
vs.
scie
nti
st)
Ko
sto
va
(19
99),
Du
tto
nan
dD
un
can
(19
87a)
,W
illi
ams
(20
01),
Lan
ean
dS
irm
on
(20
03),
Sir
mo
nan
dL
ane
(20
04),
Dan
ean
dP
ratt
( 20
07),
Vo
raan
dK
ost
ov
a(2
00
7),
An
sari
etal
.(2
01
0)
Chat
terj
eeet
al.
(19
92),
Go
llan
dS
amb
har
ya
(19
95),
Web
eran
dS
hen
kar
(19
96),
Cote
etal
.(1
99
9),
Ink
pen
etal
.(2
00
0),
van
Ou
den
ho
ven
and
van
der
Zee
(20
02),
Yiu
and
Mak
ino
(20
02),
Web
eran
dC
amer
er(2
00
3),
Bij
lsm
a-F
ran
kem
a(2
00
4)
38 T. Franke, D. zu Knyphausen-Aufsess
123
Ta
ble
1co
nti
nu
ed
Lev
elo
fan
alysi
sA
nte
ceden
tsC
once
ptu
alw
ork
sE
mpir
ical
evid
ence
En
vir
on
men
tS
tru
ctu
re(i
nd
ust
ry)
E.g
.,fa
shio
nab
letr
end
s/co
nv
enti
on
alw
isdo
m/m
imet
icb
ehav
ior,
com
pet
itiv
ein
ten
sity
and
po
stu
re/s
tru
ctu
re/m
atu
rity
/m
ob
ilit
yb
arri
ers,
mun
ifice
nce
Pra
hal
adan
dB
etti
s(1
98
6),
McG
eean
dT
ho
mas
(19
86),
Hit
tan
dIr
elan
d(1
98
7),
Bo
gn
eran
dB
arr
(20
00),
Tik
kan
enet
al.
(20
05),
Mil
ler
and
Flo
rice
l(2
00
7)
Fah
eyan
dN
aray
anan
(19
86),
Fo
mbru
nan
dZ
ajac
(19
87),
Bar
ret
al.
19
92;
Cal
ori
etal
.(1
99
2),
Gin
sber
gan
dV
enk
atra
man
(19
92),
Su
tcli
ffe
and
Hu
ber
(19
98),
Co
teet
al.
(19
99),
Yiu
and
Mak
ino
(20
02),
Pan
agio
tou
(20
06),
Peh
rsso
n(2
00
6),
San
tos
and
Eis
enh
ard
t(2
00
9),
Ob
loj
etal
.(2
01
0),
Du
nn
and
Jon
es(2
01
0)
Tec
hn
olo
gy
E.g
.,te
chno
log
yin
ten
sity
,te
chn
olo
gic
ald
om
inan
cean
din
no
vat
iven
ess
Hit
tan
dIr
elan
d(1
98
7),
An
sari
etal
.(2
01
0)
Fo
mbru
nan
dZ
ajac
(19
87),
Gin
sber
gan
dV
enkat
ram
an(1
99
2),
Lan
ean
dL
ub
atk
in(1
99
8),
Tri
psa
san
dG
avet
ti(2
00
0),
Bra
nn
bac
kan
dW
iklu
nd
(20
01),
Sig
gel
ko
w(2
00
1),
Peh
rsso
n(2
00
6),
Kei
let
al.
(20
08)
Dy
nam
ics
E.g
.,fr
equen
cy/t
urb
ule
nce
,in
ten
sity
and
irre
gu
lari
tyo
fch
ang
esU
lric
han
dW
iers
ema
(19
89),
Ly
les
and
Sch
wen
k( 1
99
2),
Mil
ler
(19
96),
Bo
gn
eran
dB
arr
(20
00),
Mil
ler
and
Flo
rice
l(2
00
7),
Kura
tko
and
Audre
tsch
(20
09)
Day
and
Lo
rd(1
99
2),
Reg
eran
dP
alm
er(1
99
6),
Su
tcli
ffe
and
Hu
ber
(19
98),
Gav
etti
and
Lev
inth
al(2
00
0),
Sig
gel
ko
w(2
00
2),
Bau
man
dW
ally
(20
03),
Gar
get
al.
20
03,
Nad
kar
ni
and
Nar
ayan
an(2
00
7),
Nad
kar
ni
and
Bar
r(2
00
8),
Ob
loj
etal
.(2
01
0)
Po
licy
/re
gu
lati
on
E.g
.,d
egre
eo
fre
gu
lati
on
Hit
tan
dIr
elan
d(1
98
7),
An
sari
etal
.(2
01
0)
Fo
mbru
nan
dZ
ajac
(19
87),
Cote
etal
.(1
99
9),
Ch
oan
dH
amb
rick
(20
06),
Du
nn
and
Jon
es(2
01
0),
DiV
ito
(20
12)
Nat
ion
alcu
ltu
reE
.g.,
regu
lato
ry,
no
rmat
ive,
and
cog
nit
ive
dis
tan
ceb
etw
een
cou
ntr
ies
Do
zan
dP
rah
alad
(19
86),
Hit
tan
dIr
elan
d(1
98
7),
Ko
sto
va
(19
99),
Pal
ich
and
Go
mez
-Mej
ia(1
99
9),
Lan
ean
dS
irm
on
(20
03),
Sir
mo
nan
dL
ane
(20
04),
Vo
raan
dK
ost
ov
a(2
00
7),
An
sari
etal
.(2
01
0),
Ver
bek
e(2
01
0)
Ko
gu
tan
dS
ing
h(1
98
8),
Cal
ori
etal
.(1
99
2),
Web
eran
dS
hen
kar
(19
96),
Ink
pen
etal
.(2
00
0),
van
Ou
den
ho
ven
and
van
der
Zee
(20
02),
Co
llin
set
al.
(20
09),
Ob
loj
etal
.(2
01
0)
On dominant logic: review and synthesis 39
123
logic and its increasing absolute dominance. Thus, this bias is likely to be a strong
source of inertia or even escalating commitment in periods of change.
Personal background, experience, and orientation comprise individuals’ educa-
tional and functional background (e.g., Walsh 1988; Lane and Sirmon 2003; Daniels
et al. 1994; Ansari et al. 2010), as well as company and industry membership (e.g.,
Daniels et al. 1994; Sutcliffe and Huber 1998). Individuals’ orientation and
representation of their environment are shaped by their background and experiences
(over time), and hence influence, for example, whether a technical/engineering, a
scientific, or an entrepreneurial orientation is developed (Sirmon and Lane 2004;
Ansari et al. 2010; Ireland et al. 2009). This may extensively inform an
organization’s DL, if we consider these antecedents are intended to gain a critical
mass within an organization and/or affect the key individuals of the firm.
4.2.2 Group (top management team) level antecedents
In regard to the antecedents of (dominant) managerial logics at the group (TMT)
level, we distinguish TMT characteristics and group processes.
TMT characteristics include TMT demographics, composition and diversity,
power structure and size (e.g., Ginsberg 1990; Klimoski and Mohammed 1994;
Miller 1996; Thomas 2005; Ansari et al. 2010; Panagiotou 2006; Knight et al. 1999;
Houghton et al. 1994), as well as member tenure (in particular, CEO or owner) (e.g.,
Lant and Milliken 1992; Cho and Hambrick 2006).
Group processes, such as coverage, cohesion, consensus or conflict, and
transitory collective cognition influence the formation and adaptation of a certain
(dominant) managerial logic at the group/TMT level. These elements predominantly
drive the complex aggregation processes of the managerial logics of firms’ key
individuals forming a shared mental template (e.g., Langfield-Smith 1992; Sutcliffe
and Huber 1998; Knight et al. 1999; Ensley and Pearce 2001; Lyles and Schwenk
1992; Ginsberg 1990; Klimoski and Mohammed 1994; Santos and Eisenhardt 2005;
Ansari et al. 2010). While coverage refers to the number of elements within each
individual’s vs. the group’s cognitive map, the levels of cohesion and consensus
determine which elements of each individual’s map becomes an important element
of the shared cognitive map of the group (e.g., Langfield-Smith 1992; Ensley and
Pearce 2001). Transitory collective cognition may account for elements and
structures within the shared map that do not exist at the individual level (Langfield-
Smith 1992).
4.2.3 Organizational antecedents
A significant portion of DL research refers to organizational antecedents. We found
that an organization’s business model, strategic orientation, and architecture as well
as its culture, determine the formation and adaptation of a managerial logic at this
level of analysis.
The notion of a business model refers to a firm’s (1) value proposition to the
customer (e.g., products and services in different markets), (2) its value chain and
value creating activities, and (3) the architecture of revenues and cost including the
40 T. Franke, D. zu Knyphausen-Aufsess
123
mechanisms to capture value (e.g., Zott and Amit 2010; Teece 2010). Different
configurations of one or more of these elements significantly affect the specification
of a (dominant) managerial logic. Changes in one or more of these elements induce
a reconfiguration of the business model as a whole, and hence, may require the
adaptation of the managerial logics employed. While some works point to the
characteristics of the ‘‘core business,’’ type of business, or its systemic character-
istics in general as a major determinant of a particular managerial logic (Prahalad
and Bettis 1986; Ginsberg 1990; Doz and Prahalad 1986; Ramaswamy 1997; Reger
and Huff 1993; Noda and Collis 2001; Osborne et al. 2001), others refer to single or
multiple dimensions of the business model concept. For example, evidence was
found for the strong impact of a firm’s value proposition, as product and service
businesses’ managerial logics differed considerably up to the point of strong conflict
between those (Hitt and Ireland 1987; Walton 1986; Porac et al. 1989; Stimpert and
Duhaime 1997; Cote et al. 1999; Purdy and Gray 2009; Pehrsson 2006). A firm’s
value creation activities and its value chain position also strongly influence its
managerial logic, as similar value creation activities (e.g., production, retail, or
logistics) and a similar value chain position (upstream vs. downstream) were found
to contribute to DL-commonality and higher performance in the MBF (Siggelkow
2002; Ilinitch and Zeithaml 1995; Miller and Floricel 2007). Finally, the
architecture and mechanism of revenue generation and of capturing value affect
the formation of a certain managerial logic; for example, the different levels of
complexity of direct (traditional commerce) vs. indirect (e-commerce) revenue
models may shape quite distinct mental templates (Day and Nedungadi 1994;
Ramaswamy 1997; Miller and Floricel 2007).
Configurations of strategic orientation determine a firm’s (dominant) logic, since
these reflect its strategic attitude toward conducting business. One apparent
operationalization of this concept is the classification into Defenders, Prospectors,
Analyzers and Reactors by Miles and Snow (1978), which proved to have
significant empirical relevance (e.g. Doty et al. 1993). While ‘Defenders’ focus on
the engineering problem and continually attempt to develop greater efficiency in
existing operations, ‘Prospectors’ emphasize the entrepreneurial problem and
explore environmental change in search of new opportunities. Whereas these two
configurations reside at opposite ends of a continuum of adjustment strategies,
‘Analyzers’ reside between them and ‘Reactor’ is a residual strategy arising when
one of the others is improperly pursued (Miles et al. 1978). In particular, the
Defender vs. the Prospector strategy will lead to significant differences concerning
the evolving (dominant) managerial logic (e.g., Cho and Hambrick 2006; Garg et al.
2003; Reger and Huff 1993; Ireland et al. 2009; Kuratko and Audretsch 2009;
Ireland et al. 2006). Studies that employed other operationalizations, such as
Venkatraman’s six dimensions—aggressive pursuit of growth, analysis, defensive-
ness, futurity, proactiveness, and riskiness (Venkatraman 1989; Ensley and Pearce
2001)—or industry-specific models (Ramaswamy 1997) are consistent with this
finding. Even simple distinctions in strategic orientation, such as short- and long-
term orientation, were recently identified ‘‘as a higher-order heuristic that, in
matters of intertemporal choice, provides a dominant logic for decisions and
actions’’ (Lumpkin and Brigham 2011). Furthermore, a firm’s strategic orientation
On dominant logic: review and synthesis 41
123
and intent determine its perception of organizational boundaries, that is, the
boundaries of its represented internal information environment, which serves as the
template for strategic decision making (e.g., Santos and Eisenhardt 2005, 2009; Fiol
1989; Walsh 1995).
An organization’s architecture complements its parameters of business design
and conduct. Organizational architecture (e.g., Ireland et al. 2009; Vora and
Kostova 2007), the configuration of its elements (e.g., Miller 1996; Siggelkow
2002), and its size and ownership (e.g., Walton 1986; Fombrun and Zajac 1987;
Lumpkin and Brigham 2011) affect the managerial logic formed within the firm.
Processes, such as strategic planning, resource allocation and control systems, and
human resource practices (e.g., incentive systems and promotion practices), in turn,
reflect the characteristics of a certain management logic as they support a particular
strategic attitude and respective business goals of a firm (Ocasio 1997; Ansari et al.
2010; Kuratko and Audretsch 2009; Miller 1996; Grant 1988; Dutton and Duncan
1987b; Cote et al. 1999). Thus, while an organization’s architecture was found to be
antecedent to an evolving (dominant) managerial logic of an organization, the
design of its business processes and procedures mirrors that logic in an observable
manner. However, both have to complement an organization’s business model and
strategy/strategic orientation.
Following the conceptualizations of the construct of organizational culture from
Schein (1985) and Hatch (1993), an organization’s culture, inter alia, incorporates
the administrative heritage, values, beliefs, historical norms, ideology, and attitude
toward learning, innovation, and collaboration. These intangible and elusive
elements of social norms and interaction complement the comprehensible elements
of business design and conduct, architecture and governance, and hence, affect the
specification of a managerial logic on the organizational level and are key to
understanding the complex aggregation processes from individual to group and
finally organizational level cognition, i.e., the formation of an organization’s shared
mental map (e.g., Miller 1996; Vora and Kostova 2007; Kostova and Roth 2002;
Kostova 1999; Dane and Pratt 2007; Ansari et al. 2010; Chatterjee et al. 1992; Goll
and Sambharya 1995; Weber and Camerer 2003; Weber and Shenkar 1996; Cote
et al. 1999; Inkpen et al. 2000; Yiu and Makino 2002; Bijlsma-Frankema 2004; van
Oudenhoven and van der Zee 2002; Collins et al. 2009). Furthermore, an
organizational culture is supplemented by subcultures, such as employees’
professional cultures (Sirmon and Lane 2004), and may vary in its degree of
differentiation and complexity, which are positively related to the flexibility and
adaptability of the evolving overall (dominant) managerial logic (Dutton and
Duncan 1987a).
4.2.4 Environmental antecedents
It can be assumed that external, that is, environmental antecedents have a strong
impact on the formation of a managerial logic and its absolute dominance because
(at least an initial) internal and external fit is needed to create equilibrium and
stabilize an overall configuration pattern, that is, a specific (absolute) dominant logic
(Bettis and Prahalad 1995; Siggelkow 2001, 2002). Antecedents at this level of
42 T. Franke, D. zu Knyphausen-Aufsess
123
analysis, which were revealed by the literature, can be grouped into five categories,
namely, structure (e.g., industry structure), technology, policy/regulation, dynam-
ics, and national culture.
Environmental (e.g., industry) structure influences the specification of a
managerial logic according to the specificity and configuration of typical industry
and market characteristics, such as market size and segmentation, competition,
customers, suppliers, and properties like munificence and maturity (Fahey and
Narayanan 1986; Fombrun and Zajac 1987; Calori et al. 1992; Sutcliffe and Huber
1998; Santos and Eisenhardt 2009; Obloj et al. 2010; Dunn and Jones 2010; McGee
and Thomas 1986). For example, new entrants in nascent markets were found to
start by claiming the market with a sense giving logic characterized by strong
customer focus; followed by demarcating the market, employing a co-optation logic
integrating suppliers and competitors into alliances; and, finally, by trying to control
the market and develop an ownership logic with a focus on competitor elimination
and acquisitions (Santos and Eisenhardt 2009). Obloj et al. (2010) also found the
impact of such DL specifications and development paths to be positively related to
entrepreneurial firm performance. Thus, it can be assumed that the greater the
distance between industries concerning their market characteristics, munificence,
and maturity, the greater the distance between the DLs developed by organizations
within these different industries.
Technology factors include technology intensity, standards, dependence, and
evolution paths (e.g., innovation barriers) (Hitt and Ireland 1987; Ansari et al. 2010;
Pehrsson 2006; Fombrun and Zajac 1987; Ginsberg and Venkatraman 1992; Tripsas
and Gavetti 2000; Brannback and Wiklund 2001; Keil et al. 2008; Lane and
Lubatkin 1998). Thus, organizational competitive advantage and long-term success
depend on technology and technological innovation factors within a firm’s
(dominant) managerial logic. For example, new technologies and new product
development were found to be central elements of the DL of pharmaceutical and
biotechnology firms, which are typically strongly R&D driven (Lane and Lubatkin
1998).
Policy/Regulation is a crucial part of an organization’s task environment (e.g.,
Dill 1958; Duncan 1972; Bourgeois III 1985). Parameters such as regulation,
lobbying intensity, and multilateral public interests and influences are determinants
of specific conditions and mechanisms within the market and competitive space.
The specifications of these parameter values require particular organizational and
managerial capabilities to allow a firm to thrive in the competitive arena, and hence,
significantly affect the characteristics of an evolving (dominant) managerial logic,
i.e. driving the absolute dominance of its policy/regulation-centered elements. (e.g.,
Cote et al. 1999; Fombrun and Zajac 1987; Cho and Hambrick 2006; Dunn and
Jones 2010; Hitt and Ireland 1987; Ansari et al. 2010; DiVito 2012). Policy/
regulation-centered sectors include energy, water supply, healthcare (e.g. pharma/
biotech), environment, infrastructure, transport and mobility, information and
communication, as well as defense (e.g., Cote et al. 1999; Dunn and Jones 2010).
DiVito (2012) recently confirmed the role of this antecedent, having found
significant differences concerning how biotech firms adapt their innovation
strategies to cope with constraints in national institutional environments.
On dominant logic: review and synthesis 43
123
Environmental (e.g., industry) dynamics are constituted by the frequency (or
turbulence), amplitude, and irregularity of changes within the task (and general)
environment of an organization (e.g., Dess and Rasheed 1991; Jurkovich 1974;
Miles et al. 1974; Wholey and Brittain 1989; Boyd et al. 1993; Child 1972;
Hauschild et al. 2011). Different specifications of these constitutional elements
require specific organizational configurations and managerial capabilities. Hence,
environmental dynamics were found to determine the characteristics of a particular
(dominant) managerial logic (e.g., Baum and Wally 2003; Bogner and Barr 2000;
Day and Lord 1992; Gavetti and Levinthal 2000; Lyles and Schwenk 1992;
Nadkarni and Barr 2008; Nadkarni and Narayanan 2007; Ulrich and Wiersema
1989; Reger and Palmer 1996; Sutcliffe and Huber 1998; Obloj et al. 2010; Garg
et al. 2003). Different levels of dynamics require very different managerial logics
and the configuration of this antecedent significantly discriminates the fit of
different logics (e.g., Nadkarni and Barr 2008; Nadkarni and Narayanan 2007;
Hauschild et al. 2011).
National cultures affect the structure of organizations, the motivation of people
within these organizations, and issues people and organizations face within society
(Hofstede 1983). Cultural differences are determined by the regulative, normative,
and cognitive distance of countries (Kostova 1999). Thus, the distance of
organizations’ DLs is considerably influenced by the distance of the elements of
national cultures, that is, the greater the national cultural (i.e., regulative, normative,
and cognitive) distance between two organizational entities, e.g. the corporate
headquarter and its global subsidiaries, the greater the distance (and potential
conflict) between their DLs (e.g., Doz and Prahalad 1986; Vora and Kostova 2007;
Kostova and Roth 2002; Kostova 1999; Palich and Gomez-Mejia 1999; Sirmon and
Lane 2004; Lane and Sirmon 2003; Verbeke 2010; Kogut and Singh 1988; Calori
et al. 1992; Inkpen et al. 2000; Weber and Shenkar 1996; van Oudenhoven and van
der Zee 2002; Collins et al. 2009).
4.3 The DL commonality-performance linkage
After providing an overview of what may determine a certain managerial logic, that
is, what its antecedents across all levels of analysis may be, this section addresses
the discriminating effects of different configurations of this set of antecedents, the
relative dominance of different configurations, the commonality between them, and,
finally, the performance impact of such commonality within the diversified firm.
Within the single business firm (SBF), a particular managerial logic is related to
firm performance according to the fit between its internal and external configuration,
that is, high levels of fit are related to superior performance and vice versa,
increasing the ‘‘absolute dominance’’ of a certain logic over time (e.g., Miller 1993;
Nadkarni and Narayanan 2007; Obloj et al. 2010; Siggelkow 2001, 2002). Thus, for
SBFs, the corporate-view of our framework would be masked.
A multi-business firm (MBF), however, has to orchestrate a portfolio of
businesses, and, consequently—as the corporate-view of our framework illus-
trates—a portfolio of managerial logics, of which the relative dominance may vary
according to the power distribution across the businesses as well as exhibit different
44 T. Franke, D. zu Knyphausen-Aufsess
123
levels of commonality. Following Prahalad and Bettis (1986), scholars continued to
propose a positive relationship between high levels of commonality among
businesses’ managerial logics and corporate performance (e.g., Grant 1988; Palich
and Gomez-Mejia 1999; Lane and Sirmon 2003; Gavetti et al. 2005; Dane and Pratt
2007). Superior corporate performance is presumed to arise from strategic
similarities in administrative structures, processes, and systems (Grant 1988),
superior firm efficiencies (Palich and Gomez-Mejia 1999), appropriate replication of
DL core elements across businesses (Gavetti et al. 2005), and the higher probability
of making good intuitive decisions through a shared domain-relevant scheme (Dane
and Pratt 2007). For example, DL commonality between joint venture parents is
expected to increase joint venture performance moderated by the power relations
between the parents (Guidice and Mero 2007). DL commonality is also assumed to
moderate positively the relationship between related complementary resources and
the effectiveness of value-creating activities in alliances (Sirmon and Lane 2004), to
decrease role conflicts of subsidiary managers in multinational enterprises (MNE)
(Vora and Kostova 2007), and to increase post-merger success with high levels of
desired reverse knowledge transfer, particularly in international mergers and
acquisitions (Verbeke 2010). The proposed positive effects of the commonality of
managerial logics were frequently supported empirically, for example, for MBF
performance (Ilinitch and Zeithaml 1995; D’Aveni et al. 2004; Pehrsson 2006; Goll
and Sambharya 1995; Cote et al. 1999), as well as for post-merger and acquisition
performance (e.g., Datta 1991; Chatterjee et al. 1992; Weber and Camerer 2003;
Weber and Shenkar 1996; Ramaswamy 1997; Inkpen et al. 2000). In particular, high
levels of commonality between managerial logics allow for higher levels of control
and faster integration (Bijlsma-Frankema 2004), whereas low levels of DL
commonality were related to decreasing innovation capabilities (Paruchuri et al.
2006; Puranam et al. 2006). Moreover, Lyles and Reger (1993) provided evidence
of the impact of high vs. low DL commonality and the respective low vs. high level
of joint venture autonomy on joint venture performance. Kostova and Roth (2002)
provided evidence of the impact of logic commonality on coherent and effective
management in MNEs.
Moreover, a positive (DL) commonality-performance relationship is assumed to
be moderated by the managerial capability to handle multiple DLs (Bettis and
Prahalad 1995), as well as the ability to integrate similar DLs into a coherent system
by linking an organization’s macro-logic with its micro-logics (Lane and Sirmon
2003). For example, Calori et al. (1992) found support for the relevance of cognitive
complexity to predicting managers’ ability to manage effectively strategic variety
and handle multiple DLs, whereas others refer to the importance of managerial
capabilities to integrate and exploit synergies in order to achieve superior
performance using the high levels of commonality between the managerial logics
of different lines of businesses (e.g., Bijlsma-Frankema 2004; Pehrsson 2006;
D’Aveni et al. 2004).
However, most of these works employed a fragmentary and inconsistent
operationalization of DL, taking only a very limited number of antecedents into
consideration. For example, Ilinitch and Zeithaml (1995) focus on a firm’s position
in the value chain to operationalize strategic relatedness, while others focus on
On dominant logic: review and synthesis 45
123
national cultural differences and facets of international management (e.g., Inkpen
et al. 2000; Kostova and Roth 2002) or corporate cultural elements (e.g., Chatterjee
et al. 1992; Weber and Shenkar 1996; Weber and Camerer 2003).
Table 2 summarizes the conceptual and empirical findings.
4.4 The dynamics of DL
The literature on the dynamics of (dominant) managerial logics refers to what we
termed absolute dominance that is characterized by either (1) reinforcement and
stabilization or (2) break-up and transformation. Both development paths are
moderated by the presence of anthropogenic cognitive biases and firm-specific
contextual factors (i.e., most prominent environmental dynamics). As illustrated in
our framework (Fig. 2), these moderated reinforcement or break-up processes may
affect the current DL directly (single loop learning) or indirectly via the
specification of the antecedents of DL and a (re-)configuration of an organization’s
internal elements (double loop learning) respectively (see, e.g., Argyris 1976).
4.4.1 Reinforcement and stabilization
Reinforcement and stabilization of managerial logics have been conceptualized as a
function of time and success. That is, the more successful organizations are over long
periods of time, the more their configuration and managerial logic become dominant
and rigid (Bettis and Prahalad 1995; Miller 1993; Prahalad 2004, 2010; Dane and Pratt
2007). This relationship appears simple and is backed by strong empirical evidence
(e.g., Bateman and Zeithaml 1989; Tripsas and Gavetti 2000; Noda and Collis 2001;
Siggelkow 2001; Weinstein and Standifird 2010). The processes of reinforcement and
stabilization carry the risk of decreasing flexibility and engendering inertia, myopia,
and path-dependent learning processes that block adaptation to structural changes in
the environment (e.g., Miller 1993; Sirmon et al. 2007; Levinthal and March 1993;
Bettis and Prahalad 1995; Prahalad 2004, 2010). This may cause organizational
decline due to slow and inadequate responses to environmental changes and strategic
issues, that is, the application of an inappropriate DL (e.g., Bettis and Prahalad 1995;
Prahalad 2004, 2010). Thus, long-term competitiveness and success depend on
managers’ willingness and ability to challenge continuously the appropriateness of
their DL and modify it, or even unlearn the old and implement a new DL if necessary
(e.g., Hamel and Prahalad 1993; Prahalad 2004, 2010; Bettis and Prahalad 1995; Lei
et al. 1996). This relationship amplifies in high-velocity environments, as highly
flexible schemata were found to lead to superior performance. In contrast, the high
costs of change and hastily negated wisdom in stable environments may derogate
performance (Gavetti and Levinthal 2000; Siggelkow 2002; Garg et al. 2003;
Nadkarni and Barr 2008; Nadkarni and Narayanan 2007).
4.4.2 Breakup and transformation
Empirical research into the dynamics of DL focused on elucidating the processes of
breakup and transformation of a DL and the barriers to adaptation and unlearning on
46 T. Franke, D. zu Knyphausen-Aufsess
123
Table 2 The dominant logic commonality-performance linkage
Article Research/study design Findings on the relationship between
DL commonality and performance
Prahalad and
Bettis (1986)
Conceptual work Strategic variety in the multi-business
firm is limited by managerial
capabilities for handling multiple
DLs. Hidden cost of diversity can be
caused by (a) inadequate influence
on the business units or (b) slow and
inadequate responses to
environmental changes (e.g., crises)
Grant (1988) Conceptual work Focus should be on strategic similarity
rather than on business-level
similarity as transaction costs for
synergies hardly pay off
Ginsberg (1990) Conceptual work The economic benefits of creativity
and diversity have to be balanced
with the costs of collaboration and
relatedness
Palich and
Gomez-Mejia
(1999)
Conceptual work DL commonality facilitates superior
firm efficiencies, e.g., in strategy
formulation, implementation, and
control, and, in turn, leads to
superior corporate performance
Lane and Sirmon
(2003)
Conceptual work Meso-logic serves as a link between
firms’ macro-logic (e.g., corporate
DL) and micro-logic(s) (e.g.,
business or functional logic), and
serves to ensure commonality across
businesses. A high degree of
realized commonality (vs. intended
commonality) increases
performance (corp. and BU-level)
and other relevant processes, e.g.,
integration success
Sirmon and Lane
(2004)
Conceptual work Differences in international alliance
partners’ DL, as determined by
national and professional cultures,
negatively moderate the relationship
between related complementary
resources and the effectiveness of
the alliance’s value-creating
activities
Gavetti et al.
(2005)
Conceptual work High levels of DL commonality
among businesses in the diversified
firm lead to superior performance as
DL can be replicated (via analogical
reasoning) throughout the portfolio
Dane and Pratt
(2007)
Conceptual work DL commonality across the portfolio
ensures the appropriateness of a
learned, complex domain-relevant
schema (DL) that leads to a higher
probability of making effective
intuitive decisions
On dominant logic: review and synthesis 47
123
Table 2 continued
Article Research/study design Findings on the relationship between
DL commonality and performance
Guidice and
Mero (2007)
Conceptual work DL commonality between JV parents
is positively related to JV
performance and moderated
(strongly) by power relations
between parents
Vora and
Kostova (2007)
Conceptual work DL commonality facilitates a nested
‘‘dual organizational identification’’
and, hence, decreases role conflicts
of subunits’ managers
Alain Verbeke
(2010)
Conceptual work The desired level of reverse
knowledge transfer (high vs. low)
and the (ex post) DL commonality
(high vs. low distance) determine
post-merger success, particularly in
international M&As as the potential
distance between DLs increases in
cross-border M&As
Datta (1991) Survey data from 173 U.S.-based
manufacturing and mining firms
Low DL commonality has a negative
impact on performance in
acquisitions characterized by both
high and low levels of post-
acquisition integration
Chatterjee et al.
(1992)
Survey and archival data from 52 U.S. firms
(regressions on performance for 30 firms)
Strong inverse relationship is seen
between low DL commonality
(determined by cultural differences)
and shareholder gains.
Overemphasis on controlling newly
acquired firms by imposing the
acquirers’ DL may be detrimental
Lyles and Reger
(1993)
Longitudinal case study (1946–1978) of a
joint venture between U.S.- and EU-based
industry tooling manufactures
Low levels of DL commonality
between JV partners require high
degree of (JV) autonomy
Calori et al.
(1992)
26 Case studies involving CEOs of UK- and
France-based firms from the brewing, car,
retail banking, and book publishing
industries
Cognitive complexity is a predictor of
managers’ ability to effectively
manage strategic variety, and,
hence, handle multiple DLs
Goll and
Sambharya
(1995)
Survey data from 91 U.S. manufacturing
firms
Higher levels of DL commonality
facilitate a ‘‘meta-logic’’ in
diversified firms at the corporate
level with different dominant logics
at the business level
Ilinitch and
Zeithaml
(1995)
Archival data from 1981 to 1985 from U.S.
Fortune 100 companies in industries such
as forest products (n = 144), oil
(n = 116), and highly diversified firms
(n = 145)
Diversified firms should operate in
lines of business that are
managerially similar (meaning
businesses that show high levels of
DL commonality) in order to
minimize complexity and apply core
skills appropriately to realize
superior performance
48 T. Franke, D. zu Knyphausen-Aufsess
123
Table 2 continued
Article Research/study design Findings on the relationship between
DL commonality and performance
Weber and
Shenkar (1996)
Survey data from 52 mergers of U.S.-based
firms comparing international and
domestic mergers
Synergies (through high fit) resulting
in outperforming outcomes in
horizontal (‘‘related’’) mergers may
be explained by clashes caused by
low levels of DL commonality as
problems are in the case of misfit
(same vice versa for conglomerate
mergers)
Ramaswamy
(1997)
Archival data (1984–1990) from 46 mergers
(comprising 92 banks) in the U.S. banking
industry
High levels of DL commonality
between bidder and target firms
have a positive impact on post-
merger performance. Differences
between business models (e.g.,
product-market combinations and
revenue models of wholesale vs.
retail banks) largely account for
strategic dissimilarities
Inkpen et al.
(2000)
6 longitudinal cases (1990–1999) of EU
acquirers that made acquisitions in U.S.
IT sector (Silicon Valley), and
comparison with CISCO
European firms have struggled with
their Silicon Valley-type
acquisitions and, in particular, with
the integration and governance of
the acquired firms. Failure was
mainly caused by national and
corporate cultural differences,
reflecting significant differences in
DLs
Kostova and
Roth (2002)
Survey data from 534 managers and 3,238
non-managerial employees in 104
subsidiary locations from 10 countries
DL commonality (reflected by the
institutional distance) between host/
sub and parent country and the
relational context within the MNC
(dependence, trust, and identity)
have an influence on organizational
coherence, and hence, for example,
effective diffusion of practices
van Oudenhoven
and van der
Zee (2002)
Survey data from 78 managers representing
a diverse set of countries
High levels of DL commonality and
the learning ability of organizations
(handling of multiple DLs and
mutual integration of such) are
critical to success in international
cooperation
Weber and
Camerer
(2003)
Laboratory experiment incorporating five
sessions of 20 rounds with two pairs of
subjects
Low levels of DL commonality lead
to decreased performance in
mergers. In addition, each group
(firm) blames the other for that
decrease
Bijlsma-
Frankema
(2004)
Interview data from nine managers of a
Dutch multinational engineering company
about the success and failure factors of
(post-) acquisition processes
Higher levels of DL commonality
allow for higher levels of control
and faster integration in post-merger
integration processes (without
destroying value)
On dominant logic: review and synthesis 49
123
different levels of analysis. In general, changes in DL are likely to occur due to the
detection of events (environmental/structural changes) that are perceived to threaten
the central goals or survival of the firm (e.g., Fahey and Narayanan 1986; Jackson
and Dutton 1988; Barr and Huff 1997; Gilbert 2005), and finally, due to phases of
poor performance or crises (e.g., Bateman and Zeithaml 1989; Lant and Milliken
1992; Cote et al. 1999; Siggelkow 2001). This relationship was termed threat bias,
and refers to the fact that managers are more sensitive to threat frames than to
opportunity frames (Jackson and Dutton 1988; Fahey and Narayanan 1986). Thus,
opportunity-framed environmental change is likely to result in ‘‘fit-conserving
change’’, that is, ‘‘the environmental change has left the internal logic of the firm’s
system of choices intact while decreasing the appropriateness of the system as a
whole’’ (Siggelkow 2001, p. 841). Managerial reaction to such changes is very
difficult as it requires managers to perceive the systemic characteristics of the
needed changes and be willing to implement changes on a broad scale that may
contradict their past decisions. Threats that trigger the breakup and transformation
of a DL were radical changes in technology (Ginsberg and Venkatraman 1992;
Brannback and Wiklund 2001), industry transformation and (de)regulation (Barr
and Huff 1997; Barr et al. 1992; Cho and Hambrick 2006). Organizational and
resource dependence (Milliken 1990), as well as competitive posture (Ginsberg and
Table 2 continued
Article Research/study design Findings on the relationship between
DL commonality and performance
D’Aveni et al.
(2004)
Archival data from 3,185 U.S. firms—from
261 manufacturing and 14 non-
manufacturing categories (SIC 4 digit)
The more closely a business unit (BU)
is aligned with its parent’s dominant
logic, that is, the higher the DL
commonality between the BU and
the center, the better it performs and
the lower its costs relative to
competitor BUs of the focal BU’s
industry
Paruchuri et al.
(2006)
Archival (patent application) data from
3,933 inventors from M&As within the
U.S. pharmaceutical industry between
1979 and 1994
Low levels of DL commonality and
high levels of integration after a
merger lead to a decrease of
innovation capabilities in the
acquired firm and may lead to an
overall performance decrease
Pehrsson (2006) Survey data from 124 Swedish
manufacturing firms
High levels of DL commonality
across the business portfolio have a
positive impact on performance in
(intended) related diversified firms
Puranam et al.
(2006)
Archival data (1988–1998) of 207
acquisitions from 49 acquirers from the
U.S. information technology hardware
industry
Disruptions due to loss of autonomy
as a result of structural integration
and DL imposition are particularly
severe at early stages of the acquired
firm’s innovation trajectory (in
which exploration is more important
than exploitation)
50 T. Franke, D. zu Knyphausen-Aufsess
123
Venkatraman 1992), increase the momentum for change as they increase threat
perception. However, Gilbert (2005) found that subcategories of resource and
routine rigidity are discrete and have different causal mechanisms.
Threat perception releases constraints on resource rigidity (single loop learning)
while amplifying problems with routine rigidity (double loop learning) (Argyris
1976). This is in line with Milliken (1990), who found a significant impact of the
perceived threats on releasing resource rigidity but could explain only a small
amount of the variance in certainty regarding how to respond to the changes.
Structural autonomy as well as outside influence on decisions and opportunity
framing helps to decouple the effects of cognition on the different types of inertia
(Gilbert 2005, 2006; Bateman and Zeithaml 1989; Houghton et al. 1994), because
the interpretation of controllability serves as an antecedent of strategic action
(Thomas et al. 1993). Hence, a separated structure with high levels of autonomy
allows the threat perception to overcome resource rigidity in a parent company,
whereas opportunity perception relaxes routine rigidity in a new venture or a line of
business (Gilbert 2005, 2006).
Besides the threat bias, the self-serving attribution bias—blaming the environ-
ment for poor performance while attributing superior performance to internal
management capabilities and initiatives—was found to be a predominant cognitive
barrier to DL breakup and transformation (Clapham and Schwenk 1991; Barr et al.
1992; Lant and Milliken 1992; Hodgkinson 1997). Moreover, these cognitive biases
may be encouraged by organizational processes and systems, for example, incentive
and reward systems (Levinthal and March 1993; Jackson and Dutton 1988), that
channel and distribute the attention of their decision makers (Ocasio 1997), and/or
either environmental munificence (Barr et al. 1992) or the presence of well-known
threat stimuli that blocks new information (Hodgkinson 1997).
Moreover, a greater differentiation (Dutton and Duncan 1987a) or ‘‘bandwidth’’
(von Krogh et al. 2000) of an organization’s DL was found to support the reduction
of said biases. This refers to a more complex belief structure with a greater coverage
and lower consensus regarding the strategic array of issues incorporated that in turn,
facilitates organizational flexibility, adaptability, and momentum for change
(Dutton and Duncan 1987a; Lyles and Schwenk 1992). Outward-oriented scanning
efforts and environmental awareness as well as TMT diversity, its size and member
turnover, and TMT compensation that favor strategic change were found to
encourage these organizational characteristics (e.g., Lant and Milliken 1992;
Thomas et al. 1993; Tripsas and Gavetti 2000; Noda and Collis 2001; Cho and
Hambrick 2006; Houghton et al. 1994; Panagiotou 2006). Furthermore, internal and
external experimentation helps managers and organizations to develop cognizance
of their future capability and logic needs, and adapt to environmental change
accordingly (e.g., Barr et al. 1992; Lei et al. 1996; Keil et al. 2008; Farjoun 2008).
However, purposeful organizational unlearning and the search for a new DL are
highly complex processes and accompanied by the risks of under- and over-
identification that cause time lags and impede the search for an appropriate DL as a
whole (Fahey and Narayanan 1989; de Holan and Phillips 2004). Hence, effective
change in DL remains a major managerial challenge.
On dominant logic: review and synthesis 51
123
Finally, an organization’s capability to identify and react to environmental
changes that require the adaptation or unlearning and relearning of a certain DL is of
particular relevance in high-velocity environments (Day and Lord 1992; Reger and
Palmer 1996; Ulrich and Wiersema 1989; Bogner and Barr 2000; Kuratko and
Audretsch 2009; Obloj et al. 2010). This is essential, as highly flexible schemata and
logics were found to lead to superior performance in high-velocity environments,
while imposing costs of change and hastily negated wisdom in stable environments
will negatively impact performance (Gavetti and Levinthal 2000; Siggelkow 2002;
Garg et al. 2003; Nadkarni and Barr 2008; Nadkarni and Narayanan 2007).
However, as organizations and industries mature over time, DLs might have to
become relatively stable while remaining sensitive to disruptive changes in the
competitive landscape (Obloj et al. 2010).
In summary, maintaining a continuous fit between an organization’s DL and its
environment is a necessary condition for high performance. Therefore, fit-
destroying change, that is, lower performance and threat perception, provokes a
straightforward internal reconfiguration to achieve a new fit between a firm’s set of
choices and its environment and will lead to quick reaction and adaptation. In
contrast, in the case of fit-conserving change, no obvious misfits can be detected
because the current DL remains intact (Siggelkow 2001). However, the concept of
DL is characterized by equifinality, as the fit of a specific DL and its respective
environment at a given point in time always indicates an idiosyncratic local
optimum within the performance landscape that reflects the firm’s specific internal
and external fit (Bettis and Prahalad 1995; Siggelkow 2001). This opens up the
solution space for many alternative scenarios of internal and external fit leading to
different performance levels. How to navigate such landscapes and find the peaks
still has to be investigated in large part.
5 Concluding remarks and directions for future research
The purpose of this review was to provide a comprehensive overview of the existing
DL research and to integrate the continuously growing, large, and fragmented body
of literature that currently prevents scholars from purposefully applying and
enhancing the concept (e.g., Bettis and Prahalad 1995; Grant 1988; Stimpert and
Duhaime 1997; von Krogh and Roos 1996; Verbeke 2010). We summarize the
theoretical extensions that became apparent from our integration efforts, that is, an
enhanced conceptualization and definition of the DL concept itself. Salient gaps and
fruitful avenues for future research efforts are identified and discussed below,
providing further implications of our research.
First, in introducing the distinction between absolute and relative dominance we
explain not only why the concept of DL in general is claimed to be ‘‘successfully’’
applied on the business level (e.g., Obloj et al. 2010; Bettis and Prahalad 1995) as
well as on the corporate level (e.g. Cote et al. 1999; Lampel and Shamsie 2000;
Prahalad and Bettis 1986), but we account for past theoretical inconsistencies and
confusions when trying to define what a DL actually may be. We address the
substantial lack of a common conceptualization, its definition, and clear distinction
52 T. Franke, D. zu Knyphausen-Aufsess
123
from other concepts in an effort to prevent such inconsistencies in future works; we
do this by defining a ‘‘DL’’ (on the corporate level) as a shared (i.e., organizational)
mental template that has reached a certain level of maturity and stability (i.e.,
absolute dominance) and is highly (relatively) dominant across a defined set of
businesses of the corporate portfolio, thus dominating the logics of the businesses
within this set. Besides clarifying the DL concept itself by means of our
conceptualization and definition, we make a clear distinction from other related
concepts (e.g., managerial and organizational cognition, mental models or schemas)
in order to prevent the confusion of future scholarship with regard to theory
development and discussions of applicability. However, the lack of a consensus on
how a DL should be operationalized and measured calls for a detailed review of the
conduct of empirical DL research and should focus on these issues, by contrasting
the different operationalizations and measurement instruments on different levels of
analysis. The three areas of DL research identified by our review [i.e., themes (1) to
(3)] provide a starting point to guide such important efforts.
Second, in keeping with the structure of our research framework (see Fig. 2),
research on DL included investigating different antecedents of the formation/
adaptation of managerial logics at a certain level of analysis. However, studying
managerial logics and its antecedents and organizational consequences requires
considering the interdependencies at all levels of analysis (Walsh 1995). Moreover,
research on managerial logics is all about distance of configurations and the drivers
of that distance. Thus, future research on antecedents of DL should investigate the
relative impact of these antecedents concerning the distance between DL
configurations. This starts with questions on discriminating patterns that emerge
from the discussion on antecedents, for example, do business models with a novelty
theme lead to (and demand) significantly different managerial logics than those with
an efficiency theme (e.g., Zott and Amit 2010), or do dynamic environments shape a
discriminating, different logic compared to that of stable ones (e.g., Nadkarni and
Narayanan 2007)? We would obviously assume ‘‘yes’’ from the perspective of a
single level of analysis, but how do probable interdependencies between both levels
of analysis (i.e., firm level and environmental level) influence the evolving logic of a
firm? Do different business model patterns overrule different industry dynamic
patterns concerning the distance of the evolving managerial logic or vice versa?
Thus, a major area of future research will involve identifying the vital few out of the
trivial many antecedents at all levels of analysis that drive the distance (or fit) of
managerial logics. A main emphasis of future research efforts should be on the
antecedents of DL that are subject to managerial influence and control—such as the
business model pattern—in order to contribute equally to management research and
practice (Markides 2007). Moreover, the indirect rather than the direct feedback
effects of the dynamics of DL, that is, the evolution of its absolute dominance, on its
antecedents and the (re-)configuration of an organization’s internal elements
(double loop learning) remain an intriguing area for future research (see future
research on dynamics of DL for details on the evolution of the absolute dominance
of logics).
Future research should also focus on the intersection of the antecedents of DL
and the DL-commonality-performance linkage, that is, investigating discriminating
On dominant logic: review and synthesis 53
123
DL configurations. As the source of a DL’s success does not lie in the specification
of each of its elements, but rather in the configuration and fit of its internal and
external elements (e.g., Miller 1993, 1996; Siggelkow 2001, 2002; Doty et al. 1993),
scholars could contribute by identifying certain discriminating configuration
patterns and estimating the distance between them. This would be a first step
toward the hitherto missing predictive power of DL research, and in turn be helpful
to managers who face the question of integration or separation when conducting
diversification moves or when thinking of different governance structures for an
alliance or joint venture (e.g., Aggarwal et al. 2011).
This empirical challenge could, for example, be approached by employing
repertory grid methodology to derive the most discriminating antecedents (e.g.,
Ginsberg 1989, 1990), and qualitative comparative analysis to derive discriminating
DL patterns and estimate their distance (e.g., Fiss 2007).
Furthermore, concerning the relative dominance of managerial logics, the
question of how DLs diffuse across businesses within MBFs and/or across country
borders within MNEs is of significant scholarly and managerial importance.
Coherent corporate management logic, linking the corporate and business levels,
provides guidance for the different businesses and subsidiaries, and ensures strategic
alignment between the businesses, subunits, and headquarters (Lampel and Shamsie
2000; Lane and Sirmon 2003). Superior business level performance is related to an
alignment of corporate and business level logics concerning decentralized business
conduct (Lampel and Shamsie 2000). However, very little is known about the
antecedents, processes and mechanisms of DL diffusion though these are central
managerial issues. Existing research refers to the transfer of practices within MNEs
(Kostova 1999; Kostova and Roth 2002) and issues concerning the dual
organizational identification of subsidiary managers in MNEs (Vora and Kostova
2007). The context of MNEs, however, is limited to the impact of national and
cultural differences on diffusion. With respect to MBFs, differences in strategic
orientation among business units and divergent business models, as well as
environmental dynamics, are likely to increase the complexity of the relationships
and mechanisms. Furthermore, antecedents of DL are multidimensional and the
diffusion mechanisms of DL may differ from what is known of the diffusion of
practices. Moreover, we found evidence for the ‘‘role of hierarchy,’’ that is, at
different management levels different signals are perceived and interpreted
differently, which in turn may seriously impair a coherent corporate strategy and
its successful implementation (Lane and Sirmon 2003; Murtha et al. 1998; Tripsas
and Gavetti 2000). This issue must be resolved by aligning and linking the different
logics to avoid diverging strategic action and detrimental effects on performance at
all levels. Hence, the ‘‘role of hierarchy’’ clearly merits further scholarly attention.
Multi-level studies investigating the coherence and the respective absolute
dominance of managerial logics (or at least common elements of such) on different
management levels in comparison with the aggregated repertory grids on each level
(e.g., Ginsberg 1990, 1989) could be a first step into this important research area.
Concerning the dynamics of DL (i.e., absolute dominance), empirical evidence
underlines the dangers of inertia that originate from a stable DL and stresses the
biases and barriers that block strategic change. Moreover, research efforts on
54 T. Franke, D. zu Knyphausen-Aufsess
123
breakup and transformation are limited to reactive change as a response to
performance decrease or even crisis, but knowledge of the processes and
determinants for purposeful unlearning and (re)learning that adopt an opportunity-
rather than a threat-driven approach toward DL adaptation remains vague at best
(Fahey and Narayanan 1989; de Holan and Phillips 2004). What we termed absolute
dominance has to be understood in greater detail in order to ‘‘manage’’ dominance
purposefully or at least be aware of the underlying processes and so avoid escalating
commitment to a losing course of action (e.g., Ross and Staw 1993). Future research
should address the process of proactive and purposeful unlearning and their
antecedents, to enable scholars to provide meaningful advice to managers on
matters such as how to set-up their organizational structure, on processes and
routines to recognize the signs of a need for strategic change early, and on how to
promote these changes throughout the organization. As velocity and volatility
increase throughout all industries (e.g., Castrogiovanni 2002) and appropriate
strategic innovation of business models (e.g., Markides 2006; Charitou and
Markides 2003; Gilbert and Bower 2002; Dewald and Bowen 2010) as well as
complementary management innovations (e.g., Birkinshaw et al. 2008) are more
important than ever, it is crucial that the role and pitfalls accompanying the inertial
power of an established DL are understood by the world-leading incumbents to
preserve and strengthen their current market positions. Intriguing perspectives are
offered by Karl Weick and his works on sense-making vs. schemas in reliable vs.
efficient organizations (e.g., Vogus et al. 2010; Weick 2008; Weick 2011). Learning
from reliable organizations and incorporating processes of continuous sense-making
rather than establishing schemas (i.e., managerial logics) might be a pathway to
successful adaptation for organizations operating in particularly dynamic environ-
ments that would keep absolute dominance below a certain level in order to allow
opportunity-driven adaptation when such opportunities are sensed.
Finally, the co-evolution and co-existence of multiple (conflicting) logics
emerged as an important topic for future research efforts. Though Prahalad and
Bettis (1986) conceptualize a sectoral structure for conglomerate diversified firms
with a distinct coherent DL within each sector, the literature still remains to be
empirically validated concerning this question. Nevertheless, evidence was found for
the co-evolution and persistence of multiple (conflicting) institutional and profes-
sional logics (Purdy and Gray 2009; Dunn and Jones 2010). Conditions supporting
the institutionalization of multiple logics in this field were (1) the field character-
istics, such as the emerging nature of a field, the low degree of urgency, and its lack
of unified goals; (2) multiple local contexts; (3) the presence of multiple resource
pools facilitating the persistence of different logics through respectively different
funding schemes; (4) resistance from existing institutions; and, finally, (5) the lack of
field-level regulation (Purdy and Gray 2009). These first empirical insights into the
complex arena of co-evolution and co-existence of multiple DLs provide a starting
point for further theory-building and testing within the organizational field.
A great methodological challenge for those researching the dynamics of DL is
the need for at least medium-sized comparative longitudinal data. Again, qualitative
comparative analyses of primary and secondary data provide a promising
methodological approach for future research efforts in this field.
On dominant logic: review and synthesis 55
123
Drawing on 25 years of DL research, our review provides a comprehensive
overview of these efforts, and serves as a starting point for purposeful theoretical
elaboration and empirical application of the concept. By providing such a
cornerstone, we hope to revive the scholarly dialogue on the concept of ‘‘Dominant
Logic’’ and encourage future research.
Appendix 1
See Table 3.
Table 3 Example of identification of search terms and database search
Step 0 ‘‘Quick search’’ for first set of appropriate search terms
Search area Dominant logic
Search terms [AB (‘‘dominant logic’’ OR ‘‘dominant management logic’’)]
not [AB (‘‘service-dominant logic’’ OR ‘‘service’’ OR
‘‘marketing’’)] and [SU (Strategic OR Management OR
Business)]
No. of articles found 34
Step 1 Broad search
Step 1.1 Broad search concerning dominant logic and relevant
synonyms or neighbored concepts (derived from ‘‘quick
search’’ findings)
Search area Dominant logic, (shared) mental models, etc.
Search terms AB (‘‘dominant logic’’ OR ‘‘dominant management logic’’
OR ‘‘mental model*’’ OR ‘‘mental map*’’ OR ‘‘cognitive
map*’’ OR ‘‘managerial perception*’’ OR ‘‘mindset*’’ OR
‘‘managerial cognition*’’ OR ‘‘managerial representation*’’
OR ‘‘strategic variety’’ OR ‘‘strategic schema*’’) NOT AB
(‘‘service-dominant logic’’ OR ‘‘service’’ OR ‘‘marketing’’)
OR TI (‘‘dominant logic’’ OR ‘‘dominant management logic’’ OR
‘‘mental model*’’ OR ‘‘mental map*’’ OR ‘‘cognitive map*’’ OR
‘‘managerial perception*’’ OR ‘‘mindset*’’ OR ‘‘managerial
cognition*’’ OR ‘‘managerial representation*’’ OR ‘‘strategic
variety’’ OR ‘‘strategic schema*’’) NOT TI
(‘‘service-dominant logic’’ OR ‘‘service’’ OR ‘‘marketing’’)
No. of articles found 11,145
Step 1.2 Broad search concerning diversification and corporate
management
Search area Diversification and corporate management
Search terms AB (‘‘diverse*’’ OR ‘‘multi business*) OR ‘‘multi business
firm*’’ OR ‘‘corporate strategy’’ OR ‘‘parenting advantage’’
OR ‘‘corporate-level*’’ OR ‘‘business-level*’’ OR
‘‘corporate center*’’ OR ‘‘strategic N2 related*’’) OR TI
(‘‘diverse*’’ OR ‘‘multi business*’’ OR ‘‘multi business
firm*’’ OR ‘‘corporate strategy’’ OR ‘‘parenting advantage’’
OR ‘‘corporate-level*’’ OR ‘‘business-level*’’ OR
‘‘corporate center*’’ OR ‘‘strategic N2 related*’’)
No. of articles found 379,643
56 T. Franke, D. zu Knyphausen-Aufsess
123
Appendix 2
See Table 4.
Table 4 Overview of articles: distribution per journal and impact factors
Journal No. of
articles
Impact
factor
(IF)
5-Year
IF
Cum.
share
(%)
Total
share
(%)
Strategic Management Journal 34 3.344 6.708 26 26.4
Journal of Management Studies 14 2.558 3.485 37 10.9
Academy of Management Journal 12 6.079 7.670 47 9.3
Academy of Management Review 9 6.125 8.211 53 7.0
Organization Science 6 2.575 5.453 58 4.7
Administrative Science Quarterly 5 2.853 6.313 62 3.9
Management Science 4 2.354 4.065 65 3.1
Journal of Management 3 3.08 4.532 67 2.3
Entrepreneurship Theory & Practice 4 1.726 3.327 71 3.1
Table 3 continued
Step 2 Focusing
Step 2.1 Focus search on dominant logic
Search area Dominant logic and relevant synonyms or neighbored
concepts within the strategic management field
AB (‘‘dominant logic’’ OR ‘‘dominant management logic’’
OR ‘‘mental model*’’ OR ‘‘mental map*’’ OR ‘‘cognitive
map*’’ OR ‘‘managerial perception*’’ OR ‘‘mindset*’’ OR
‘‘managerial cognition*’’ OR ‘‘managerial representation*’’
OR ‘‘strategic variety’’ OR ‘‘strategic schema*’’) NOT AB
(‘‘service-dominant logic’’ OR ‘‘service’’ OR ‘‘marketing’’)
OR TI (‘‘dominant logic’’ OR ‘‘dominant management
logic’’ OR ‘‘mental model*’’ OR ‘‘mental map*’’ OR
‘‘cognitive map*’’ OR ‘‘managerial perception*’’ OR
‘‘mindset*’’ OR ‘‘managerial cognition*’’ OR ‘‘managerial
representation*’’ OR ‘‘strategic variety’’ OR ‘‘strategic
schema*’’) NOT TI (‘‘service-dominant logic’’ OR
‘‘service’’ OR ‘‘marketing’’) and SU (strategic
management)
No. of articles found 154
Step 2.1 Intersection of broad searches to provide focus
Search area Search for articles included in step 1.1 and in step 1.2
Search terms n.a. (intersection of search routine 1.1 and search routine 1.2.)
No. of articles found 272
Step 3 Consolidation and adjustment of database search (e.g.,
doublings, false positives, etc.)
No. of articles (from database search)
included for detailed review
173
On dominant logic: review and synthesis 57
123
Appendix 3
See Tables 5 and 6.
Table 4 continued
Journal No. of
articles
Impact
factor
(IF)
5-Year
IF
Cum.
share
(%)
Total
share
(%)
Journal of International Business Studies 3 2.992 5.030 73 2.3
Journal of Organizational Behavior 3 2.441 3.932 75 2.3
British Journal of Management 2 1.839 2.112 77 1.6
Harvard Business Review 2 1.793 2.314 78 1.6
Long Range Planning 2 1.617 1.781 80 1.6
Management Decision 2 0.622 n.a. 81 1.6
Academy of Strategic Management Journal 1 82 0.8
Research Policy 1 2.508 4.242 83 0.8
Academy of Management Executive (Perspective in
Ranking)
1 1.118 1.118 84 0.8
Applied Psychology: An International Review 1 1.811 2.424 84 0.8
California Management Review 1 1.109 2.142 85 0.8
Creativity & Innovation Management 1 n.a. n.a. 86 0.8
Human Resource Management 1 0.729 1.378 87 0.8
International Journal of Innovation Management 1 n.a. n.a. 88 0.8
Human Relations 1 1.372 1.827 88 0.8
Journal of Bioeconomics 1 n.a. n.a. 89 0.8
Journal of Business Research 1 0.943 1.695 90 0.8
Journal of Business Strategy 1 n.a. n.a. 91 0.8
Journal of Management & Governance 1 n.a. n.a. 91 0.8
Journal of Managerial Psychology 1 n.a. n.a. 92 0.8
Journal of Marketing 1 3.598 7.092 93 0.8
Journal of Risk Management in Financial Institutions 1 n.a. n.a. 94 0.8
Knowledge & Process Management 1 n.a. n.a. 95 0.8
Managerial and Decision Economics 1 n.a. n.a. 95 0.8
Organization Studies 1 1.857 2.653 96 0.8
Problems & Perspectives in Management 1 n.a. n.a. 97 0.8
Scandinavian Journal of Management 1 0.765 n.a. 98 0.8
Academy of Management Best Paper Proceedings 3 n.a. n.a. 100 2.3
Total 129 2.312 3.891 n.a. n.a
58 T. Franke, D. zu Knyphausen-Aufsess
123
Table 5 Examples of findings from conceptual research on dominant logic (complete tables incorpo-
rating all 49 articles are available)
Article Theory base Level of analysis Key findings and contribution to dominant
logic research
Hitt and
Ireland
(1987)
Dominant logic/RBV Organizational Drivers of commonalities between
businesses can be (1) product markets,
(2) technology, (3) managerial dominant
logic, and (4) corporate distinctive
competencies
Grant (1988) Dominant logic Organizational Examination of dominant logic not as a
mindset but as a set of specific corporate-
level functions: (1) Allocation of
resources, (2) formulation and
coordination of business-level strategies,
and (3) setting and monitoring
performance targets for BUs. Focus
should be on strategic similarity rather
than on business-level similarity since
transaction costs for synergies hardly
pay off
Hamel and
Prahalad
(1993)
RBV/DC (Managerial
frames)
Individual Managerial frames (e.g., dominant logic)
bind company’s approach to competitive
warfare and determine competitive
outcomes. Long-term competitiveness
depends on managers’ willingness to
continually challenge their frames (to
avoid blinders of dominant logic)
Klimoski and
Mohammed
(1994)
Shared mental models Team Dominant logic can be interpreted as a
team mental model concept that refers to
collective strategic decision making
Bettis and
Prahalad
(1995)
Dominant logic Organizational DL is a local optimum concerning the
adaptation of complex organizations to
their (stable) environments. Changes in
the environment make a DL obsolete and
it has to be unlearned and a new one
learned. This gets harder as such
configurations tighten over time. Firms
need to differentiate between financial
and strategic performance to achieve
long-term success
Prahalad
(2004)
Dominant logic Organizational DL keeps organization on road ahead but
can also act as a blinder, obstructing
peripheral vision and environmental
changes. DL needs to be reassessed
regularly
Tikkanen
et al. (2005)
Managerial cognition Individual DL (as part of managerial cognition)
directly influences the evolution of an
organization’s business model
On dominant logic: review and synthesis 59
123
Table 5 continued
Article Theory base Level of analysis Key findings and contribution to dominant
logic research
Boisot and Li
(2005)
RBV/KBV (dominant
logic as part of
KBV)
Individual (and
organizational)
Dominant logic is construed via epistemic
heterogeneity and, in turn, allows
epistemic heterogeneity among firms to
persist. This leads to competitive
advantage or a debilitating inertia
depending on the appropriateness of the
employed DL for environmental
conditions
Guidice and
Mero (2007)
Dominant logic/
principal-agent and
stewardship theory
Network (joint
venture)
Dominant logic consistency/commonality
of JV parents (agent vs. steward control-
performance logic) is positively related
to JV performance. This relationship is
strongly moderated by the power
relations between parents and is
particularly important for symmetrical
power relations (and weaker for
asymmetrical power relations)
Farjoun
(2008)
Managerial cognition/
reasoning
Individual Besides analogical reasoning, mental
experimentation, and other methods may
play a larger role in invent-ting effective
strategies in novel and complex contexts,
such as procedures for changing and
adding dominant logics as new
businesses are added or significant
environmental changes occur
Kuratko and
Audretsch
(2009)
Dominant logic (and
various)
Organizational An entrepreneurial DL promotes strategic
agility, flexibility, creativity, and
continuous innovation throughout the
firm. The focus of the firm is opportunity
identification, discovery of new sources
of value, and product and process
innovation that will lead to greater
profitability. This focus is translated into
the objectives, strategies, reward
systems, control systems, planning
approaches, structure, etc., of the firm
Verbeke
(2010)
Dominant logic Organizational Social community building and the
balancing of DL integration (unilateral
imposing of acquirer’s routines vs.
mutual adaptation of routines) are both
crucial dimensions in (international)
post-merger success. The desired level of
reverse knowledge transfer (high vs.
low) and the (ex post) DL commonality
(high vs. low distance) determine post-
merger success, particularly in
international M&A as the potential
distance in DL increases in cross-border
M&A
60 T. Franke, D. zu Knyphausen-Aufsess
123
Ta
ble
6E
xam
ple
so
ffi
nd
ing
sfr
om
empir
ical
rese
arch
on
do
min
ant
logic
(co
mp
lete
tab
les
inco
rpo
rati
ng
all
78
arti
cles
are
avai
lab
le)
Art
icle
Th
eory
bas
eR
esea
rch
/stu
dy
des
ign
Ap
pli
edco
nte
xt
Lev
elo
f
anal
ysi
s
Key
fin
din
gs
and
con
trib
uti
on
tod
om
inan
tlo
gic
rese
arch
Wal
sh(1
98
8)
Man
ager
ial
cog
nit
ion
Ex
per
imen
t(s
ort
ing
task
and
case
stud
y
anal
ysi
s)in
vo
lvin
g1
21
mid
-car
eer
man
ager
s
Man
ager
ial
info
rmat
ion
pro
cess
ing
Ind
ivid
ual
Man
ager
s’lo
gic
isb
ased
on
asi
mp
leex
po
sure
effe
ct.
Exposu
reto
the
acti
vit
ies
of
apar
ticu
lar
dep
artm
ent
or
fun
ctio
np
rom
ote
sth
ed
evel
op
men
t
of
ab
elie
fst
ruct
ure
or
vie
wpo
int
(DL
)th
at
syst
emat
ical
lyaf
fect
sin
form
atio
npro
cess
ing
Po
rac
etal
.
(19
89)
(Sh
ared
)
men
tal
mo
del
s
Inte
rvie
ws
and
arch
ival
dat
afr
om
17
firm
s
fro
mS
cott
ish
kn
itw
ear
indu
stry
Str
ateg
icgro
ups
Org
aniz
atio
nal
and
indu
stry
(Sh
ared
)m
enta
lm
od
els
of
stra
teg
ists
det
erm
ine
the
(per
ceiv
ed)
com
pet
itiv
een
vir
on
men
tan
dli
nk
gro
up-l
evel
and
firm
-lev
ello
gic
s.C
og
nit
ive
oli
go
po
lies
are
crea
ted
via
mu
tual
lyd
efin
edse
tso
f
com
pet
ito
rsb
ym
akin
gse
nse
of
the
bu
sin
ess
env
iro
nm
ent.
Pro
du
ct-m
ark
etco
mb
inat
ion
and
val
ue
chai
nat
trib
uti
on
are
the
core
det
erm
inan
ts
of
gro
up
bo
und
arie
s,an
d,
hen
ce,
of
aco
her
ent
DL
emplo
yed
wit
hin
ag
rou
p
Reg
eran
d
Hu
ff(1
99
3)
Man
ager
ial
cog
nit
ion
/
per
cepti
on
Cas
est
udie
sin
volv
ing
23
stra
tegis
tsfr
om
the
U.S
.b
ank
ing
ind
ust
ry
Str
ateg
icg
rou
ps
Ind
ivid
ual
Str
ateg
icg
rou
pd
iscr
imin
atin
gd
imen
sio
ns
are
(‘‘d
esig
np
aram
eter
’’),
bu
sin
ess
mo
del
dim
ensi
on
s
(pro
du
ct-m
ark
et,v
alu
ech
ain,re
ven
ue
mo
del
),an
d
(‘‘c
on
duct
par
amet
er’’
)st
rate
gic
ori
enta
tio
n/i
nte
nt
cate
gori
es
Go
llan
d
Sam
bhar
ya
(19
95)
Con
tin
gen
cy
theo
ry/
do
min
ant
log
ic
Su
rvey
dat
afr
om
91
U.S
.m
anu
fact
uri
ng
firm
s
Div
ersi
fica
tion
Org
aniz
atio
nal
DL
com
monal
ity
wit
hsi
gnifi
cant
effe
cton
firm
per
form
ance
.In
add
itio
n,
on
eca
nco
nce
ptu
aliz
ea
‘‘m
eta-
logic
’’in
div
ersi
fied
firm
sat
the
corp
ora
te
lev
elw
ith
dif
fere
nt
do
min
ant
logic
sat
the
bu
sin
ess
lev
el
On dominant logic: review and synthesis 61
123
Ta
ble
6co
nti
nu
ed
Art
icle
Th
eory
bas
eR
esea
rch
/stu
dy
des
ign
Ap
pli
edco
nte
xt
Lev
elo
f
anal
ysi
s
Key
fin
din
gs
and
con
trib
uti
on
tod
om
inan
tlo
gic
rese
arch
Ho
dg
kin
son
(19
97)
(Sh
ared
)
men
tal
mo
del
s
Su
rvey
dat
afr
om
20
6U
.K.
real
esta
te
firm
s
Org
aniz
atio
nal
chan
ge
Mult
i-le
vel
com
par
e-so
n
Th
reat
per
cep
tio
no
fk
no
wn
stim
uli
(mar
ket
entr
yo
f
big
pla
yer
s)b
lock
edch
ang
eo
fm
enta
lm
od
els
on
all
lev
els
(e.g
.,D
L)
and
adap
tati
on
tog
ener
al
ind
ust
ryd
ow
ntu
rnb
ecau
seth
efi
rms’
do
min
ant
log
icfo
cuse
do
nth
ein
tern
alta
sken
vir
on
men
t—
the
mo
stre
lev
ant
env
iro
nm
ent
acco
rdin
gto
the
ind
ust
ries
’h
isto
ry
Sti
mp
ert
and
Du
hai
me
(19
97)
Man
ager
ial
cog
nit
ion
/
Do
min
ant
log
ic
Su
rvey
dat
afr
om
20
0C
EO
so
fU
.S.
ind
ust
rial
firm
s
Div
ersi
fica
tion
Indiv
idual
Rel
ated
nes
s(f
rom
abeh
avio
ral
and
DL
per
spec
tive)
isa
mult
i-dim
ensi
onal
const
ruct
.M
anag
ers
do
thin
ko
fre
late
dn
ess
inte
rms
of
pro
duct
-mar
ket
sim
ilar
itie
san
dd
iffe
ren
tiat
ion
(ch
arac
teri
zed
by
a
com
mon
emphas
iso
npro
duct
des
ign,
bra
nd
nam
e
pro
duct
s,R
&D
,an
dth
ed
evel
op
men
to
fn
ew
pro
duct
s)ac
ross
thei
rfi
rms’
po
rtfo
lio
so
f
bu
sin
esse
s
Lam
pel
and
Sh
amsi
e
(20
00)
Do
min
ant
log
ic
Lo
ngit
ud
inal
case
stu
dy
of
GE
(19
84–
93
),
anal
yzi
ng
arch
ival
dat
afr
om
70
join
t
ven
ture
s
Join
tv
entu
re
per
form
ance
Net
wo
rk(J
oin
t
ven
ture
s)
Join
tv
entu
res
foll
ow
ing
GE
’sd
om
inan
tlo
gic
con
cern
ing
size
and
sco
pe
of
par
tner
firm
ssh
ow
ed
sign
ifica
ntl
yb
ette
rp
erfo
rman
cean
dlo
ng
er
life
tim
eo
fjo
int
ven
ture
than
tho
sew
ho
sep
atte
rns
wer
eco
ntr
ary
toG
E’s
do
min
ant
logic
(e.g
.,
emer
ged
from
subsi
dia
ryhea
ds
indep
enden
tly)
D’A
ven
i
etal
.(2
00
4)
Do
min
ant
log
ic/R
BV
Arc
hiv
ald
ata
from
3,1
85
U.S
.fi
rms
from
26
1m
anu
fact
uri
ng
and
14
no
n-
man
ufa
cturi
ng
cate
gori
es(S
IC4
dig
it)
Div
ersi
fica
tion
Org
aniz
atio
nal
(bu
sin
ess
un
it)
Th
em
ore
clo
sely
ab
usi
nes
su
nit
isal
ign
edw
ith
its
par
ent’
sd
om
inan
tlo
gic
,th
atis
,th
em
ore
con
gru
ent
itis
,th
eb
ette
rit
per
form
san
dth
elo
wer
its
cost
sre
lati
ve
toco
mp
etit
or
bu
sin
esse
so
fth
e
foca
lb
usi
nes
su
nit
s’in
du
stry
.R
esou
rce
con
gru
ence
refe
rsto
con
gru
ence
inad
ver
tisi
ng
inte
nsi
ty,
R&
Din
ten
sity
,se
llin
gin
ten
sity
,an
d
cap
ital
inte
nsi
ty
62 T. Franke, D. zu Knyphausen-Aufsess
123
Ta
ble
6co
nti
nu
ed
Art
icle
Th
eory
bas
eR
esea
rch
/stu
dy
des
ign
Ap
pli
edco
nte
xt
Lev
elo
f
anal
ysi
s
Key
fin
din
gs
and
con
trib
uti
on
tod
om
inan
tlo
gic
rese
arch
Peh
rsso
n
(20
06)
RB
V/
do
min
ant
log
ic
Su
rvey
dat
afr
om
12
4S
wed
ish
man
ufa
ctu
rin
gfi
rms
Div
ersi
fica
tion
Org
aniz
atio
nal
Busi
nes
sre
late
dnes
s—as
ace
ntr
alan
tece
den
tof
DL
—is
am
ult
i-d
imen
sio
nal
con
stru
ctw
ith
(a)
pro
duct
-mar
ket
attr
ibute
s,(b
)re
sou
rce
attr
ibute
s,an
d(c
)v
alue
chai
nat
trib
ute
s
Nad
kar
ni
and
Nar
ayan
an
(20
07)
(Str
ateg
ic)
sch
emas
Arc
hiv
ald
ata
fro
m1
24
vs.
10
1U
.S.
firm
s
fro
m7
hig
h-
vs.
7lo
w-v
elo
city
ind
ust
ries
Ind
ust
ryv
eloci
ty
and
stra
teg
ic
flex
ibil
ity
Org
aniz
atio
nal
Indust
rycl
ock
spee
dm
oder
ates
the
rela
tionsh
ipof
stra
teg
icsc
hem
as(D
L),
stra
teg
icfl
exib
ilit
y,
and
firm
per
form
ance
.C
om
ple
xit
yo
fst
rate
gic
sch
emas
pro
mo
tes
stra
teg
icfl
exib
ilit
yan
d,
hen
ce,
succ
ess
infa
st-c
lock
spee
din
du
stri
es,
wh
erea
sth
e
focu
sof
stra
tegic
schem
asfo
ster
sst
rate
gic
per
sist
ence
,w
hic
his
effe
ctiv
ein
slow
-clo
cksp
eed
ind
ust
ries
Pu
rdy
and
Gra
y
(20
09)
Do
min
ant
log
ic/
Inst
ituti
on
al
dif
fusi
on
22
-Yea
rlo
ng
itu
din
alca
sest
ud
ies
of
35
U.S
.st
ate
offi
ces
of
dis
pu
tere
solu
tio
n
(arc
hiv
al1
98
2–
200
4,
inte
rvie
ws
19
92
–1
99
4,
surv
ey1
99
8)
Dif
fusi
on
and
co-e
xis
ten
ceo
f
do
min
ant
log
ic(s
)
Inst
itu
tio
nal
fiel
d
Inco
ntr
ast
tost
andar
din
stit
uti
on
ald
iffu
sio
nm
od
els
and
report
sof
how
confl
icti
ng
alte
rnat
ive
logic
s
gra
du
ally
giv
ew
ayto
on
ed
om
inan
tlo
gic
that
is
dif
fuse
d(p
arti
cula
rly
inm
ature
fiel
ds)
,th
edat
a
pro
vid
esev
iden
ceof
the
dif
fusi
on
and
per
sist
ence
of
mult
iple
(con
flic
tin
g)
logic
s.S
erv
ice/
val
ue
pro
posi
tion
(leg
alv
s.so
cial
inex
amp
le)
are
pri
mar
yan
tece
den
tsfo
rD
Lfo
rmat
ion
Ob
loj
etal
.
(20
10)
Do
min
ant
log
ic/R
BV
Surv
eydat
afr
om
98
Poli
shen
trep
reneu
rial
firm
s
Entr
epre
neu
rship
Org
aniz
atio
nal
Inen
trep
reneu
rial
firm
s(h
igh-v
eloci
tyen
vir
onm
ent)
aD
Lfo
cusi
ng
on
(1)
op
port
un
ity
seek
ing
ori
enta
tio
n,
(2)
hig
hle
vel
of
pro
acti
ven
ess,
(3)
hig
her
abil
ity
of
lear
nin
g(f
rom
fail
ure
and
succ
ess)
,an
d(4
)lo
wle
vel
so
fco
difi
cati
on
of
rou
tin
esle
ads
tosu
per
ior
per
form
ance
DL
can
be
seen
asan
inta
ng
ible
reso
urc
e
On dominant logic: review and synthesis 63
123
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