The purpose of this essay is to analyse five journals of management and business studies to develop an understanding of the factors, which influence the managers while taking business decisions. The essay will discuss about five major factors as descripted in the journals, such as organisational governance, environmental forces of the market, business risks, organizational practices and diversity, as well as how these factors control the firms’ performance. The essay has been framed in a form of annotated bibliography and analysis will be done in order to find out new theories on business practices that are influencing the management of the companies to take pragmatic decisions.
Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go?. Journal of Management, 43(1), 200-227.doi/10.1177/0149206316675927.
According to the authors, management scholars have developed the concept of business model or structure as a tool of innovation. Organisations practice various business structure to discuss and develop strategic opportunities. BMI (business model innovation) has become an integral part of management research and it has gained immense popularity as well among business practitioners. With the help of several business literature the utility of a particular business structure or model has been evaluated here. This theoretical model works as backbone behind the process of decision-making rather than a sequence of levels, which are needed to follow before delivering opinion. Under a certain organisational structure, initial legitimacy of technological factors are low. However, managers have to be aware of the limitations and seek for opportunities to make the best use of the structure. Such evolution in organizational structure enables them to handle strategies, e-commerce and technological issues. Innovation of business model indicates new creative ideas of innovation, which add dimensions to the prior practiced traditional methods of business process and implementing innovative strategies. The conclusion has been drawn on the statement that during the last twenty years business model innovation has gained relevance in macro management business practices. In order to make the BMI literature advanced, it has been proposed here that concept should be adopted from the literature of innovation and complex organization system. The concept will be able to deliver an insight of managerial difficulties and depending on the challenges, the literature of BMI will provide solutions to improve. The central concentration should be on gaining clear perception of BMI, so that practitioners can implement the theory with an expectation of positive outcome.
Schilke, O., 2014. On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism. Strategic management journal, 35(2), pp.179-203, doi/abs/10.1002/smj.2099.
According to the authors of the journal, the turbulent business environment has a great role to play in the process of gaining competitive advantage in the market for a company. The ever-changing nature of business environment increase the capabilities of the firm to sustain in the midst of complications. The link between dynamic capabilities of the firm and market advantage is likely to be the strongest under moderate intensity of dynamism yet it is weak when dynamism is lower or higher than that. Evidences have been collected from 279 firms to justify the previously mentioned fact. The study helps to recognise the fact that dynamic capabilities should not be considered as universal as the nature of the entire business scenario is changing gradually. The research has established the important role of environmental dynamism in the relationship between changing capabilities and competitive advantage in the market. Capabilities can be increased by producing new product, improving technological aspects and marketing strategies. In order to understand all the mechanism, influencing capabilities distinctly further research is necessary. In the addition, the study did not choose a big picture, rather consider a ‘narrow definition’ of experienced based dynamic capabilities and refused to consider flexible norms of organizational change. However, the findings indicates that ever-changing capabilities have more complex role to play in decision making of the organisation. It can be said, irrespective of the presence of positive or negative external factors, if the firm is capable of changing its potential then automatically the competitive advantage will be increased.
Brustbauer, J. (2016). Enterprise risk management in SMEs: Towards a structural model. International Small Business Journal, 34(1), 70-85, doi/abs/10.1177/0266242614542853.
Business organizations supervise their operations amidst of extreme competitive and dynamic environment. It is needless to say, that working under such complexity initiates numerous risk factors. Therefore, risk managers implement effective strategies to reduce potential damages while exploring new opportunities in the market for enhancing competitive advantage. This journal discusses risk management process of small and medium sized organizations by performing a qualitative survey. The result has shown that SMEs follow one of the ERM approaches between active and passive which is directly related to strategic practices, while passive approach refers to defensive strategy, active refers to offensive. There are several variables like the size and the sector of dealings of the firm, hierarchy of the company, which leave a deep impact in the implementation of risk management strategies. This study can be considered as a guideline for SMEs to cope up with the dynamic business environment, so that they can achieve competitive advantage and simultaneously, accomplish organizational objectives. As far as the result of this survey is concerned, it clearly states that the model of Enterprise Risk Management follows few market trends. Passive approach deals with low risk managerial activities and vice versa. Passive approach has been framed to identify low and moderate level of risks and it is responsible for monitoring them too. Entrepreneurs are not always well prepared to face the risks yet they feel to emphasize the sectors of customer satisfaction, beating the competitors, completion of the project on time and finally accomplishing with the organizational objectives. The importance of risk identification is less than high-level risk assessment as well as risk monitoring as a SME applying the theories of active and passive approaches of ERM. Currently, for SMEs, risk management is a burning issue as there is not enough effective mechanism to believe in. Simultaneously, professionals run out of resources while managing critical business issues. As a result, they have to choose passive approach while dealing with the risk factors. A reading of this journal can be helpful to develop an understanding of implementing strategies after judging the prior conditions of the situation. However, this paper indicates to several loopholes, on which field further research can be performed to develop theories that is more reliable.
Lechner, C., & Gudmundsson, S. V. (2014). Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1), 36-60, doi/abs/10.1177/0266242612455034.
The purpose of this journal is to discuss about the practice of small business organisations and in which way the strategies adopted by them are helping to gain the advantage in the market. The central theme revolves around how the perception of individual entrepreneur influences firms’ strategies and practices towards a better performance. Based on entrepreneur’s orientation the competitive strategies have been framed, therefore the relationship between EO and firm’s performance competitive strategies and practices play a crucial part. The survey has been performed on 335 firms in total divided in the terms of bankruptcy. The result has shown that small firms are more occupied with the techniques of making a phenomenal debut in the market and initial sales and profit matters to them rather framing strategies and develop them as practices. The firms with existence of more than three years and less than ten years are likely to perform better by exploring the role of entrepreneur. The result has stated that competitive strategies and practices are essential for small business organisations as well as it has shown a positive impact of cost leadership and differentiation of entrepreneur orientation over firms performance. Business decisions depend traditional practices, as far as new small organisations are concerned they are more worried about inaugural than competitive strategies. Therefore, this article presents a theory of competitive strategies and why it should be practiced to gain advantage for the small business organizations. Development of proper business practice is influenced by managerial behaviour and it matters while taking important decisions on behalf of the organisation.
Andrevski, G., Richard, O. C., Shaw, J. D., & Ferrier, W. J. (2014). Racial diversity and firm performance: The mediating role of competitive intensity. Journal of Management, 40(3), 820-844, DOI: 10.1177/0149206311424318.
The main theme of this journal revolves around one of the major influencing factors behind firm performance, which is racially diverse management. It has been derived from various analyses that in a competitive environment, a racially diverse management likely to perform better. As business organisations are going increasingly for global approach, the percentage of ethnic minorities has increased as well in workforce of the companies. According to the authors, diverse human resource not only improves the work culture but also a racially diverse management has the ability to consider various opportunities and generate creative ideas for framing the strategies to increase competitive advantage in the market. The data had been collected from 115 firms over three years to find out new theories based on this hypothesis and the findings indicate that racially diverse firms recognise the opportunities and take more frequent actions towards gaining profit than homogenous authorities take. Different cultural and educational background generate creative ideas to make profit and gain market share. It has been shown by the study that in an intense competitive environment racially diverse firms act more efficiently and likely to identify various opportunities more than their rivals do, as they are diversely knowledgeable and exchange information with their co-workers. However, the research suggests that this theory cannot be applicable for low- growth industries to gain advantage. Industries with limited growth potential and if experiencing high growth, have the opportunity to practice diversity while recruiting and developing workforce. Therefore, the article concludes itself by stating that a diverse workforce comes with varied knowledge and information, which enhance the capability of an organization to take decisions effectively and perform better in a competitive business environment.
Conclusion
A detail reading of every journal presents different aspects, which directly or indirectly control firms’ performance and decision. It is not an easy task for the management to decide significant decisions on behalf of the firm. They have to consider organizational structure, external forces of the environment, business practices according to sector and size of the firm, risk factors and finally diverse human resource in order to function in a correct way. All these aspects directly or indirectly influence the firms’ performance. These five journals have discussed possible areas to emphasize if the management prefers to take pragmatic decisions in order to influence better organizational performance.
References
Andrevski, G., Richard, O. C., Shaw, J. D., & Ferrier, W. J. (2014). Racial diversity and firm performance: The mediating role of competitive intensity. Journal of Management, 40(3), 820-844, DOI: 10.1177/0149206311424318.
Brustbauer, J. (2016). Enterprise risk management in SMEs: Towards a structural model. International Small Business Journal, 34(1), 70-85, doi/abs/10.1177/0266242614542853.
Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go?. Journal of Management, 43(1), 200-227.
Lechner, C., & Gudmundsson, S. V. (2014). Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1), 36-60, doi/abs/10.1177/0266242612455034.
Schilke, O., 2014. On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism. Strategic management journal, 35(2), pp.179-203, doi/abs/10.1002/smj.2099.
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