Prior literature is ambivalent about whether organizational complexity has positive or negative effects on firm performance. Using rich data on global service providers, we explore this ambivalence by disentangling performance consequences of different types of organizational complexity. We show that complexity arising from the coordination of different services and operations negatively influences profit margins through increased coordination costs, whereas complexity coming from the sophistication of particular services may positively influence margins through informational advantages. We also investigate the moderating effects of process commoditization and client-specific investments. Our findings point to critical performance dilemmas facing global service providers in a highly competitive industry, and they help better differentiate performance effects of complexity at different organizational levels.
Larsen, Marcus Møller; Seppälä, Timo & Ali-Yrkkö, Jyrki (2018)
The changing geography and ownership of value creation: evidence from mobile telecommunications
Through an innovative trade-in-task case study, we explore how Nokia, which is historically one of the most important mobile phone manufacturers in the world, offshored the development and production of three distinct mobile phones at three different points in time. Adjacent to these processes, we find that the value creation in areas such as design and manufacturing knowledge has rapidly shifted away from advanced economies to emerging economies. Moreover, we find that the value added captured by Nokia decreased dramatically over the studied time period. Based on our results, we uss more generally the challenge of multinational corporations to preserve value and how the realisation of the benefits of offshoring must be assessed with respect to the altered requirements for controlling value-adding activities.
Larsen, Marcus Møller & Lyngsie, Jacob (2017)
Ambiguous adaptation: The effect of contract duration and investments in relational mechanisms on premature relationship termination