Consistent with a Red Queen effect, firms whose patents cited competitors' older ones have slower rates of new product introduction. Thus, the speed of learning matters: organizations that learn slowly from competitors may find their innovation performance rapidly deteriorating. Firms citing older extra-industry patents introduce new products at a higher rate, however. Intra-firm knowledge has a nonlinear effect, first promoting, then hampering innovation as age increases. Temporal diversity in intra-firm and extra-industry knowledge reduces the number of new product introductions but may still positively impact their innovativeness. By considering the location of knowledge in both time and space (that is, its relatedness to a firm's existing knowledge base), newer knowledge is always better for innovation an issue that is made all the more relevant as digitization hastens technology and industry dynamics.
Different organizational processes require different paces, and the management challenge is to discover and manage the optimal temporal progression of various processes. When faced with a deadline, individuals and groups tend to use time and temporal milestones to guide their work and evaluate task progress. These transitions occur when a sense of urgency emerges, prompting intensive reflection within a team on its progress and a reevaluation and reassignment of tasks for the remainder of the time span.
Perhaps one of the most critical issues of the present time, and one that is beyond the scope of this article, is the level of social responsibility the present generation feels toward future generations. Issues of sustainability and environmental accountability are being raised more often than ever before by consumers, as well as by NGOs and government agencies. This issue is often considered in the realm of environmental responsibility but is less often discussed in the context of individual- or team-level behavior within firms. The behavior of a previous generation influences the behavior of a present generation toward a future generation in regard to allocating both benefits and burdens.
The opening of markets and digitization of technologies are creating an array of new opportunities and challenges for management in the 21st century.
Management theorists have distinguished between "mechanistic" and "organic" organizations. Consistent with the idea of "minimal critical specification" put forth in the sociotechnical systems literature of the 1960s (e.g., Emory & Trist), recent research has shown that successful organic firms adopt a few semistructures in the form of general rules, priorities, and deadlines to guide adaptation and development while leaving sufficient room for improvisation. Successful firms in the fast-paced computer industry developed project priorities, responsibilities, and time intervals between projects that governed their development speed, the timing and rhythm of organizational change, and the synchronization of teams. Such practices and structures will likely increase in importance as the underlying forces of global competition and change-opening markets and digitization realize their full impact over the next decades.
Opening markets and digitization are pulling large corporations and small and medium-sized enterprises (SMEs) beyond their national borders and into a race to get to new foreign countries and regions first. In the changing and uncertain world of the 21st century, this process can usefully be conceptualized as a search process in which internationalizing firms search, identify, and probe new opportunities. In these quests to increase firm value, they often take toehold positions (or options) and withdraw or expand later, as new information about the trial or the environment entered becomes available.
The expansion experience allows internationalizing companies to update their routines and their cognitive maps on how to operate in different cultural environments and on what the interesting expansion opportunities are. Hence, internationalization can be seen as a journey through a "rugged landscape" on which firms search for, identify, and probe sequences of foreign expansion opportunities in their quests to reach ever-higher peaks of firm value.
For decades, researchers have debated whether firm performance is best served by incremental or radical change. However, it appears that many changes, including some foreign expansions through acquisition and various changes in organization structures, strategies, and technologies occur at a meso level: they are too big to be called incremental and too small to be called radical. Meso-level change appears increasingly important in an accelerating world.
Acquisitions, for example, function as a mechanism through which organizations change, reconfigure, and/or redeploy capabilities that cannot easily be exchanged on the open market. They infuse expanding firms with new ideas, insights, people, capabilities, and routines. Further, absorbing these acquisitions causes short-term frictions, tensions, and searches for solutions, processes that help firms to break unproductive inertia in their mental maps and routines.
From this perspective, "trouble is good," and successful organizations orchestrate it, provided the experience relates to what they already know and can provide learning. It is a popular belief that firms in an accelerating world need to change ever faster. Indeed, firms that develop too slowly stay behind as rivals’ race ahead. And developing too slowly may hurt firm capacity to absorb changes and to learn, while regular change may retain or increase firm capacity to absorb novel developments.
One of the main challenges for firms in the 21st century is managing diversity. On the one hand, diversity implies great opportunities in an accelerating world. Firms with sufficient diversity in managers are more likely to initiate and implement innovation and organizational change. Firms can also usefully tap diversity by locating parts of their value chains or using suppliers in remote countries.
More generally, diversity in teams, firms, and constellations of firms may help competitors to speed up in their race to get to the future first and possibly to shape it, which may imply large competitive gains, boost performance, and enhance long-term survival. At the same time, diversity may also prevent organizations from developing too quickly and from falling into a speed trap, as diversity improves awareness of different decision alternatives, the need to discuss them, and the need to reach consensus on the best solutions. From this perspective, diversity in organizations may also help them to reach an optimal pace of development in an accelerating world.
Despite claims to the contrary, distance is not dead. The dramatic geographic dispersion of firms' value chains in the wake of globalization has rendered physical space a conspicuous variable for both practitioners and researchers in management. Indeed, the rise of spatially dispersed global firms in the 21st century represent a transformation in the structure of business equal to/or perhaps greater than the rise of multidivisional firms in the 20th century. Further, the behavioral consequences of this change seem far greater than were the consequences of that earlier change. Contemporary global firms, whether multiple units of a single firm or constellations comprised of complementary firms competing together, endeavor to coordinate and synchronize their dispersed value chains and market behaviors far more than multidivisional firms did in the era of portfolio planning.
Such synchronization may be particularly difficult to achieve in groups whose members come from different national or occupational cultures and so construct and interpret time differently. Firms now routinely create and attempt to coordinate, across time zones, languages, and cultures, virtual teams whose members have never had an opportunity to meet face-to-face. Effective cross-cultural interactions require an understanding of the different ways in which time is perceived, valued, and experienced across cultures. Some scholars, for example, distinguish between cultures that run on "clock time" and those that run on "event time". Clock time is common in North America and Northern Europe, where life is paced according to schedules and agendas, and temporal preferences and expectations are closely aligned. Event time, in contrast, is common in southern Europe and Latin America, as well as in Native American cultures. Events are paced relative to other events, schedules are fluid, and events simply "take as long as they take." These, as well as other temporal understandings (including discount rates, linear versus circular conceptions of time, and emphasis on the past versus the future), vary culturally.
Although early researchers in both economics and sociology paid serious attention to the role that geographic location played in the organization of industry and firms, as these fields developed, they moved toward abstract approaches in which firms and industries were treated as if they occupied a single point in space. A surge of research within the fields of economics, sociology, strategy, organization theory, and marketing has, however, begun to reevaluate the role of geography in business.
The dramatic geographic dispersion of firms' value chains in the wake of globalization also highlights the network conception of organizational form. Networks within and between firms are conduits for the diffusion of innovations. Common ownership is a strong conduit for knowledge that can make diffusion of innovations relatively rapid among network components. Diffusion within a globally dispersed value chain may make its components prone to early adoption of innovations both because innovations spread rapidly within the value chain and because their representation in multiple geographic markets allows their early detection. The ability of dispersed global firms and constellations to accumulate competitive experience and diffuse learning quickly may make them potent competitors that energize Red Queen competition.
Reinforcing this observation, inter-firm networks are frequently characterized by uneven structures that are locally clustered cliques within which the partners of partners are also frequently partners and are also sparsely connected, with each firm having few ties relative to the number of firms in the relevant industry. These characteristics are consistent with the notion of a "small world," which implies far more order and stability than is intuitively implied by these characteristics. "Small-world structures" are notable for their great efficiency in moving information, innovations, routines, experience, and other resources that enable organizational learning, adaptation and competitive advantage.
Understanding the intra- and inter-firm networks connecting dispersed value chains of global firms and constellations requires departing from static conceptions in which networks are viewed "as given contexts for action, rather than as being subject to deliberate design…perhaps a necessary corollary of the assumption that social structure endures over time". In a dynamic conception, networks are emergent in the sense that they are produced by locally interacting firms and individuals. As emergent phenomena, their evolution can be surprising because it can be hard to anticipate the network-level consequences of even simple forms of micro-level interaction among actors.
Although having the right information acquired, for instance, through diversity within teams, firms, and constellations is likely a necessary underpinning for success in the changing and uncertain world of the 21st century, it is not likely a sufficient condition for success. Having the right incentives, from the top down, is crucial as well.
However, despite the vast amount of empirical work that has been conducted by great academia, conclusive evidence on many issues seems lacking. These issues include the relative effectiveness of various forms of corporate governance and incentives schemes and the conditions under which each is most effective.
Still less is understood about which incentive schemes induce successful organizational development and change. More insight into these issues would be particularly relevant in view of recent developments regarding managerial incentive schemes involving stock options and other derivatives. These schemes appear to have inspired top managers to make "creative use" of financial engineering and accounting rules to maintain high market valuations for their firms; in the process, they have destroyed investor trust and hurt the "real economy" through reducing consumers' wealth and spending, undermining the takeover market and leading firms into insolvency.
While top managers amassed great amounts of wealth by exercising stock options in time, private investors and pension funds lost large sums of money, a situation implying a wealth transfer reminiscent of the "corporate plundering" leading us to the economic meltdown, a challenge most businesses are yet to overcome.
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