The conceptual model so far

The idea for the research is:

Both the environmental situation (velocity plus turbulence) and the growth strategy of a company (explorative or exploitative) prescribe the pattern for business succession (ad hoc replacement, heir development, talent pool management). If the actual pattern, which a company chooses, matches the prescribed one, the company performance will be higher than in the case of mismatch.

A patchy vulnerability of the teaching tradition

All of us won't die, but we will all be changed.
(1 Corinthians 15:51 Common English Bible)

MOOCs are on the hype, classroom teaching is facing a demise? For onlookers the educational industry is being rapidly, massively and chaotically disrupted. Grim comments of insiders readily support that feel of the end of teaching as we know it. But once knowledge providers - teachers and institutions - step out of the paradigm shift box, they admit the change is no chaos, it is just regrouping them by obscure criteria. The emerging groups will have to deal with new environments and live up to new karmas. Some may be rewarded for their die-hard fidelity to the teaching tradition. Others will give up business to newcomers for the very same strategy. Thirds will merely enjoy the synergy between the MOOC tech and classroom contact hours.

Based on such a concept, the key question will be "who's going where?"

I believe the MOOC impact on the teaching tradition is linked to the nature of disciplines. Two features of a discipline appear to be particularly important: its telework potential and the interpretational power of its provider. The former suggests how specific knowledge and skills will be exploited at future workplaces. The latter tells whether c'est le ton qui fait la chanson or vice versa. Those independent variables define how deeply the teaching tradition of a discipline will be affected by the change. In this concept they are the criteria by which advancing MOOCs reshape the educational industry, so applying them to one's case may spark some insights about his future.

To do so, position your portfolio of disciplines on the map below. Meet your emerging strategic group. Reconcile. Frame your personal or institutional strategy. (And don't take it all too seriously: the model has not been empirically tested.)

Figure 1. Teaching tradition vulnerability map.

X axis. Score and sum up to assess the discipline telework potential:

1. What is the need for a practitioner, when applying the knowledge and skills he/she acquired from the discipline, to work face-to-face with colleagues, clients, suppliers and other organization stakeholders?
(Significant – 2, moderate – 1, insignificant or none – 0).

2. How does the technological progress influence the above need?
(Increases – 2, has insignificant or no effect – 1, decreases – 0).

3. What is the current presence of telework practice in industries where the knowledge and skills of the discipline are employed?
(Wide – 2, moderate – 1, insignificant or none – 0).

4. How does the technological progress influence the above practice?
(Increases – 2, has insignificant or no effect – 1, decreases – 0).

5. What is the value of the knowledge and skills practitioners acquire from the discipline for organizational sustainability?
(High – 2, moderate – 1, low – 0).

Y axis. Rank the interpretational power of the discipline provider:

1. What is the maturity of theories underlying the discipline?
(None or nascent – 2, theories are being tested – 1, grounded and mature – 0).

2. What is the branch of sciences to which the discipline belongs?
(Social – 2, formal – 1, life and natural – 0).

3. What is the rivalry of main communities (schools) which adhere to different paradigms in teaching the discipline?
(Fierce – 2, moderate – 1, low or none – 0).

4. What is the social significance of the discipline providers?
(High – 2, medium – 1, low – 0).

5. What is the convertibility of the discipline material to algorithms or infographics?
(Full – 2, partial – 1, low – 0).

Interpretation of the world. The meaning of hermeneutics

 

This text is not a PhD raw material but rather an exercise in dialectical reasoning. My sweet little daughter Sonya drew a portrait of Thomas Kuhn, and that's what made the difference.

Extremes of Vattimo and Ricoeur

Gianni Vattimo argued that there were no facts but only interpretations and that statement itself was merely an interpretation of the meaning of hermeneutics in philosophy. He described hermeneutics as an ultimate generalization of the notion of interpretation to a man’s experience of the world (Vattimo, 1997). I take this statement as an extreme proclamation of a full merger of a scientist’s personal values and perspectives with properties and characteristics of the phenomenon that he/she researches. 

That merger, I think, should it become generally accepted beyond the realm of social sciences, would seriously affect theoretical grounds, research designs and strategies of natural sciences. That is hardly possible. The negation of Ultimate Truth makes little sense in interpretation of lab experiments or astronomic observations as they provide the universal man-made system of coordinates we need to survive in the world. Man is the measure of all things, including black holes and God’s particles, but that measure is a controlled variable to be held constant (and separated) in the physical model of the universe, which is the arena of natural sciences. The “interpretational influence” of man in that arena appears to be far lower than in social sciences. 

Perhaps the area where Vattimo’s hermeneutics may constructively rival against the empiricist is limited by the span of social sciences.

Paul Ricouer’s extreme was related to excessive, surplus meaning that is always left unknown in any scholarly quest (Ricoeur, 1979). Unlike Vattimo’s, it seems more applicable in the realm of natural sciences. This is because it fosters a scholar’s curiosity stronger than the positivist linear approach to collecting knowledge about the world. Ricouer encourages a scholar to imagine additional meanings that are hidden deep and require an intensive elaboration, while the Vienna circle (positivist) promotes an extensive development of the researched area. The former is about talent and passion, the latter is about skills and discipline.

Optimism of Kuhn and Gadamer

In the 1st half of the XX century the Vienna circle manifested there was one and only way to read and perceive the book of nature: science. That logical positivism left no room for science of man. The situation slowly changed with works of Gadamer, Heidegger, Taylor, Vattimo and Kuhn.

Thomas Kuhn

Physicist Thomas Kuhn discovered hermeneutics for himself as scientific way of thinking by reading Aristotle’s works on kinesis: he understood that a qualitative, not quantitative change was meant. As a result, Kuhn offered hermeneutics to all as a new philosophy of science. 

Hermeneutic or interpretative way of thinking suggested by Kuhn can be explained through the book vs text metaphor. A book belongs to its author, and readers can only find and understand its meaning. A text incorporates readers’ knowledge, values, experiences into its interpretation. The former is logical positivism, the latter is the science of man, hermeneutics.

Like other modern hermeneutics, he argued there was no such thing as a linear development of knowledge, but instead there was an intermittent change of paradigms. Paradigm by Kuhn is a temporary consent among scientists and practitioners on what problems are and how to solve them. Thus discontinuity of human science came to play to fight continuity of empiricism (Noe, 2011).

The concept of paradigm shift is well combined with Gadamer’s fusion of time horizons. In both cases new meanings and scientific consents are created by tectonic moves in the human knowledge rather by a gradual exploration of the unknown. I might comment, should we be able to predict paradigm shifts, that would create some sort of a surfing effect when one cohort of scholars hurries up to complete their studies, as those will be discarded by the coming wave of change, and the other cohort just lies on the surfs (research questions) and waits for the coming newness to arm them with new interpretations and perspectives. (This reasoning reflects Karl Popper’s critical “wait for a better theory” remark on Kuhn’s hermeneutics.)

Kuhn’s American optimism shows up in his attitude to prejudice. Prejudice in science, in Kuhn’s concept of paradigm, is good and needful. He argued, that without a paradigm-based prejudice a scientist could not even set up an experiment (Kavaliauskas, 2012). This sounds compelling and quite universal, although it seems appropriate to link that idea with what I speculated above: the interpretational influence of researchers in natural sciences is insignificant in comparison with that in social ones. I mean that a researcher’s dependence on a paradigm-based prejudice in social sciences appears to be quite definitive and truly important, while Gadamer’s new time horizons in natural sciences are contaminated (urbanized) with solid meanings inherited from older horizons or paradigms.

Kuhn coined the term incommensurability, which reflected autism of adepts of two different paradigms, their inability and/or unwillingness to use common criteria and language. That state of paradigmatic autism, however, is always temporary, proclaims Kuhn in his optimistic tone. Incommensurability promotes a fundamental change: the paradigm shift, which integrates the horizons of two earlier confronting paradigms. That well complies with the theories categorization by Van de Ven and Poole (1995): Kuhn stands in the dialectical corner of their four-field matrix where multiple entities study meets constructive approach. This leads to a paradox: the interpretational philosophy of science (hermeneutics, science of man), the way Kuhn introduced it to us, was the product of hermeneutical surgery in the body of analytical philosophy of Anglophone Europe made in the 2nd half of the XX century.

The bottom line

The key hermeneutical definitions and conclusions by Vattimo, the concepts and reconciliations by Kuhn are, indeed, a great leap in philosophy of science. They (i) have put an end to illusions (or debates) that a researcher may not be part of his/her research, and now it is a commonly shared view; (ii) they have promoted the idea of scientific revolutions to substitute the idea of gradual continuous extension of mankind’s horizons; (iii) they have claimed – once more, yet from a new perspective – that there is no such thing as Ultimate Truth but there is abundance of surplus meanings, and that induces scientific inquiry by adding more senses to each researched phenomenon and to the scholarship itself.

On the other hand, hermeneutics seems to receive a disparate treatment in two scientific realms: natural and social sciences. It is obviously less applicable in material studies than in researching intangibles. And that casts doubts on its overall ability to replace empiricism.

Hermeneutics may be considered a meaningful part of another paradigm (or time horizon), which has been brought to the rapidly changing XX century to blend with the empirical tradition. It has endured the time of incommensurability, reached its limits, and at present it is lying on its surf waiting for a new paradigmatic wave to come.

P.S. As far as PhD research is concerned, it is not a good idea to ground a conceptual variance model in hermeneutics. Empiricism works more reliably.

References

Kavaliauskas, Tomas (2012). “Philosophy of Science”. Course of Baltic Doctoral Program, ISM, Vilnius.

Kuhn, T.S. (1965). “Logic of Discovery or Psychology of Research?”. Princeton University.

Noe, Keiichi (2011). “Hermeneutic problems in the Philosophy of Science”. Tohoku University, Japan.

Ricoeur, Paul (1976). “Interpretation Theory: Discourse and the Surplus of Meaning”. The Texas Christian University Press.

Van de Ven, A. H. and Poole, M.S. (1995). “Explaining Development and Change in Organizations”, Academy of Management Review, 20 (3): 520.

Vattimo, Gianni (1997). “Beyond Interpretation: The Meaning of Hermeneutics for Philosophy”. Standford University Press.

Assumptions and units of the research

Research question

What is the linkage between environment, growth strategy and stakeholder satisfaction with business succession?

Type of the research

Quantitative variance study.

Assumptions behind the conceptual model

1. Companies operate to satisfy all of their stakeholders. Stakeholders pursue quantitative and qualitative, rational and irrational, explicit and implicit goals. Given such a broad range of interests, stakeholder satisfaction is an ultimate measure for all processes and results that companies perform and achieve.

2. All types of resources are scarce, including knowledge and skills. Therefore, they are distributed among companies unevenly, what results in differences of foresight and implementation capabilities which companies possess.

Table 1. The variables and units of the conceptual model

Variables	Name	Units of analysis[1]	Units of observation[2]
V1	Environment	Environments	Macro- and micro-factors
V2	Growth strategy	Companies	Companies
V3	Business succession pattern	Companies	Companies
V4	Stakeholder satisfaction	Stakeholder groups	Individual stakeholders

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[1] Units of analysis are those about whom conclusions are drawn.

[2] Units of observation are those at whose level data are collected.

Founder successions in Russia: linking environment, strategy and stakeholder satisfaction (framing, take 1)

 

The European statistics of the 2000s shows that only 5-15% of family businesses reached the third generation, and 30% of closures were considered transfer failures (FEE, 2000; Le Breton-Miller et al., 2004; SBS, 2004). At the same time, established companies in the US faced shortfalls of experienced managerial talent for leadership positions due to a rapidly ageing workforce as the baby boomer generation began to retire (Groves, 2006; Williams, 2010). In other developed economies both SMEs and large firms suffered from shifts in workplace demographics and lack of structured efforts in planning for succession, for example, in Australia, UK, Canada (Taylor and McGraw, 2004; Ip and Jacobs, 2006). Russia’s new economy is currently entering the period of business transfers across all industries and all sizes of companies. There was the wave of start-ups in the 1990s, as entrepreneurs were launching their ventures. They have led them until recently and now they start to exit from management and/or ownership positions. That raises the wave of business successions in Russia. Similar situations are observed in China, India and South Africa. The problem of business succession is becoming a major strategic challenge for a significantly larger proportion of companies than usual. Therefore, studying business succession from different perspectives and in different contexts is an appropriate modern research agenda. Providing practitioners with generalizable models, practical approaches and reliable tools may help reduce the number of business transfer failures in this global top-management turbulence.

In the current discourse business succession issues fall in three broad categories: family and organizational; legal, finance, tax; practical approaches to business succession. The debate focuses primarily on SME of developed countries. However, there is a discussion with the emphasis on implementation aspects of business succession management in established corporations. In the last decade emerging economies have contributed to the business succession discourse. Concerns related to planning for succession are spread across diverse industries (Ip and Jacobs, 2006; Stadler, 2011).

Organizational behavior and human resources management researchers seem to have been investigating the problem of business succession mainly from a company internal perspective (Ip and Jacobs, 2006). That fails to explain the degree and nature of influence a company environment and strategy have on business succession. Strategic management researchers have done a number of studies on the linkage between founding conditions, strategy and growth of young companies (Eisenhardt and Schoonhoven, 1990). However, their approach does not distinguish business succession as a separate problem of organizational development, therefore it fails to provide advice on how companies should approach it to minimize damage to performance.

Additionally, the measures, which the majority of researchers currently use for evaluating the process and outcomes of business succession, are mainly financial. Clearly, financial measures cannot be considered ultimate and/or satisfactory for all cases for business successions have multiple internal and external stakeholders with different goals and motives. The human perspective in measuring success of business succession has just started to emerge in resent research. It is bringing in new measures reflecting stakeholders' satisfaction with the process of succession and its outcomes (Serra and Borzillo, 2013).

The purpose of this work is to link a company’s environment and strategy to stakeholder satisfaction with the process and outcomes of business succession. The conceptual model (see Figure 1) underlying this work combines four variables:

V1. Environmental situation.

V2. Company strategy.

V3. Business succession pattern.

V4. Stakeholder satisfaction.

Figure 1 also depicts three propositions on how and why the variables interact:

P1. Environmental situation determines the business succession pattern, which more likely leads to stakeholder satisfaction.

P2. Growth strategy determines the business succession pattern, which more likely leads to stakeholder satisfaction.

P3. Coherence of the prescribed and actual business succession patterns more likely results in stakeholder satisfaction.

Figure 1. The conceptual model.

Environmental turbulence and velocity define resource intensity of business succession as a task, which a company should manage. In stable environments business succession is independent from external factors. High-velocity/turbulent environments require significant planning, organization, managerial skills and time for business succession to become a success.

To match environment and internal resources, companies pursue two generic types of growth strategies: explorative and exploitative. While explorative strategies achieve growth by expanding customer base at a fixed efficiency, exploitative strategies generate growth through a higher efficiency on a fixed customer base. Explorative strategies require diversified organizational structures, which substantially increase the demand for business planning, organization and management. Exploitative strategies allow companies to grow with the nearly unchanging organization. The former bring additional internal challenges to business succession, which leads to its high resource intensity. The latter, in turn, take fewer resources to achieve success in business transfers.

With regard to the resource claim, patterns of business succession fall in three categories (i) ad hoc reactions, (ii) heir development and (iii) talent pool development. The first two are person-focused and have a lower resource claim in comparison with the third, which is merit-focused, functioning as part of an established strategic management process and, therefore, highly resource-intensive.

In this work stakeholder satisfaction with the process and outcomes of business succession is used as an ultimate measure of success. Five types of succession stakeholders are identified as subjects with the strongest interest and influence: (i) the exiting owner-CEO, (ii) the incoming CEO, (iii) the top-management team, (iv) the external investors and (v) the external experts/consultants.

This work focuses on the cases of founder exits from managing positions. Among all varieties of business successions those have the highest potential impact on company. That has been proven by the previous research, which indicates that personal ability plays a significant role in small firm growth (Sexton and Bowman-Upton, 1991; Jennings and Beaver, 1997; Covin and Slevin, 1997; Wiklund and Shepherd, 2003), and that founding teams produce a strong path dependence[1], which increases over time and which is more significant that the influence of later CEOs (Eisenhardt and Schoonhoven, 1990).

A cross-sectional sample survey is planned for 2014-2015. It will supposedly engage about 200 companies from a range of industries in Russia’s mining, manufacturing, transportation, construction and service sectors. All of the companies will have to have passed through founder successions at least one year before the study. Five stakeholders of different types from each company will be asked to fill out questionnaires on a specially created website. The questions will address (i) environmental situations before and at the time of founder successions, (ii) types of strategy the companies pursued, (iii) actual succession patterns the companies implemented and (iv) the stakeholders’ evaluation of the process and outcomes of the successions. The research is supposed to test propositions P1, P2, P3 and to yield the findings that

• Environment and strategy pre-determine the business succession patterns, that will likely lead to stakeholder satisfaction.
• Coherence of the prescribed and actual succession patterns will likely result in stakeholder satisfaction.

The research will conceptualize and attempt to explain the linkage between environment, strategy and business succession. It is expected to provide insights on how companies should approach the problem of founder and other types of business successions to ensure the satisfaction of internal and external stakeholders. The variables of the conceptual model are universal across countries and independent from the degree of economic maturity. That ensures the findings will have a strong potential for generalization. They may be particularly useful for practitioners in the emerging economies where the waves of founder exits are expected, as well as for those developed economies that are currently passing through the decline in workforce demographics.

References

(The) European Federation of Accountants (FEE) (2000), “Keeping it in the family. SME family business succession”, available at: www.fee.be (accessed November 2013).

Le Breton-Miller, I., Miller, D. and Steier, L. (2004), “Toward an integrative model of effective FOB succession”, Entrepreneurship Theory and Practice, Vol. 28 No. 45, pp. 24-5.

Small Business Service (SBS) (2004), “Passing the baton – encouraging successful business transfers: evidence and stakeholder opinion”, available at:www.gov.uk/ (accessed November 2013).

Groves K. (2006), “Integrating leadership development and succession planning best practices”, Journal of Management Development, Vol. 26 No. 3, 2007, pp. 239-260.

Taylor, T., McGrow, P. (2004), “Succession management practices in Australian organizations”, International Journal of Manpower, Vol. 25 No. 8, 2004, pp. 741-758.

Ip, B., Jacobs, G. (2006), “Business succession planning: a review of the evidence”, Journal of Small Business and Enterprise Development, Vol. 13 No. 3, 2006, pp. 326-350.

Stadler, K. (2011), “Talent reviews: the key to effective succession management”, Business Strategy Series, Vol. 12 No. 5, 2011, pp. 264-271.

Eisenhardt, K.M. and Bourgeois, L.J. (1988), ‘‘Politics of strategic decision making in high-velocity environments: toward a midrange theory’’, Academy of Management Journal, Vol. 31 No. 4, pp. 737-70.

Serra, Caroline Kaehr  and Borzillo, Stefano (2013). "Founder successions in new ventures: the human perspective." Journal of Business Strategy, Vol. 34, No. 5, pp. 12-24.

Sexton, D. L. and Bowman-Upton, N. B. (1991). Entrepreneurship: Creativity and Growth. New York: Macmillan.

Jennings, P. and Beaver, G. (1997). The performance and competitive advantage of small firms: a management perspective. International Small Business Journal, 15, 2, 63–75.

Covin, J. G. and Slevin, D. P. (1997). High growth transitions: theoretical perspectives and suggested directions. In Sexton, D. and Smilor, R. (Eds), Entrepreneurship 2000. Chicago, IL: Upstart Publishing Company.

Eisenhardt, Kathleen M., Schoonhoven, Claudia Bird (1990). Organizational growth: Linking founding team, strategy, environment, and growth among U.S. semiconductor ventures, 1978-1988. Administrative Science Quarterly (RSS).

Wiklund, J. and Shepherd, D. (2003). Aspiring for, and Achieving Growth: The Moderating Role of Resources and Opportunities. Oxford, UK and Malden, MA, USA: Blackwell Publishing.

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[1] Path dependence means that both the starting point and accidental events can have significant effects on the outcome. In other words, history matters.

Stable, high-velocity, turbulent and high-velocity/turbulent environments

 

Emery and Trist (1965), Terreberry (1968) defined turbulent environments (TEs) looking at the problem from the standpoint of change in interactions between players (government, companies, external stakeholders).

Interested in the dynamics of change, Dess and Beard (1984) and Eisenhardt and Bourgeous (1988) introduced the notion of high-velocity environments (HVEs).

Jones and Mahon (2012) synthesized the above material and suggested updated definitions of TEs and HVEs. They also suggested the notion of high-velocity turbulent environments (HVTEs) and contrasted it to stable environments (SE). They wrote

High velocity environments are those situations where change is rapid, large and discontinuous (that is, changes occur at intermittent times and are not related to what occurred more recently).

Turbulent environments … are more long lived and reflect large (or small, but significant) changes in the interactions between and among players in an environment … AND where those changes impact on the processes of interactions themselves.

For Jones and Mahon (2012) high-velocity/turbulent environments are those in which the pace of changes, the magnitude of changes and the interactive effects of change and magnitude are significant.

They argued that stable environments do not present dynamic changes or noticeable variations in players’ interactions.

I  summarize the combinations in Figure 1.

Figure 1. The four types of environments

References

Dess, G. and Beard, D. (1984), ‘‘Dimensions of organizational task environments’’, Administrative Science Quarterly, Vol. 29, pp. 52-73.

Eisenhardt, K.M. and Bourgeois, L.J. (1988), ‘‘Politics of strategic decision making in high-velocity environments: toward a midrange theory’’, Academy of Management Journal, Vol. 31 No. 4, pp. 737-70.

Emery, F.E. and Trist, E. (1965), ‘‘Causal texture of organizational environments’’, Human Relations, Vol. 18 No. 1, pp. 21-32.

Jones, N.B. and Mahon, J.F. (2012), “Nimble knowledge transfer in high velocity/turbulent environments”. Journal of Knowledge Management, Vol. 16 No. 5 2012, pp. 774-788.

Terreberry, S. (1968), ‘‘The evolution of organizational environments’’, Administrative Science Quarterly, Vol. 12 No. 4, pp. 590-613.