Strategy and general management

The ETP provides an integrative understanding of key management functions, including the personal and organizational skills required to lead an enterprise and the broad strategic capabilities needed to identify and capitalize on new growth opportunities.

We explore mortality beliefs by eliciting individual-level belief distributions for participants’ remaining lifespan. Across two independent samples, from Germany and the USA, we find that individuals—while accurately forecasting their life expectancy—substantially overestimate the likelihood of dying young (100 years). In other words, the modes of the belief distributions are relatively accurate, but the tails of the belief distributions are significantly ‘fatter’ than the corresponding tails of distributions obtained from demographic data. Our results are robust to variations in belief elicitation techniques, and to assumptions underlying normative longevity forecasts. The results have implications for a range of questions of economic behavior—including intertemporal choice, consumption smoothing, saving, and risk management.

Partnerships can be found in many areas of social and economic life. These arrangements have become particularly common in research and development activities where organizations increasingly look for partners to complement their own technological capabilities with a view to create innovative products and processes. R&D partnerships, however, are fraught with challenges because the conditions for creativity through cooperation are still not fully understood. Academic partnerships are also very common and offer a fertile ground for investigation. Academic cooperation takes many different forms and results in a wide range of outcomes (Laband and Tollison, 2000). One of the most visible outcomes is co-authored publications (Melin and Persson, 1996). Nowadays, there is extensive data available about both the context of these partnerships as well as the quality of their outcome. This paper explores the determinants of the gain for authors who cooperate through co-authorship in the publication of academic articles. We distinguish between short-term benefits (i.e. the increase in citations of the co-authored article relative to the authors’ previous publications) and the long-term ones (i.e. the increase in citations of articles subsequent to the co-authored piece). We find evidence that these benefits have different determinants for co-authors depending on their past experience. While co-authorship generally seems to benefit more the junior (younger and with a lower academic reputation) author, the senior partner can reduce the gap with a strong personal track record and co-authoring experience.

Co-development alliances are formed to create new capabilities (technologies, products, services, processes, etc.) that partner organizations need in order to reach their goals. They involve the combination of competencies, and other intangible assets. These alliances typically face a high level of risks in terms of undesired leakages of confidential knowledge or failure to achieve the expected development. Relational quality, an important consideration in all alliances, is particularly key. Without it, partners might not be open enough to combine their knowledge effectively with the partners’. This article proposes a framework for defining, assessing, and monitoring relational quality in co-development alliances.

“The best thing about Russian managers is that they challenge everything and that they are trying to think through everything themselves in very much detail. That gives them a substantial advantage.” ESMT talked to Alexander Landia about differences between Russian and European managers, and about what influenced him most. Alexander Landia is Managing Director and Partner at Bernotat & Cie. From 2006–2011 he was Chairman of the Board of Siberian Coal Energy Company, the largest coal producer in Russia. He has a Dr. Rer. Nat. degree in Mathematics and is former Chancellery Minister to Georgia. Since 1993 he had a career in Germany with Dresdner Kleinwort Wasserstein and Accenture.

Due to resource constraints, startup innovators often struggle to assemble complementary assets for successful product commercialization. Alliances are an important avenue for startups to access resources and learn commercialization skills. However, an alliance structure that enables startup learning imposes costs on the alliance partner. Moreover, alliance partner quality is likely co-determined with complementary-asset learning potential in shaping alliance product performance. Using data from biotechnology alliances, we separately estimate the importance of partner quality and learning effects in explaining the drug approval hazard. We find that higher quality partners have a positive impact on product development success while alliance structures enabling startup downstream commercialization capability development have a negative effect. Innovators with cumulated learning experience are more likely to self-commercialize in future product development.

In this special ESMTcast episode of "90 seconds with...", Mario Monti, the President of Bocconi University Milan and Honorary President of Bruegel, looks at the behavior of leaders in the current crisis, saying that the most dangerous thing for managers is to lose their own critical independent vision. He believes that business schools should put more emphasis teaching behavioral characteristics to upcoming managers, and that ESMT is ideally placed in Berlin as there is increased international interest in the German 'models' of policy making and institution behavior.

In this special ESMTcast episode of "90 seconds with...", Levin Zhu, CEO, China International Capital Corporation Ltd., attends the 4th ESMT Annual Forum in Berlin. He talks about his company's interest and move into the European marketplace. And shares his views on Chinese management attributes, and what he thinks a company should concentrate on to get a competitive edge.

Zoltán Antal-Mokos has been a full professor (of strategy) and ESMT's first associate dean of degree programs since November 2009. In April 2011, the president appointed him dean of degree programs. He joined ESMT in May 2005 as an associate professor and served as the director of ESMT's Executive MBA Program from July 2007 to November 2009. Prior to joining ESMT, Zoltán was the director of Budapest School of Management of BUESPA and the associate dean of the university's Faculty of Business Administration where he held the McKinsey & Co. Chair in Strategy. He graduated from Budapest University of Economic Sciences, which is where he also received his first university doctorate degree. With a grant from the Joint Japan/World Bank Graduate Scholarship Program, Zoltán then completed his second PhD at London Business School. Zoltán has vast experience in teaching MBA and executive courses. He has created new and successful courses on privatization, corporate strategy, and M&A. He was member of the Committee of Management and Organization Science of the Hungarian Academy of Sciences between 1996 until 2011. Zoltán has delivered classes and lectures at the London Business School, Purdue’s Executive Master’s, Copenhagen Business School, Aristotle University of Thessalonica, as well as various international conferences.

In this special ESMT cast episode of "90 seconds with...", Jan Muehlfeit, Chairman, Microsoft Europe, attends the 4th ESMT Annual Forum in Berlin. He shares here his views on the future of capitalism, and the need to bring back the care to today's marketplace; he adds that future businesses focusing on education and unlocking human potential will succeed going forward, noting that to be the best in the world, you must be the best for the world.

This paper analyzes the technology commercialization strategy of an innovating firm when the incumbent firms possess specialized commercialization capabilities. According to the predominant framework, if the innovation is protected by a strong appropriabilty regime the optimal strategy is to license the innovation to an incumbent product firm. This paper argues by contrast that if the innovating firm has the ability to learn from its commercialization experience, its optimal strategy may be to commercialize alone or to pursue a hybrid arrangement (called co-promotion) whereby it licenses the innovation but retains the rights to participate in the commercialization process. The paper develops a game-theoretic model of the technology commercialization process and derives the conditions under which these different strategies are equilibrium outcomes. It then uses these to explain the pattern of arrangements pursued by biotech firms attempting to commercialize products in the pharmaceutical industry between 1978 and 2008. The results show that a firm is significantly more likely to use the hybrid strategy when there is a higher probability of commercializing a subsequent product in the same product field in future, when there are more firms competing to license the innovation, and when it is in a stronger financial position.

In this episode of ESMTcast 90 seconds with, Dr. Andreas Wiele, Member of the Management Board, Axel Springer AG, visits the ESMT MBA Masterclass and outlines to students the importance of Business schools going beyond the numbers. He says that today's business students need to be open and curious about current political, cultural and environmental movements, and be able to include these factors in today's changing marketplace.

In this episode of ESMTcast "90 seconds with..." President of BUSINESSEUROPE, Jürgen R Thumann talks about Europe's need for a strong industrial sector, suggesting the new EU Commission focus on clearing out bureaucracy and pushing for better regulation. He also reiterates Europe's commitment to climate control policies that set forth targets until 2020. Visiting ESMT, he sees excellent experience throughout the school, and says it's the "most international business school in Germany".

In this episode of ESMTcast "Learning for Leading", ESMT professor and Associate Dean Luc Watheiu talks about his recommendations for Decision Making.

We explore the determinants of the willingness to rely on trust in a business partnership where both partners are at risk. By focusing on the willingness to rely on trust (WTRT) we reduce the methodological challenge of perception-based approaches where trust is measured as an expectation on the partner's behavior. Executives in several countries were presented with a proposal for a business partnership and were asked about the level of safeguards they would require in the agreement, their main concerns as to future conditions, and to what extent their views would be affected by several behaviors and/or events. Twelve hypotheses are tested using path analysis and multiple/hierarchical regressions. Whereas our findings confirm prior results on differences in the propensity to trust between nationalities, they suggest that several organizational, functional and contextual variables mediate their impact in determining WTRT in inter-organizational ventures. Among these are the partners' cultural proximity, their concerns about business risk, and two organizational demographics regarding the size of the organization. In addition, we found that sensitivity to external information on partner's benevolence and the respondent's education and industry affected WTRT significantly.

Christoph Burger is a member of the faculty at ESMT and managing director of ESMT Customized Solutions GmbH. He studied business administration and economics at the University of Saarbrücken (Germany), the Hochschule St. Gallen (Switzerland), and the University of Michigan, Ann Arbor (USA). Christoph has taught microeconomics at the University of Ann Arbor, was project leader at Otto Versand, worked as a strategy consultant at Arthur D. Little and as an independent consultant, and was vice president at the Bertelsmann Buch AG. Christoph has professional experience in strategy, post-merger integration, equity financing as well as customer and supplier management. He has solid international experience, spanning Northern and Eastern Europe and the United States. At ESMT, Christoph directs and teaches in the open enrollment programs Decision Making and Entscheidungs-/ Verhandlunsgtechniken as well as in customized executive programs for clients such as BDI, Deutsche Lufthansa, E.ON, European Business Congress, and T-Systems. He has previously taught in the MBA program of Guanghua School of Management of Peking University and the EMBA and CEO program of CKGSB. He also runs discussion forums such as the Climate Lunch series together with BDI, WWF.

Dr. Klaus Kleinfeld, President and CEO of Alcoa, gives a MasterClass at ESMT. In this clip, he shares insights into being a manager today and why it is important to believe in what you do.

In this article we report on the design, prototyping and results of a research effort aimed at identifying if and how trust affects the creativity of a partnership between two economic agents. The methodology combines an experiment and two questionnaires. The purpose of the research is to increase our understanding of trust and its impact on the outcome of cooperation, and to derive some guidance for economic actors, namely R&D managers and executives who want to build trustful innovation oriented relationships with their business partners. Specifically, we investigate the effect of trust on partners' creativity and willingness to invest financially in a joint development. Our results show that more trustful partners invest higher amounts in the alliance, while there seems to be an optimum amount of mutual trust between partners to maximize their joint creativity; if the level of mutual trust is below or above this threshold; their joint creativity seems to decrease.

In all the literature on the theory and practice of negotiation, the governing metaphor remains consistently one of war or fighting. This is true not only for tactical schools of power-based negotiation, but even for more constructive, interest-based approaches. Our language is infused with talk of tactics, flanks, concessions, gaining ground and winning. This article explores the possible consequences of abandoning this picture in favor of the far too little explored metaphor of the dance. We will see that both the content and the process of negotiation can change dramatically once when we think of bargaining as an aesthetic activity which provides intrinsic joy as well as extrinsic benefits. In such a dance, there is plenty of room for competition as well as cooperation, as movements can be spirited and confrontational as well as smooth and harmonious. We identify many forms of dance in negotiation, and explore three: the dance of positioning, where passions and presentations interact proudly; the dance of empathy, when the partners come to better understand each other; and then the dance of concessions, where the deal is struck and the music comes to an end. Finally, we will try to show how the dance can be employed pedagogically, in teaching and training negotiation and mediation. In particular, the Brazilian dance of capoeira illustrates holistically and experientially how movement and rhythm can be interpreted both as fight and as a dance and how we can come to see a process as both aesthetic and purposeful at the same time. First feeling, then thinking and finally speaking, we can use this medium to explore the dynamics of confrontation and cooperation in a negotiation setting.

Extensive industry consolidation is taking place in Europe in many industries. The aviation industry, for example, has seen mergers between Air France and KLM, as well as Lufthansa and Swiss. The German banking industry just recently started to consolidate with the takeover of Dresdner Bank by Commerzbank and the partial takeover of Postbank by Deutsche Bank. But how about consolidation in one of the biggest growth-markets worldwide - China? A recent survey by ESMT has looked at the differences between Europe and China when it comes to consolidation.

Summary of results from the 2007 Consolidation Impact Survey. The survey covers four industries that are most affected from consolidation trends in Germany: Aviation, Utilities, Telecoms and Banking.

While markets internationalize and at the same time consolidate, companies have to ask themselves if they can develop to one of the market leaders in this broader international market. To give guidance to this question, the business brief introduces the concept of the consolidation index as a framework for developing and validating strategies in this regard and discusses the results of the consolidation index for the European banking and utilities industry.

Der Abstieg erfolgte vergleichsweise unspektakulär, aber nachhaltig: Noch zu Beginn der neunziger Jahre war die Deutsche Bank gemessen an der Marktkapitalisierung die größte europäische Bank und gehörte zu den zehn größten Banken weltweit. Seither haben sich die Relationen grundlegend verschoben: In allen großen europäischen Ländern gibt es inzwischen jeweils mindestens zwei Banken, die eine größere Marktkapitalisierung aufweisen, als die Deutsche Bank. Damit stellt sich die Frage, welche Rückschlüsse für die, neben den in Deutschland dominierenden Volksbanken und Sparkassen, börsennotierten privaten Banken zu ziehen sind.

"Im Hinblick auf die endgültige Öffnung der europäischen Energiemärkte im Juli 2007 sehen sich die ursprünglich nationalen Versorger der Gefahr sinkender Marktanteile im Heimatmarkt, aber auch der Chance, das internationale Geschäft zu forcieren, gegenüber. Nachdem sowohl die deutschen als auch die ausländischen Energieversorger bereits in den 90-iger Jahren und verstärkt ab der Jahrtausendwende mit den Privatisierungen in Osteuropa international tätig wurden, befindet sich die Industrie nun in einer Phase der europäischen Konsolidierung. Zeichen hierfür sind die versuchte Übernahme von Endesa durch E.ON, die Enel als ""weißen Ritter"" auf das Spielfeld brachte, die gelungene Übernahme von Scottish Power durch Iberdrola oder von Gaz de France und Electrabel durch Suez. Folglich stellt sich die Frage, ob die deutschen Energieunternehmen die Neuverteilung der europäischen Energiemarktanteile für sich nutzen können. Zur Beantwortung dieser Frage sind drei Aspekte zu betrachten: i. Haben die deutschen Energieunternehmen im Vergleich zu ihren europäischen Konkurrenten die nötigen Kompetenzen, um den europäischen Konsolidierungsprozess treiben zu können? ii. Ist die Marktdefinition ""Integrierte Strom-/ Gasunternehmen"" für die Beantwortung dieser Frage die richtige Abgrenzung? iii.Welche Implikationen erschließen sich daraus für die deutschen Energieversorger?"