Skip to main content
SpringerLink
Log in

Thinking like a specialist or a generalist? Evidence from hidden champions in China

  • Original Article
  • Published:
Asian Business & Management Aims and scope Submit manuscript

Abstract

Hidden champions are companies whose market dominance belies their low profiles. Experts believe that “the single-minded specialist usually beats the generalist,” reflecting the importance of managerial cognition in hidden champions’ development. Given varying levels in firm growth of hidden champions, a two-phase multi-method approach was adopted. In the first phase, a longitudinal case is analyzed for exploring the effects of different cognitive structural attributes in the growth of hidden champion; in the second phase, this article presents a panel data analysis of Chinese hidden champions to identify the structural attributes of strategic schema for their growth and determine how the regional environment and industrial structure moderate these relations. This study complements the view only emphasizing the positive role of complex cognitive structure in organizational adaptation by exploring the role of centrality in developing ‘focus and depth’ strategy. Additionally, this study also highlights the adaptive view of managerial cognition given the various developing stages of firms and the external dynamic context, offering an expanded perspective in the literature on managerial cognition.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8

Similar content being viewed by others

References

  • Agarwal, R., Sarkar, M. B., & Echambadi, R. (2002). The conditioning effect of time on firm survival: An industry life cycle approach. Academy of Management Journal, 45(5), 971–994.

    Google Scholar 

  • Ali, A., Klasa, S., & Yeung, E. (2014). Industry concentration and corporate disclosure policy. Journal of Accounting & Economics, 58(2–3), 240–264.

    Google Scholar 

  • Audretsch, D. B., Lehmann, E. E., & Schenkenhofer, J. (2018). Internationalization strategies of hidden champions: lessons from Germany. Multinational Business Review, 26(1), 2–24.

    Google Scholar 

  • Bartunek, J. M., Gordon, J. R., & Weathersby, R. P. (1983). Developing "complicated" understanding in administrators. Academy of Management Review, 8(2), 273–284.

    Google Scholar 

  • Benner, M. J., & Tripsas, M. (2012). The influence of prior industry affiliation on framing in nascent industries: The evolution of digital cameras. Strategic Management Journal, 33(3), 277–302.

    Google Scholar 

  • Berry, C. H. (1971). Corporate growth and diversification. The Journal of Law and Economics, 14(2), 371–383.

    Google Scholar 

  • Bikker, J. A., & Haaf, K. (2002). Competition, concentration and their relationship: An empirical analysis of the banking industry. Journal of Banking & Finance, 26(11), 2191–2214.

    Google Scholar 

  • Bogner, W. C., & Barr, P. S. (2000). Making sense in hypercompetitive environments: A cognitive explanation for the persistence of high velocity competition. Organization Science, 11(2), 212–226.

    Google Scholar 

  • Boyer, K. K., & Swink, M. L. (2008). Empirical elephants—why multiple methods are essential to quality research in operations and supply chain management. Journal of Operations Management, 26(3), 338–344.

    Google Scholar 

  • Bromiley, P., & Rau, D. (2016). Social, behavioral, and cognitive influences on upper echelons during strategy process: A literature review. Journal of Management, 42(1), 174–202.

    Google Scholar 

  • Buse, S., & Tiwari, R. (2014). Global innovation strategies of German Hidden Champions in key emerging markets. In ISPIM Conference Proceedings (pp. 5–11). The International Society for Professional Innovation Management (ISPIM).

  • Calori, R., Johnson, G., & Sarnin, P. (1994). CEOs' cognitive maps and the scope of the organization. Strategic Management Journal, 15(6), 437–457.

    Google Scholar 

  • Carley, K., & Palmquist, M. (1992). Extracting, representing, and analyzing mental models. Social Forces, 70(3), 601–636.

    Google Scholar 

  • Carroll, G. R. (1985). Concentration and specialization: dynamics of niche width in populations of organizations. American Journal of Sociology, 90(6), 1262–1283.

    Google Scholar 

  • Cavusgil, S. T., & Knight, G. (2015). The born global firm: An entrepreneurial and capabilities perspective on early and rapid internationalization. Journal of International Business Studies, 46(1), 3–16.

    Google Scholar 

  • Chakravarthy, B. S. (1982). Adaptation: A promising metaphor for strategic management. Academy of Management Review, 7(1), 35–44.

    Google Scholar 

  • Chen, D. N., & Liang, T. P. (2016). Knowledge diversity and firm performance: an ecological view. Journal of Knowledge Management, 20(4), 671–686.

    Google Scholar 

  • Cheng, K., Chen, L., & Xu, Q. (2012). Strategic schema, strategic flexibility and technological innovation capability: A moderating role of environmental dynamism. In 2012 International Symposium on Management of Technology (ISMOT) (pp. 38–42). IEEE.

  • Cheng, S. L., & Chang, H. C. (2009). Performance implications of cognitive complexity: An empirical study of cognitive strategic groups in semiconductor industry. Journal of Business Research, 62(12), 1311–1320.

    Google Scholar 

  • Cooper, A. C. (1995). Entrepreneurial information search. Journal of Business Venturing, 10(2), 107–120.

    Google Scholar 

  • Daft, R. L., & Weick, K. E. (1984). Toward a model of organizations as interpretation systems. Academy of Management Review, 9(2), 284–295.

    Google Scholar 

  • Danneels, E. (2011). Trying to become a different type of company: Dynamic capability at Smith Corona. Strategic Management Journal, 32(1), 1–31.

    Google Scholar 

  • Davidsson, P., Achtenhagen, L., & Naldi, L. (2010). Small firm growth. Foundations & Trends in Entrepreneurship, 6(2), 69–166.

    Google Scholar 

  • Davidsson, P., Delmar, F., & Wiklund, J. (2006). Entrepreneurship and the Growth of Firms. Northampton, MA: Edward Elgar Publishing.

    Google Scholar 

  • Din, F. U., Dolles, H., & Middel, R. (2013). Strategies for small and medium-sized enterprises to compete successfully on the world market: Cases of Swedish hidden champions. Asian Business & Management, 12(5), 591–612.

    Google Scholar 

  • Demir, R., Wennberg, K., & Mckelvie, A. (2017). The strategic management of high-growth firms: A review and theoretical conceptualization. Long Range Planning, 50(4), 431–456.

    Google Scholar 

  • Dunne, P., & Hughes, A. (1980s). Age, size, growth and survival: UK companies in the 1980s. Journal of Industrial Economics, 42(2), 115–140.

    Google Scholar 

  • Dutton, J. E., Fahey, L., & Narayanan, V. K. (1983). Toward understanding strategic issue diagnosis. Strategic Management Journal, 4(4), 307–323.

    Google Scholar 

  • Eberhart, R., Eesley, C. E., & Eisenhardt, K. M. (2017). Failure is an option: Institutional change, entrepreneurial risk and new firm growth. Organization Science, 28(1), 93–112.

    Google Scholar 

  • Eden, C., Ackermann, F., & Cropper, S. (1992). The analysis of cause maps. Journal of Management Studies, 29(3), 309–324.

    Google Scholar 

  • Egfjord, K. F. H., & Sund, K. J. (2020). Do you see what I see? How differing perceptions of the environment can hinder radical business model innovation. Technological Forecasting and Social Change, 150, 119787.

    Google Scholar 

  • Eggers, J. P., & Kaplan, S. (2013). Cognition and capabilities: A multi-level perspective. Academy of Management Annals, 7(1), 295–340.

    Google Scholar 

  • Eshima, Y., & Anderson, B. S. (2017). Firm growth, adaptive capability, and entrepreneurial orientation. Strategic Management Journal, 38(3), 770–779.

    Google Scholar 

  • Evans, D. S. (1987). The relationship between firm growth, size, and age: Estimates for 100 manufacturing industries. Journal of Industrial Economics, 35(4), 567–581.

    Google Scholar 

  • Froese, F. J., Sutherland, D., Lee, J. Y., Liu, Y., & Pan, Y. (2019). Challenges for foreign companies in China: Implications for research and practice. Asian Business & Management, 18(4), 249–262.

    Google Scholar 

  • Freeman, L. C. (1978). Centrality in social networks. Social Networks, 1(3), 215–239.

    Google Scholar 

  • Gao, G. Y., Murray, J. Y., Kotabe, M., & Lu, J. (2010). A "strategy tripod" perspective on export behaviors: Evidence from domestic and foreign firms based in an emerging economy. Journal of International Business Studies, 41(6), 1090–1091.

    Google Scholar 

  • Gerschewski, S., Rose, E. L., & Lindsay, V. J. (2015). Understanding the drivers of international performance for born global firms: An integrated perspective. Journal of World Business, 50(3), 558–575.

    Google Scholar 

  • Gollop, F. M., & Monahan, J. L. (1991). A generalized index of diversification: Trends in U.S. manufacturing. Review of Economics & Statistics, 73(2), 318–330.

    Google Scholar 

  • Gröschl, S., Gabaldón, P., & Hahn, T. (2019). The co-evolution of leaders’ cognitive complexity and corporate sustainability: The case of the CEO of Puma. Journal of Business Ethics, 155(3), 741–762.

    Google Scholar 

  • Häckner, E. (1991). Technological and market innovation: Strategies for product and company development. Scandinavian Journal of Management, 7(1), 67–69.

    Google Scholar 

  • Han, L., Zhang, S., & Greeen, F. (2017). Bank market concentration, relationship banking and small business liquidity. International Small Business Journal, 35(4), 365–384.

    Google Scholar 

  • Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251–1271.

    Google Scholar 

  • Hemmert, M., Cross, A. R., Cheng, Y., Kim, J. J., Kohlbacher, F., et al. (2019). The distinctiveness and diversity of entrepreneurial ecosystems in China, Japan, and South Korea: An exploratory analysis. Asian Business & Management, 18(3), 211–247.

    Google Scholar 

  • Hendricks, B., Howell, T., & Bingham, C. (2019). How much do top management teams matter in founder—led firms? Strategic Management Journal, 40(6), 959–986.

    Google Scholar 

  • Hodgkinson, G. P. (1997). Cognitive inertia in a turbulent market: The case of UK residential estate agents. Journal of Management Studies, 34(6), 921–945.

    Google Scholar 

  • Hong, E. S., & O'Neil, H. F. (1992). Instructional strategies to help learners build relevant mental models in inferential statistics. Journal of Educational Psychology, 84(2), 150–159.

    Google Scholar 

  • Hong, J., Wang, C., & Kafouros, M. (2015). The role of the state in explaining the internationalization of emerging market enterprises. British Journal of Management, 26(1), 45–62.

    Google Scholar 

  • Hoskisson, R. E., Hitt, M. A., & Hill, C. W. L. (1991). Managerial risk taking in diversified firms: An evolutionary perspective. Organization Science, 2(3), 296–314.

    Google Scholar 

  • Hsieh, L., & Lin, S. M. (2016). Exploring the market concentration and the market dominance of international tourist hotels in Taiwan. Journal of Statistics & Management Systems, 19(2), 285–301.

    Google Scholar 

  • Huff, A. S. (1982). Industry influences on strategy reformulation. Strategic Management Journal, 3(2), 119–131.

    Google Scholar 

  • Kaplan, S. (2008). Cognition, capabilities, and incentives: Assessing firm response to the fiber-optic revolution. Academy of Management Journal, 51(4), 672–695.

    Google Scholar 

  • Kaplan, S. (2011). Research in cognition and strategy: Reflections on two decades of progress and a look to the future. Journal of Management Studies, 48(3), 665–695.

    Google Scholar 

  • Kiesler, S., & Sproull, L. (1982). Managerial response to changing environments: Perspectives on problem sensing from social cognition. Administrative Science Quarterly, 27(4), 548–570.

    Google Scholar 

  • Kim, J., Lee, C. Y., & Cho, Y. (2016). Technological diversification, core-technology competence, and firm growth. Research Policy, 45(1), 113–124.

    Google Scholar 

  • Kiss, A. N., & Barr, P. S. (2015). New venture strategic adaptation: The interplay of belief structures and industry context. Strategic Management Journal, 36(8), 1245–1263.

    Google Scholar 

  • Knight, G. A., & Cavusgil, S. T. (2004). Innovation, organizational capabilities, and the born-global firm. Journal of international business studies, 35(2), 124–141.

    Google Scholar 

  • Kusnadi, Y., Yang, Z., & Zhou, Y. (2015). Institutional development, state ownership, and corporate cash holdings: Evidence from China. Journal of Business Research, 68(2), 351–359.

    Google Scholar 

  • Lampel, J., & Shamsie, J. (2000). Probing the unobtrusive link: Dominant logic and the design of joint ventures at General Electric. Strategic Management Journal, 21(5), 593–602.

    Google Scholar 

  • Lant, T. K., Milliken, F. J., & Batra, B. (1992). The role of managerial learning and interpretation in strategic persistence and reorientation: An empirical exploration. Strategic Management Journal, 13(8), 585–608.

    Google Scholar 

  • Lehmann, E. E., Schenkenhofer, J., & Wirsching, K. (2019). Hidden champions and unicorns: A question of the context of human capital investment. Small Business Economics, 52(2), 359–374.

    Google Scholar 

  • Lin, H. E., & McDonough, E. F., III. (2014). Cognitive frames, learning mechanisms, and innovation ambidexterity. Journal of Product Innovation Management, 31, 170–188.

    Google Scholar 

  • Liu, Y., & Huang, Q. (2018). University capability as a micro-foundation for the Triple Helix model: The case of China. Technovation, 76, 40–50.

    Google Scholar 

  • Liu, X., Lu, J., & Chizema, A. (2014). Top executive compensation, regional institutions and Chinese OFDI. Journal of World Business, 49(1), 143–155.

    Google Scholar 

  • March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.

    Google Scholar 

  • Mckiernan, P., & Purg, D. (2013). Hidden Champions in CEE and Turkey. Berlin: Springer.

    Google Scholar 

  • Mcnamara, G. M., Luce, R. A., & Tompson, G. H. (2002). Examining the effect of complexity in strategic group knowledge structures on firm performance. Strategic Management Journal, 23(2), 153–170.

    Google Scholar 

  • Miller, D., Lant, T. K., Milliken, F. J., & Korn, H. J. (1996). The evolution of strategic simplicity: Exploring two models of organizational adaption. Journal of Management, 22(6), 863–887.

    Google Scholar 

  • Mol, E. D., Khapova, S. N., & Elfring, T. (2015). Entrepreneurial team cognition: A review. International Journal of Management Reviews, 17(2), 232–255.

    Google Scholar 

  • Nadkarni, S., & Barr, P. S. (2008). Environmental context, managerial cognition, and strategic action: An integrated view. Strategic Management Journal, 29(13), 1395–1427.

    Google Scholar 

  • Nadkarni, S., Herrmann, P., & Perez, P. D. (2011). Domestic mindsets and early international performance: The moderating effect of global industry conditions. Strategic Management Journal, 32(5), 510–531.

    Google Scholar 

  • Nadkarni, S., & Narayanan, V. K. (2007). Strategic schemas, strategic flexibility, and firm performance: The moderating role of industry clockspeed. Strategic Management Journal, 28(3), 243–270.

    Google Scholar 

  • Nadkarni, S., & Narayanan, V. K. (2005). Validity of the structural properties of text-based causal maps: An empirical assessment. Organizational Research Methods, 8(1), 9–40.

    Google Scholar 

  • Narayanan, V. K., Zane, L. J., & Kemmerer, B. (2011). The cognitive perspective in strategy: An integrative review. Journal of Management, 37(1), 305–351.

    Google Scholar 

  • Piao, X., & Moon, J. J. (2019). When does knowledge similarity help foreign firms improve performance? Asian Business & Management, 18(4), 301–323.

    Google Scholar 

  • Porter, M. (1980). Competitive strategy: Techniques for analyzing industries and competitors. Social Science Electronic Publishing, 2, 86–87.

    Google Scholar 

  • Prahalad, C. K., & Bettis, R. A. (1986). The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7(6), 485–501.

    Google Scholar 

  • Purg, D., Saginova, O., Skorobogatykh, I., et al. (2016). Family owned hidden champions in Russia: Innovations, human capital and internationalization. Indian Journal of Science & Technology, 9(12), 1–10.

    Google Scholar 

  • Raffaelli, R., Glynn, M. A., & Tushman, M. (2019). Frame flexibility: The role of cognitive and emotional framing in innovation adoption by incumbent firms. Strategic Management Journal, 40(7), 1013–1039.

    Google Scholar 

  • Richard, O. C., Wu, J., Markoczy, L. A., & Chung, Y. (2019). Top management team demographic-faultline strength and strategic change: What role does environmental dynamism play? Strategic Management Journal, 40(6), 987–1009.

    Google Scholar 

  • Reger, R. K., & Palmer, T. B. (1996). Managerial categorization of competitors: Using old maps to navigate new environments. Organization Science, 7(1), 22–39.

    Google Scholar 

  • Shepherd, D. A., Mcmullen, J. S., & Ocasio, W. (2017). Is that an opportunity? An attention model of top managers' opportunity beliefs for strategic action. Strategic Management Journal, 38(33), 5083–5094.

    Google Scholar 

  • Short, J. C., & Palmer, T. B. (2003). Organizational performance referents: An empirical examination of their content and influences. Organizational Behavior & Human Decision Processes, 90(2), 209–224.

    Google Scholar 

  • Simon, H. (1992). Lessons from Germany's midsize giants. Harvard Business Review, 70(2), 115–123.

    Google Scholar 

  • Simon, H. (2009). Hidden champions of the twenty-first century: Success strategies of unknown world market leaders. New York: Springer.

    Google Scholar 

  • Simon, H. (2012). Hidden Champions-Aufbruch nach Globalia: Die Erfolgsstrategien unbekannter Weltmarktführer. New York: Campus Verlag.

    Google Scholar 

  • Simon, H. (1996). You don't have to be German to be a “Hidden Champion”. Business Strategy Review, 7(2), 1–13.

    Google Scholar 

  • Simon, H. A. (1990). Invariants of human behavior. Annual Review of Psychology, 41(1), 1–20.

    Google Scholar 

  • Stabell, C. B. (1978). Integrative complexity of information environment perception and information use: An empirical investigation. Organizational Behavior & Human Performance, 22(1), 116–142.

    Google Scholar 

  • Staw, B. M. (2016). Dressing up like an organization: When psychological theories can explain organizational action. Journal of Management, 17(4), 805–819.

    Google Scholar 

  • Teodoridis, F., Bikard, M., & Vakili, K. (2018). Creativity at the knowledge frontier: The impact of specialization in fast- and slow-paced domains. Administrative Science Quarterly. https://doi.org/10.1177/0001839218793384.

    Article  Google Scholar 

  • Tong, Y., Tan, C. H., & Teo, H. H. (2017). Direct and indirect information system use: A multimethod exploration of social power antecedents in healthcare. Information Systems Research, 28(4), 690–710.

    Google Scholar 

  • Tripsas, M., & Gavetti, G. (2000). Capabilities, cognition, and inertia: Evidence from digital imaging. Strategic Management Journal, 21(10–11), 1147–1161.

    Google Scholar 

  • Venkatesh, V., Brown, S. A., & Sullivan, Y. W. (2016). Guidelines for conducting mixed-methods research: An extension and illustration. Journal of the Association for Information Systems, 17(7), 2.

    Google Scholar 

  • Wang, X. L., Fan, G., & Yu, J. W. (2017). Marketization index of China's provinces: NERI report 2016. Beijing: Social Science Academic Press China.

    Google Scholar 

  • Weerawardena, J., & Mort, G. S. (2006). Investigating social entrepreneurship: A multidimensional model. Journal of World Business, 41(1), 21–35.

    Google Scholar 

  • Wei, L. Q., Lau, C. M., Young, M. N., & Wang, Z. (2005). The impact of top management team demography on firm performance in China. Asian Business & Management, 4(3), 227–250.

    Google Scholar 

  • Weick, K. E. (1995). Sensemaking in organizations. Thousand Oaks, CA: Sage Publications.

    Google Scholar 

  • Wiklund, J., Patzelt, H., & Shepherd, D. A. (2009). Building an integrative model of small business growth. Small Business Economics, 32(4), 351–374.

    Google Scholar 

  • Witt, A. V. J. (2015). Global hidden champions: The internationalisation paths, entry modes and underlying competitive advantages of Germany's and Britain's Global'top Three'Niche Players. Doctoral dissertation, University of Edinburgh.

  • Wright, M., Filatotchev, I., Hoskisson, R. E., & Peng, M. W. (2005). Strategy research in emerging economies: Challenging the conventional wisdom. Journal of Management Studies, 42(1), 1–33.

    Google Scholar 

  • Xie, Q. (2017). Firm age, marketization, and entry mode choices of emerging economy firms: Evidence from listed firms in China. Journal of World Business, 52(3), 372–385.

    Google Scholar 

  • Yang, D., Wang, A. X., Zhou, K. Z., & Jiang, W. (2019). Environmental strategy, institutional force, and innovation capability: A managerial cognition perspective. Journal of Business Ethics, 159(4), 1147–1161.

    Google Scholar 

  • Yin, R. K. (2017). Case study research and applications: Design and methods. Thousand Oaks, CA: Sage publications.

    Google Scholar 

Download references

Acknowledgement

The authors would like to acknowledge the financial support provided by National Natural Science Foundation of China (No. 71832013).

Author information

Authors and Affiliations

  1. School of Management, Zhejiang University, Hangzhou, 310058, China

    Linan Lei & Xiaobo Wu

Authors
  1. Linan Lei
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Xiaobo Wu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Xiaobo Wu.

Ethics declarations

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Lei, L., Wu, X. Thinking like a specialist or a generalist? Evidence from hidden champions in China. Asian Bus Manage 21, 25–57 (2022). https://doi.org/10.1057/s41291-020-00114-2

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41291-020-00114-2

Keywords

Search

Navigation