Role of strategy in value capture from foresight exercises: firms’ responsiveness to long term trends in the passenger car industry

Abstract

Purpose – This paper aims to address the broad question of how organizations capture value from foresight exercises. Through a comparative case analysis, this paper looks at what firms do to make the information usable and create value. It explores factors that cause different firms to respond differently to the same trends. It analyzes the passenger car segment of the automobile industry and the response of six major firms to fossil fuel and changing environmental regulations through an analysis of their policies and strategic activities, such as new product development. It finds foresight to be an important link between firm capabilities and environmental changes. Design/methodology/approach – This paper adopts the case approach to capture the linkage between the issue and the context (Yin, 1994) and uses multiple cases to explore the variables by comparing and contrasting the cases on key aspects (Eisenhardt and Graebner, 2007). As the paper ' s objective is to understand the similarities and differences between dominant firms in the sector, it chooses through theoretical sampling, six firms that have a presence in all the major regions of the world – two each from the USA, Europe and Japan – Ford, General Motors, Volkswagen, Renault, Toyota and Honda. This sample represents the firms and regions traditionally strong in the passenger car industry. Findings – Thus, it is seen that the relationship that was posited in the conceptual model between the goal of the firms, the vision of the future and the nature of products and approach to technology/competence development seems to be valid. However, in addition, the paper perceives that some additional linkages that link between foresight and the goals and vision of the future seem to be influenced by the extent of uncertainty. In addition, the decisions regarding portfolio of products and approaches to technology and competence development seem to be also influenced by the perception of existing competencies and the external competitive context. Research limitations/implications – This paper was based on multiple cases created out of secondary information, hence the constructs used are those which are perceived and stated. Practical implications – The paper could help firms understand decisions related to technology choices in field involving high levels of uncertainty and competition. Social implications – This paper could improve learning processes from foresight exercises, and enable strategic decisions to be taken on these. Originality/value – Thus, this paper has explored the linkages between what firms perceive and state, and what is reflected in their actions. It has looked at this linkage from the perspective of foresight, and the strategic perspective of the firm. It has come up with additional issues and questions that influence this relationship. These can inform future research in this domain.