Wisconsin School of Business

Russell (Russ) Coff

Associate Dean for PhD and Research

Professor - Management & Human Resources, Office of the Dean
Wisconsin Naming Partners Professor of Strategic Management

Russell Coff is the Wisconsin Naming Partners Chair of Strategic Management at the University of Wisconsin-Madison. His research explores the role of human assets in innovation, creativity, and, ultimately in competitive advantage. For example, he studies management dilemmas associated with human capital including: 1) the management of strategic investments in knowledge-based assets under great uncertainty 2) appropriating value (rent) from competitive advantages, 3) creativity & innovation under conditions of asymmetric information and uncertainty, and 4) how buyers cope in mergers and acquisitions that involve human assets. Coff received his Ph.D. from UCLA and has previously been a faculty member at Emory and Washington Universities.

Russ has served the research community through his participation on a variety of editorial boards including Academy of Management Journal, Academy of Management Review, Organization Science, Strategic Management Journal, and Strategic Organization (where he is currently a Co-Editor). He also chaired the Business Policy and Strategic Division of the Academy of Management and the Strategic Human Capital Interest Group of the Strategic Management Society. He currently serves on the Board of the Strategic Management Society.
 

Selected Published Journal Articles


Wright, P., Coff, R., & Moliterno, T. (2014). Strategic Human Capital: Crossing the Great Divide. Journal of Management (40)
Campbell, B., Coff, R., & Kryscynski, D. (2012). Re-thinking Competitive Advantage from Human Capital.
Article AbstractThe strategy literature often emphasizes firm-specific human capital as a source of competitive advantage based on the assumption that it constrains employee mobility. We first identify three boundary conditions that limit the applicability of this logic. We then offer a more comprehensive framework of human capital–based advantage that explores both demand- and supply-side mobility constraints. The critical insight is that these mobility constraints have more explanatory power than the firm specificity of human capital.
Academy of Management Review (37), 376-395.
Perry-Smith, J., & Coff, R. (2011). In the mood for entrepreneurial creativity? How optimal group affect differs for generating and selecting ideas for new ventures.
Article AbstractSuperior entrepreneurial creativity arises when teams are effective at both generating diverse alternatives and culling them to select the best solution. We develop theory about how the optimal group mood varies for the generation and selection stages of creativity. Using data from an entrepreneurial creativity task, we find that these stages require distinct collective moods. While an activated-pleasant mood promotes variance generation, idea selection requires a very different mood. Findings suggest that some teams fail to make transitions to the appropriate mood. We conclude by discussing implications for promoting entrepreneurial creativity.
Strategic Entrepreneurship Journal (5), 247-268.
Coff, R., & Kryscynski, D. (2011). Drilling for Micro-Foundations of Human Capital Based Competitive Advantages.
Article AbstractThere has been great interest in gaining a better understanding of the micro-foundations of strategic capabilities. Along these lines, there is little doubt that heterogeneous human capital is often a critical underlying mechanism for capabilities. As such, one path to micro-foundations would integrate literature regarding the management of human capital. For example, the strategic human resource management literature has focused on broad policy mechanisms that often enhance performance. However, these are not designed to mitigate idiosyncratic dilemmas that arise from the very attributes that hinder imitation of human capital-based capabilities (e.g., specificity, social complexity, and causal ambiguity). We drill down deeper to identify individual and firm level components that interact to grant some firms unique capabilities in attracting, retaining, and motivating human capital. We conclude by outlining a research agenda for exploring cross-level components of human capital based advantages.
Journal of Management (37), 1429-1433.
Coff, R. (2010). The Co-evolution of Rent Appropriation and Capability Development.
Article AbstractExtant approaches to rent appropriation are static in that they explore bargaining power at a fixed point in time. This article contributes by examining how capabilities and bargaining power co-evolve. As capabilities are developed, those who are favored by knowledge asymmetries make decisions, such as the organizational form in which the capability will be embedded, that balance value creation potential against the rent appropriation regime. Using the example of Apple’s development of the iPod, this article illustrates how stakeholders plan for rent appropriation as they assemble new capabilities – well before any value is actually created. Given that firm performance is an outcome of both capability development and rent appropriation, a robust theory must incorporate an understanding of how they co-evolve.
Strategic Management Journal (31), 711-733.
Makadok, R., & Coff, R. (2009). Both Market and Hierarchy: An incentive-system theory of hybrid governance forms.
Article AbstractToday economic activity is increasingly organized by fusing elements of hierarchies into market transactions (e.g., quasi-integration) or bringing aspects of markets within hierarchies (e.g., empowerment). These hybrid governance forms are not adequately addressed in most extant theories that envision a unidimensional continuum between markets and hierarchies, thereby ignoring true hybrids that are market-like in some ways yet hierarchy-like in others. We contribute first by creating a taxonomy of hybrid forms and second by developing a formal theory that predicts when a given hybrid form will be efficient. Our model is unique in that we consider cross-task synergies in a multi-task principal-agent model, where hybrid forms result as principals try to motivate cooperation among agents indirectly through incentives, ownership and formal authority. We conclude with a discussion of other mechanisms that might also help to understand and predict hybrid governance forms.
Academy of Management Review (34), 297-319.
Coff, R., & Lee, P. (2007). Insider Trading as a Path to Competitive Advantage?. Strategic Organization (5), 1-5.
Coff, R., & Laverty, K. (2007). Real Options Meet Organizational Theory: Coping with path dependencies, agency costs, and organizational form.
Article AbstractScholars have begun to recognize the importance of integrating organizational issues into real options theory. In doing so, some argue that options are inappropriate for evaluating critical strategic investments. In a more in-depth analysis, we argue that the organizational form that an option takes has a profound effect on exercise decisions. When options are initially integrated, organizational elements such as routines and culture become increasingly intertwined over time, raising the cost of abandoning the option – in effect, pushing firms to exercise options. In contrast, initially isolated options become idiosyncratic and more costly to integrate over time – pushing firms to kill them. There are also reputational and social capital effects that may bias exercise decisions beyond the mere consideration of costs, leading to escalation or missed opportunities.
Advances in Strategic Management (24), 333–361.
Coff, R., Coff, D., & Eastvold, R. (2006). The Knowledge Leveraging Paradox: How to scale up without making knowledge imitable.
Article AbstractTacit knowledge, one of the most promising resources, is among the toughest to leverage. It is important because it is often inimitable. However, increasing its scale may require codification, which may make it imitable. We explore and illustrate an approach to applying information technologies to leverage scarce expertise without codifying or transferring knowledge. Such technology may allow individuals to further specialize and generate more tacit knowledge, preserving the strategic properties of knowledge while scaling up.
Academy of Management Review (31), 452-465.
Ahuja, G., Coff, R., & Lee, P. (2005). Managerial Foresight and Attempted Rent Appropriation: Insider Trading on Knowledge of Imminent Breakthroughs.
Article AbstractIn order to establish a competitive advantage, ?rms must acquire or create resources at a price below their value in use. Absent pure luck, this requires managers to exercise foresight about a resource’s future value and/or complementarities with pre-existing capabilities. This foresight grants managers the opportunity to exploit information asymmetries for personal gain as well as building organizational capabilities. Nevertheless, there is limited research on the extent of foresight or how managers use it. In our study of insider trading, we found that managers purchase stock well before breakthrough patents are ?led. We argue for further research on the extent of managerial foresight and how it affects rent generation and appropriation
Strategic Management Journal (26), 791-808.
Blyler, M., & Coff, R. (2003). Dynamic Capabilities, Social Capital, & Rent Appropriation: Ties that Split Pies.
Article AbstractWho reaps the fruits of a dynamic capability? We argue that while social capital is essential for the acquisition, integration, and release of resources at the core of a dynamic capability, actors can also use social capital for personal gain. Thus, social capital may be a key to understanding both rent generation and rent appropriation. Even when causal ambiguity obscures individual contributions, they may use their social capital to establish credible claims on the rent. Speci?cally, employees who occupy structural holes, span organizational boundaries, or who are highly central may be most able to appropriate rent because their social capital grants credibility to their claims. Rent that is appropriated in this way may be unobservable in performance measures that fail to distinguish normal compensation from rent. We contribute by identifying the speci?c role of social capital in a dynamic capability and linking social capital to rent appropriation patterns.
Strategic Management Journal (24), 677-686.
Coff, R., & Lee, P. (2003). Insider Trading as a Vehicle to Appropriate Rent from R&D.
Article AbstractWhile most insider trading is routine and legal, investors still treat it as new information about the ?rm’s prospects—they assume that trades re?ect managers’ attempts to pro?t from their private information. This article explores insider trading as a mechanism to appropriate rent from R&D advances. We analyze stock price reactions to over 134,000 insider-trading events and ?nd that insider purchases generate larger positive stock price reactions for R&D-intensive ?rms. Investors seem to assume that managers use insider trading to appropriate rent from R&D breakthroughs. We discuss how shareholders may prefer this rent appropriation mechanism over other forms of compensation that directly reduce the ?rm’s income.
Strategic Management Journal (24), 183-190.
Coff, R. (2003). Bidding Wars Over R&D Intensive Firms: Knowledge, opportunism and the market for corporate control.
Article AbstractThe knowledge-based theory of the firm (KBTF) suggests that the scope and existence of firms can be explained independent of opportunism, the driving force behind transaction cost economics (TCE). Moreover, this theory suggests that, as knowledge intensity increases, organizational boundary decisions are increasingly driven by knowledge management concerns, rather than by opportunism. Therefore, as R&D-intensity increases, the KBTF should gain explanatory power over TCE. However, this study finds that problems of opportunism increase with R&D intensity. Specifically, as R&D intensity increased, managers actively discouraged bidding wars (e.g., by granting lockup agreements), contrary to shareholder interests. Managers may even be able to buy the firm themselves at a discount since rivals are unlikely to emerge. Indeed, TCE seems to gain explanatory power as knowledge intensity grows.
Academy of Management Journal (46), 74-85.
Coff, R. (2002). Human Capital, Shared Expertise, and the Likelihood of Impasse in Corporate Acquisitions.
Article AbstractHuman capital often cannot be acquired in ef?cient labor markets due to poor information or ?rm-speci?c skills that develop over time. Since such knowledge may be critical to ?rms building a strategic capability, it is not surprising that many acquisitions occur in human capital-intensive industries. Yet, the uncertainty associated with human capital increases the risk of overbidding. If the buyer bids conservatively, the target may reject the offer or rival bidders may emerge. In contrast, aggressive bidders may need to back out of the transaction if due diligence reveals unanticipated risks. Either way, impasse is more likely for targets in human capital-intensive industries. This study explores whether a shared expertise mitigates these hazards. Findings suggest that similar expertise is particularly important when acquiring human capital-intensive targets. Transactions involving unrelated buyers of such targets are less likely to close. This has implications for diversi?cation theory and the resource-based view.
Journal of Management (28), 115-137.
Coff, R., & Kevin, L. (2001). Roadblocks to Competitive Advantage: How institutional constraints and decision biases hinder investments in strategic resources.
Article AbstractResource-based theory suggests that unique and tacit resources may be key sources of sustainable competitive advantage. This framework is particularly compelling for technology-driven firms, where knowledge-based strategic assets are critical resources. In this paper we argue that managers pursuing a resource-based advantage are impeded by two mutually reinforcing and potentially interacting barriers: [a] structural and procedural characteristics of the resource-allocation process, and [b] individual cognitive biases in decisions involving uncertain, long time horizon investments. While the competitive challenge of implementing resource-based theory arises from the strategy literature, we describe how firms must address problems that exist at the organizational and individual levels to achieve a sustainable advantage.
Journal of High Technology Management Research (12), 1-24.
Coff, R. (1999). How Buyers Cope with Uncertainty When Acquiring Firms in Knowledge-Intensive Industries: Caveat emptor.
Article AbstractKnowledge often cannot be acquired in efficient factor markets due to asymmetric information and because it may be bundled in teams or networks. As a result, knowledge is frequently the focus of corporate acquisitions. However, variations in quality are harder to observe for knowledge-based assets than tangible assets. This creates dilemmas for buyers whenever a target's industry is knowledge-intensive. This study finds that buyers cope by: 1) offering lower bid premia; 2) paying in stock; and 3) increasing information through lengthy negotiations and by avoiding tender offers. However, unrelated buyers do not apply these strategies. Their information needs may be lower if they do not intend to integrate the target. These findings have implications for further work in strategic management and organizational theory.
Organization Science (10), 144-161.
Coff, R. (1999). When Competitive Advantage Doesn’t Lead to Performance: Resource-based theory and stakeholder bargaining power.
Article AbstractWhat if rent from a competitive advantage is appropriated so it cannot be observed in performance measures? The resource-based view was not formulated to examine who will get the rent. Yet, this essay argues that the factors leading to a resource-based advantage also predict who will appropriate rent. Knowledge-based assets are promising because firm-specificity, social complexity and causal ambiguity make them hard to imitate. However, the roles of internal stakeholders may grant them a great deal of bargaining power especially relative to investors. This essay integrates the resource-based view with the bargaining power literature by defining the firm as a nexus of contracts. This new lens can help to explain when rent will be generated and, simultaneously, who will appropriate it. In doing so, it provides a more robust theory of firm performance than the resource-based view alone. It is also suggested that this lens might be useful for examining other theories of firm performance.
Organization Science (10), 119-133.
Coff, R. (1997). Human Assets and Management Dilemmas: Coping with Hazards on the Road to Resource-based Theory.
Article AbstractResource-based theorists argue that human assets can be a source of sustainable advantage because tacit knowledge and social complexity are hard to imitate. However, these desirable attributes cause dilemmas that may prevent firms from generating an advantage. This article develops a framework for analyzing and coping with these challenges. Although the problem arises from the strategy literature, the solutions are drawn from the organizational behavior, human resource management, human capital, and professions literatures. Finally, I examine implications for how insights from these diverse literatures can be integrated to guide future strategy research.
Academy of Management Review (22), 374-402.
Flamholtz, E., & Coff, R. (1994). Human Resource Valuation and Amortization in Corporate Acquisitions: A Case Study. Advances in Management Accounting (3), 55-83.

Submitted Working Papers


Raffiee, J., & Coff, R. Micro-Foundations of Firm-Specific Human Capital.
Coff, R., & Raffiee, J. Towards a Theory of Perceived Firm-Specific Human Capital: Peering into Shrouded Markets Through Distorted Lenses.

Practitioner-Oriented Publications


Coff, R., & Laverty, K. (2001). Real Options on Knowledge Assets: Panacea or Pandora's Box?. Business Horizons (November/December), 73-79.
Coff, R., & Flamholtz, E. (1993). Corporate Investments in Human Capital: How Financial Accounting Standards Undermine Public Policy.
Article AbstractAccounting standards generally treat all expenditures associated with human capital as expenses - it is therefore assumed that no future value can be gleaned. This article explores how this may distort business decisions and how public policy may be better served by adopting standards that more accurately reflect the nature of today's most important assets.
Stanford Law and Policy Review (5), 30-40.
Flamholtz, E., Gerald, S., & Coff, R. (1988). Developing Human Resource Accounting as a Decision Support System. Accounting Horizons (2), 1-9.

Graduate Courses


PhD Orientation Seminar
Course DescriptionThis course provides an introduction to academic life and the life of a PhD student. It also offers a survey of resources and critical success factors to be successful in the PhD program.
(BUS 965 Section 1), Fall 2013. Download Syllabus

Strategic Management (PhD Seminar)
Course DescriptionThis doctoral level strategy seminar invites students to explore drivers of performance heterogeneity among firms. Why do some firms out-perform others? The topic is integrative in that the answer draws on theory from economics, sociology, and even psychology as well as management and organizational theory that is interdisciplinary. In studying this topic, we will also focus on the process of conducting management research. What is the anatomy of a scholarly contribution and how does one conduct research in this field?
(MHR 765 Section 6), Spring 2012. Download Syllabus

Business Strategy (Full time MBA)
Course DescriptionThis course examines how firms gain and sustain competitive advantages. To be successful, the firm’s strategy must permeate all departments and functional areas. As such, this course integrates knowledge and skills gained from your prior studies (e.g., marketing, management, finance, accounting...). In drawing on these tools, we explicitly apply a general management point of view –we will analyze strategies in light of the total enterprise.
(MHR 723 Section 1), Fall 2012. Download Syllabus

EMBA Business Strategy
Course DescriptionThis course examines how firms gain and sustain competitive advantages. To be successful, the firm’s strategy must permeate all departments and functional areas. As such, this course integrates knowledge and skills gained from your prior studies (e.g., marketing, management, finance, accounting...). In drawing on these tools, we explicitly apply a general management point of view –we will analyze strategies in light of the total enterprise.
(MHR 723 Section 31), Fall 2013. Download Syllabus



Learning/Teaching Oriented Publications


Maggitti, P., Coff, R., Hatfield, D., & Ferrier, W. (2012). Dynamics of Rivalry.
Article AbstractThis energetic lecture consists of a paper fight and another exercise to provide background, methodology, and findings from research examining competitive dynamics. Foundational to this topic are several literatures including game theory and the Structure-Conduct-Performance paradigm. Empirical research in competitive dynamics analyzes firm actions by examining competitive actions and responses identified through content analysis of newspapers and trade magazines. This methodology has enhanced our understanding of competitive dynamics and identified key practical implications. Students then analyze competitive data between Coke and Pepsi to illustrate differences in their behavior and the strengths and weaknesses of each approach.
Journal of Industrial Organization Education (6), 1-10.
Coff, R., & Hatfield, D. (2003). Tinkering in Class: Using the Tinker Toy Exercise to Teach First Mover Advantages and the Resource-based View.
Article AbstractWe suggest how an experiential exercise using building toys - such as Tinker Toys or Builderifics, can be used to teach students about the concepts of first-mover advantages and the resource-based view. The exercise requires the class to be broken up into teams. Each team is then assigned the task of building the tallest tinker toy tower they can in a short amount of time. After each team is allowed sequentially to attempt to build a tall tower, the class then discusses why later teams tended to do better than earlier teams at accomplishing this task. The discussion should revolve around the resource-based view concepts of rarity, imitability and substitutability, and the first-mover advantages (technological leadership, preemption, switching costs and buyer uncertainty) and disadvantages (free-rider effects, resolution of technological or market uncertainty, shifts in technological or customer needs, and incumbent inertia).
Journal of Strategic Management Education (1), 289-303.

Professional Organizations


Academy of Management. Assistant Program Chair - Division Chair of the BPS division (2005-2009)

Strategic Management Society. Founding Chair of the Strategic Human Capital Interest Group

Strategic Management Society. Elected to the Board of Directors


Editorial and Reviewing Activities


Journal of Management (Co-editor of the Strategic Human Capital special issue) - Since July 2013
Special Issue Editor

Strategic Organization (Co-Editor) - Since November 2011
Editor

Strategic Management Journal - Since August 2007
Editorial Board Member

Academy of Management Journal - August 2004 - December 2010
Editorial Board Member

Organization Science - Since August 2002
Editorial Board Member

Journal of Strategic Management Education - Since August 2002
Editorial Board Member

Academy of Management Review - August 1998 - December 2002
Editorial Board Member


Photograph of Russell Coff

Russell (Russ) Coff

Associate Dean for PhD and Research
 
Professor | Management & Human Resources, Office of the Dean
Wisconsin Naming Partners Professor of Strategic Management
(608) 263-6437
4259 Grainger Hall