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Uncertainty, strategic sensemaking and organisational failure in the art market: What went wrong with LVMH's investment in Phillips auctioneers?

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  • Samdanis, Marios
  • Lee, Soo Hee

Abstract

Strategic decision-making in the volatile and uncertain art market is not only instigated by rational interpretation of the external environment, but also by expert-based intuition. This paper investigates organisational failure at Phillips auctioneers between 1999 and 2002, a period in which it was owned by the multinational luxury goods conglomerate Louis Vuitton Moët Hennessy (LVMH). To analyse this case, we develop a conceptual framework for strategic sensemaking in art organisations that includes the processes of scanning, interpreting, strategising, acting and adjusting, which take place in non-linear and recursive patterns in supporting continuous loops of improvement. Our analysis identifies the merits of intuitive decision-making when realising a novel artistic and entrepreneurial vision which established Phillips as a boutique auction house. However, it also highlights the limitations of emotional and opportunistic decision-making which could lead to blinded management if any of the processes of strategic sensemaking is ignored.

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  • Samdanis, Marios & Lee, Soo Hee, 2019. "Uncertainty, strategic sensemaking and organisational failure in the art market: What went wrong with LVMH's investment in Phillips auctioneers?," Journal of Business Research, Elsevier, vol. 98(C), pages 475-488.
    • Handle: RePEc:eee:jbrese:v:98:y:2019:i:c:p:475-488
    DOI: 10.1016/j.jbusres.2018.08.030
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    Cited by:

    1. Merendino, Alessandro & Sarens, Gerrit, 2020. "Crisis? What crisis? Exploring the cognitive constraints on boards of directors in times of uncertainty," Journal of Business Research, Elsevier, vol. 118(C), pages 415-430.
    2. Mohammad Fakhar Manesh & Giulia Flamini & Damiano Petrolo & Rocco Palumbo, 2022. "A round of dancing and then one more: embedding intuition in the ballet of entrepreneurial decision making," International Entrepreneurship and Management Journal, Springer, vol. 18(2), pages 499-528, June.
    3. Ma, Gang & Zheng, Junjun & Wei, Ju & Wang, Shilei & Han, Yefan, 2021. "Robust optimization strategies for seller based on uncertainty sets in context of sequential auction," Applied Mathematics and Computation, Elsevier, vol. 390(C).

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