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The effect of international venturing on firm performance: The moderating influence of absorptive capacity
Abstract
Companies have vigorously pursued opportunities for profitability and growth through international venturing. Yet, research evidence on the performance benefits of international venturing activities has been contradictory. Applying an organizational learning framework, we propose that the expected effects of international venturing activities on financial performance depend on companies' absorptive capacity. Data from 217 global manufacturing companies show that absorptive capacity moderates the relationship between international venturing and firms' profitability and revenue growth. These results urge executives to build internal R&D and innovative capabilities in order to successfully exploit the new knowledge acquired from foreign markets.
... Nel gativel rel latiol nship bel twel el n branding capability and firm agel el xists basel d ol n [130] argumel nt that ol ldel r firms arel unlikel ly tol changel duel tol thel ir inel rtia and burel aucratizatiol n. [131] arguel that yol ung ol rganizatiol ns arel mol rel likel ly tol suffel r frol m a lack ol f rel sol urcel s and capabilitiel s than ol ldel r col mpaniel s. Yol ungel r col mpaniel s arel nol t burdel nel d by thel inel rtia that el xists in ol ldel r col mpaniel s, inel rtia that wol uld hindel r thel lel arning nel cel ssary tol use l Dynamic Capability el ffel ctivel ly [132]. With changel s in col rpol ratel ol pel rating capabilitiel s rarel in yol ungel r col mpaniel s, Dynamic Capability will increl asel lel arning mol rel and havel a grel atel r impact ol n futurel col mpany pel rfol rmancel [62]. ...
... El stablishel d SMEl s may lol sel thel initial col mpel titivel advantagel ol f agility duel tol strel ngthel ning col rel rol utinel s, prol cel ssel s and structurel s [126]. As a rel sult, nel wcol mel rs whol del mol nstratel high lel vel ls ol f el ntrel prel nel urial ol riel ntatiol n ol ftel n piol nel el r radical branding in el nvirol nmel nts ol f tel chnol lol gy-inducel d discol ntinuity [132]. In shol rt, thel pursuit ol f branding in el stablishel d col mpaniel s will bel charactel rizel d by grel atel r difficultiel s col mparel d tol flel xiblel and fastmol ving nel w col mpaniel s [137]. ...
... Thel sel includel brand namel , intel rnal knol wlel dgel , skillel d pel rsol nnel l, tradel col ntacts, machinel ry, el fficiel nt prol cel durel s, and capital, [10]. Yol ungel r col mpaniel s arel nol t burdel nel d by thel inel rtia that el xists in ol ldel r col mpaniel s; inel rtia wol uld hindel r thel lel arning nel cel ssary tol use the l Dynamic Capability el ffel ctivel ly [132]. With changel s in col rpol ratel ol pel rating capabilitiel s in yol ungel r col mpaniel s, Dynamic Capability will increl asel lel arning affects futurel col mpany pel rfol rmance [62]. ...
... Existing research underscores the pronounced influence of absorptive capacity on firm performance, particularly in terms of financial outcomes (Ahmed et al. 2020;Lehmann et al. 2022;Liu et al. 2018;Zahra and Hayton 2008). However, only a limited number of studies have delved into the interplay between absorptive capacity and a firm's operational performance. ...
... This landscape necessitates a closer examination of how absorptive capacity influences firm operational performance. Past research has presented mixed results in this domain: while some findings affirm a positive association between absorptive capacity and firm performance (Ahmed et al. 2020;Lehmann et al. 2022;Liu et al. 2018;Zahra and Hayton 2008), others suggest an insignificant impact (Kale et al. 2019). This inconsistency in results suggests the presence of potential moderating factors in the relationship between absorptive capacity and firm performance. ...
... Organizations with elevated levels of absorptive capacity are positioned to not only expand their operational and market footprints internationally but also accelerate learning and attain market triumph (Zahra and Hayton 2008). However, cultivating such capacity mandates sustained financial investment and a profound commitment to R&D. ...
This study aims to clarify the mediating role of absorptive capacity in the relationship between organizational orientation specifically, technology opportunism and change orientation and operational performance, while also exploring the moderating role of organizational ambidexterity (encompassing exploration and exploitation orientation) on absorptive capacity and organization operational performance. Data were sourced from 265 managers across diverse industries in Malaysia, revealing a statistically significant mediating effect of absorptive capacity on the relationship between organizational orientation and operational performance. Moreover, organizational ambidexterity was found to statistically support the moderating effects on the relationship between absorptive capacity and operational performance. This research examines the interplay between various dimensions of organizational orientation and ambidexterity with respect to absorptive capacity and operational performance, thereby adding valuable insights to the extant literature in the field.
... CVC investments can be used to discover, learn about, and evaluate foreign markets (Anokhin et al., 2016;Zahra & Hayton, 2008). Once an attractive region has been identified, CVC units scan the market for suitable start-ups in which to invest. ...
... Moreover, CVC, as a comparatively resource-efficient approach, can be used to identify suppliers and partner firms to establish initial business relationships in the target region (Hill & Birkinshaw, 2008;Magni, Chierici, Fait, & Lefebvre, 2022). Similarly, CVC is often used to find and assess promising foreign acquisition targets (Zahra & Hayton, 2008): parent firms first invest a minority stake to evaluate a venture's potential better, and when they improve their understanding, they acquire the funded start-up. Thus, the more money that is spent on foreign targets, and the larger the international portfolio, the stronger the subsequent geographic change effect should be. ...
... After the initial transaction, CVC units accumulate foreign market-related information and incorporate it into their knowledge base (Bruneel et al., 2010;Narayanan et al., 2009). By learning best practices and adapting to the region's characteristics (Zahra & Hayton, 2008), companies assess the potential to succeed in the country, learn how to set up international activities, and they may decide to become more involved in the foreign target market (Du, Zheng, & Chang, 2020;. Likewise, when CVC is used to test startup candidates for subsequent M&A activity (Lee & Kang, 2015), it also takes several periods to close major internationalization deals. ...
Incumbent firms use corporate venture capital (CVC) as an interorganizational learning mechanism to get access to new technologies or to study and enter foreign markets. When companies adapt their product portfolios or expand their business activities geographically, strategic change takes place. Nonetheless, research still lacks an understanding of CVC's impact on both dimensions of strategic change. Building on learning theory, we examine the impact of CVC activity on product portfolio change and geographic change using a sample of 1,458 CVC units and 6,751 transactions. Our study empirically shows that technology-related CVC investments lead to subsequent product portfolio adjustments, while investments in foreign start-ups drive geographic change. Our paper also finds that these positive change effects diminish with increasing industry and cultural distance, as higher investment uncertainty and risk arise from identifying (excessively) heterogeneous knowledge. Thus, increasing distance reduces the effectiveness of interorganizational learning and impedes strategic change. However, our paper confirms that CVC represents an effective catalyst for knowledge acquisition and related strategic change, offering practical insights for firms seeking to leverage CVC as a low-cost mechanism for product and geographic diversification.
... Prior studies suggest that AC may have an important role in determining the extent to which a firm could reap the benefits from their diversification experiences (Camisón and Forés, 2010) because enables managing diverse and complex product portfolios (Fernhaber and Patel, 2012) and enhances benefits of international operations (Zahra and Hayton, 2008). Firms with superior AC will have a diverse and deep stock of knowledge that will help them to manage and absorb the variety of information and knowledge that is accessible in diverse product and international markets (Fernhaber and Patel, 2012;Zahra and Hayton, 2008). ...
... Prior studies suggest that AC may have an important role in determining the extent to which a firm could reap the benefits from their diversification experiences (Camisón and Forés, 2010) because enables managing diverse and complex product portfolios (Fernhaber and Patel, 2012) and enhances benefits of international operations (Zahra and Hayton, 2008). Firms with superior AC will have a diverse and deep stock of knowledge that will help them to manage and absorb the variety of information and knowledge that is accessible in diverse product and international markets (Fernhaber and Patel, 2012;Zahra and Hayton, 2008). The existing stock of knowledge enables firms to draw the appropriate conclusions from their experience of diversification while coordinating across markets (Fernhaber and Patel, 2012;Zahra and Hayton, 2008). ...
... Firms with superior AC will have a diverse and deep stock of knowledge that will help them to manage and absorb the variety of information and knowledge that is accessible in diverse product and international markets (Fernhaber and Patel, 2012;Zahra and Hayton, 2008). The existing stock of knowledge enables firms to draw the appropriate conclusions from their experience of diversification while coordinating across markets (Fernhaber and Patel, 2012;Zahra and Hayton, 2008). AC helps diversified firms recognise the value of information accessible in diverse businesses and leverage them in future strategic moves (Nguyen and Cai, 2016). ...
Many researchers have tried to test whether there really is a relationship between global diversification and firm performance, although many of them only deal with one aspect, be it market diversification or product diversification, without considering the role of the internal capacities of the company. Considering the importance of knowledge and its management in complex and uncertain contexts such as the current ones, the study investigates the effect of absorptive capacity on the global diversification-performance relationship. This research analyses the global diversification-firm relationship, considering the moderating role of absorptive capacity, in a sample of 496 Spanish medium-high and high technology companies for the period corresponding to 2019. The conclusions obtained, through statistical inference tests confirm an inverted U-shaped relationship between diversification and firm performance and, partially, the moderating effect of absorptive capacity in this relationship.
Keywords: diversification; absorptive capacity; knowledge; corporate performance.
... Absorptive capacity has a moderating effect and can translate the implementation of ESG initiatives into sustained competitive advantages for firms [53]. Zahra et al. (2008) emphasized the relationship between absorptive capacity regulation, international venture capital, and firm profitability and revenue growth [54]. Engelen et al. (2014) focused on absorptive capacity as a moderator of the relationship between entrepreneurial orientation and firm performance, particularly the benefits of improving the application of entrepreneurial strategies [55]. ...
... Absorptive capacity has a moderating effect and can translate the implementation of ESG initiatives into sustained competitive advantages for firms [53]. Zahra et al. (2008) emphasized the relationship between absorptive capacity regulation, international venture capital, and firm profitability and revenue growth [54]. Engelen et al. (2014) focused on absorptive capacity as a moderator of the relationship between entrepreneurial orientation and firm performance, particularly the benefits of improving the application of entrepreneurial strategies [55]. ...
Environmental, social, and governance (ESG) performance is a key indicator of a firm’s long-term value and competitiveness. This study combined internal management dynamics (TMT diversity and absorptive capacity) and external social responsibility (ESG) to provide a more holistic perspective that explores the relationship between ESG performance and corporate value at multiple levels. In this study, Chinese A-share listed companies from 2011 to 2022 were selected and analyzed using a quantitative approach. The findings are as follows: (1) There is a positive correlation between ESG performance and firm value. (2) This relationship is particularly accentuated within non-high-polluting industries, the eastern and middle region, and non-state-owned firms. (3) The age, gender, financial background, and absorptive capacity of TMTs significantly moderate the relationship between corporate ESG performance and firm value. These findings will help business leaders and policymakers understand how effective management and responsibility practices can drive long-term business success and social impact. These findings not only help academics deepen their theoretical constructs but also provide operational guidance for business practices.
... This enables them to know more about customer needs and better manage their knowledge flow [4]. Recent Studies have investigated how international venture activity affects financial performance, and it has been found that companies' absorptive capacity moderates the relationship [5]. In addition, a study on Nigerian oil sector firms revealed that individual absorptive capacity has a positive impact on employee performance [6]. ...
... Furthermore, the research results show that a person's absorptive capacity regulates the relationship between IT intensity and employee performance [6]. In contrast, the results show that absorptive capacity regulates the relationship between financial performance and international venture activity [5]. This indicates that absorptive capacity plays an important role in the innovation process of companies by providing knowledge flows [4]. ...
This paper conceptually analysed the special issue briefly reviews about absorptive capacity. Based on a systematic literature review, the paper discusses the Impact of Absorptive Capacity on Banking Performance in Indonesia. The paper also explains the mediating effect of marketing mix and innovation on the performance of banks in Indonesia which shows that the mediation of marketing mix and innovation has a positive effect on the impact of absorptive capacity on bank performance. The paper offers a definition of absorptive capacity for strategic management discipline, constructs a conceptual framework of absorptive capacity for banking sector, and clarifies the main implication of absorptive capacity theory for the development of marketing and management, thereby providing sources for future research.
... -The presence of R&D activities in the year of interest (if R&D activities are in place, the relative dummy variable equals 1 and 0 otherwise). For similar approaches, see Cohen and Levinthal (1990), Tsai (2001), and Zahra and Hayton (2008). The presence of continued R&D activities is widely regarded as a source of ACAP development both in the management and innovation economics literature. ...
... Moreover, firms operating in more innovative sectors displaying relatively higher technological intensity levels are more likely to engage in R&D activities and invest in human capital accumulation, thus boosting ACAP (Cohen and Levinthal, 1990;Tsai, 2001;Zahra and Hayton, 2008). Fig. 4 shows ACAP potential across the categories of the Pavitt taxonomy. ...
This study provides new firm-level evidence on the impact of the technological change generated by investments in instrumental goods on employment growth. We posit that firms' potential absorptive capacity moderates this effect by leveraging the embodied technological change (ETC) contained in these goods. Testing our hypothesis on administrative linked employer-employee (LEED) data for a sample of 6.120 manufacturing firms over 2008-2017, we find that ETC investments have an overall positive and significant effect on employment growth. Such an effect depends on firms' technological intensity and size class, with a larger impact on high-tech and large firms. However, higher levels of potential absorptive capacity increase positively and significantly the effect for low-tech and SMEs in a way that is more compatible with a conditional role than a moderating one. Our findings imply that regional policies should consider firm-specific investments targeted to human capital accumulation and collaborative partnerships to maximize the occupational impact of ETC investments.
... Because learning from new knowledge is cumulative and associative, superior assimilation ability is more useful if existing and acquired knowledge overlap. Also, established communication structures (Troy et al., 2008) are better at facilitating the diffusion and sharing of related rather than unrelated knowledge (Zahra and Hayton, 2008). Hence, new knowledge reinforces existing knowledge. ...
... Last, we estimate models using the deviation of a firm's ROA from its industry mean (Miller, 2004) and a firm's 3-year moving average of ROA (Zahra and Hayton, 2008). The results are shown in columns (22)-(27) and are consistent with our main analysis. ...
... ACAP refers to "an organization's ability to recognize the value of new external knowledge, assimilate it, and apply it to commercial ends" (Flatten et al., 2011a). ACAP includes four dimensions, as highlighted by most studies: acquisition, which refers to the organisation's ability to identify and acquire knowledge sources outside its boundaries; assimilation, which involves the processes the organisation undertakes to analyse and interpret knowledge critical to its operations; transformation, which refers to the organisation's ability to integrate existing knowledge with newly acquired knowledge to generate new insights; and finally, exploitation, which related to the organisation's ability to apply knowledge for commercial purposes, such as developing tangible products (e.g., goods) and intangible products (e.g., services) (Andersén and Kask, 2012;Javalgi et al., 2014;Zahra and Hayton, 2008). ...
This study aims to explore the association between entrepreneurial resilience (ER), absorptive capacity (ACAP), and new product performance (NPP). Additionally, it aims to investigate if marketing agility (MA) acts as a mediator in these relationships within the suggested model. Data were gathered from telecommunications firms in the Kurdistan region of Iraq through a self-administered survey. A total of 556 questionnaires were distributed, and 299 of them were returned and used for statistical analysis. A structural equation model (SEM) was used to assess both the measurement and structural models in the data analysis. Both ER and ACAP have an influence on NPP. In addition, MA not only affects NPP but also enhances the relationship between ER and NPP. Contrary to expectations, ACAP has no impact on MA. This study provides NPP researchers with a deeper insight into the capabilities that can influence the performance of new products.
... Outcomes: in accordance with a range of evidence, the international performance of SMEs thus depends on their innovative and proactive capabilities and their propensity to take risks, which is consistent with the theory of dynamic capabilities (Sapienza et al., 2005;Zahra and Hayton, 2008;Acosta et al., 2018). According to Chiara and Minguzzi (2002), SMEs have made a large-scale contribution to the trade balances of various different countries, and it hence remains fundamental to study their internationalisation processes (Coviello and Munro, 1995;Knight and Kim, 2009;Chetty and Stangl, 2010) and crucial dimensions, such as scale, as moderating factors for their levels of international performance. ...
... In addition to KS, several authors have argued that dynamic capabilities are also fundamental to the innovation orientation of MSMEs, as they allow them to be proactive and risk-taking (Zahra and Hayton 2008;Acosta, Crespo, and Agudo 2018;Djardin et al. 2023). According to Teece (2007), dynamic capabilities can be categorized into three fundamental groups: sensing, seizing, and reconfiguring. ...
Although the importance of integrating digital technologies in micro, small, and medium enterprises (MSMEs) is growing rapidly, empirical research related to knowledge spillovers (KS), organizational resilience, innovation orientation, and digital capabilities still remains scarce. This research proposes a framework in which we verify the moderating effect of digital capabilities on the relationship between KS, organizational resilience, and innovation orientation. Another aim of this research is to study the effect of KS and organizational resilience on innovation orientation by conducting a quantitative study utilizing data from the World Bank's Enterprise Survey, collected at three separate times. Drawing from a sample of 2291 MSMEs in the service sector across 15 EU countries, the partial least squares structural equation modeling was the method used to evaluate our proposed conceptual model and examine the hypothesized relationships. The findings reveal that KSs have a positive effect on innovation orientation by leveraging digital capabilities. In addition, the empirical evidence demonstrates that both KS and organizational resilience have a positive impact on innovation orientation. This research also makes several theoretical and practical contributions.
... L'imprenditorialità è il fattore chiave che consente alle aziende di essere dinamiche, di favorire il cambiamento strategico , di costruire nuove capacità e vantaggi competitivi (Zahra & Hayton, 2008), di migliorare le prestazioni e la crescita dell'azienda nonché di creare ricchezza economica (Dess et al., 2003) e valore per gli azionisti (Narayanan et al., 2009). ...
L’imprenditorialità è il fattore chiave che consente alle aziende di essere dinamiche, di favorire il cambiamento strategico (Ireland et al., 2003), di costruire nuove capacità e vantaggi competitivi (Zahra & Hayton, 2008), di migliorare le prestazioni e la crescita dell’azienda (Kuratko et al., 2021) nonché di creare ricchezza economica (Dess et al., 2003) e valore per gli azionisti (Narayanan et al., 2009). Dopo una breve introduzione sul concetto di imprenditorialità, questo studio teorico ha esaminato le teorie sull’imprenditorialità femminile al fine di comprendere meglio l’evoluzione della ricerca in questo campo, esplorare considerazioni sociali ed etiche che motivano le imprenditrici e
identificare le sfide sensibili al genere che esse devono affrontare, “perché le donne affrontano sfide diverse o perché affrontano le stesse situazioni in modo diverso rispetto agli uomini, sebbene conducano la loro attività nello stesso ambiente aziendale” (Akter et al., 2019). L’obiettivo di questo capitolo è stato pertanto quello di riassumere, attraverso una revisione narrativa e tradizionale della letteratura e adottando un approccio interdisciplinare, le diverse principali prospettive manageriali, economiche e sociologiche che hanno caratterizzato la ricerca accademica
sull’imprenditorialità femminile, tracciando un quadro più completo sull’evoluzione del fenomeno, indentificando le questioni emergenti in questo campo di ricerca e offrendo un utile riferimento per ricerche future, teoriche ed empiriche.
Attualmente la sfida è consentire alle donne che fanno impresa di avere successo nei settori emergenti e in crescita, come l’economia verde, l’e-commerce, la digitalizzazione, integrando l’educazione all’imprenditorialità nella loro formazione, dedicando finanziamenti alle imprese femminili e incentivi a favore delle aziende guidate da donne che pongono le pratiche di sostenibilità al centro della loro strategia aziendale, svolgendo servizi
di orientamento e supporto che incoraggiano le imprenditrici ad andare avanti, ad essere attive anche nei settori a predominanza maschile e ad affrontare il divario digitale di genere. Elevare il tasso di imprenditorialità femminile richiede altresì di elevare il tasso di partecipazione delle donne al mercato del lavoro. Occorre pertanto dare pieno sostegno al potenziale imprenditoriale delle donne, da un lato per stimolare la crescita dell’economia e della società e, dall’altro lato, per creare modelli di riferimento in grado di ispirare e motivare le giovani donne che intendono affrontare la
sfida della creazione e della gestione delle proprie imprese.
... We measured strategic renewal using scales like the percentage change in a firm's competitive strategies (Boeker, 1997), changes in structure and control systems (Gordon et al., 2000), and vertical integration patents (Rothaermel et al., 2006). We measured corporate venturing using scales that capture entrepreneurial ventures, such as when a firm enters a new industry (Hayton, 2005), enters an alliance with a new venture (Zahra, 2010), invests in a new venture (Zahra, 1995), or undertakes related and unrelated international acquisitions (Zahra & Hayton, 2008). ...
How do the attributes of a firm's top management team (TMT) influence corporate entrepreneurship across organizational and national contexts? Drawing on upper echelons theory and the managerial discretion perspective , this meta‐analytic study examines the dynamic relationship between TMTs' attributes and corporate entrepreneurship, focusing on the moderating role of managerial discretion arising from organizational and national‐level factors. To provide insights into the micro‐foundations of firm behavior, we explore how key TMT attributes—diversity, size, transformational leadership, tenure, general human capital, and entrepreneurial human capital—affect corporate entrepreneurship. A comprehensive meta‐analysis of 57 primary studies reveals that the effect of a TMT's attributes is context‐dependent and is significantly influenced by the approach to managerial discretion taken by the country in which the firm operates. By showing that transformational leadership and the TMT's entrepreneurial human capital and size affect corporate entrepreneurship, while attributes like tenure, diversity, and general human capital have limited or no impact, our findings challenge the prevailing view that a standardized approach to the TMT's composition drives corporate entrepreneurship. The study also underscores the role of the national‐level managerial discretion and finds that firms in institutional environments that feature low managerial discretion must align their TMT strategies with local institutional contexts to maximize their corporate entrepreneurship. These findings advance upper echelons theory by demonstrating that managerial discretion acts as a boundary condition in shaping how the TMT's attributes influence corporate entrepreneurship based on the national context. This research contributes to the fields of strategic and innovation management and offers practical insights for leaders who seek to harness the full potential of their TMTs.
... Despite this extension, the results remained consistent with our hypothesized specifications. Previous research suggests that when interaction terms with common variables are concurrently included, they may obscure the detection of true moderating variables due to multicollinearity (Zahra & Hayton, 2008). However, the consistency between the interaction terms in the main model and the interaction term models supports the robustness of our regression models. ...
To date, our understanding of how collaborative entrepreneurship influences social innovation performance is limited. In this article, we developed and tested a model that examines the effect of collaborative entrepreneurship on social innovation performance and introduced two boundary conditions of this relationship. Time‐lag data collected from 261 entrepreneurial firms in Vietnam yielded the following results. First, collaborative entrepreneurship positively influences social innovation. Second, institutional support boosts the effect of collaborative entrepreneurship on social innovation performance. Finally, the effect of collaborative entrepreneurship on social innovation performance is contingent on social legitimacy such that at high levels of social legitimacy, the effect of collaborative entrepreneurship on social innovation performance is amplified. These findings contribute to the collaborative entrepreneurship and social innovation literature and offer implications for practice.
... Studies by Zahra and Hayton [17] and Laforet [18] emphasize the importance of internal capabilities such as R&D and innovation, which drive revenue growth and profitability but also face management challenges and operational risks. Smriti and Das [19] identify human capital as crucial for increasing sales and market value, directly influencing key indicators like revenue percentage, operating income, and net profit. ...
This study delves deeply into the multifaceted nature of investor value creation, focusing on financial health, growth, profitability, cash flow, and ESG (environmental, social, and governance) risk ratings. The research employs partial least squares structural equation modeling (PLS-SEM) to dissect the interactions among these variables in a sample of 482 S&P 500 firms. Data were obtained from the FINRA database (2023) and Sustainalytics ESG risk ratings (2023). The results indicate that solid financial health enhances investor value creation. While growth fosters profitability, its direct impact on value creation and cash flow appears limited. The study also uncovers that ESG risk ratings negatively moderate the relationship between cash flow and value creation. This finding suggests that higher ESG risks lead to increased operational and compliance costs, which can reduce working capital and operating cash flow. Additionally, although sustainability investments may initially incur higher costs, they generate long-term value in terms of investment cash flow. A high perception of ESG risk can also raise financing costs, negatively impacting financial cash flow. These findings offer significant contributions to both academic theory and practical applications, shedding light on the complex interplay between financial and sustainability indicators in driving value creation for investors.
... Outcomes: in accordance with a range of evidence, the international performance of SMEs thus depends on their innovative and proactive capabilities and their propensity to take risks, which is consistent with the theory of dynamic capabilities (Sapienza et al., 2005;Zahra and Hayton, 2008;Acosta et al., 2018). According to Chiara and Minguzzi (2002), SMEs have made a large-scale contribution to the trade balances of various different countries, and it hence remains fundamental to study their internationalisation processes (Coviello and Munro, 1995;Knight and Kim, 2009;Chetty and Stangl, 2010) and crucial dimensions, such as scale, as moderating factors for their levels of international performance. ...
... The moderating role of absorptive capacity Absorptive capacity is the ability of companies to identify, absorb and exploit knowledge in their business operations (Cohen & Levinthal, 1990;Zahra & George, 2002). It allows companies to recognise the value of new knowledge available in the environment and assimilate and combine it with in-house capabilities to promote improvements in operational performance, innovation development and financial growth (Duan et al., 2021;Zahra & Hayton, 2008). Many studies agree that absorptive capacity is one of the most important determinants of innovation (Lau & Lo, 2015). ...
The outcomes from the associations between manufacturers and knowledge-intensive business services (KIBS) with consequences at the firm and regional levels have been called territorial servitisation. This article explores whether the effect of regional KIBS deepening on productivity growth is dependent on minimum levels of manufacturers' absorptive capacity. An econometric analysis was carried out using a threshold regression model of 125 Brazilian manufacturers collected from 2010 to 2017. Results indicate that KIBS deepening on its own does not bring productivity benefits. Manufacturers may collect positive gains if they are endowed with high levels of absorptive capacity.
... ENO, the moderating variable, was operationalized with nine items adapted from [47]. Furthermore, types of venture, venture size, and age were adopted from previous studies [30], [32], [48]. To visualize at a glance, the constructs with their definitions have been presented in a tabular form in Table II. ...
Digital transformation relates to the deployment of digital technologies to improve business practices, culture, and customer experience to meet changing market needs. Digital transformation capabilities could also influence environmental and social performance of entrepreneurial ventures. Against this backdrop, the aim of this study is to investigate how digital transformation capability could impact environmental and social performance as well as economic sustainability of entrepreneurial ventures. This study examines if there are any moderating impacts of entrepreneurial orientation on the relationships between digital transformation capability and its consequences. Also, this study uses different control variables to determine the impact on economic sustainability of entrepreneurial ventures. With the support of resource-based view (RBV) and literature review, a research model has been developed conceptually which was later validated using CB-SEM (covariance based) technique with consideration of feedback of 312 entrepreneurs from different sectors and industries. The study found that there is a significant impact of digital transformation capability on environmental performance and social performance of entrepreneurial ventures which in turn influences the economic sustainability of the entrepreneurial venture. This study also highlighted that there is a significant moderating impact of entrepreneurial orientation on different performances of entrepreneurial ventures.
... The GAC is used by many organizations to adapt to the environment for discovering new knowledge (Wang et al., 2023). Absorptive capacity refers to the possibility of a firm to develop, incorporate, translate, and use information to enhance performance (Zahra & Hayton, 2008). The findings are in harmony with Brdulak (2019) who stated that green SCM practices allow organizations to achieve higher absorptive capacity. ...
Due to the substantial scientific development in the economy and the increasingly dynamic competitive market, small- and medium-sized manufacturing enterprises (SMEs) face great difficulties in utilizing the available resource potentials. This requires SMEs to adopt non-traditional tools and techniques to compete in the market. This study aims to develop an empirical model to assess the role of SMEs dynamic capability through green absorptive capacity (GAC) in building a significant relationship between green supply chain management practices (GSCMP), relational capability (RC) and environmental performance (EP).The model was established through an extensive review of existing works of literature and was tested with 265 managers and entrepreneurs from manufacturing SMEs operating in Karachi, the largest city in Pakistan. In this paper, PLS structural equation modeling approach was employed to validate the proposed research hypotheses. The findings confirmed that GAC directly relates to EP. Moreover, the results significantly uncovered that GSCMP positively impacts the GAC and EP. It was also confirmed that RC has a positive significant effect on GAC and EP. Finally, the outcomes confirmed that GAC mediates the linkages among GSCMP, RC, and EP.Green absorptive capacity in the setting of a manufacturing organization as a dynamic capability is a novel approach explained in this study. The study focused on how small- and medium-sized enterprises can enjoy a competitive edge through acquiring and disseminating dynamic environmental knowledge throughout the value chain and by practicing strategically green supply chain management and relational capabilities to boost environmental performance. The outcomes will incorporate industry practitioners through practicing superior green dynamic capabilities like green SCM practice, relational capability, and green absorptive capacity to achieve high environmental goals and organizational excellence.
... In comparison, Grimpe and Sofka (2009) stated that AC determines whether firms can exercise Figure 2. Full structural model results JRME entrepreneurial capabilities. AC is a catalyst and the backbone of a firm's dynamic capability to boost EO outcomes (Makhloufi et al., 2023a(Makhloufi et al., , 2023b(Makhloufi et al., , 2023cZahra and Hayton, 2008). Thus, the study findings support and enrich our knowledge of this theory. ...
Purpose
Knowledge sharing enables a firm’s absorptive capacity to reconfigure its dynamic capabilities to sense, track and recognise embryonic business opportunities. Entrepreneurial opportunity recognition triggers entrepreneurs to invest in and upgrade their knowledge practices to improve entrepreneurial performance. This study aims to examine the relationship between knowledge sharing and absorptive capacity on entrepreneurial orientation as well as the moderating effect of opportunity recognition and the mediating effect of absorptive capacity.
Design/methodology/approach
A quantitative cross-sectional research design was applied to data from Algerian small and medium-sized enterprise managers in middle- to top-management positions. The final analysis using smart PLS included 246 respondents.
Findings
Knowledge sharing positively influenced entrepreneurial orientation and absorptive capacity. In addition, the findings reveal that entrepreneurial orientation positively influences entrepreneurial performance, and opportunity recognition strengthens the relationship between entrepreneurial orientation and entrepreneurial performance. Entrepreneurial orientation and absorptive capacity have partial mediating effects.
Practical implications
This study focuses on how firms create and share developed knowledge to enable absorptive capacity to fit a level of entrepreneurial orientation. This study validates the vital impact of opportunity recognition as a leading motivation for entrepreneurial orientation. The results highlight an important area of research and suggest that firms should focus on knowledge sharing to boost entrepreneurial outcomes.
Originality/value
The notions of entrepreneurship, absorptive capacity and knowledge sharing are extended by building on dynamic capability theory. Knowledge sharing increases absorptive capacity, which drives superior entrepreneurial orientation outcomes.
... Cohen and Levinthal (1990) suggest that a prior related knowledge base enhances the ability to recognize and exploit new knowledge. At the firm level, a pre-existing knowledge base can be proxied by investments in R&D, which remains the most popular proxy of ACAP (Lee et al., 2010;Zahra, Hayton, 2008). Thus, we use the R&D intensity to measure the capacity to value external technology (George et al., 2001), and the first hypothesis proceeds as follows: ...
In this paper we propose a methodology for assessing the efficiency of technology transfer through merger and acquisition (M&A) and empirically estimate the effect of key factors impacting it. We implement data envelopment analysis (DEA) to calculate an efficiency score of the technology transfer process. The DEA efficiency score integrates a set of outputs (post-merger characteristics of an acquirer) and inputs (pre-merger technological parameters of a target); thus, it provides a multidimensional estimate of efficiency adjusted for the value of the acquired technology base.In the empirical part of this research, we collect data from 434 M&As to study a channel for transferring a technology base across organizational boundaries. Overall, empirical results suggest the adverse outcomes of accumulation of capability to value external technology: the higher the acquirer’s R&D intensity, the lower the efficiency of interorganizational technology transfer. The size of acquirer and relative size of the deal also affect the post-merger outcomes significantly and negatively. At the same time, the estimated effect of such technological characteristics of acquirer as capital expenditure intensity and number of patents is insignificant.
... this learning challenge is shaped by the established knowledge and skill set of the organization as well as its capacity to absorb new insights. the absorptive capacity of an organization limits as well as enables the learning path of each new initiative (Zahra and Hayton, 2008). studies reveal interesting insights. ...
... In the same vein, many studies find similar results through firm-or industry-level analyses (Fabrizio, 2009;Kneller, 2005;Li, 2011;Khachoo et al., 2018;Narula & Marin, 2003;Zhang et al., 2010;Zahra & Hayton, 2008), providing evidence that spillovers favour only those firms or industries that possess the capabilities required to appropriate them. According to Li (2011), technology purchases from domestic firms increase the innovation rate of the acquirer, while technology purchases from developed countries contribute to indigenous innovation only when coupled with previous investment in R&D. ...
In this paper, we analyse the role of international patent collaborations in the performance of domestic firms and how the relationship is augmented by the pre-existing capabilities of the domestic firms. Using data on Indian firms, we study patterns of co-invention by Indian firms and foreign partners. The results confirm the crucial role played by the absorptive capacity of domestic firms in enhancing benefits from patent collaborations. Strikingly, we find that the coefficient associated to foreign collaboration has a positive effect on performance only when complemented with previous innovative capabilities. The evidence we present in this work contributes to existing knowledge on the microeconomics behind the process of technological capability accumulation and catching up in developing countries.
... Zahra et al. (2009) asserted that AC is the key to success for an entrepreneur's green mindset and proactive behavior resulting in recognizing ecobusiness opportunities. Firms with sufficient absorptive capacity can convert knowledge creation to applications used for commercialized entrepreneurial purposes (Makhloufi et al., 2021c;Zahra and Hayton, 2008). In addition, it helps firms GEO to explore market opportunities, access information, tracking customer behavior and future business trends (Mahmood and Mubarik, 2020). ...
Purpose
Based on the dynamic capability view, this study aims to draw for the first time the missing link between big data analytics capabilities (BDAC) on both green absorptive capacity (GAC) and green entrepreneurship orientation (GEO). It is theoretically necessary to address how BDAC levels up the GAC to achieve the same level of GEO and then respond to their green business agenda. In addition, the study introduces knowledge sharing (KS) and green organizational ambidexterity (GOA) as potential moderating factors in the relationship between GEO and eco-innovation and explores the mediation role of GAC in the BDAC–GEO relationship.
Design/methodology/approach
The study collected 268 questionnaires from employees working in Chinese manufacturing firms using a self-administered survey and cross-sectional research design. The study applied SmartPLS to analyze the obtained data.
Findings
The findings revealed that BDAC positively and significantly influences GAC and GEO, positively impacting eco-innovation. The KS and GOA's moderation effect strengthens the relationship between GEO and eco-innovation. GAC partially mediates the relationship between BDAC and GEO.
Practical implications
The study advises firms to invest heavily in developing technological aspects of BDAC as a dynamic strategic capability that facilitates tracking and anticipating the future behavior changes of customers, competitors and market demands. BDAC also allows firms to upgrade and reconfigure their dynamic capabilities by responding to managerial, operational and strategic necessities. BDAC is necessary to increase GAC's impact and help drive GEO's eco-business agenda. Notably, the study gave superior attention to KS and GOA as a backbone of GEO to improve eco-innovation economic and managerial outcomes.
Originality/value
The study highlights the necessity to upgrade and integrate technological aspects of BDAC within firms' GEO to enhance green practices. Significantly, green business practices changed quickly as customers' needs and eco-markets fluctuated; BDAC is the crucial dynamic capability fostering GAC and entrepreneurs' green mindset to deal with environmental challenges. To the best of the author’s knowledge, this study is to predict the potential effect of BDAC on both GAC and GEO. BDAC helps firms to develop GEO eco-business agenda and balance green growth with green issues.
... Por isso, é importante que a empresa invista na melhoria da sua base de conhecimento para mantê-la atual, construindo as suas capacidades inovadoras através de investimentos sustentados em P&D (ZAHRA; HAYTON, 2008 FELDMAN, 2020). A capacidade absortiva também promove o avanço da inovação, reflexo das práticas da gestão de capital proporcionadas pelas rotinas organizacionais (CASSOL et al., 2016). ...
... posit that AC utilize external knowledge through organizational learning. Jansen et al. (2005), Garcia-Morales et al. (2007), Zahra and Hayton (2008) found that AC enhance and accelerate organizational learning. Without this capacity, it is impossible to learn and transfer knowledge from other units (Bierly et al., 2009;Lane et al., 2006). ...
The success of exporting SMEs depends on their distinctive export-related dynamic capabilities that enable them to survive and grow in international environment. Since these capabilities are knowledge-based, they provide a great advantage for resource-constrained SMEs even with very small investments. This study investigates these specific export-related dynamic capabilities and their effect on export performance in SMEs of an emerging economy. A survey was conducted to 427 exporting SMEs in all over Turkey to test the hypothesis concerning the relations between international orientation, export market orientation, ambidexterity, absorptive capacity and export performance. The results showed that ambidexterity is a mediator between orientations (international orientation, export market orientation) and export performance. Besides, absorptive capacity has a moderating effect on the relationship between ambidexterity and export performance.
... Model 1 included the control variables, Model 2 added perceived contract breaches, Model 3 added the direct roles of the four moderators, and Models 4-7 added the perceived contract breaches × communication efficiency, perceived contract breaches × informational justice, perceived contract breaches × humility, and perceived contract breaches × perceived leader forgiveness interaction terms, respectively. It is recommended to estimate multiple interaction effects in different regression equations, because their concurrent estimation in a single equation can conceal true moderating effects (De Clercq & Belausteguigoitia, 2017; De Clercq & Pereira, 2019; Zahra & Hayton, 2008). Following established recommendations (Aiken & West, 1991), the constructs were mean-centered before we calculated their respective interaction terms. ...
... Sous-thèmes Auteurs Veille stratégique Le dynamisme de l'environnement (Dess and Beard 1984, Jenssen and Nybakk 2009, Roberts 2015, Todorova and Durisin 2007 Lyles 2010) Système de surveillance de l'environnement (Potter and Lipinski 2009, Oreja-Rodriguez and Yanes-Estevez 2010, Jennings and Lumpkin 1992, Haase and Franco 2011, Dutton 1993, Boyd and Fulk 1996, Berard and Delerue 2010, Terry 1977, Stubbart 1982, Robinson and Simmons 2018, Hambrick 1981a Surabondance des informations (Loza-Aguirre et al. 2016, Xu et al. 2011, Bettis-Outland 2012 Performance de l'entreprise (Beal 2000, McGee and Sawyerr 2003, Howell and Shea 2001, Garg, Walters, and Priem 2003, Daft, Sormunen, and Parks 1988 Capacité d'absorption Caractéristique de la connaissance (Limaj, Bernroider, and Choudrie 2016, Roberts et al. 2012, Teece, Pisano, and Shuen 1997) (Pryor et al. 2019. Innovation (Naqshbandi and Tabche 2018, Hart, Gilstrap, and Bolino 2016, Lane, Koka, and Pathak 2006, Bilgili, Kedia, and Bilgili 2016 Li 2014) Apprentissage organisationnel (Roberts 2015, Ojo et al. 2014, Martinkenaite and Breunig 2016, Lichtenthaler 2009, Kim 1998, Bilgili, Kedia, and Bilgili 2016, Ben-Oz and Greve 2015, Apriliyanti and Alon 2017, Zahra and Hayton 2008, Liu 2012, Lane and Lubatkin 1998, Gunawan and Rose 2014, Flores et al. 2012, Hart, Gilstrap, and Bolino 2016, Minbaeva et al. 2014 Source : Réalisé par les auteurs 1.1-La veille stratégique L'entreprise est influencée, de manière positive et/ou négative, par l'environnement dans lequel elle évolue. Cet environnement est formé d'un ensemble d'organisations, d'acteurs, et de faits dont l'existence peut influencer le comportement et la performance de l'entreprise, en dictant ses choix opérationnels et surtout stratégiques. ...
Aujourd’hui, la surcharge informationnelle se fait de plus en plus ressentir. Nous sommes chaque jour un peu plus inondés par la masse informationnelle, ce qui rend la tâche de la prise de décision encore plus difficile dans les organisations. Cet article vise à comprendre comment la capacité d’absorption peut contribuer à gérer la surabondance des informations issues de la veille stratégique. L’objectif est de déterminer et d’analyser la relation entre la veille stratégique et la capacité d’absorption pour gérer la surcharge d’informations, et de contribuer aussi à enrichir les connaissances sur le sujet. Ce travail fut mené auprès de six centres de recherche, dont trois centres canadiens et trois autres algériens. Une étude qualitative a été privilégiée pour comprendre les différents points de vue des répondants. Nos résultats révèlent que, la veille stratégique peut générer une surcharge d’informations, et que la capacité d’absorption des employés a une influence sur cette surabondance. Néanmoins, l’utilisation de la capacité d’absorption comme entonnoir pour filtrer les informations pertinentes ne peut être suffisant.
... For example, firms with a higher degree of absorptive capability can build an effective learning process and a more diverse knowledge base, increasing the potentiality that firms value and positively use new knowledge and technology [55]. Furthermore, the moderating effect of absorptive capability has been confirmed in the field of innovative activities [53], science-toindustry technology transfer projects [56], new product introduction [13] and international venturing [57]. Therefore, the following hypothesis is proposed: Hypothesis 5. Absorptive capability moderates the relationship between digital transformation and firm performance during the COVID-19 pandemic, such that the relationship will be stronger at a higher level of absorptive capability than at a lower of absorptive capability. ...
The COVID-19 pandemic has drawn attention to the strategic responses of Chinese firms on digital transformation and led to a call for enhancing competitive advantage via accelerating digital transformation. Besides the physical health issue, the pandemic has triggered an extraordinary social and economic crisis in which service industries have been attacked hard. In this situation, firms are meeting increasing competitive pressure, which urges them to achieve better performance with the help of digital transformation. Based on the technology-organization-environment framework and dynamic capabilities theory, this research proposed two studies with two methods, including a structural equation model and a regression discontinuity design with a fixed-effect model. The findings suggest digital transformation mediates the relationship between competitive pressure and firm performance among Chinese small- and medium-sized enterprises and large firms after the outbreak of COVID-19, respectively. It confirms that digital transformation is a practical strategic decision for Chinese service firms to respond to increasing competitive pressure in the COVID-19 pandemic. Besides, the results also illustrate the moderating effects of absorptive, innovative, and adaptive capability on the relationship between digital transformation and firm performance among large firms.
... Moreover, the employees in such organizations should realize the values of knowledge and external innovations [44,49]. It should apply and extend the cognitive knowledge to generate learning until it becomes the ability to create innovative and competitive advantages [50]. ...
The human resources department, as a dynamic mechanism in the hotel business, is a supporter and a manager who manages the corporation to grow by planning, supervising, and assuring the expected performance leads to desirable outcomes. The situation of spread of the COVID-19 virus has resulted in businesses and labor departments having to adapt to survive by upgrading existing knowledge and adding new skills. Therefore, this research aims to describe components and models of necessary skills development for performance affecting dynamic capabilities and performance in a new normal era for human resources managers of five-star hotels in Phuket Province, which are crucial components in an increased corporation’s sustainability and performance in terms of personnel efficiency, assets, funds, and information. This research is quantitative, and research data was collected from a total of 384 human resource managers of five-star hotels. There was a mutual discussion of factor analysis and structural equation results with three human resources managers who have been successful for not less than seven years in their work. The components consisted of systematic consideration through the following causes: necessary skills; professional skills, work skills, and emotional skills, mediator variables; dynamic capabilities, and organizational performance. This research also discussed five guidelines for developing the necessary skills for performance. As various factors have affected the performance in the new normal era, the human resources executives of five-star hotels in Phuket province should apply them and consider them together with their business plans for setting the strategic plan of organizational management, management, administrative, and human resources development.
Doi: 10.28991/HIJ-2023-04-01-03
Full Text: PDF
Research Summary
Powerful geopolitical, demographic, cultural, and technological forces are reshaping MNEs' markets, compelling them to be entrepreneurial in order to successfully adapt and grow. We argue that MNEs can leverage digital technologies to exploit their resources, especially mobile resources, to fuel and infuse entrepreneurship throughout their operations. By leveraging and exploiting mobile resources, digital technologies make it possible for MNEs to cultivate their entrepreneurial activities to create new knowledge, build valuable organizational capabilities, and develop new businesses. These arguments contribute to ongoing conversations about the growing role of entrepreneurship in MNEs, the value of mobile resources as a source of competitive advantage, the transformative role of digital technologies in the global marketplace, and IB theories on the sources of MNEs' competitive advantage in dynamic markets.
Managerial Summary
In today's rapidly changing global business environment, multinational enterprises (MNEs) face unprecedented challenges from geopolitical shifts, demographic changes, cultural evolution, and technological disruption. To thrive amidst these transformations, MNEs must embrace entrepreneurship throughout their global operations. This research demonstrates how MNEs can strategically use digital technologies to unlock the value of their mobile resources—including talent, knowledge, and capabilities that can be deployed across locations—to foster entrepreneurship enterprise‐wide. By effectively leveraging these mobile resources through digital platforms, MNEs can: Generate new knowledge across geographic boundaries
Build distinctive organizational capabilities that competitors cannot easily replicate
Develop innovative business models and ventures that create value in dynamic markets
Our findings offer practical guidance for multinational executives seeking to enhance their firms' entrepreneurial capacity in a digital era. By intentionally combining mobile resource deployment with digital enablement, MNEs can create sustainable competitive advantages even as markets continue to evolve rapidly. This approach represents a crucial adaptation strategy for multinational firms navigating today's complex global business landscape.
Using dynamic capabilities theory, this study investigates how the reconfiguration of a firm's technology portfolio influences its performance. Analyzing data from S&P 500‐listed firms (an unbalanced panel of 587 firm‐year observations) in the ICT industry, we identify an inverted U‐shaped relationship between such reconfiguration and performance. We also find that this relationship is moderated by entrepreneurial orientation. Specifically, the positive impact of technology portfolio reconfiguration on firm performance at relatively low levels of reconfiguration and the negative impact at relatively high levels are both more pronounced in firms with high levels of entrepreneurial orientation than in those with low levels. However, we do not find evidence that market dynamism moderates this inverted U‐shaped relationship. These findings form a significant contribution to the body of knowledge on technology portfolio management and organizational change.
The theme of drivers of performance has always represented a fundamental node in the literature on early internationalization. During the second decade of research, studies suggested that early internationalization leads to superior performance while inviting scholars to investigate postentry outcomes and dynamics. Given the above, it is no surprise that studies on the determinants of performance, survival, and post-entry growth have increased over the last decade. This chapter deepens the origins and evolutions of these three main topics and provides recommendations for future studies.
Teleworking was just an option for many companies up to mid-2020. (1)This study examines the acceptance of teleworking practices by employees because of the covid-19 scenario from the dynamic capabilities' framework. Although this study is based on whether telework promotes dynamic capabilities within organizations, specifically absorption and adaptation capabilities, it includes other factors, such as quality of life and productivity. (2)A questionnaire has been built and distributed to 1000 Spanish workers. Data were processed by using the structural equation modeling analysis (SEM). (3) Results confirm that the model built provides a sound theoretical framework to understand and explain the practice of teleworking in a work environment, providing workers with a longer time to rest, an increase in their quality of life (4) This work can help companies understand the need to redesign telework processes based on the deployment of dynamic capabilities to achieve better results from this practice, which is no longer an option in pandemic scenarios.
Firms’ innovation positively affects their competitiveness and thus their financial performance. To bridge the research gap in the theoretical framework of dynamic capabilities and respond to the call for papers to explore new ways of analyzing innovation in family businesses, this study investigates how entrepreneurial orientation and absorptive capacity influence innovative capacity in family firms. Data from 156 family firms are analyzed using the theoretical framework of dynamic capabilities and structural equation modeling. The results reveal that both entrepreneurial orientation and absorptive capacity influence innovative capacity and that this influence is greater when both capabilities act together than when they act individually. This study confirms that entrepreneurial orientation and absorptive capacity are antecedents of innovative capacity. Moreover, entrepreneurial orientation has a greater influence on innovative capacity than absorptive capacity does.
Purpose: The study analyzed the effect of strategic financial controls on project implementation in Selected County Government in Western Kenya. Methodology/Approach: A correlation research design was achieved. There are a total of 72 workers here, including managers, freelancers, and other employees. A pilot study was performed at the Busia County Government to test and verify the efficacy of the research instruments. If the coefficient of the research instruments was greater than 0.7, they were considered suitable for usage. Predetermined questions were used to collect data. The research data was analyzed employing a mix of descriptive and inferential (simple linear regression and correlation) statistics. The data was displayed using tables. Findings: The research benefited county government administration, informed academics in adjacent subjects, added to the existing literature on strategic controls, and sparked more investigation into strategic planning and performance at the county level in Kenya. Specifically, a positive linear relationship was discovered between financial controls and project implementation (R = 0.897). Implications: The research urged that since the importance of fiscal management was highlighted in the study, it was suggested that county governments make funds available to improve county performance.
Purpose
Based on organizational learning theory, this study aims to investigate the performance consequences and potential contextual factors of outward foreign direct investment (OFDI) persistence.
Design/methodology/approach
A regression analysis was conducted on a sample of 19,950 OFDI events of 1,425 A-share listed Chinese enterprises from 2008 to 2022. The estimator used was ordinary least squares with residual analysis, which allowed us to obtain robust and reliable results.
Findings
The results indicated that persistence in both greenfield investments and cross-border M&As had a significant and positive impact on firm performance, and such relationship was positively moderated by organizational absorptive capacity.
Research limitations/implications
This study only tested the economic performance of OFDI persistence rather than innovation and social performance. Exploring the effects of OFDI persistence on other aspects may also add new insights to the persistence literature. Besides absorptive capacity, it might be useful to conduct a more comprehensive consideration of moderators in the future.
Originality/value
This paper contributes to the research on the temporal dimension of internationalization by introducing the concept of OFDI persistence. Additionally, we used the OFDI spell to capture the notion of OFDI persistence, which is an endeavor to overcome the shortcomings of the traditional indicator. Finally, this paper also contributes to the organizational learning perspective by applying it to analyze persistent OFDI operations.
The research literature on Corporate Venturing (CV) has increased over the last few years. While research mainly focuses on analyzing one single CV dimension (e.g. Ambidexterity, etc.) or the interplay between selected dimensions, rarely does research cover and explain all CV dimensions and their characteristics holistically. This paper analyzes the status quo of different CV dimensions and their characteristics. To do so, we identified 100 studies we first used to perform a bibliometric analysis. After that, we executed a conceptual systematic literature review (SLR), updating and extending an existing research paper written by Gutmann (Manag Rev Q 69(2):121–157, 2018). The bibliometric analysis results help objectively evaluate and describe the research landscape and point out leading countries, main keywords, main cited papers, and main research clusters of our CV research. We discovered three new dimensions within our SLR: Relatedness, Time Horizon, and Development Stage. In addition, we show new findings within the 7 CV dimensions described by the existing research paper. Even though the characteristics within each dimension have, to some extent, developed significantly over time, each of the dimensions described in this paper contains substantial new knowledge. e.g. previously the dimension “Link to the corporate firm” mainly covered operational and structural linkages. However, we distinguish these linkages between operational and strategic autonomy.
This study investigates the impact of conservative financial reporting on corporate diversification, in order to explore whether accounting policy plays a role in mitigating agency problems associated with corporate decisions. Based on a sample of U.S. publicly listed firms in the period 2000–2017, this study initially reveals that diversification has an adverse effect on firm value. Our findings indicate that the increase in accounting conservatism leads to a subsequent reduction in the degree of corporate diversification. Additionally, the increase in accounting conservatism helps enhance the excess value attributed to diversification, suggesting that conservatism can alleviate the detrimental influence of diversification on firm value. Our results further indicate that the effect of accounting conservatism is more pronounced for firms with higher information asymmetry or poor corporate governance structure. Overall, the findings suggest that conservative accounting plays an effective monitoring role in disciplining management’s corporate strategies of diversification, and therefore, benefits shareholders and capital markets.
تهدف الدراسة إلى التعرف على التأثير التفاعلي للقدرات االستيعابية والقدرات
التطويرية على األداء االبتكاري في مؤسسات الصناعة الصيدالنية الجزائرية؛ وقد تكون
مجتمع الدراسة من جميع املؤسسات الصيدالنية الجزائرية والبالغ عددها 58 مؤسسة.
ولتحقيق أهداف الدراسة تم استخدام املنهج الوصفي لجمع البيانات وتحليلها
واختبار الفرضيات، من خالل استمارة استخدمت كأداة رئيسية لجمع البيانات والتي
تكونت من30 سؤال، تم توجيهها إلى مديري املؤسسات محل الدراسة )رئيس مدير عام أو
مدير عام أو من ينوب عنه(، وتم استرجاع 31 استمارة صالحة للتحليل بنسبة استرجاع
قدرت بـ.%53,44
Extant internationalization studies have devoted limited attention to the dynamics of the learning advantage of newness (LAN), which we, in response, investigate through the process approach and the novel lens of the concept of liminality. We conduct a longitudinal multiple-case study of five Finnish internationalizing firms. We inductively derive a process model that shows how the underlying liminal factors, such as international opportunity scaffolding activities, learning from communitas, and rituals, contribute to the development of learning advantage of newness. Originating in anthropology, the liminality perspective offers a novel perspective on LAN of early internationalizing firms. We also provide directions for future research and recommendations for practitioners.
Purpose
This study aims to explore the political dimension of social network theory and assess how these connections motivate entrepreneurial activity and enhance postentry stages. The authors take an individualistic approach to the topic of institutional deterioration by uncovering the potential opportunities it can create, as entrepreneurship often arises when a market opportunity is perceived.
Design/methodology/approach
This study used a quantitative approach, using a self-selection sampling method to target private entities that own electric generators (also known as “illicit SMEs”) who are providing electricity services to the community despite the deterioration of the public energy sector in Lebanon. Data was collected through a survey administered electronically to 230 illicit SMEs, using a judgmental sampling method to ensure representation from all Lebanese governorates. The collected data was analyzed using ordinal least squares regression models.
Findings
The findings indicate a significant relationship between institutional deterioration and the reinvestment rate of entrepreneurs, with the moderating effect of political connections suggesting that the impact of institutional deterioration is dependent on the strength of an entrepreneur’s political connections.
Practical implications
The research findings demonstrate the significant influence of social ties and political connections on entrepreneurial activities, particularly in the context of SMEs that are providing services “illegally”. These results shed light on the importance of considering the role of social and political factors in the success and sustainability of entrepreneurial ventures operating in challenging environments.
Originality/value
Entrepreneurial studies typically focus on free market platforms and supply-demand associations, assuming perfect government conditions. However, this study differs from previous research by highlighting the positive impact of social ties on entrepreneurial market access within a socially linked environment. The findings suggest the importance of considering social connections in entrepreneurial studies, particularly in challenging economic and political contexts.
La nueva realidad posterior a la pandemia Covid-19, representa un verdadero reto en diferentes rubros de nuestra vida diaria y nuestro entorno social, económico y Medioambiental. El impacto que esto tendrá en el seguimiento y evaluación de las metas de los ODS de la Agenda 2030 será crucial para los próximos ocho años que restan para cumplir con parte de la resolución 70/1 Transformar nuestro mundo. Por lo que el objetivo de esta edición especial es lograr dar un panorama actual de trabajos o propuestas en pro de la Sostenibilidad, Medioambiental y los objetivos, metas e indicadores de la Agenda 2030 mediante un análisis crítico desde el contexto de la nueva realidad a la que nos enfrentamos.
Purpose
The purpose of this paper is to investigate the relationships of supply chain resilience (SCR) and absorptive capacity (ACAP) with firm performance by specifically examining the crisis-mitigating effects under an environmental jolt such as COVID-19.
Design/methodology/approach
This paper is based on data from a questionnaire survey among Danish manufacturing and transport and logistics companies with 174 respondents.
Findings
While the adaptive capabilities associated with both SCR and ACAP are well recognized in extant SCM literature, less is known about their boundary conditions. Examining the functioning of SCR and ACAP amid the COVID-19 crisis, this study finds that both SCR and ACAP related positively to firm performance. However, while the positive relationship between SCR and firm performance was partly mediated by better crisis-mitigation, the results of this study did not find that a similar mechanism was present for ACAP. These results suggest notable refinements of current understandings of SCR and ACAP.
Research limitations/implications
This study is limited by the cross-sectional design, the focus on Danish companies only, and by examining only two industries. Hence, comparisons to other countries and other industries would be of significant interest.
Practical implications
Investing in SCR and ACAP to different extents provides for a complementary mix of longer-term opportunity-generating dynamic capabilities and more short-term crisis-mitigating dynamic capabilities. Firms will benefit from both types of dynamic capabilities during a crisis, but the latter will be more important for mitigating specific crisis impacts.
Originality/value
This paper extends current theorizing on ACAP and SCR by adding the distinction between the long-term opportunity generating dynamic capabilities and short-term crisis-mitigating dynamic capabilities. This paper provides novelty by empirically examining this theorizing by investigating the performance- and crisis-mitigating effect of SCR and ACAP in the light of the COVID-19 crisis.
Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the Jinn-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical-biotechnology RED alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. (C) 1998 John Wiley & Sons, Ltd.
This paper extends current theory by analyzing the knowledge dynamics and social structure
of the internal selection-retention environment. On the knowledge side, our view is that
entrepreneurial ideas are subjected progressively to subjectivist, empiricist, and pragmatic
criteria in the process of knowledge creation. This argument helps to explain how individual
knowledge enters an organizational process and how individual knowledge becomes
shared within the group. For social structures, we argue that actor centrality, structural
equivalence, and bridging relationships account for an individual's ability to acquire novel
information and to achieve a position of influence. Combining these assertions, the paper
offers an integrative model that explains how organizations overcome inertia in the capability
development process. A series of propositions are deduced as a basis for conducting
future empirical research, and the paper closes with a discussion of the model's implications
for theory and practice.
Because of the substantial technical, market, organizational and resource uncertainties associated with radical innovation projects, project team members and the managers who sit on decision-making boards frequently view traditional resource allocation processes as ineffective. Yet, the resource acquisition effort necessitated by inefficient or ineffective project funding mechanisms requires substantial time and energy from the project team, thereby diminishing the capacity of the team to focus on resolving technical and market uncertainties. Firms recognizing this difficulty are experimenting with new corporate venture capital models. This exploratory study employs in-depth, semi-structured interviews with representatives of Lucent, 3M, Norte I Networks, and Proctor & Gamble to obtain a rich description of the venture capital models that are emerging in support of radical innovation.
Three research theories used to explain firm boundaries are transaction cost economics, an options perspective, and a resource-based view of the firm. Our integrated model addresses the degree to which each of these three perspectives explains firm boundaries for technology sourcing is contingent on managerial risk taking, which is partly determined by organizational context. Our results suggest that, in general, management stockholdings, firm risk orientation, and slack resource availability moderate the extent to which the perceived threat of opportunism, the threat of commercial failure, and opportunity for sustainable advantage all influence firm boundaries.
Research on acquisitions has typically focused on acquisitions per se, examining issues such as performance and implementation problems. This study moves beyond that perspective and studies the influence on a firm's later expansions. We argue that exploitation of a firm's knowledge base through "greenfields" eventually makes a firm simple and inert. In contrast, acquisitions may broaden a firm's knowledge base and decrease inertia, enhancing the viability of its later ventures. Over time, firms strike a balance between the use of greenfields and acquisitions. Various implications of this theory-tested with survival analysis and "logit" models-were strongly corroborated.
Examining the relationship between governance and corporate innovation strategies, we found, in opposition to the assumption that owners have a unified voice, differences among governance constituencies' preferences for corporate innovation strategies. The managers of public pension funds preferred internal innovation, but professional investment funds' managers preferred acquiring external innovation. The profiles of boards of directors also shaped these innovation strategies. Inside directors with equity emphasized internal innovation, and outside directors with equity emphasized external innovation. The two types of fund manager equally preferred boards composed of outsider representatives with equity. However, pension fund managers preferred inside directors with equity more strongly than did professional investment fund owners.
Managers can form populations of strategies using lessons learned from complexity theory and evolution.
Working Paper. Please do not quote or cite without authors ’ permission. © 2002 G. Dushnitsky & M. LenoxCorporate Venture Capital and Incumbent Firm Innovation Rates In this paper, we focus on the potential innovation benefits to corporate venture capital, i.e. equity investments in entrepreneurial ventures by incumbent firms. In particular, we ask do firms that invest corporate venture capital learn about and appropriate new technologies and practices from those ventures they invest. Our investigation builds on two theoretical pillars. First, incumbent firms operating in competitive markets are inclined towards introducing innovations. Second, the knowledge necessary to generate innovation may likely reside outside the boundary of the incumbent firm and in entrepreneurial ventures. Thus, we propose that corporate venture capital programs may be instrumental in harvesting innovations from entrepreneurial ventures and thus an important part of a firm’s overall innovation strategy. We hypothesize that these programs are especially effective in weak intellectual property regimes. To this end, we explore the relationship between corporate venture capital and incumbent firm innovation by analyzing a large panel of public firms that pursued venturing activity or patented over a twenty-year period. We find that increases in corporate venture capital investments are associated with subsequent increases in firm patenting. The findings of this study have important implications for the study of inter-organizational learning and the development of firm’s dynamic capabilities.
This study examines the outcomes of technology-sourcing partnerships from the sourcing firms' point of view. Using a knowledge-based perspective, we develop a contingency model suggesting how the imitability, uniqueness, and uncertainty associated with a technology interact with partner interdependence to influence sourcing outcomes. Ninety-five sourcing arrangements spanning licensing, joint development, and acquisitions were examined close to the time of conception and three to four years afterward. Overall, the results support a contingency framework.
In this paper we present a study of the structure of three lead firm‐network relationships at two points in time. Using data on companies in the packaging machine industry, we study the process of vertical disintegration and focus on the ability to coordinate competencies and combine knowledge across corporate boundaries. We argue that the capability to interact with other companies—which we call relational capability—accelerates the lead firm’s knowledge access and transfer with relevant effects on company growth and innovativeness. This study provides evidence that interfirm networks can be shaped and deliberately designed: over time managers develop a specialized supplier network and build a narrower and more competitive set of core competencies. The ability to integrate knowledge residing both inside and outside the firm’s boundaries emerges as a distinctive organizational capability. Our main goal is to contribute to the current discussion of cooperative ties and dynamic aspects of interfirm networks, adding new dimensions to resource‐based and knowledge‐based interpretations of company performance. Copyright © 1999 John Wiley & Sons, Ltd.
Historically, acquisition scholars and practitioners have adopted a choice perspective which portrays the corporate executive analyzing acquisition opportunities as a rational decision maker. This paper suggests that the choice perspective be supplemented with a process perspective which recognizes the acquisition process itself as a potentially important determinant of activities and outcomes. A series of research propositions is offered suggesting how four impediments present in the process itself might affect acquisition outcomes.
Examines how external corporate venturing can enhance organizational renewal, and a practical guide to help management apply it within their own organizations. Keil's succinct, readable study shows how major players in the information and communication technology industries have used corporate venture capital, alliances, acquisitions or spin-offs to achieve remarkable strategic self-renewal. Based on indepth empirical research, Keil clarifies and emphasizes the role that external corporate venturing plays as a mechanism to acquire new knowledge and to advance corporate strategic capabilities. It supports the creation of new business opportunities in other ways too. It creates new entry options, it opens access to other complementary means of renewal, it helps to control critical resources, and it accelerates the growth of organizations generally. For corporate executives, scholars, researchers, and graduate students, Keil's book is a major contribution to our understanding of external corporate venturing, and a highly practical guide to help management use it in the strategic renewal of their own organizations. Keil argues that an ability to do external venturing is an important factor in the successful development and growth of any organization. He conceptualizes the process into two main elements. One is the creation of what he sees as a shared context that bridges the gap between the corporation and the community in which it resides. Bridging supports knowledge transfer and the formation of new cognitive intra-corporate frameworks. The second element is the process of executing relationships efficiently, to make possible the rapid development of venturing opportunities. With case studies and lucid explanations, Keil shows how other corporations create and use a variety of connected learning processes to build their own venturing capabilities as well.
Large companies have long sensed the potential value of investing in external startups, but more often than not, they fail to get it right. Remember the dash to invest in new ventures in the late 1990s and the hasty retreat when the economy turned? This article presents a framework that will help a company decide whether it should invest in a particular start-up by first understanding what kind of benefit might be realized from the investment. The framework-illustrated with examples from Intel, Lucent, and others - explains why certain types of corporate VC investments proliferate only when financial returns are high, why other types persist in good times and in bad, and why still others make little sense in any phase of the business cycle. The framework describes four types of corporate VC investments, each defined by its primary goal - strategic and financial and by the degree of operational linkage between the start-up and the investing company. Driving investments are characterized by a strong strategic rationale and tight operational links. Enabling investments are also made primarily for strategic reasons, but the operational links are loose. Emergent investments which are characterized by tight operational links, have little current - but significant potential - strategic value. Passive investments offering few potential strategic benefits and only loose operational links, are made primarily for financial reasons, Passive corporate VC investments dry up in a down economy, but enabling and driving investments usually have more staying power. That's because their potential returns are primarily strategic, not financial. In other words, they can foster business growth. Emergent investments may make sense even in a weak market because of their potential strategic value - that is, their ability to help companies identify and spark the growth of future businesses.
Strategy development requires that managers predict the future in an inherently uncertain world. Many mistakenly do so on the basis of perceived historical patterns that, according to recent scientific understanding of complex systems, do not have great predictive value. Complex systems consisting of many dynamically interacting parts are difficult and often impossible to predict because they exhibit punctuated equilibrium (periods of relative quiescence interspersed with episodes of dramatic change) and path dependence (small, random changes at one point in time that lead to radically different outcomes later). What, then, is a strategist to do? Beinhocker recommends cultivating and managing populations of multiple strategies that evolve over time, because the forces of evolution acting on a population of strategies make them more robust and adaptive. Because both biological evolution and business evolution are complex adaptive systems, to better understand business strategy, managers can employ a tool that scientists use to better understand biological evolution. An imaginary grid called a fitness landscape is an aid to comprehending how evolution increases the odds of survival in nature. In general, the rules for success in fitness landscapes also apply to business problems, though their specific application differs significantly by company and situation. The lessons of fitness landscapes offer an untraditional picture of what a company needs to develop a successful strategy. Because shifting an organization to this way of thinking about strategy is not easy, a company can take six actions to reinforce the robust, adaptive mind-set: Invest in a diversity of strategies. Evaluate strategies as real options that may open future possibilities, and remove biases that undervalue experimentation and flexibility. Diversify strategies along three dimensions time frame, risk, and relatedness to current business. Ensure that the strategies include sufficiently diverse initiatives in promising areas. Check that selection pressures on the firm's population of strategies reflect those operating on the population of strategies in the marketplace. Use venture capital performance metrics.
In this paper, we examine organizational characteristics, structural mechanisms and contextual factors that influence knowledge acquisition from the foreign parent in international joint ventures (IJVs). We in turn relate assessments of knowledge acquisition to IJV performance. The data come from a survey of IJVs in the Hungarian context, where learning and knowledge acquisition from the foreign parent is thought to be particularly critical. Adaptation mechanisms, such as capacity to learn, articulated goals, and structural mechanisms, such as the provision of training, technology and managerial assistance by foreign parents, all were positively associated with the degree to which IJVs reported acquiring knowledge from their foreign parents. We also found limited support for the belief that cultural conflicts can impede knowledge acquisition, but only for two-party joint ventures with 50/50 equity arrangements. We also looked at the relationship between knowledge acquisition and different dimensions for evaluating IJV performance. The relationship between knowledge acquisition and performance was significant for all indicators of performance, through knowledge acquisition from the foreign parent and the organizational characteristics hypothesized to enhance IJV knowledge acquisition affected assessments of some dimensions of performance more than others. Our findings contribute to advancing knowledge about the relationship between organizational characteristics and organizational knowledge acquisition in IJVs, as well as the relationships between knowledge acquisition and different dimensions of IJV performance.
How do large corporations encourage their senior managers to become more entrepreneurial? This is a key question which is seldom addressed in mainstream entrepreneurship studies. Professor Sathe has written this study based on hundreds of hours of interviews with senior managers to help understand why some organizations and some top managers are better than others in fostering entrepreneurship leading to successful new business growth. Corporate Entrepreneurship explores the real world of top managers in a systematic and comprehensive way, examining business realities, the management culture, the corporate philosophy, the organizational politics, the personalities and the personal agendas of the people at the top. The book offers both a theory of corporate entrepreneurship and practical advice on how to manage it better. An interesting and valuable contribution to the literature on strategic management, this is a book that will appeal to graduate students, researchers and reflective practitioners.
Conceptual arguments for the association between cultural characteristics and entrepreneurship have existed for decades but only in the last 10 years has this relationship been the focus of empirical scrutiny. In this article, we review and synthesize the findings of 21 empirical studies that examine the association between national cultural characteristics and aggregate measures of entrepreneurship, individual characteristics of entrepreneurs, and aspects of corporate entrepreneurship. The study concedes that a predominant number of empirical studies have used Hofstede's conceptualization of national culture and that other domains have been underdeveloped. A preliminary model that integrates past findings is extended. The review highlights fruitful avenues for future research.
An increasing number of new venture firms are internationalizing their business operations early in their life cycles. Previous explanations of this trend have focused on the importance of technological knowledge, skills, and resources for new ventures' international expansion. However, little is known about how these firms use the technological learning gained through internationalization. This study examined the effects of international expansion, as measured by international diversity and mode of market entry, on a firm's technological learning and the effects of this learning on the firm's financial performance.
In recent years there has been an explosive growth in international alliances. As more of them mature, the issue of exit, the end-game scenario, will escalate in importance. As a general theme, we have observed that partners in international alliances do not often prepare for the eventual termination of their alliances, and some are caught off guard when their other partners are better prepared to deal with issues related to termination of the alliance. In this article we will explore three issues: why alliances end, how they end, and key issues to consider. Then, using the lessons that we learned from studying more than two dozen divorces in international alliances, we provide a list of dos and don'ts for prospective suitors.
Globalization of the world economy has encouraged U.S. companies to leverage their resources and skills by expanding into existing or new foreign markets. U.S. companies have also acquired new capabilities by locating important functional activities overseas, and joining with foreign partners in new markets through alliances and joint ventures. These opportunities, however, are tempered by the constraints imposed by the competitive forces that exist in international environments. Aggressive government intervention, technological changes, and fierce local rivalries all contribute to hostile international environments for U.S. firms' global expansion.Success in global business operations requires resourcefulness and entrepreneurial risk taking. The activities of U.S. companies in foreign markets, therefore, provide a unique opportunity to examine the effects of international corporate entrepreneurship (ICE) efforts on company performance. ICE is defined as the sum of a company's efforts aimed at innovation, proactiveness, and risk taking. These efforts offer an important means of revitalizing and renewing established companies and improving their performance. Few studies have empirically examined the effects of ICE activities on companies' financial performance.This study used data from 98 U.S. companies to: (1) determine the impact of ICE efforts on firm performance, and (2) explore the moderating effect that the perceived hostility of the international environment has on the relationship between ICE and company performance. The results showed that ICE was positively associated with a firm's overall profitability and growth as well as its foreign profitability and growth. Those firms that aggressively pursued ICE in international environments with higher levels of hostility had higher return on assets (ROA) but did not achieve significantly higher levels of growth. However, as hostility in the international environment continued to intensify, ROA rose and then fell as companies increased their ICE activities. Thus, there was a point of diminishing returns to a company's aggressive pursuit of ICE under excessive environmental hostility.The results highlight both the rewards and risks of pursuing ICE. Companies benefit from ICE activities by achieving higher overall performance as well as foreign profits and growth in revenue. However, the aggressive pursuit of ICE does not always guarantee superior performance. Our results show that the payoff from ICE is moderated by executives' perceptions of the hostility of their firm's international business environment. Our findings highlight the importance of ICE for organizational success, both overall and in foreign markets. Yet, the results compellingly suggest that there are upper limits to the potential gains a firm achieves from its aggressive pursuit of ICE when the international environment in which it competes is hostile.
An archival study of the airline and trucking industries over a ten-year period and a laboratory study revealed that greater past success led to greater strategic persistence after a radical environmental change, and such persistence induced performance declines. The laboratory study also demonstrated that dysfunctional persistence is due to greater satisfaction with past performance, more confidence in the correctness of current strategies, higher goals and self-efficacy, and less seeking of information from critics.
Researchers have used the absorptive capacity (ACAP) construct to explain various organizational phenomena. However, they have not been consistent in defining and measuring ACAP or in articulating the conditions under which it can enhance value creation. In this paper, we review the literature to identify the key dimensions of ACAP and offer a more definitive reconceptualization of this construct.
In this paper we present a study of the structure of three lead firm-network relationships at two points in time. Using data on companies in the packaging machine industry, we study the process of vertical disintegration and focus on the ability to coordinate competencies and combine knowledge across corporate boundaries. We argue that the capability to interact with other companies—which we call relational capability—accelerates the lead firm's knowledge access and transfer with relevant effects on company growth and innovativeness. This study provides evidence that interfirm networks can be shaped and deliberately designed: over time managers develop a specialized supplier network and build a narrower and more competitive set of core competencies. The ability to integrate knowledge residing both inside and outside the firm's boundaries emerges as a distinctive organizational capability. Our main goal is to contribute to the current discussion of cooperative ties and dynamic aspects of interfirm networks, adding new dimensions to resource-based and knowledge-based interpretations of company performance. Copyright © 1999 John Wiley & Sons, Ltd.
Influenza still has significant morbidity and mortality in people over 65 years.
The availability of external equity finance is a key factor in the
development of technology-based firms (TBFs). However, although a wide
variety of sources are potentially available, many firms encounter
difficulties in securing funding. The venture capital community,
particularly in the UK, has done little to finance early stage TBFs and
has failed to cater adequately for the specific value-added requirements
of these firms. Non-financial companies have the potential to become an
important alternative source of equity finance for TBFs through the
process of corporate venture capital (CVC) investment. Based on a
telephone survey of 48 UK TBFs that have raised CVC, examines the role
of CVC in the context of TBF equity financing. Shows that CVC finance
has represented a significant proportion of the total external equity
raised by the survey firms and has been particularly important during
the early stages of firm development. In addition, CVC often provides
investee firms with value-added benefits, primarily in the form of
technical- and marketing-related nurturing and credibility in the
marketplace. Concludes with implications for TBFs, large companies,
venture capital fund managers and policy makers.
Globalization of the world economy has encouraged U.S. companies to leverage their resources and skills by expanding into existing or new foreign markets. U.S. companies have also acquired new capabilities by locating important functional activities overseas, and joining with foreign partners in new markets through alliances and joint ventures. These opportunities, however, are tempered by the constraints imposed by the competitive forces that exist in international environments. Aggressive government intervention, technological changes, and fierce local rivalries all contribute to hostile international environments for U.S. firms' global expansion.
Historically, acquisition scholars and practitioners have adopted a choice perspective which portrays the corporate executive analyzing acquisition opportunities as a rational decision maker. This paper suggests that the choice perspective be supplemented with a process perspective which recognizes the acquisition process itself as a poten- tially important determinant of activities and outcomes. A series of research propositions is offered suggesting how four impediments present in the process itself might affect acquisition outcomes.
As companies try to keep pace with rapid changes in technology and cope with unstable business environments, their research departments have to do more than simply invent new products. They must design the new technological and organizational architectures that make a continuously innovating company possible. In this 1991 article, John Seely Brown, then director of Xerox's Palo Alto Research Center (PARC), describes the business logic behind this distinctive vision of research's role and the ways Xerox PARC tried to realize that vision. its researchers developed prototypes of new work practices as well as new technologies and products. They designed new uses for technology to encourage the local innovation that, they found, occurs naturally at all levels of any big company. And they experimented with new techniques for what the author terms "co-producing" technological and organizational innovations with Xerox's customers. Xerox's business is technology, but Seely Brown argues that any company, no matter what its business, must eventually grapple with the issues he raises. The successful company of the future must understand how people really work and must adapt its technology to the work rather than the other way around. It must know how to create an environment that allows for continuous innovation by all employees. It must rethink traditional business assumptions and tap into needs that customers don't even know they have. In essence, he argues, the most important invention that will come out of the corporate research lab in the future will be the corporation itself.
Includes bibliographical references (p. 24-27).
Three principal aspects of venture capital (VC) are empirically explored: fundraising, investing, and exiting those investments. Despite the recent attention to VC, misconceptions abound that the authors attempt to correct. Throughout, the discussions are based on examinations of a large sample of firms, VC funds, and investments. Three themes are elaborated in the volume: (1) The great incentive and information problems venture capitalists must overcome; (2) the interrelatedness of each aspect of the VC process and how it proceeds through cycles; and that (3) the VC industry adjusts slowly to shifts in the supply of capital or the demand for financing. The VC partnership is the intermediary between investors and high-tech start-ups. The fundraising aspect is examined in terms of its structure, means of compensation, and the importance of the structure of the limited partnership form used by most VC funds. The need to provide incentives and shifts in relative negotiating power impact the terms of VC limited partnerships. Covenants and compensation align the incentives of VC funds with those of investors; covenants and restrictions limit conflicts among investors and venture capitalists. Supply and demand and costs of contracting determine contractual provisions. VC contracting may not always be efficient. During periods of high demand and capital flows, partners negotiate compensation premiums. The investing aspect is discussed in terms of why investments are staged, how VC firms oversee firms, and why VC firms syndicate investments. Four factors limit access to capital for firms: uncertainty, asymmetric information, nature of firm assets, and conditions in the financial and product markets. These factors determine a firm's financing choices. Asymmetries may persist longer in high-tech firms, thus increasing the value of delaying investment decisions. Exiting VC investments is examined, in regard to the market conditions that affect the decision to go public, whether reputation affects the decision to go public, why venture capitalists distribute shares, the performance of VC-backed firms, and the future of the VC cycle. Exiting investments affects every aspect of the investment cycle. Venture capitalists add value to the firms in which they invest. The VC cycle is a solution to information and inventive problems. (TNM)
Examines how major firms utilize R&D activities to create new businesses through internal corporate venturing (ICV). Using a qualitative method, this analysis was done for one large, U.S.-based high-technology firm. This firm has a new venture division, which was formed in the early 1970s. Data were obtained from the study of six major projects that were ongoing at the time of the research. This data collection included interviews with 61 firm employees involved in the projects. The key and peripheral managerial activities of the grounded process model of ICV and the flow of these activities through four venture stages are presented. The four major processes in the model are definition, impetus, strategic context determination, and structural context determination. Among the findings: It is usually the autonomous strategic initiatives of individuals at the operational level that provide the ideas for much of corporate entrepreneurship. As a result of the very autonomous nature of these initiatives, management has difficulty deciding how to deal with the new initiatives and often ignores administrative issues through the entrepreneurial process. Middle-level managers are found to play a key role in linking these autonomous initiatives to the corporate strategy of these diversified major firms. (SRD)
Examines the correlation between the exploration of new possibilities and the exploitation of old certainties in organizational learning. Also discusses the difficulty in balancing resource management between gaining new information about alternatives to improve future returns (i.e., exploration) and using information currently available to improve present returns (i.e., exploitation). Two models which evaluate the formation and use of knowledge in organizations are developed. The first is a model of mutual learning in a closed system having fixed organizational membership and stability. The second is a model which considers the ways in which competitive advantage is affected by knowledge accumulation. The analysis indicates that the choice to rapidly develop exploitation over exploration might be effective in the short term, but is potentially detrimental to the firm in the long term. (SFL)
Expert case studies This book is about national systems of technological innovation. The heart of the book consists of studies of 17 countries, including the large market-oriented industrialized countries, several smaller high-income countries, and a number of newly industrialized states. The studies have been carefully designed, developed and written to illuminate the institutions and mechanisms supporting technological innovation in the various countries, the similarities and differences across countries, and how these came to be.
Four promising research avenues in corporate entrepreneurship are identified which have important implications for knowledge creation and exploitation as well as organizational learning. The discussion opens with a focus on how knowledge is created through four types of corporate entrepreneurship and their implications for organizational learning. The four types are sustained regeneration, organizational rejuvenation, strategic renewal, and domain redefinition. Mediated by two forms of organizational learning, these types lead to three forms of new knowledge that are used differently within the firm. The roles of leadership and social exchanges in the corporate entrepreneurship process are identified. These roles and information exchanges cross levels of management and promote the types of organizational learning required by the four types of corporate entrepreneurship. The interplay between corporate entrepreneurship and internationalization is discussed. A typology is proposed which that separates content from process-related studies in new ventures versus established companies. Finally, the outcomes of corporate entrepreneurship research is assessed considering the importance of social, human, and intellectual capital in creating competitive advantages and wealth in today's knowledge economy. The need to include multiple measures of economic and financial outcomes of corporate entrepreneurship initiatives and to include stakeholder perspective is stressed. Organizational learning theory is used throughout the discussion to emphasize the contributions of corporate entrepreneurship to knowledge creation and exploitation.(TNM)
Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the firm-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical–biotechnology R&D alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. © 1998 John Wiley & Sons, Ltd.
Global competition highlights asymmetries in the skill endowments of firms. Collaboration may provide an opportunity for one partner to internalize the skills of the other, and thus improve its position both within and without the alliance. Detailed analysis of nine international alliances yielded a fine-grained understanding of the determinants of interpartner learning. The study suggests that not all partners are equally adept at learning; that asymmetries in learning alter the relative bargaining power of partners; that stability and longevity may be inappropriate metrics of partnership success; that partners may have competitive, as well as collaborative aims, vis-à-vis each other; and that process may be more important than structure in determining learning outcomes.
This paper examines the impact of acquisitions on the subsequent innovation performance of acquiring firms in the chemicals industry. We distinguish between technological acquisitions, acquisitions in which technology is a component of the acquired firm's assets, and nontechnological acquisitions: acquisitions that do not involve a technological component. We develop a framework relating acquisitions to firm innovation performance and develop a set of measures for quantifying the technological inputs a firm obtains through acquisitions. We find that within technological acquisitions absolute size of the acquired knowledge base enhances innovation performance, while relative size of the acquired knowledge base reduces innovation output. The relatedness of acquired and acquiring knowledge bases has a nonlinear impact on innovation output. Nontechnological acquisitions do not have a significant effect on subsequent innovation output. Copyright © 2001 John Wiley & Sons, Ltd.