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A Composition-Based View of Firm Growth
Abstract
This article presents a composition-based view (CBV), which explicates the growth of enterprises that compete and develop without the benefit of resource advantages, core technology, or market power. The CBV emphasizes how ordinary firms with ordinary resources may generate extraordinary results through their creative use of open resources and unique integrating capabilities, resulting in an enhanced speed and a price-value ratio that are well suited to large numbers of mass market consumers. In addition to defining the CBV, this article explains the key elements of composition-based strategy and the distinctive processes of composition. Although CBV logic can apply to any firm endeavoring to catch up with better endowed competitors, it aligns well with the case of emerging economy enterprises (EEEs), and Chinese ones in particular. Nonetheless, the advantages of adopting composition-based strategy are temporary in nature and will decline over time, especially after the firm passes the imitative or catch-up stage. We also propose an agenda for future research. © 2015 The International Association for Chinese Management Research.
... The internationalization of emerging market MNEs (EMNEs) has been a popular topic in the past two decades as IB scholars have been trying to understand the distinctive features of the entry model, speed, role of state, role of institutions, and other key aspects of the internationalization of EMNEs compared with their Western peers (Luo & Tung, 2018). New theories, such as springboard theory (Luo & Tung, 2007, 2018 and composition-based view (Luo & Child, 2015), have emerged to answer the call for an understanding of the unique features of EMNE internationalization. ...
... Although several generalized theories (Luo & Child, 2015;Luo & Tung, 2007) have been proposed to understand the internationalization process of Chinese MNEs, theories specifically focusing on their internationalization at the 'post-springboard' phase still require more probing to fill the research vacuum and answer the practical calls from Chinese MNEs to overcome the key barriers and latecomer disadvantages in developed markets under the current Western Shock context. ...
The international landscape has changed remarkably in the last decade. This fast-changing business context necessitates the re-examination of the IB theories for Chinese MNEs’ internationalization in developed markets within the current volatile, uncertain, complex, and ambiguous (VUCA) setting. In this paper, we firstly propose a novel term of ‘Western Shock’ to elucidate the unpleasant encounters and barriers Chinese MNEs are experiencing in developed markets. Furthermore, drawing on the springboard perspective and dynamic capabilities theory, we introduce a ‘surfboard perspective’ to help researchers and practitioners better understand the motives and behaviours of Chinese MNEs’ internationalization during the ‘post-springboard’ phase.
... The strategic importance of this concept leads companies down the road of gaining sustainable competitive advantages by capitalizing on core competencies that are difficult for competitors to duplicate or acquire (Luo & Child, 2015;Tashman & Marano, 2009). IoT, BDA-AI, and HRC technologies are many of the key competitive levers that the RBV sheds light on in advanced manufacturing. ...
In the age of Industry 5.0 (I 5.0), manufacturing SMEs face the critical challenge of balancing technological advancement with environmental sustainability. This study 448 explores the intricate relationships between Industry 5.0 technologies-specifically Big Data Analytics and Artificial Intelligence (BDA-AI), Human-Robot Collaboration (HRC), and the Internet of Things (IoT), and sustainable practices in manufacturing SMEs. Drawing on data from 466 SMEs across key industrial regions, we employ structural equation modeling to uncover the transformative roles of Eco-Innovation. Our findings reveal that Eco-Innovation (Eco-Inn) acts as a pivotal mediator, translating technological capabilities into enhanced environmental performance (EP). This study breaks new ground by examining the ethical implications of Human-Robot Collaboration within Industry 5.0, offering insights into its long-term sustainability impact. By integrating the resource-based view theory, this research presents a novel framework for sustainable manufacturing SMEs in the digital era.
... Ambrosini et al. (2009) and Correia et al. (2020) shown that sustainability should be addressed through a continual adjustment process that can facilitate dynamic capabilities in the enterprise. Various works of scholars have revealed that the upper echelon theory contributes pathways to reflect the sustainability of enterprises that have not been sufficiently considered by the traditional owner of the enterprise domain (Luo and Child, 2015;Kanda et al., 2020). Also, the dynamic capabilities theory is more appropriate to explain the diversity of sustainability entrepreneurs in the current competitive market (Shang et al., 2020;Kundurpi et al., 2020). ...
Purpose
There is a widely held belief that open government data (OGD) have the potential to generate both economic and social value. This study aims to empirically unpack the relationship between OGD, diversification activities and innovation in the pursuit of economic value creation by firms.
Design/methodology/approach
Using a matched sample comparison method and difference-in-differences analyses, the authors study the impact of OGD on innovation over time in the USA. The authors considered the open government directive in the end of 2009 in the USA as a policy intervention and collected 10 years of financial data of 79 firms that use OGD and 79 matched control firms in the USA. The authors compare US firms using OGD, with matched control firms, regarding the firms’ level of product diversification as a measure of innovative use of OGD.
Findings
The authors provide empirical evidence that OGD policy contributes toward innovation, and hence economic value creation, through product diversification. Firms that leverage OGD show superior product diversification in comparison to the matching control firms. The results suggest that OGD contribute to firms’ innovation and pursuit of economic value, as evidenced by their increased product diversification.
Originality/value
Although the extant literature concerning OGD has underscored the impact of OGD on innovation and economic value generation, there is a lack of empirical evidence in the literature. This study seeks to add to the extant literature by providing empirical evidence that contributes to the understanding of the relationship between OGD, diversification and innovation in the pursuit of economic value creation.
This research paper investigates the impact of Strategic Management Accounting Techniques (SMAT) as a cutting-edge accounting technology on enhancing business performance. It takes a comprehensive approach by analyzing SMAT’s effectiveness from both the Contingency and Resource-Based View (RBV) perspectives. The study begins by assessing the effectiveness of SMAT in enhancing business performance. From a Contingency viewpoint, the research delves into how SMAT can enhance business performance by aligning accounting practices with the unique contingencies faced by different organizations. It reveals that SMAT’s adaptive nature allows it to respond to specific organizational needs, thereby promoting better performance outcomes. Furthermore, the research explores the Resource-Based View (RBV) approach to understand how SMAT can be leveraged as a valuable resource for organizations. Findings suggest that SMAT, when integrated into the organization’s resource portfolio, can lead to sustainable competitive advantages and superior business performance.
This paper underscores the critical role of SMAT in modern business management and decision-making. It highlights the need for organizations to adopt SMAT in their strategic planning and execution processes, as its application transcends traditional accounting practices. The study provides a holistic perspective on how SMAT contributes to improving business performance, offering valuable insights for practitioners, researchers, and policymakers seeking to enhance the efficiency and competitiveness of contemporary businesses.
This research aims to improve the understanding of the scientific contributions to international ambidexterity and identify possible lines of research. We conducted a systematic literature review of 193 articles on international ambidexterity published from 2003 to 2023 that are indexed in Scopus. The publications were systematically analyzed, and scientific mapping was carried out with the VOSviewer and ATLAS TI tools. The study reveals that research in this field focuses on multinational companies from developing countries, dynamic capabilities, internationalization, innovation, and business performance. The United States, the United Kingdom, and China lead research in this area, with the most prominent journals being the International Business Review, the Thunderbird International Business Review, and the Journal of Business Research. Based on the findings, the article suggests seven categories for future research: types of ambidexterity, organizational factors, internationalization, contextual factors, effects, relationships and capabilities, innovation, and networks. We encourage academics and practitioners to contribute to this area of research and deepen our understanding of international ambidexterity.
The chapter presents the literature review of the study. Two main theoretical lenses, with a focus on China, are applied in the analysis: (i) Institutional Theory and (ii) The Resource-Based View (with a focus on marketing capabilities), in addition to Outward Foreign Direct Investment (OFDI) theories that are introduced and critically analysed in order to understand Chinese internalisation processes. The chapter also highlights the main gaps found in the literature and identifies the questions this book intends to address.
Since it is well documented that no business can succeed persistently without recourse to business model re-engineering, small and medium-sized enterprises (SMEs) have been lauded for their strategic manoeuvring, elasticity and flexibility. Yet, the aftermath of the Covid-19 pandemic has demonstrated the fragility of SMMEs’ brick-and-mortar business model predominantly founded on location-based production and delivery of products and services. The Covid-19 pandemic has proven that, in highly disruptive and turbulent environments characterised by social distancing and limited logistical delivery of goods, digital technologies could become the epicentre of new business models for SMEs. In fact, digital innovation in business model development and value creation has proven to be pivotal in preventing business bankruptcy, expanding to foreign markets and increasing the competitiveness of these businesses. Drawing on (Christensen in The innovator's dilemma: When new technologies cause great firms to fail, Harvard Business School Press, 1997) Disruptive Innovation Theory, the concept of institutional voids and extensive review of literature, this chapter argues that digital platforms (“platfirms”), crowdfunding, cloud-based computing, social media marketing, tockenisation and securitisation of assets, big data-driven decision-making and artificial intelligence (AI)-informed business processes are business model forms and processes that could transform the digital futures of African SMEs. As such, these firms cannot afford to ignore these model forms and processes as they constitute critical business survival and continuity strategies. The study contributes to the development of a recursive, self-perpetuating and self-regulating system comprising the acquiring, assembling, combining and integration of resources that trigger digitalisation processes, digital innovation and business model development and value creation. The study concludes with some policy and practical implications for African SMEs.
Business leaders constitute a powerful driving force for the miraculous growth of the Chinese economy in the past few decades. However, scholars have not developed theories accounting for the unique leadership phenomenon in the Chinese context, characterized by high uncertainty, intense market competition, and constant changes in government regulations and policies. This special issue aims at offering insights regarding business leadership in China. In this paper, we first introduce the three streams of Chinese leadership research, varying in the degree of Chinese context being considered in theory development. We then discuss how Chinese leadership has co-evolved with the transformation of firms and the institutional environment in China. The new values of young employees, born after 1980, are driving the need for leaders to adjust their leadership practices once again. After that, we present a summary of the four papers in this special issue, and the insights they provide to our understanding of leadership and its effectiveness in the Chinese context. Finally, we suggest future research directions for Chinese leadership research.
The study of organizational change, as the many chapters in this handbook demonstrate, reflects extensive and diverse theoretical perspectives and empirical approaches. In this chapter we return to an examination of the adaptation-selection debate (Baum, 1996, Lewin and Volberda, 1999). Our purpose is to consider the implications of the different theories on adaptation and selection for strategy and change. In particular, we reconsider theories and empirical studies that inform organization-level adaptation as a direct outcome of strategic management and organizational change or have implications for organizational change but make no direct or explicit assumptions about managerial intentionality.
This paper focuses on dynamic capabilities and, more generally, the resource‐based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high‐velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well‐known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high‐velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long‐term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high‐velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.
The article focuses on the development of a theory. A discussion is presented about steps involved in developing a theory, such as seeing which factors logically should be considered as part of the explanation of the social or individual phenomena of interest. The authors assert that authors developing theories are considering these factors, they should err in favor of including too many factors, recognizing that over time their ideas will be refined. The article presents information about the importance of sensitivity to the competing virtues of parsimony and comprehensiveness.
This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed 'best practice'). This suggests that they are more homogeneous, fungible, equifinal and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of REV, we conclude that traditional REV misidentifies the locus of long-term competitive advantage in dynamic markers, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright (C) 2000 John Wiley & Sons, Ltd.