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Dynamic Capabilities: What are they?
Abstract
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.
... This almost axiomatic relationship between agility and resilience is, however, being questioned by a number of researchers such as Eisenhardt & Martin [2] , who consider that the impact of agility is neither universal nor absolute. ...
... Mass production methods, such as Taylorism, emphasized the maximization of productivity through job Qeios, CC-BY 4.0 · Article, Qeios ID: LZC1WM.2 · https://doi.org/10.32388/LZC1WM. 2 3/31 specialization and close supervision of work practices (Taylor, 1911). Such rigidity was clearly inappropriate for settings where a rapid adjustment was appropriate. ...
... As a result, agility, looked at from a strategic capability perspective, is more than just an ability to react; it is a strategically enhanced set of competencies enabling firms to be "in constant state of adjustment to change, continuously taking advantage of new opportunities presented, and changing in the process". According to Eisenhardt & Martin, "dynamic capabilities are not vague, idiosyncratic processes but rather specific and identifiable routines that generate visibly advantageous performance" [2] . Thus, agility should be seen not as an ephemeral but an real strategic asset. ...
The paper discusses how this affects the financial resilience across industries, using Amazon, Ford, Toyota, and Pfizer from 2008 to 2023, with further forecasts up to 2028. It utilizes the ARIMA model in computing the extent to which agility in operational, financial, and strategic dimensions leads to recoveries and performance during economic turmoil. In this regard, the adaptability of Amazon and Toyota further increased its growth, but Ford and Pfizer demonstrated really constrained flexibility due to the limitations of their industries. The approach of Toyota to lean manufacturing proves that structured agility can also work for traditional industries. Besides, Pfizer's short-term gains from rapid innovation underlined the relevance of Pfizer's long-term strategic agility. Based on the case study, several contributions are created to the dynamic capability theory: agility works best within an industry context and within the discipline in finance. This conference is insightful for leaders seeking to bring agility into various industries' diverse operational requirements, showcasing agility as both the great factor of competitive advantage and stability.
... There are two different schools of thought in dynamic capabilities research grounded in evolutionary elements [22]. Eisenhardt and Martin [23] argue that dynamic capabilities consist of specific processes; therefore, best practices can be identified at an industry or firm level [23]. On the contrary, Teece, Pisano, and Shuen [21] focus on the individual firm level with the role of routines, individual characteristics, and behaviours to achievein achieving variation and adoption as an outcomeoutcomes in disruptive and rapidly changing environments [22]. ...
... There are two different schools of thought in dynamic capabilities research grounded in evolutionary elements [22]. Eisenhardt and Martin [23] argue that dynamic capabilities consist of specific processes; therefore, best practices can be identified at an industry or firm level [23]. On the contrary, Teece, Pisano, and Shuen [21] focus on the individual firm level with the role of routines, individual characteristics, and behaviours to achievein achieving variation and adoption as an outcomeoutcomes in disruptive and rapidly changing environments [22]. ...
Organisations need dynamic capabilities in the ongoing digital transformation to recon-figure knowledge and learning. There is a need to define new concepts and explain mechanisms of relevant factors to build dynamic capabilities. Organisations acting in healthcare experience a dil-emmatic situation. New digital processes and business models are promising benefits for cost-containment measures and, improved patient-centric care, offeringand digital services. However, investments are needed to benefit. The critical question is the following: How can individual actors in healthcare be motivated to engage in this transformational process to build and reconfigure relevant competences and establish new learning routines? Founded on the essence of the existing literature, we assume sustained learning asto be a relevant dynamic capability to seize and sense competences and reconfigure human capital. This paper answers the call for deeper investigations into the mechanisms in new digitally transformed environments and sectors focussing less on performance and competitive advantages, like public administration or the healthcare sector. Based on previous research , validated in qualitative interviews and quantitative testing, we define the new construct of sustained learning with its subdimensions. By providing measures, we build the groundgrounds for further quantitative research.
... The use of technologies and digital strategies by MSMEs requires resources and competencies that reflect dynamic capabilities (Teece et al., 1997). As MSMEs operate in a dynamic environment, they must continually renew their competencies to remain competitive (Eisenhardt & Martin, 2000). Human and investment resources are influenced by past decisions and, when combined with the dynamism of the environment, establish new requirements for action in response to emerging digital business models. ...
This study aims to analyze the influence of digital transformation on innovation and the moderating role of barriers to digitalization in
this relationship within Brazilian micro, small, and medium enterprises (MSMEs). The sample comprises 731 Brazilian MSMEs. The
findings indicate that digital transformation, characterized by digitalization strategies and technology usage, has a positive and
significant impact on innovation. Moreover, barriers to digitalization negatively and significantly affect the relationship between digital transformation and innovation, but this effect is observed only in medium-sized enterprises. This study contributes to strategic management practices by providing insights into the role of digital transformation in business innovation. Future research should investigate why barriers to digitalization do not consistently impact the relationship between digital transformation and innovation.
... The agile organization continuously adapts, refines, and integrates its resources to achieve a competitive advantage [69,70]. Digital technologies are an organizational resource that acts as both a digital operational tool and as a digital innovation enabler [71]. ...
In response to the rapid advancement in smart technology and the 2019–2020 pandemic, the hospitality industry has accelerated its adoption of innovative technologies. However, new technologies are often disruptive and may not be aligned with the organization’s strategy, technological expertise, and employee and customer expectations. This negatively affects the perceived value of the new technology and its adoption and continuous use. The review of the relevant research presented in this paper indicates that despite the many potential points of intersection between technology acceptance and adoption theories and studies of entrepreneurship and change management, these connections have not been explored in sufficient depth in the hospitality context. Drawing on extant theories, this study proposes a novel conceptual framework for the management of technology adoption in hotel organizations. The four stages of the framework represent the process of technology adoption from initiation to institutionalization to new challenges, connecting the theoretical constructs with the tangible needs of the hotel organizations. The framework considers technology adoption as a process of change that involves capability and leadership building. It shows how managing technology adoption through an integrated change management and digital capability-building perspective can lead to sustainable digital innovation. Practitioners can use the framework to systematically evaluate the potential of new and emerging technologies and develop the required digital competencies while managing organizational culture shifts and user resistance to change.
... Two important theories that contribute to this capability are the dynamic capability theory (DCT) and the technology-organization-environment (TOE) paradigm. DCT states that dynamic capabilities enable organizations and their top management to adjust resources based on volatile and ever-changing environments by creating, recombining, integrating, and releasing resources (Eisenhardt and Martin, 2000;Teece, 2019). On the other hand, the TOE paradigm outlines the organizational, technological, and environmental as factors influencing the adoption and implementation of technological innovations (Tornatzky et al., 1990). ...
Purpose
This paper aims to provide insights into service innovation (SI) during the COVID-19 crisis and its potential impact on tourism development in the medium-to-long term. The pandemic had a devastating effect on the industry, requiring immediate mitigation. It is yet to fully establish the impact of SI in the face of the COVID-19 volatility, uncertainty, complexity and ambiguity (VUCA). This study discusses the potential link between SI and COVID-19 crisis mitigation and offers recommendations for tourism recovery.
Design/methodology/approach
This paper synthesizes empirical evidence on post-crisis tourism SI using a theory-based general literature review approach.
Findings
COVID-19 crisis spun various forms of SI, which emerged as a conventional solution to crisis prevention, encompassing the management of crisis-time competitiveness, revenue deficits and risk perception. However, resistance to innovative services is linked to situational conditions.
Research limitations/implications
COVID-19 is an unprecedented crisis. Therefore, this study serves as a primer for further inquiry into SI. For instance, areas such as governance in tourism innovation and consumers' inclination toward innovation-driven services are underexplored.
Practical implications
SI acts as a situational facilitator, but its characteristics can impede or facilitate adoption. Moreover, the irrelevance of innovations in some environments is evidenced. Thus, practitioners must adopt a responsive learning approach in SI adoption. To mitigate the COVID-19 impacts, reconfiguration in SI, recovery marketing strategy, knowledge gap and governance will be critical interventions.
Originality/value
This paper is one of the first comprehensive discussions on the potential role of SI in mitigating the impact of COVID-19 on the THI.
... Past research found a connection between conceptual competency and the success of female entrepreneurs in business [12][13][14]. Past research has shown that entrepreneurs' management capabilities [15][16][17], conceptual capabilities [18], and technological capabilities [19][20][21] play crucial roles in achieving sustainable business performance in female-owned enterprises. These competencies enable female entrepreneurs to take on their environment, improve organizational effectiveness, and create and maintain competitive advantage [22,23]. ...
The primary objective of this paper is to explore how management capabilities influence the sustainable business performance of women-owned SMEs in Bangladesh, encompassing the moderating role of technological capabilities and the mediating effect of conceptual competency. This research is necessary to address a gap in understanding how managerial capabilities can drive long-term growth for women-owned SMEs in emerging countries, thereby enhancing the broader discourse on women’s entrepreneurship and sustainable business practices. Data were collected from 216 women entrepreneurs across various SMEs in Bangladesh, and Smart PLS version 4 was employed for analysis. The measurement model was evaluated using factor loadings, Cronbach’s Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), the Heterotrait–Monotrait (HTMT) ratio, and the Fornell–Larcker test. Structural model analysis was conducted, examining R2, Q2, f2, beta coefficients, p-values, and t-statistics derived through bootstrapping. The results indicate that management capabilities play a pivotal role in enhancing conceptual competencies, which, in turn, significantly contribute to sustainable business performance. However, technological capabilities were not found to moderate the relationship between conceptual competency and sustainable business performance. Additionally, conceptual competency fully mediates the relationship between management capabilities and sustainable business performance. The findings underscore the importance of fostering skills and competencies among women entrepreneurs in emerging economy to drive long-term business success. The study’s limitations and recommendations for future research are also discussed.
Existential philosophy provides a framework to understand the motivations and strategic decisions of startup founders in navigating uncertainty and limited resources. This study explores the interplay between existential reflection and the 'Arema Spirit,' a cultural ethos in Malang, Indonesia, in shaping financial bootstrapping strategies. Using a qualitative phenomenological approach, data was collected from 30 creative startup founders through in-depth interviews, participatory observations, and qualitative questionnaires. The analysis emphasizes how founders integrate philosophical reflection with local cultural values to balance autonomy, ethical responsibility, and resource efficiency. The findings reveal that existential reflection fosters strategic independence and resilience while the 'Arema Spirit' inspires ethical and community-oriented decisions. This dynamic is encapsulated in the Bootstrapping Existential Reflection Cycle, an iterative framework connecting existential values, bootstrapping practices, and practical innovation. The study highlights the role of cultural identity in entrepreneurial strategy, bridging philosophy, and practice in navigating startup challenges.
A crise sanitária e econômica causada pela pandemia da Covid-19 afetou fortemente as cidades que têm eventos de caráter religioso e que têm no turismo religioso sua grande fonte de receita. O patrimônio cultural de cidades e regiões cuja economia é baseada na fé é enorme e deve ser preservado devido a seus aspectos antropológicos, sociais e econômicos. O turismo religioso cria espaços de reafirmação, fortalecimento e consolidação de uma fé ou tradição religiosa. A governança exige uma implementação eficaz e acompanhamento dos meios para criar coerência entre as atividades do governo e dos participantes do setor privado e é crucial para qualquer sociedade que deseja promover seu desenvolvimento econômico e o bem-estar de sua comunidade. A proposição de retomada para as cidades está baseada na Teoria das Capacidades Dinâmicas, que trata da habilidade de se integrar, construir e reconfigurar competências internas e externas em ambiente de rápidas mudanças. As capacidades dinâmicas são sustentadas por decisões organizacionais que promovem a criação, extensão e reconfiguração de competências principais, integrando comportamentos, rotinas e mecanismos de aprendizado organizacional.
Business and management scholars have always placed a strong emphasis on the study of capabilities. As digital technology moves from the back office to the forefront of digital innovation and transformation, organizations increasingly recognize the vital role of their digital‐related capabilities. Yet, despite the attention, substantial confusion remains in the cross‐disciplinary management and business literature, caused by conflating related, yet distinct, constructs: information technology (IT) capabilities, IT‐enabled capabilities and digital capabilities. Our objective in this article is twofold. First, we analyse the capability literature across business research areas to identify weaknesses, contradictions, controversies or inconsistencies regarding ‘IT’ and ‘digital’ constructs. We do so by conducting a theory‐driven critical review encompassing 360 studies in fields ranging from accounting to strategy. Second, our article advances a theoretical framework that clarifies the differences across IT capabilities, IT‐enabled capabilities and digital capabilities. It also provides solid ground for future inquiry by ensuring reliable knowledge accumulation while pointing research attention to unique and novel research questions.
This study investigates the impact of environmental uncertainty on the digital transformation of Chinese A-share listed companies from 2013 to 2022. Our empirical analysis reveals that environmental uncertainty negatively affects digital transformation by inducing managerial myopia, hindering research and development (R&D) investment, and exacerbating financial constraints. However, these negative effects can be mitigated by increasing management shareholding, which aligns managers’ interests with long-term goals, providing digital transformation subsidies to lower financial barriers, and fostering a favorable legal environment to protect digital investments and innovation. These findings offer valuable insights for understanding how environmental uncertainty influences digital transformation strategies and provide practical implications for enterprises and policymakers in dynamic business environments.
This study examines the mediating role of new product performance in the relationship between service innovation and both financial and non-financial performance in selected banks in Ghana using the dynamic capability theory as the theoretical lens. The study employed a descriptive research design to frame the study’s methodology. The target population consisted of 159 commercial and community banks in Ghana. Utilizing a quantitative research approach, a structured questionnaire was used to gather data from 113 sampled respondents through purposive sampling, Structural Equation Modeling (SEM) was employed to analyze the data and assess the proposed relationships. The results reveal that service innovation has a direct and positive impact on the financial performance of banks, with a b coefficient of 0.316, affirming its importance in enhancing profitability and market share. However, the relationship between service innovation and non-financial performance was negative. Despite this, new product performance emerged as a significant mediator, strengthening the positive impact of service innovation on financial performance, with a b coefficient of 0.245 and a t-statistic of 2.409. The mediation effect of new product performance on the relationship between service innovation and non-financial performance was also validated, indicating that while service innovation alone may negatively affect non-financial outcomes, introducing successful new products can mitigate this impact. These findings contribute to the understanding of how service innovation influences different aspects of organizational performance in the banking sector. The study offers practical insights for bank managers, emphasizing the need to focus on new product development to maximize service innovation's benefits.
Purpose
Borrowing from the dynamic capabilities theory and augmented by the relational view, the study investigates the criticality of supply chain agility in delivering operational performance while understanding the determinant role of key cross-firm resources. Additionally, based on the contingency theory, the interactive influence of two critical context factors, supply uncertainty and product complexity, is examined to enrich the understanding of the contingent nature of the operational performance implications.
Design/methodology/approach
The study draws its conclusions from the survey data collected from a 152-respondent sample of executives from US manufacturing firms. The empirical data analyses using partial least square structural equation modeling (PLS-SEM) relate agility to operational performance enhancements while incorporating the moderating effects of contextual factors.
Findings
The study relates agility capability to operational performance enhancements, while resource specificity and resource complementarity emerge as significant determinants of the capability. Results on the contingent impact of contextual factors suggest differential influences of supply uncertainty and product complexity on the agility–performance relationship: while the former enhances, the latter detracts from the relationship.
Originality/value
The study’s contributions suggest theory extensions into supply chains as contexts, reinforcing the importance of market-responsive capabilities and the foundational nature of supply chains as repositories of vital cross-firm resources. The contingent nature of the agility–performance relationship accents the importance of market context factors.
Prior work shows limited success in retail firms’ efforts to create socially responsible supply chains by enforcing suppliers’ compliance with labor standards, partly due to conflicting sourcing demands exerted on the supplier by siloed functional units within the retail firm. To ensure the substantive adoption of labor standards throughout its supply chain, we argue that the retail firm must improve their degree of “supply chain labor compliance integration” by minimizing cross-functional tensions in human capital, identities, processes and goals. We define supply chain labor compliance integration, identify its determinant organizational practices that reduce cross-functional tensions, and explain the mechanisms by which it improves the retail firm’s supply chain labor standards performance. This work offers theoretical and practical insights on the retail firm’s capacity for managing socially responsible supply chains, and more broadly, on how systematically minimizing intra-organizational tensions arising in the pursuit of competing organizational priorities is a prerequisite for their simultaneous execution in inter-organizational business exchanges.
What dynamic capabilities are needed to sucessfully contribute within an ecosystem? Successful companies have opened their boundaries and are leveraging external knowledge, resources, and skills. Macroeconomic developments and regulations, constantly changing customer requirements, and technological advancements lead to high dynamics and complexity. The key to transformation and effective adaptation of business models is an open and permissive organizational culture and new management practices. These are based on synergistic and systemic leadership approaches. Three ecosystem capabilities are highly relevant—openness, agility and ambidexterity. Openness internalizes the open innovation approach and promotes curiosity, motivation, and flexibility within the organizational structure to drive the creation of new ideas and solutions. Agility, precicely inter-organizational agility, is crucial for collaboration and communication and is characterized by adaptability, speed, and customer centricity. Ambidexterity is the ability to bring diametrically opposed things into a holistic context and to tackle them simultaneously. All three key principles are closely intertwined, significantly impacting knowledge, learning, and the innovative capacity of each player, who creates distinct value within an open and digital ecosystem.
Supply chain resilience (SCR) has been a topic of enormous interest among researchers for almost two decades. Still, there’s been limited focus on the impact of digital twin (DT) technologies and supply chain disruption mitigation (SCDM) strategies on SCR. This study addresses this gap by examining how DT and SCDM strategies enhance SCR and whether strategic fit (SF) moderates these relationships. Using the dynamic capability view (DCV) as the theoretical foundation, we developed our conceptual framework and research hypotheses. Data were collected from 200 Bangladeshi manufacturing organizations through a survey-based approach, and the partial least square (PLS) technique was utilized to assess the framework and research hypotheses. The findings reveal that both DT technologies and SCDM strategies significantly boost SCR. Besides, while SF plays a critical moderating role in the relationship between DT and SCR, it does not moderate the association between SCDM strategies and SCR. This study contributes to the theoretical understanding of SCR by integrating DT and SCDM strategies within the DCV framework, offering insights into their roles in managing supply chain disruptions. Additionally, it provides practical guidance for managers on effectively leveraging DT and SCDM strategies to build resilient supply chains while emphasizing the importance of strategic alignment in optimizing digital interventions.
Businesses with owners from ethnic minorities function differently. Ethnocultural differences shape business decision-making and are impacted by discriminatory practices across the marketplace. While research has centered on the way ethnicity shapes business development and on the impact barriers have on commercial practices within ethnic minority populations, this chapter provides an instrumental case study of 20 immigrant student entrepreneurs at a Canadian university, investigating their perceptions of the capabilities needed to overcome barriers and rapidly pursue foreign market opportunities. It builds on a body of knowledge that features immigrant entrepreneurs’ ability to overcome barriers and identify and exploit opportunities. This chapter focuses on the experiences of immigrant student entrepreneurs in Canada and observes that this population of ethnic minority business owners possess certain generic, and unique capabilities that are further developed from within the university space in order to allow this population of entrepreneurs to overcome barriers and excel in the marketplace. These observations help transform how we understand ethnic minority entrepreneurship and offer important recommendations to facilitate effective support mechanisms to develop this potential beyond this university-centered instrumental case study.
Invention is a core component of innovation, but it is not the same as innovation, and the inventor does not have to be party to, or involved in any way in the subsequent innovation that exploits their invention. The two are separate processes with innovation dependent on invention but invention not being dependent upon innovation. Invention is dependent upon creativity, novelty and utility and so questions are asked about the role of creativity in invention and how this is influenced by circumstance and the different classes and origins of opportunity that drive subsequent innovation and whether innovation is wholly research dependent? The chapter also addresses how innovation is best categorised, given a multitude of approaches and parties engaged in its delivery; what institutional factors influence success, and why is priority given to product and process innovation when the economies of so many advanced nations are service-based?
Purpose
Configuring strategies to ensure a health service provider’s resilience when extreme disruptions occur is not simple. Optimal configuration in such circumstances is rare. Therefore, this research has relied on the dynamic capability view (DCV) to develop a decision-support framework for configuring resilience strategies that will mitigate the worst challenges and improve the performance of health service providers during “extreme” disruptive events.
Design/methodology/approach
The research adopted a multi-study, multi-method approach comprising interviews, quality function deployment (QFD), and fuzzy set qualitative comparative analysis (fsQCA).
Findings
The findings reveal that, during a crisis, standalone resilience strategies are not enough. To guarantee performance, healthcare services require a combination of resilience strategies and a negation of challenges.
Originality/value
This research extends our current knowledge of healthcare operational management by offering optimal configurations of resilience strategies to manage performance during extreme disruptions. Thus, it offers strategic insights into how health-service managers can be more resilient during a crisis.
The study examines the sustainability of competitive advantages among Russian multinationals, particularly those in the commodity sectors. Using data from the Fortune 500 and Forbes Global 2000rankings, we analyze the dynamics of the representation of Russian MNEs and the structural factors contributing to their dominance. The paper explores several theoretical concepts, including the Market-Based View, Resource-Based View, Knowledge-Based View, and Dynamic Capabilities Perspective, to understand the drivers behind the sustained competitive edge of these firms. Emphasis is placed on the role of resource dependency, oligopolistic power, and state intervention, and the challenges posed by evolving global sustainability standards. The findings suggest that while Russian commodity companies benefit from stable internal resources, they face increasing pressure to adapt to sustainability and environmental regulations to maintain long-term competitiveness.
Drawing on the intensive literature on Business Resilience and Business model innovation, the purpose of this chapter is to propose a conceptual framework examining the effect of value co-creation and firm resource integration capabilities in transforming business model innovation. Various databases were searched for identifying the literatures on the proposed variable to understand their role in business model innovation. Further, data for pilot testing were collected from goods and service-based micro, small, and medium enterprises (MSME) in India. The literature review and the pilot study findings revealed that value co-creation and resource integration mechanism plays a significant role in business model innovation. Besides, digital transformation intention has a moderating role in the process. In addition, business resilience moderates the relationship between digital transformation intentions and business model innovation. The suggested framework on the basis of literature and the findings of pilot study proposes capabilities and practices that helps in business model innovation. This study is the first of its kind that has provided an in-depth analysis of the impact of business resilience on business model innovation. In addition, intentions for digital transformation have also been studied in the overall process.
With the advent of the digital wave, understanding the impact of Digital Transformation on sustainable development in firms is increasingly important. Drawing from the Technology-Organization-Environment (TOE) framework and the Dynamic capability view, this study investigates the determinants of Digital Transformation and its impact on Sustainable Innovation Capability and Sustainable Organizational Performance. Data from 261 firms were collected via surveys and analyzed using partial least squares structural equation modeling (PLS-SEM) and fuzzy-set qualitative comparative analysis (fsQCA). The results demonstrate that Technology, Organization, and Environment are critical factors driving Digital Transformation. Digital Transformation can enhance Sustainable Organizational Performance by improving a firm's Sustainable Innovation Capability. Environmental Dynamism positively moderates the effect of Digital Transformation on Sustainable Innovation Capability and Sustainable Organizational Performance. Importance-performance map analysis (IPMA) confirms Digital Transformation as the most significant predictor of Sustainable Organizational Performance. fsQCA identifies three configurations leading to highly Sustainable Organizational Performance. These findings provide new theoretical evidence for understanding the relationships among Digital Transformation, Sustainable Innovation Capability, and Sustainable Organizational Performance and the moderating role of Environmental Dynamism in these relationships. This study offers a new perspective on the relationship between Digital Transformation and sustainable development and supports applying TOE framework, and Dynamic capability view. The results are significant for understanding the drivers of Digital Transformation and its impact on sustainable development in firms.
Purpose
In the highly competitive sector of state-owned enterprises in Indonesia, particularly within the electricity group, innovation is crucial for sustainability and growth. This study investigates the impact of transformational leadership and knowledge management on innovation performance, emphasizing the mediating role of innovation capability.
Design/methodology/approach
Employing a quantitative approach, this research focuses on the upper management of 11 companies, gathering data from 196 out of 280 surveyed individuals through structured questionnaires. Structural equation modeling (SEM) was utilized for analysis.
Findings
Our analysis reveals a dual role of transformational leadership; while it significantly enhances innovation capability, it unexpectedly detracts from innovation performance. Conversely, knowledge management boosts both innovation capability and performance. Significantly, innovation capability serves as a crucial mediator, amplifying the effects of both transformational leadership and knowledge management on innovation performance. These results highlight complex interdependencies within organizational leadership and knowledge frameworks.
Practical implications
These findings can guide organizations in refining leadership and knowledge management strategies to bolster innovation. By enhancing transformational leadership skills, implementing robust knowledge management systems and fostering innovation capabilities, companies can better navigate the complexities of the modern market. The adaptation of these strategies should consider specific organizational cultures and market dynamics to optimize performance.
Originality/value
This research extends the resource-based view (RBV) by detailing the interplay between key organizational variables, offering fresh insights into their collective impact on innovation within the context of state-owned enterprises in Indonesia.
Research Summary
How should decision‐making be organized in entrepreneurial teams pursuing competing economic and noneconomic goals? Using a computational model, we examine how four archetypical decision‐making structures—unanimous approval, individual autonomy, majority voting, and lead entrepreneur—shape the performance of entrepreneurial firms when team members hold varied preferences for how to tradeoff economic and noneconomic goals. In stable environments, we find that majority voting generates highest economic performance, while unanimous approval generates highest noneconomic performance. Conversely, unanimous approval outperforms in fast‐changing contexts. Although goal diversity generally reduces economic performance, it enhances it in fast‐changing settings when teams operate under unanimous approval. This study thus underscores the critical role of decision‐making structures for the success of entrepreneurial teams.
Managerial Summary
How should entrepreneurial teams make decisions when balancing economic and noneconomic goals? We examine four decision‐making approaches—unanimous approval, individual autonomy, majority voting, and lead entrepreneur—and their impact on economic and noneconomic performance. In stable environments, majority voting leads to highest economic performance, while unanimous approval excels in achieving noneconomic goals. In fast‐paced environments, unanimous approval consistently delivers superior outcomes, enhancing both economic and noneconomic performance. Notably, teams with diverse goals can improve their economic performance in high‐velocity settings when using unanimous approval. These findings highlight the importance of choosing the right decision‐making structure to optimize performance in varying conditions. For entrepreneurial teams, adapting decision‐making processes to the pace of the environment is essential for success.
Purpose
This study aims to explore the impact of ecosystem-related digital decoupling capability (DDC) and digital integrative capability (DIC) on manufacturing firms’ radical service innovation (RSI) and the moderating effect of strategic flexibility, specifically resource flexibility (RF) and culture flexibility (CF).
Design/methodology/approach
This study employed empirical survey data collected from 238 Chinese manufacturing firms to test all hypotheses through hierarchical multiple regression analyses.
Findings
DDC and DIC have positive effects on RSI, with DDC exerting a stronger impact. RF and CF strengthen the positive effect of DIC on RSI, whereas CF diminishes DDC’s positive effect on RSI, and RF does not moderate this effect.
Practical implications
Manufacturing firms should prioritize developing ecosystem-related DDC and DIC to drive RSI, especially DDC. Managers should improve firms’ RF and CF when leveraging DIC to drive RSI. However, they should minimize the negative impact of CF when leveraging DDC to drive RSI.
Originality/value
This study shifts the service innovation capabilities from the firm to the ecosystem level, opening a new perspective for exploring RSI’s driving mechanism. With RF and CF as the moderators, the findings reveal the contingent impact mechanism of ecosystem-related digital capabilities on RSI, which provides profound insights into the complex role of strategic flexibility in the new contexts.
Purpose
This study aims to clarify the direct impact of digitalization on export performance (EP) by synthesizing previous research and testing this relationship empirically. Furthermore, the study investigates digitalization types, contextual moderators and method moderators affecting the impact of digitalization on EP.
Design/methodology/approach
The study uses meta-analysis to test the digitalization–EP relationship (k = 81) using data from 106 independent samples involving 62,082 respondents across nearly 30 countries.
Findings
The study finds digitalization’s positive and significant effect on EP (r = 0.36). The impact of digitalization on EP is also subject to different moderators, including digitalization type (i.e. digital capabilities), contextual factors (i.e. institutions, export experience, development of the region and industry) and method factors (i.e. back translation and strategy measurement).
Originality/value
Scholars have initiated studies on the impacts of diverse digitalization types on EP, while empirical findings on these effects remain inconclusive. Based on resource-based theory, the study develops and validates a comprehensive meta-analytic framework, revealing the important influence of digitalization on EP. The moderator findings further highlight the impact of internal and external contingencies on the outcomes of exporting firms’ digitalization.
Organizational resilience is a crucial capability that enables firms to navigate external shocks and achieve sustainability. While it enhances market value, it can also have potential negative impacts on it. Drawing from dynamic capability theory, this study adopts a dual-pathway approach to investigate the dual effects of organizational resilience on firm market value. Utilizing data from Chinese A-share listed firms during 2010–2022, our findings reveal that organizational resilience exhibits both positive and negative pathways on firm market value. Specifically, it can boost firm market value by promoting financial investment (positive pathway) while suppressing it through environmental, social, and corporate governance (ESG) responsibility fulfillment (negative pathway). Moreover, industry competition moderates the indirect effects of organizational resilience on firm market value through financial investment and ESG responsibility fulfillment. In high-competition environments, organizational resilience promotes financial investment, thus facilitating firm market value. Conversely, in low competition environments, organizational resilience enhances ESG responsibility fulfillment, subsequently hindering firm market value. This paper reveals the double-edged sword effect of organizational resilience on enterprise market value, offering a dialectical perspective for understanding their relationship. It also provides valuable insights for enterprises to develop solutions to enhance market value in a competitive industry environment.
It is no longer news that organizations had faced serious challenges due to the emergence and rapid development of disruptive technologies. This study explored the relationship between disruptive technology and firm capabilities of oil and gas companies in Port Harcourt, Rivers State Nigeria. The study adopted a survey design, the population of the study is 401, and the sample size was 200 using the sample size formula. The respondents was using the simple random technique. And Pearson Product Moment Correlation technique was used at 0.01 level of significance with the aid of SPSS. Our findings show a positive and significant relationship between dimensions and measures of disruptive technology and organizational capabilities in the companies under investigation. The study showed that there is a correlation between disruptive technology and organizational capabilities in the companies under survey. The researcher concludes that disruptive technology has a positive impact on the organizational capabilities. The researcher recommendations were as follows. The management should adopt cloud services technology to bring flexibility, security to businesses, supporting new investment area of the business and to make the business grow. This will enable the oil and gas companies to rapidly modernize their operating system to lower cost and increase the agility of their management in data storage, backup and complete information accessibility. The oil and gas organizations must invest in security service technology to combats different treats from different quarter and form a collaboration between national security and international security to fostering a safer and more connected business world. Management should ensure they are dynamic in their operations so that they can survive any types of changes that may pose a serious threat to the survival and growth of the organization. Oil and gas companies must furcate the environment and consider which disruptive technology might influence their performance and prepare resources and formulate a strategy that will helps to adjust to the disruptive technology for better performance.
Dynamic capabilities refer to an organization’s ability to integrate, build, and reconfigure internal and external competencies to address a rapidly developing environment. In his highly influential 2014 JIBS paper, David Teece provides a holistic explanation of how firms can: achieve sustained competitive advantage, adjust and preserve superior performance, and adapt to changing environments. The article, along with Teece’s related contributions, is remarkable in that it has led us to rethink and reframe our conventional understanding of markets, strategy, competitive advantage, and the firm. In this commentary, we reflect on the transformative contributions of the article. We argue that the dynamic capabilities framework provides a foundation for theorizing and developing a coherent logic that guides theory development.
The chapter explores how small and medium-sized enterprises (SMEs) can enhance competitiveness and innovation in a constantly evolving business environment. SMEs face significant challenges to remain relevant amid rapid technological evolution, shifts in consumer preferences, and increasing global competition To adapt, innovate, and thrive, SMEs must develop dynamic capabilities, comprising a set of skills, processes, and knowledge that enable them to integrate, build, and reconfigure their internal resources in response to environmental changes. To improve competitiveness and innovation, SMEs should foster a culture of innovation that values experimentation and creative thinking, promote collaboration through strategic alliances and agile methodologies, and manage organizational well-being by addressing mental health and stress management. These strategies collectively enhance resilience and adaptability, essential for navigating BANI environments
Study about reason why start-ups fail has shown that internal issues become the most likely cause of failure. An indication that people within the organization have a difficulty to establish strong sense of identity as the foundation of start-up’s continuity in the long run. Previous studies mentioned how establishment of distinct and understandable identity influence many aspects starting from decision making to recognition by customers. Thus, the aim of this study is to analyse the way of thinking from start-up founders in establishing their start-up identity and construct model that can be applied by other founders. This paper using qualitative method to investigate an in-depth reason of “why” and “how” such phenomenon happen by interviewing 15 start-up owners in Indonesia to gain deeper understanding about how start-up owners establish their identity. By using start-ups’ perspective of value creation to answer questions within Law of Identity model used in this study. The result of this study is a comprehensive step by step model along with questions that can be answered by start-ups founder to establish their identity based on the value they hold. The new model developed in this study are expected to help start-up’s founder establish their identity easier and can be understood by all members within the organization.
Ecological innovation is an important conduit to realizing economic and environmental benefits. As such, improving enterprise ecological innovation performance has recently gained prominence. In this vein, the interaction between internal and external driving factors is key to influencing ecological innovation performance. Although existing studies underscore network embedding as one of the important external driving factors, research is lacking on the influence of the interaction mechanism between political network embedding and internal driving factors on enterprise ecological innovation performance. Therefore, by engaging social network theory and social capital theory, this paper proposes a moderated‐mediation model, with absorptive capacity as the mediator and dynamic capability as the moderator for an empirical investigation. Analyzing 302 items of survey data, the current study discusses the influence mechanism of political network embeddedness on enterprise ecological innovation performance. Regression results confirmed no significant correlation between political network embeddedness depth and enterprise ecological innovation performance. However, political network embeddedness breadth and absorptive capacity positively affected enterprise ecological innovation performance. Absorptive capacity partially mediated the relationship between political network embeddedness breadth and enterprise ecological innovation performance. Dynamic capability also moderated the relationship between absorptive capacity and enterprise ecological innovation performance. The study results expanded the internal mechanism of the relationship between political network embeddedness and enterprise ecological innovation performance, corroborating the imperativeness of external political network resources and internal capital such as absorptive capacity and dynamic capability to improve enterprise ecological innovation performance.
Introducción: Los avances tecnológicos en el campo de la comunicación cada vez más van en aumento y las organizaciones intentan en paralelo ir al mismo ritmo, aunque eso signifique grandes desafíos. Pero necesarios para generar una comunicación más rápida con los públicos, pero sobre todo para lograr organizaciones más eficientes. Entonces aparece el CommTech, que es la digitalización de la comunicación y el marketing a través del uso de tecnología vigente. Metodología: Este estudio, a través de una metodología cualitativa y del instrumento de investigación entrevista semiestructurada, muestra la perspectiva de 5 CEO de diferentes agencias de comunicación y marketing de Ecuador. Discusión: Las implementaciones tecnológicas son fundamentales en las áreas de comunicación. Sin embargo, en las organizaciones se detectan debilidades y/o necesidades comunicacionales y tecnológicas para mejorar la gestión de la comunicación. Conclusión: Como resultado, se logra evidenciar que las tecnologías son recursos que permiten potenciar la comunicación con los públicos, generar un valor diferencial entre la competencia, valorar la adaptabilidad al cambio desde las organizaciones y promover una constante actualización en conocimientos.
Every society is intrinsically driven to optimize its productivity and operational efficiency. Such endeavors not only elevate a society’s prominence in global markets but also bolster its economic prosperity. Historically, the venture to amplify wealth and ensure its conservation has remained paramount. Groups, or at times entire societies, merged their intellectual prowess and workforce to enhance productivity, transforming their inherent advantages, be it knowledge or natural resources, into marketable goods or services (Smith, 2002). Herein lies the essence of entrepreneurship. Entrepreneurship, at its core, symbolizes this collective ambition. It’s not just about wealth generation for individuals or shareholders; it encompasses a broader societal aspiration. Furthermore, the transformative role of leadership in this narrative is undeniable (Bass & Stogdill, 1990). Leaders, often being visionaries, are instrumental in fostering a conducive environment for entrepreneurial endeavors, driving innovation, and shaping market dynamics.
The restaurant business plays a crucial role in the food economy and, like many industries, faces numerous challenges due to the rapid pace of change, driven by consumer trends and shifting demographics. In response to the pressure on businesses to adapt to these changing circumstances, new restaurant concepts, organizational structures and technologies have emerged in the hope of finding methods that are more agile during unpredictable times. The development of dynamic capabilities is a critical issue for both academics and practitioners, as it can enhance competitive advantages and improve organizational performance. The purpose of this paper is to examine the impact of dynamic capabilities on innovative potential and organizational performance. Through a literature review and the dynamic capability view, a theoretical model is proposed. This model was validated using the PLS-SEM technique, based on responses from 143 restaurants across eight of the largest Russian cities. The results indicate that dynamic capabilities related to the value proposition serve as a complete mediator in the relationship between a company's innovative potential and its performance in a highly volatile context. The proposed theoretical model is both unique and effective, demonstrating high explanatory power. This study enriches the existing literature on dynamic capabilities by addressing empirical research gaps and elucidating the mechanisms through which dynamic capabilities influence organizational performance.
Tourism and hospitality firms generally recover from crises but the resources and capabilities they leverage to maintain social performance remain elusive. Embedded in the resource-based view of the firm, we argue that psychological resources, such as employee resilience, and knowledge embedded in teams, through a transactive memory system, as well as dynamic capabilities can sustain social performance during crises. We test this proposition on a sample of 350 UK tourism and hospitality firms that survived the COVID-19 pandemic. Results from partial-least square structural equation modeling and fuzzy set qualitative comparative analysis identify different combinations of employee resilience, transactive memory systems, and dynamic capabilities that can boost social performance. Theoretically, micro and meso-level organizational resources and capabilities are intertwined in shaping social performance during crises. Managerially, recommendations on how to improve employee resilience in a way that boosts team knowledge, dynamic capabilities and ultimately social performance are offered.
Purpose
This study intends to (1) systematically review methodological, theoretical and empirical aspects of dynamic capabilities (DCs) research in international marketing; (2) identify problematic areas and gaps in the reviewed literature and (c) provide directions to address problematic aspects and fill the gaps in future research.
Design/methodology/approach
The study applies a systematic literature review methodology and covers 97 articles published between 2001 and 2022 in peer-reviewed journals ranked 2, 3, 4 and 4* in the Academic Journal Guide 2021.
Findings
The content analysis shows that (1) methodologically, the literature is dominated by single-country studies conducted mostly in Asia and Europe on a cross-section of industries, mostly adopting survey-based approaches with a cross-sectional time emphasis; (2) theoretically, dynamic capabilities view is mainly accompanied by resource-based view, followed by institutional-, organizational learning- and internationalization theories; and (3) according to the nomological network, DCs are predicted by firm-characteristics, factors related to networks/relationship/partnerships and managerial characteristics, while they act as predictors of performance-related, strategy-related and operational change and renewal-specific outcomes. Several problematic aspects and gaps for each part of the review are diagnosed.
Originality/value
The authors provide a comprehensive assessment of current knowledge on methodological, theoretical and empirical aspects of the relevant literature, map a nomological network of variables surrounding DCs in international marketing research and offer future research directions capitalizing on the problems and gaps identified in the review.
Objetivo: verificar a relação entre as práticas de economia circular (EC) e a inovação em processos na indústria têxtil. Metodologia: o estudo utilizou um questionário composto pelas dimensões inovação em processos e EC, aplicado em uma amostra de 135 empresas da indústria têxtil. A análise dos dados foi realizada pela Modelagem de Equações Estruturais (MEE). Descobertas: evidencia-se uma relação positiva entre as práticas de EC com a inovação em processos, os resultados apontam uma relação positiva. Os resultados mostram que as indústrias têxteis pesquisadas estão em fase inicial de implementação de suas práticas de EC. Limitação da pesquisa: utilização de uma amostra não probabilística, desse modo, inviabilizando a geração dos resultados obtidos e pela abordagem apenas da inovação em processo. Implicações teóricas: desenvolvimento e validação psicométrica das questões que norteiam o estudo da aplicação da economia circular, por meio do modelo ReSOLVE, bem como, a integração com o constructo de inovação em processos. Implicações sociais: ao aplicar os princípios da economia circular por meio do modelo ReSOLVE há otimização da produção e, aliado ao desenvolvimento tecnológico, as indústrias têxteis obtêm melhores resultados de inovação em processos. Implicações gerenciais: as evidências reais da aplicação do modelo ReSOLVE mostram a relação de causa e efeito entre a economia circular e a inovação em processos. Originalidade/valor: a relação teórica entre EC e inovação e processo de validação psicométrica das questões que norteiam o estudo da aplicação da EC, por meio do modelo ReSOLVE.
Background
The COVID-19 pandemic being a systemic crisis shocked the world and underscored the critical need for organizations to reimagine, reallocate, and reposition their resources to ensure survival and resilience. An organization’s resources, particularly human capital, are crucial elements of its success and adaptability in the face of such challenges. The difficulties in obtaining external assistance during the pandemic have further highlighted the importance of innovative strategies like employee-centered CSR (ECCSR) in managing and optimizing organizational resources. Recent studies emphasize the strategic role of ECCSR in bolstering resilience, with a focus on leveraging human capital effectively.
Objective
This study addresses several key objectives. First, it seeks to establish the interrelation between the four types of organizational resources (i.e., economic, human, physical, and social capital) and organizational resilience. It also aims to unveil the connection between employee-centered CSR (ECCSR) and organizational resilience, as well as to examine the relationship between ECCSR and workplace well-being. Additionally, the study investigates the link between workplace well-being and organizational resilience, and lastly, it explores the mediating role of workplace well-being between ECCSR and organizational resilience.
Methods
This study utilized a quantitative research design and employed a purposive sampling technique. The direct and indirect relationships among organizational resources, organizational resilience, ECCSR, and workplace well-being were analyzed using a variance-based structural equation modeling approach.
Results
The results revealed that among the four types of organizational resources, human capital is the most vital resource for organizational resilience. The findings also affirmed the emerging importance of ECCSR for organizational resilience, directly and indirectly through workplace well-being.
Conclusions
The study concludes that in times of crisis when organizations think outside the box by reimagining their situation and reallocating internal resources, such as human capital, they can buffer external shocks. This approach enables organizations to reposition themselves to withstand challenges and develop a strategic competitive advantage. Additionally, the study finds that the presence of ECCSR can cultivate positive employee well-being and organizations can benefit from the reciprocal gains that help them navigate difficult times more effectively. Implementing ECCSR not only fulfills an organization’s role as a responsible employer but also fosters workplace well-being, ultimately strengthening organizational resilience.
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.
As a potential theory, the elemental resource-based view (RBV) is not currently a theoretical structure. Moreover, RBV proponents have assumed stability in product markets and eschewed determining resources' values. As a perspective for strategic management, imprecise definitions hinder prescription and static approaches relegate causality to a "black box." We outline conceptual challenges for improving this situation, including rigorously formalizing the RBV, answering the causal "how" questions, incorporating the temporal component, and integrating the RBV with demand heterogeneity models.
Theorists debate whether organizations are inertial or adaptable, but mounting evidence shows they are both, provoking questions about how shifts occur between inertia and change. Research shows performance crises can trigger reactive change, but proactive revolutions in organizations are poorly understood. In project groups, temporal pacing triggers proactive change. This longitudinal study of a venture capital-backed start-up company explored whether temporal pacing could regulate momentum and change in an organization's strategy, as it does in groups. Two forms of pacing were discovered, one time-based, with reorientations initiated at temporal milestones, the other event-based, with actions initiated when the right event occurred. The two pacing types fostered systematically different patterns of momentum and change.
This paper investigates the mechanisms through which organizations develop capabilities in a dynamic sense (Teece, Pisano & Shuen, 1997) and reflects upon the role of (1) experience accumulation, (2) knowledge articulation and (3) knowledge codification processes in creating and constantly reshaping organizational routines. The argument is made that dynamic capabilities originate from the co-evolution of these three mechanisms. At any point in time firms adopt a mix of learning behaviors constituted by a semi-automatic accumulation of experience and by increasingly deliberate investments in knowledge articulation and codification activities. Further, the relative effectiveness of these capability-building mechanisms is analyzed here in their interaction with selected features of the task to be learned, such as its frequency, homogeneity and degree of causal ambiguity. Testable hypotheses are developed in the context of a theoretical model of dynamic capability building, and some preliminary empirical evidence in support of the arguments made is reviewed. Finally, implications of the analysis for evolutionary economics and for the emerging knowledge-based view of the firms are discussed and an agenda for future research efforts on these issues is advanced.
This article focuses on the activities teams use to manage their organizational environment beyond their teams. We used semistructured interviews with 38 new-product team managers in high-technology companies, log data from two of these teams, and questionnaires completed by members of a different set of 45 new-product teams to generate and test hypotheses about teams' external activities. Results indicate that teams engage in vertical communications aimed at molding the views of top management, horizontal communication aimed at coordinating work and obtaining feedback, and horizontal communication aimed at general scanning of the technical and market environment. Organizational teams appear to develop distinct strategies toward their environment: some specialize in particular external activities, some remain isolated from the external environment, and others engage in multiple external activities. The paper shows that the type of external communication teams engage in, not just the amount, determines performance. Over time, teams following a comprehensive strategy enter positive cycles of external activity, internal processes, and performance that enable long-term team success.
We build on an emerging strategy literature that views the firm as a bundle of resources and capabilities, and examine conditions that contribute to the realization of sustainable economic rents. Because of (1) resource-market imperfections and (2) discretionary managerial decisions about resource development and deployment, we expect firms to differ (in and out of equilibrium) in the resources and capabilities they control. This asymmetry in turn can be a source of sustainable economic rent. The paper focuses on the linkages between the industry analysis framework, the resource-based view of the firm, behavioral decision biases and organizational implementation issues. It connects the concept of Strategic Industry Factors at the market level with the notion of Strategic Assets at the firm level. Organizational rent is shown to stem from imperfect and discretionary decisions to develop and deploy selected resources and capabilities, made by boundedly rational managers facing high uncertainty, complexity, and intrafirm conflict.
Business historians have illuminated how first movers in many emerging industries secure an enduring leadership position, but have devoted less attention to the processes by which industry leaders relinquish their dominance. This paper examines why rubber industry leader Firestone Tire & Rubber failed to respond effectively to new technology and foreign competition. The author argues that Firestone did not respond by doing nothing, but rather accelerated activities that had contributed to its past success. Firestone's response was constrained by managers' existing strategic frames and values, and the company's processes and long-standing relationships with customers and employees.
We argue in this paper that when the knowledge base of an industry is both complex and expanding and the sources of expertise are widely dispersed, the locus of innovation will be found in networks of learning, rather than in individual firms. The large-scale reliance on interorganizational collaborations in the biotechnology industry reflects a fundamental and pervasive concern with access to knowledge. We develop a network approach to organizational learning and derive firm-level, longitudinal hypotheses that link research and development alliances, experience with managing interfirm relationships, network position, rates of growth, and portfolios of collaborative activities. We test these hypotheses on a sample of dedicated biotechnology firms in the years 1990-1994. Results from pooled, within-firm, time series analyses support a learning view and have broad implications for future theoretical and empirical research on organizational networks and strategic alliances.•.
We blend network and organizational memory perspectives in a model of technology brokering that explains how an organization develops innovative products. The model is grounded in observations, interviews, informal conversations, and archived data gathered during an ethnography of IDEO, a product design firm. This firm exploits its network position, working for clients in at least 40 industries, to gain knowledge of existing technological solutions in various industries. It acts as a technology broker by introducing these solutions where they are not known and, in the process, creates new products that are original combinations of existing knowledge from disparate industries. Designers exploit their access to a broad range of technological solutions with organizational routines for acquiring and storing this knowledge in the organization's memory and, by making analogies between current design problems and the past solutions they have seen, retrieving that knowledge to generate new solutions to design problems in other industries. We discuss the implications of this research for understanding the individual and organizational processes and norms underlying technology and knowledge transfer more generally.
Irreversible processes are the source of order: hence 'order out of chaos.' Processes associated with randomness (openness) lead to higher levels of organisation. Under certain conditions, entropy may thus become the progenitor of order. The authors propose a vast synthesis that embraces both reversible and irreversible time, and show how they relate to one another at both macroscopic and minute levels of examination.-A.Toffler
Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.
The promise of synergy is the prime rationale for the existence of the multi-business corporation. Yet for most corporations, the 1 + 1 = 3 arithmetic of cross-business synergies doesn't add up. Companies that do achieve synergistic success use a corporate strategic process called coevolving; they routinely change the web of collaborative links among businesses to exploit fresh opportunities for synergies and drop deteriorating ones. The term coevolution originated in biology. It refers to the way two or more ecologically interdependent species become intertwined over time. As these species adapt to their environment, they also adapt to one another. Today's multibusiness companies need to take their cue from biology to survive: They should assume that links among businesses are temporary and that the number of connections - not just their content - matters. Rather than plan collaborative strategy from the top, as traditional companies do, corporate executives In coevolving companies should simply set the context and then let collaboration (and competition) emerge from business units. Incentives, too, are different than they are in traditional companies. Coevolving companies reward business units for individual performance, not for collaboration. So collaboration occurs only when two business-unit managers both believe that a link makes sense for their respective businesses, not because collaboration per se is useful. Managers in coevolving companies also need to recognize the importance of business systems that support the process: frequent data-focused meetings among business-unit leaders, external metrics to gauge Individual business performance, and incentives that favor self-interest.
Business strategy is a complex subject and is usefully examined from several perspectives. This paper applies the lenses of governance and competence to the study of strategy. Both the governance and the competence perspectives have had the benefit of distinguished antecedents. They have also had to deal with tautological reputations. I begin with the governance perspective, with emphasis on the six key moves through which it has been operationalized. I then examine the competence perspective in these same six respects. Governance challenges the competence perspective to apply itself more assiduously to operationalization, including the need to choose and give definition to one or more units of analysis (of which the 'routine' is a promising candidate). The research challenges posed by competence to which governance can and should respond include dynamic transaction costs, learning, and the need to push beyond generic governance to address strategy issues faced by particular firms (with their distinctive strengths and disabilities). A lively research future for these two perspectives, individually and in combination, is projected.
Organizational learning theory is used to explain and predict whether and when acquirors learn from their direct acquisition experience. Acquisitions of 120 acquirors are tracked from 1985-1995 to explore this issue. Results suggest that acquirors experience better acquisition performance when they are managed by CEOs with longer tenure at the firm; there is a moderate temporal interval since the prior acquisition; they have previously undertaken acquisitions of different sizes; and they have made small prior acquisition mistakes; and when they are managed by executives with longer tenure at the firm who do not use acquisition advisors.
A model of the determinants of strategic decision-making pace that incorporates the role of individual differences among executive decision makers, organizational structural characteristics, and industry effects is developed. Drawing on data from 151 firms, we found that chief executive officers' cognitive ability, use of intuition, tolerance for risk, and propensity to act associated positively with speedy decisions. Decision pace appeared to be faster in centralized organizations and slower in formalized organizations. Our results also suggest that the construct of comprehensiveness has both cognitive and organizational structural aspects, with cognitive comprehensiveness relating positively and organizational comprehensiveness, negatively, to strategic decision-making pace.
Effective organizational learning requires high absorptive capacity, which has two major elements: prior knowledge base and intensity of effort. Hyundai Motor Company, the most dynamic automobile producer in developing countries, pursued a strategy of independence in developing absorptive capacity. In its process of advancing from one phase to the next through the preparation for and acquisition, assimilation, and improvement of foreign technologies, Hyundai acquired migratory knowledge to expand its prior knowledge base and proactively constructed crises as a strategic means of intensifying its learning effort. Unlike externally evoked crises, proactively constructed internal crises present a clear performance gap, shift learning orientation from imitation to innovation, and increase the intensity of effort in organizational learning. Such crisis cons truction is an evocative and galvanizing device in the personal repertoires of proactive top managers. A similar process of opportunistic learning is also evident in other industries in Korea.
Neue Technologien, globale Wettbewerber und flexible Produktionseinrichtungen führen zur Aufheizung der Märkte überall auf
der Welt. Mit dem Wort „Hyperwettbewerb“ wird dieses Umfeld des äußerst häufigen und intensiven Wandels bezeichnet, das die
Vorteile etablierter Anbieter erodiert. Generische Wettbewerbsstrategien wie Kostenführerschaft, Differenzierung und Fokussierung
erweisen sich als instabil — sind angestammte Wettbewerbsvorteile noch nachhaltig? Welche Wettbewerbsstrategien sind in einem
solchen Umfeld noch erfolgreich?
This study investigates the role of gatekeepers in the transfer of information within a single R&D location by comparing directly the performance of project groups with and without gatekeepers. The results show that gatekeepers performed a linking role only for projects performing tasks that were ‘locally-oriented’ while ‘universally-oriented’ tasks were most effectively linked to external areas by direct project member communication. Gatekeepers also appear to facilitate external communication by their locally-oriented project colleagues. A follow-up study five years later showed that almost all gatekeeping project leaders had been promoted up the managerial ladder; in contrast, one half of the non-gatekeeping project leaders had ascended the technical ladder. This implies that higher managerial levels demand strong interpersonal as well as technical skills.
This paper studies redeployment of resources between target and acquiring businesses following horizontal acquisitions. The analysis draws from perspectives that emphasize the strategic importance of resources that are subject to market failure. We define a five-part typology of R&D, manufacturing, marketing, managerial, and financial resources. We show that targets and acquirers frequently redeploy resources following horizontal acquisitions, especially resources that frequently face market failure. We then show that the magnitude of redeployment of each type of resource increases with the asymmetry of the merging businesses' relative strength on the resource dimension. The research stresses evolutionary perspectives on business organizations that emphasize the importance of organizational differences in competitive markets. The central premise of our research is that the market for businesses is often more robust than the market for resources.
How do executive teams make rapid decisions in the high-velocity mi- crocomputer industry? This inductive study of eight microcomputer firms led lo propositions exploring that question. Fast decision makers use more, not less, information than do slow decision makers. The former also develop more, not fewer, alternatives, and use a two-tiered advice process. Conflict resolution and integration among strategic de- cisions and tactical plans are also critical to the pace of decision mak- ing. Finally, fast decisions hased on this pattem of hehaviors lead to superior performance.
The essence of strategy formulation is coping with competition. Yet it is easy to view competition too narrowly and too pessimistically. While one sometimes hears executives complaining to the contrary, intense competition in an industry is neither coincidence nor bad luck.
This comparative study of the evolution of Intel Corporation's strategic position in two semiconductor memory businesses and in the microprocessor business provides insight into the forces that drive strategic business exit in dynamic environments. Inertial forces caused Intel's distinctive competence to diverge from the evolving basis of competitive advantage in the memory business. Inertial forces also caused Intel's corporate strategy to diverge from strategic actions taken by middle-level managers. Intel's internal selection environment played a key role in the strategic business exit process by causing it to shift the allocation of scarce manufacturing resources from the memory business to the emerging microprocessor business before corporate strategy was officially changed. The paper contributes to the development of theory about the role of strategy in firm evolution by offering insight into how the internal selection environment mediates the coevolution of industry-level sources of competitive advantage and firm-level sources of distinctive competence and into the link between corporate strategy and strategic action.
The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.
This paper elucidates the underlying economics of the resource-based view of competitive advantage and integrates existing perspectives into a parsimonious model of resources and firm performance. The essence of this model is that four conditions underlie sustained competitive advantage, all of which must be met. These include superior resources (heterogeneity within an industry), ex post limits to competition, imperfect resource mobility, and ex ante limits to competition. In the concluding section, applications of the model for both single business strategy and corporate strategy are discussed.
Drawing on work from behavioral learning theory in psychology, this study examines the influence of prior organizational acquisition experience on the performance of acquisitions. This theory, which examines both the conditions preceding organization events and organizational responses, predicts that experience effects may range from positive to negative. Consistent with this theory, data from 449 acquisitions show an overall U-shaped relationship between organization acquisition experience and acquisition performance. In addition, the more similar a firm's acquisition targets are to its prior targets, the better they perform. These findings suggest that relatively inexperienced acquirers, after making their first acquisition, inappropriately generalize acquisition experience to subsequent dissimilar acquisitions, while more experienced acquirers appropriately discriminate between their acquisitions. Behavioral learning theory, then, may enhance understanding of organization experience effects.
Abstract Effective organizational beaming requires high absorptive capacity, which has two major elements: prior knowledge base and intensity of effort. Hyundai Motor Company, the most dynamic automobile producer in developing countries, pursued a strategy of independence in developing absorptive capacity. In its process of advancing from one phase to the next through the preparation for and acquisition, assimilation, and improvement of foreign technologies, Hyundai acquired migratory knowledge,to expand its prior knowledge,base and proactively constructed crises as a strategic means,of intensifying its beaming,effort. Unlike,externally evoked crises, proactively constructed internal crises present a clew performance gap, shift beaming orientation from imitation to innovation, and increase the intensity of effort in organizational learning. Such crisis construction is an evocative and galvanizing device in the personal repertoires of proactive top managers. A similar process of opportunisticlearning is also evident in other industries in Korea. (Organizational Learning; Absorptive Capacity; Crisis Construction; Knowledge; Catching-up; Hyundai Motor; Korea) Organizational learning and innovation have become,crucially important subjects in management. Research on these subjects, however, is concentrated mainly in advanced countries (e.g., Argyris and Schon 1978, Dodgson 1993, Nonaka and Takeuchi 1995, Utterback 1994, von Hippel 1988). Despite the fact that many developing countries have made significant progress in industrial, educational, and technological development, research on learning, capability building, and innovation in those countries is scanty (e.g., Fransman and King 1984, Kim 1997, Kim and Kirn 1985). Models,that capture organizational learning and technological change,in developing countries are essential to understand the dynamic,process of capability building in catching-up in such countries and to extend the theories developed in advanced countries. Understanding the catching-up process is also relevant and important to firins in advanced countries. Not all firrns can be pioneers of novel breakdiroughs, even in those countries. Most firms must invest in second-hand learning to remain competitive. Nevertheless, much less attention is paid to the imitative catching-up process than to the innovative pioneering process. For instance, ABI/Inform, a computerized business database, lists a total of 9,006 articles on the subject of innovation but only 145 on imitation (Schnaars 1994). A crisis is usually regarded as an unpopular, largely negative phenomenon in management. It can,
Increasingly, strategy scholars are exploring the relationships between innovation, competition, and the persistence of superior profits. Sustained high profitability may result when a firm repeatedly introduces valuable innovations that service previously unmet consumer demands. While the returns to the firm from each innovation may erode over time, innovation ensures that, overall, the firm maintains a high performance position. At the same time, sustained high profitability may also accrue to firms that innovate less often, but effectively avoid the competition that otherwise erodes high returns. This paper elaborates these relationships before presenting an empirical analysis of the effects of differential innovative propensities and differential rates of competition on pharmaceutical firms' abilities tosustain profit outcomes that are above those earned by competing firms. The analysis, which is situated within the U.S. pharmaceutical industry, finds support for the expected relationship between high innovative propensity and sustained superior profitability, but no support for a link between persistence and the ability to avoid competition. Copyright © 1999 John Wiley & Sons, Ltd.
The ability to transfer best practices intemally is critical to a firm's ability to build competitive advantage through the appropriation of rents from scarce internal knowledge. Just as a firm's distinctive competencies might be difficult for other firms to imitate, its best practices could be difficult to imitate internally. Yet, little systematic attention has been paid to such intemal stickiness. The author analyzes intemal stickiness of knowledge transfer and tests the resulting model using canonical correlation analysis of a data set consisting of 271 observations of 122 best-practice transfers in eight companies. Contrary to conventional wisdom that blames primarily motivational factors, the study findings show the major barriers to internal knowledge transfer to be knowledge-related factors such as the recipient's lack of absorptive capacity, causal ambiguity, and an arduous relationship between the source and the recipient. The identification and transfer of best practices is emerging as one of the most important and widespread practical management issues of the latter half of the 1990s. Armed with meaningful, detailed performance data, firms that use fact- based management methods such as TQM, bench- marking, and process reengineering can regularly compare the perfonnance of their units along operational dimensions. Sparse but unequivocal evidence suggests that such comparisons often reveal surprising perfonnance differences between units, indicating a need to improve knowledge utilization within the firm (e.g., Chew, Bresnahan, and Clark, 1990).' Because intemal transfers typi-
Firms are organizations that represent social knowledge of coordination and learning. But why should their boundaries demarcate quantitative shifts in the knowledge and capability of their members? Should not knowledge reside also in a network of interacting firms?
This line of questioning presents the challenge to state an alternative view to the “theory of the firm,” a theory that has moved from Coase's early treatment of what firms do to a concern with ownership, incentives, and self-interest. We return to Coase's original insight in understanding the cost and benefits of a firm but based on a view that individuals are characterized by an “unsocial sociality.” Does the perception of opportunism generate the need to integrate market transactions into the firm, or do boundaries of the firm lead to the attribution of opportunism?
This basic dichotomy between self-interest and the longing to belong is the behavioral underpinning to the superiority of firms over markets in resolving a fundamental dilemma: productivity grows with the division of labor but specialization increases the costs of communication and coordination. The knowledge of the firm has an economic value over market transactions when identity leads to social knowledge that supports coordination and communication. Through identification, procedural rules are learned, and coordination and communication are facilitated across individuals and groups of diverse specialized competence.
A firm is distinct from a market because coordination, communication, and learning are situated not only physically in locality, but also mentally in an identity. Since identity implies a moral order as well as rules of exclusion, there are limitations and costs to relying upon a firm for exchange as opposed to the market. These costs are not necessarily those traditionally assigned to the category of decreasing returns to hierarchy. For example, an identity implies that some practices, and businesses, may be notionally inconsistent with each other. Norms of procedural justice that are identified with a firm imply that not all technically feasible complements are permissible within the logic of a shared identity. There is consequently a cost to an identity that offsets the benefits. Because the assemblage of elements that compose an organization are subject to requirements of consistency, identities rule out potentially interesting avenues of innovation and creativity.
We illustrate these ideas by returning to the original prisoners’ dilemma game and by an analysis of the coherence of a firm as a search for complements that are consistent with norms of procedural justice. We argue that the underlying dynamic of a prisoners' dilemma game reveals the problems of coordination, communication, and conflicts in norms of justice when players are deprived of social knowledge and shared identity. Similarly, the determination of a firm's coherence arises out of the demand for a moral and notional consistency in the “categorization” of its activities, as opposed to a technological necessity. These ideas are illustrated through an empirical examination of logical complements in high performance work systems.