Search results

Part I of this chapter applies the principles of the philosophy of science and the derived scientific method to analyze the foundational concepts and core proposition of the Resource-Base View (RBV) as popularized by Barney (1986, 1991, 1997). This analysis identifies seven fundamental conceptual deficiencies and logic problems in Barney's conceptualization of “strategically valuable resources” and in Barney's VRIO framework for identifying strategically valuable resources that can be sources of sustained competitive advantage. Three problems – the Value Conundrum, the Tautology Problem in the Identification of Resources, and the Absence of a Chain of Causality – relate to the RBV's and VRIO's failure to provide an adequate conceptual basis for identifying strategically valuable resources. The Uniqueness Dilemma, the Cognitive Impossibility Dilemma, and an Asymmetry in Assumptions about Resource Factor Markets result in an inability of the VRIO framework to support identification of resources that can be sources of sustained competitive advantage. More fundamentally, the core proposition of the RBV – that resources that are strategically valuable, rare, inimitable, and organizationally embedded are sources of sustainable competitive advantage – is argued to result directly in the Epistemological Impossibility Problem that precludes use of the scientific method in RBV research. This chapter argues that until these conceptual deficiencies and logic problems are recognized and remedied, the RBV – in spite of its current popularity – is and will remain theoretically sterile and incapable of contributing in any systematic way to the development of strategy theory.

Part II of this chapter then suggests how foundational concepts developed within the competence perspective on strategy provide essential remedies for the identified deficiencies and problems in the RBV – and thereby provide a more conceptually adequate basis for representing the nature of firms in the scientific study of their interactions and competitive outcomes.

This paper reports on a case study research regarding the development of capabilities from a multidimensional social capital perspective. Case study research together with a multi-disciplinary literature study are the platform for further theory development on the related questions: “How do organisations build capabilities?” and “What are the antecedents of the development of capabilities?.” We start by describing the theoretical origin of our research problem by focusing on a triangle: (1) the resource-based view; (2) the network approach; and (3) the social capital approach. Following this literature study, we discuss the case study research design that was developed within an industrial company (B2B). We next present the findings and refine our initial tentative conceptual framework.

The study here responds to the view that the crucial problem in strategic management (research) is firm heterogeneity – why firms adopt different strategies and structures, why heterogeneity persists, and why competitors perform differently. The present study applies complexity theory tenets and a “neo-configurational perspective” of Misangyi et al. (2016) in proposing complex antecedent conditions affecting complex outcome conditions. Rather than examining variable directional relationships using null hypotheses statistical tests, the study examines case-based conditions using somewhat precise outcome tests (SPOT). The complex outcome conditions include firms with high financial performances in declining markets and firms with low financial performances in growing markets – the study focuses on seemingly paradoxical outcomes. The study here examines firm strategies and outcomes for separate samples of cross-sectional data of manufacturing firms with headquarters in one of two nations: Finland (n = 820) and Hungary (n = 300). The study includes examining the predictive validities of the models. The study contributes conceptual advances of complex firm orientation configurations and complex firm performance capabilities configurations as mediating conditions between firmographics, firm resources, and the two final complex outcome conditions (high performance in declining markets and low performance in growing markets). The study contributes by showing how fuzzy-logic computing with words (Zadeh, 1966) advances strategic management research toward achieving requisite variety to overcome the theory-analytic mismatch pervasive currently in the discipline (Fiss, 2007, 2011) – thus, this study is a useful step toward solving the crucial problem of how to explain firm heterogeneity.

A firm's resources and capabilities can form the basis for performance differences among firms. The question is “how do firms face the challenge of acquiring resources and developing capabilities during their day-to-day activities in order to face competition?” Case study research involving day-to-day activities of a project-firm in a B2B context suggests that social capital – the sum of structural, relational and cognitive resources – built in networks increases the ability to face the challenge of resource acquisition and capability development even during daily activities. A communication network study clearly maps this influence of social capital. More precisely, dominant or powerful employees should be avoided. Next to organizational structures characterized by hierarchy, high and low communications are also not desirable. Moreover, too much trust can harm firms’ abilities to develop capabilities when performing day-to-day activities. Even a complete shared vision hinders firms’ capability development during their day-to-day activities. This study supports the negative impact of overembeddedness; shows the value of articles discussing the downside of social capital and confirms the paradox of embeddedness: overembeddedness as well as underembeddedness has negative implications for a firm's performance. Moreover, from the research results important managerial lessons can be deducted, such as (1) the basis for performance differences can be formed during day-to-day activities and (2) social capital management is a critical success factor in outperforming competitors. Therefore, managers should be aware of the potential value embedded in their day-to-day activities and relationships based on economic transactions. They can leverage their day-to-day activities and relationships based on economic transactions and consider them as sources for resources and capabilities that can be deployed in their search for a competitive position. Moreover, managers should not only pay attention to their financial and human capital but also to the social capital built in the firm's networks and in their employees’ networks. Social capital can influence – among others – divisional learning and divisional capability development.

The study this chapter reports focuses on how network theory contributes to the understanding of the internationalization process of SMEs and measures the effect of network capability on performance in international trade and has three research objectives.

The first objective of the study relates to providing new insights into the international market development activities through the application of a network perspective. The chapter reviews the international business literature to ascertain the development of thought, the research gaps, and the shortcomings. This review shows that the network perspective is a useful and popular theoretical domain that researchers can use to understand international activities, particularly of small, high technology, resource-constrained firms.

The second research objective is to gain a deeper understanding of network capability. This chapter presents a model for the impact of network capability on international performance by building on the emerging literature on the dynamic capabilities view of the firm. The model conceptualizes network capability in terms of network characteristics, network operation, and network resources. Network characteristics comprise strong and weak ties (operationalized as foreign-market entry modes), relational capability, and the level of trust between partners. Network operation focuses on network initiation, network coordination, and network learning capabilities. Network resources comprise network human-capital resources, synergy-sensitive resources (resource combinations within the network), and information sharing within the network.

The third research objective is to determine the impact of networking capability on the international performance of SMEs. The study analyzes 11 hypotheses through structural equations modeling using LISREL. The hypotheses relate to strong and weak ties, the relative strength of strong ties over weak ties, and each of the eight remaining constructs of networking capability in the study. The research conducts a cross-sectional study by using a sample of SMEs drawn from the telecommunications industry in Ireland.

The study supports the hypothesis that strong ties are more influential on international performance than weak ties. Similarly, network coordination and human-capital resources have a positive and significant association with international performance. Strong ties, weak ties, trust, network initiation, synergy-sensitive resources, relational capability, network learning, and information sharing do not have a significant association with international performance. The results of this study are strong (R2=0.63 for performance as the outcome) and provide a number of interesting insights into the relations between collaboration or networking capability and performance.

This study provides managers and policy makers with an improved understanding of the contingent effects of networks to highlight situations where networks might have limited, zero, or even negative effects on business outcomes. The study cautions against the tendency to interpret networks as universally beneficial to business development and performance outcomes.

Drawing on concepts from the resource-based view, the dynamic capabilities school, and competence-base theory, this chapter develops a value chain framework for evaluating and managing resources and capabilities. In common with activity-based value chains, our framework is a method for representing and analyzing the firm, and identifying what may be its optimal configuration. However, as opposed to an activity-based value chain, our approach is specifically designed to help clarify interrelationships between a firm's various assets and capabilities. Thus, it may help researchers and managers alike to analyze to what extent a firm's successes may be attributed to a certain set of resources and capabilities and whether there is scope to further develop them to advance the firm's strategies. Our value chain framework can be used singly or in conjunction with an activity value chain framework, depending on the strategic problem being addressed. However, we suggest that our resource and capabilities value chain will be most useful when determining how a firm's business processes should be funded, what resources and capabilities should make them up, or how these decisions could affect the firm's present organizational structure.

In this chapter, the authors examine the main effect of entrepreneurial orientation (EO) – a firm’s strategic entrepreneurial posture – on balancing exploration and exploitation in the form of organizational ambidexterity. Resource-constrained firms face an imperative to conduct innovative activities, survive hostile environments, and compete with larger and more resource-rich firms. The authors contend that firms can address these potential impediments through achieving ambidexterity via dynamic capabilities, firm-specific resources, and institutional factors. Specifically, The authors review the EO and ambidexterity literatures and summarize extant arguments related to the relationship between EO, exploration, and exploitation. The authors also discuss the most prominent scales and measures of EO, exploration, and exploitation. Moreover, the authors discuss operationalizational challenges that should be considered when conducting EO–ambidexterity research and suggest future research directions by specifying an agenda outlining useful theoretical perspectives and various contingencies that may influence the EO–ambidexterity relationship.

The purpose of this chapter is to introduce the capability map that addresses the potential of transactional Shared Service Centers (SSCs). The mapping approach represents a heuristic logic that provides means for analyzing SSC operation, connects SSCs capabilities with their value, and supports academics and practitioners in developing a transactional SSC that is of strategic importance.

This chapter reports on findings from a longitudinal case study within an organization that has implemented a transactional Human Resource (HR) SSC. Over a period of three years, several formal and informal meetings were attended, more than 20 interviews were conducted with SSC MT and customers, over 500 pages of project documentation and memos were studied, which allowed after integration for an in-depth analysis of how resources are bundled to build different types of capabilities.

We uncovered and mapped the operational and dynamic capabilities of a transactional SSC, their role in value creation, and their interdependencies. While the operational capabilities enable the HR SSC to provide day-to-day services to take care of individual end-users and support the business, the dynamic capabilities enable transformation of HR delivery throughout the organization and increase HR’s strategic contribution.

One limitation of this study is the extent to which the capabilities and their role in value creation are generalizable to transactional non-HR SSCs. SSCs providing services that cover other business functions might develop and deploy different capabilities. The use of a capability map is not limited to the capabilities uncovered in this study, however.

In the literature, the primary focus regarding transactional services is limited to cost savings and efficiency. This chapter addresses the potential of the transactional SSC and introduces the capability map as a tool to leverage its potential.

Strategic management research has shown growing interest in understanding the dynamic resource reconfiguration processes through which firms grow, evolve, and sustain profitability. The goal of our study is to understand how dynamic resource reconfigurations enable firms to pursue growth opportunities. We use the methods of inductive theory building from case studies to elaborate current theoretical understanding about how firms draw on both internal and external resources in the pursuit of growth. We examine the patterns of resource reconfigurations through which Yahoo and Google powered their early growth strategies in their first 10 years of existence. We analyze a total of 192 new product launches in 43 markets by the two firms to capture how they reconfigured resources dynamically. Our analysis reveals that both firms developed highly dynamic strategies exhibiting both surprising similarities and differences. These similarities and differences provided the basis for our theoretical insights about the development of what we term “dynamic resource platforms,” comprising of (a) dynamic resource shifts; (b) targeted resource orchestration; and (c) complementary processes balancing dynamism and capability development. These ideas contribute novel theoretical insights to current strategic management research on dynamic capabilities and on resource reconfiguration and redeployment.

Firms operate in a market for their corporate assets, wherein important assets being bought and sold are business units. This market is therefore a primary mechanism for firm reconfiguration, and offers the opportunity for firms to gain performance advantage as they prepare for and engage in their boundary-changing moves. This paper focuses on resource reconfiguration between firms, and examines internally and externally driven sources of performance heterogeneity in firms’ use of the market for firm reconfiguration. Viewing between-firm resource reconfiguration through three theoretical lenses surfaces several potential avenues for firm differentiation. For one, the necessity of firms’ possessing capabilities to execute both sides of the external resource reconfiguration transaction – acquisition and divestiture capabilities – is revealed. For another, the institutional prerequisites that are needed in the operating environment for a firm to build a sustainable resource reconfiguration strategy are brought to the fore, and are well illustrated by the private equity industry. Lastly, the potential benefits of using the transactional view of firm scope to animate the study of external resource reconfiguration are raised. Taken together, these elements lead to a research agenda around resource reconfiguration across firm boundaries.