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Dynamic Capabilities and Strategic Management
Abstract
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 is particularly relevant in emerging economies with weak or underdeveloped institutional infrastructure Sheng, Zhou & Li, 2011). Third, the resource-based or capability-based view suggests that a firm's sustainable competitive advantage primarily stems from its valuable, rare, inimitable, and non-substitutable resources or capabilities (Barney, 1991;Barney, Ketchen Jr, & Wright, 2021;Teece, Pisano & Shuen, 1997). This perspective emphasizes the internal strengths and weaknesses in terms of the resources or capabilities developed in individual firms (Barney, 1991;Chen, Michel, & Lin, 2021;Wernerfelt, 1984). ...
... Furthermore, the perception of risk in a strategic decision becomes less prominent when compared to a threatening environment rather than an environment filled with opportunities (Adomako et al., 2024;Noltemeyer & Bush, 2013;Voss, Sirdeshmukh & Voss, 2008), resulting in a higher probability of risk-seeking behavior in response to environmental threats. For instance, when the environment is perceived as being abundant with opportunities, firms tend to rely on existing capabilities as an adequate response (Schilke, 2014;Teece, Pisano & Shuen, 1997) in order not to risk disruptions. By contrast, to mitigate or capitalize on threatening environments, these firms are more willing to invest in product exploration, even if it involves taking risks (Voss, Sirdeshmukh & Voss, 2008). ...
... The resource and capability view posits that strategic advantages are garnered through the ability to adapt, integrate, and reconfigure internal and external competencies to address rapidly changing environments (Barney, 1991;Teece et al., 1997). In emerging markets, the capability of firms to develop and co-innovate with other firms constitutes a distinctive resource that is unique, irreplaceable, and difficult to replicate. ...
Despite burgeoning research on frugal innovation, there is limited understanding of how environmental threats shape frugal innovation, the mechanisms underlying this relationship and its boundary conditions. To address these gaps, we propose a moderated mediation model based on the strategy tripod perspective to examine the impact of environmental threats on frugal innovation through the mediating mechanism of co-innovation capability. Moreover, we investigate how legal incompleteness can moderate this relationship. We tested our model empirically with data from 301 manufacturing firms in an emerging market of Ghana, using a time-lagged research design. The results of our analysis largely support the proposed hypotheses in the model, revealing a more nuanced understanding of the indirect impact of environmental threats on frugal product innovation to contribute to the existing body of knowledge in the field of innovation.
... Companies manage their resources to establish competitive advantages in increasingly intense competition [1]. Companies gain those advantages by maximizing their resources to innovate more quickly than their competitors with a dynamic process [2,3]. The dynamics of competitive advantages should be established and sustained over time [4,5]. ...
... Knowledge creation is an organization's ability to create new knowledge that is useful in continuous organizational processes [35,36]. Knowledge creation intends to create new knowledge by managing the innovation capability of the organization's human resources [2,37]. It is socialization, externalization, combination and internalization (SECI) [38]. ...
... H3: Human capital has an impact on competitive advantage. The ability to integrate knowledge creation systematically is necessary for generating a resource-based competitive advantage [2,34]. Knowledge creation based on a knowledge-based view is an essential component of identifying a broad range of intangible resource competencies for sustaining company innovation [17, 54,55]. ...
... The term 'dynamic' is related to changes that occur in the environment of organizations (e.g. technologies, market forces, among others), while 'capacity' refers to the role of strategic management in dealing with changing environmental conditions by adapting, integrating, and reconfiguring internal and external skills, resources and organizational skills to be consistent with your ever-changing business environment (Teece et al., 1997). ...
... To develop new capabilities required by the environment, three dimensions (positions, paths, and processes) enable the organization to adapt, integrate, and reconfigure its capacities and capabilities. According to Teece et al. (1997), organizational processes (routines or patterns of current practice and learning) are shaped by the firm's position (assets, governance structure, consumer base, external relations with suppliers and partners) and pathways (decision history) as well as technological and market opportunities, which determine the "essence of the firm's dynamic capacity and competitive advantage, that is, determine its competence" (Teece et al., 1997, p. 518). ...
... Since the seminal article by Teece et al. (1997), several studies have been published in varied sources with different theoretical-analytical perspectives to develop the concept of dynamic capabilities (Meirelles & Camargo, 2014). Eisenhardt & Martin (2000) advanced the understanding of dynamic capabilities, debunking the criticism of being tautological. ...
This study aims to investigate the relationship between the dimensions of knowledge-based dynamic capabilities in innovation performance, operationalized by organizational innovation measures, in organic food production units. The research was carried out using a seven-point Likert questionnaire that measures the relationship between dynamic knowledge-based capabilities (Zheng et al., 2011) and organizational innovation (Camisón & Villar-López, 2010) in a sample of 154 organic food production units collected at ecological fairs in the metropolitan region of Porto Alegre, state of Rio Grande do Sul, Brazil. For data analysis, structural equation modeling was used. The results indicated that knowledge acquisition, generation and combination skills are important positive determinants for organizational innovation. The approach is groundbreaking in the literature as it addresses and broadens knowledge about the process of building knowledge resources and organizational innovation and adds an analysis model for studies in the interdisciplinary field of dynamic capabilities based on resource knowledge and organizational innovations. It contributes to the theory by reporting on empirical quantitative data through a measurement scale adapted and validated based on the proposal of Zheng et al. (2011).
... DCs focuses both on the perspective of how the market (outside) influences the organization (inside) and the perspective that the organization needs to adapt to the chosen market [16], but also to the inside-out perspective which values the organization's knowledge and resources in the choice of strategy and marketplace [10,17]. Teece, et al. [18], considered founders of the DC framework, describe the resource based view as static, when organizations in the short term are stuck with existing knowledge and structure. DCs are a special class of capabilities that describe change and innovation essential when organizations need to sustain performance in a changing environment [19]. ...
... Further, the importance of taking a holistic view of the organization is stressed as a prerequisite when moving towards the capability of transformation [20]. Developed DCs are difficult for competitors to replicate and will give a competitive advantage and innovative response in a rapidly changing market when time to market is critical [18]. Both inside-out and outside-in strategy capabilities need to be dynamic and constantly renewed [21]. ...
... Without sensing, the organization will appear arrogant and unwilling to seek ideas and knowledge from the outside, thus just focusing on internal plans and strategies [12]. Whereas, a strong sensing capability could lead to high expectations of seizing and transformation, causing a capability gap, which could be recognized by a lack of top management [18,29]. Moreover, they also mean that a strong sense and a strong transformation at local organizational level implies local unit-focused initiatives, thus, may suboptimize the local unit and not benefit the whole organization. ...
Introduction
This paper presents a structured review of the use of crisis management, specifically examining the frameworks of surge capacity, resilience, and dynamic capabilities in healthcare organizations. Thereafter, a novel deductive method based on the framework of dynamic capabilities is developed and applied to investigate crisis management in two hospital cases during the COVID-19 pandemic.
Background
The COVID-19 pandemic distinguishes itself from many other disasters due to its global spread, uncertainty, and prolonged duration. While crisis management in healthcare has often been explained using the surge capacity framework, the need for adaptability in an unfamiliar setting and different information flow makes the dynamic capabilities framework more useful.
Methods
The dynamic capabilities framework’s microfoundations as categories is utilized in this paper for a deductive analysis of crisis management during the COVID-19 pandemic in a multiple case study involving two Swedish public hospitals. A novel method, incorporating both dynamic and static capabilities across multiple organizational levels, is developed and explored.
Results
The case study results reveal the utilization of all dynamic capabilities with an increased emphasis at lower organizational levels and a higher prevalence of static capabilities at the regional level. In Case A, lower-level managers perceived the hospital manager as brave, supporting sensing, seizing, and transformation at the department level. However, due to information gaps, sensing did not reach regional crisis management, reducing their power. In Case B, with contingency plans not initiated, the hospital faced a lack of management and formed a department manager group for patient care. Seizing was robust at the department level, but regional levels struggled with decisions on crisis versus normal management. The novel method effectively visualizes differences between organizational levels and cases, shedding light on the extent of cooperation or lack thereof within the organization.
Conclusion
The researchers conclude that crisis management in a pandemic, benefits from distributed management, attributed to higher dynamic capabilities at lower organizational levels. A pandemic contingency plan should differ from a plan for accidents, supporting the development of routines for the new situation and continuous improvement. The Dynamic Capabilities framework proved successful for exploration in this context.
... Corporate success depends upon discovering an opportunity and then timely responding to it through innovations (Teece, 2007;Valdez-Juárez and Castillo-Vergara, 2021). The theoretical framework of dynamic capabilities (DC) describes how corporates capture and address such opportunities through three high-level capabilities: sensing, seizing, and transforming (Teece et al., 1997;Suddaby et al., 2020). Moreover, open innovation (OI) is proposed as a strategic approach that suggests collaborating with external partners to access external resources and seize innovation opportunities (Chesbrough, 2003;Weiblen and Chesbrough, 2015). ...
... Third, it develops previous work of Chesbrough (2003), Pinarello et al. (2022), and Gutmann et al. (2023) on OI practices and reveals that coworking spaces are emerging as an OI platform by hosting and orchestrating various OI activities, actors, and resources in the collaboration process. Fourth, it shows the coworking influence on corporate innovation capabilities (Teece et al., 1997;Teece, 2007) by demonstrating how actual outcomes of the collaboration enhance the dynamic capabilities of firms. Finally, the present study links the DC framework and OI strategy by empirically revealing that OI activities reinforce corporate innovation capabilities (Bogers et al., 2019;Teece, 2020;Chesbrough et al., 2021). ...
... We used the research on corporate-coworking spaces, the work of Teece and Chesbrough, to create the first set of codes. These consisted of codes related to sensing, seizing, and transforming capabilities (Teece et al., 1997;Teece, 2007); OI modes (Chesbrough, 2003;Bogers et al., 2019) and coworking space literature (Nagy and Lindsay, 2018;Josef, 2020;Bouncken and Görmar, 2021). Subsequently, in an iterative process of data coding, both authors repeatedly discussed first-order codes and second-order themes emerging from interview data and moved back and forth between theory and data to refine the coding scheme. ...
Although academia has witnessed increasing interest in coworking spaces over the past decade, the corporate perspective on utilizing such spaces has not been thoroughly studied. This paper investigates corporate goals, activities, and outcomes of corporate–coworking collaboration by examining 11 different cases in which corporates engage in coworking spaces. We find that, based on their goals, corporates choose different collaboration pathways to enhance their innovation capabilities. We call these pathways explorer , startup hunter , implementer , and transformer . Coworking spaces play an essential role by hosting and orchestrating key open innovation actors, resources, and activities such as scanning, scouting, community building, co‐development, and learning. They are emerging as an open innovation platform that can trigger sensing, seizing, and transforming capabilities of corporates. Our study contributes to the innovation management and the coworking space literature and offers practical implications for both corporates and coworking spaces.
... International expansion provides learning opportunities through exposure to new cultures, customers, competitors and terms of competition. These learning opportunities may result in the development of new capabilities, valuable in both old and new locations, and, by extension, evolve the firm's strategic configuration (Teece, Pisano, & Shuen, 1997;Luo, 2000). These premises are represented in the first four hypotheses in which a positive relationship between the entrepreneur's international vision with the firm's ILC (H1); its NFC (H2); its MLC (H4); and its MC (H5) is postulated, highlighting the critical role of the entrepreneur for DC development and orchestration. ...
... 'Market-focused learning capability' (12 items), 'internally-focused learning capability' (14 items), and 'network-focused learning capability' (12 items) follows Weerawardena et al. (2007). The Teece et al. (1997) build, integrate and reconfigure typology is applied in the original study, and also in ours. Importantly, as such, DCs are measured (Zahra et al., 2022) according to the Teece et al. (1997) typology. ...
... The Teece et al. (1997) build, integrate and reconfigure typology is applied in the original study, and also in ours. Importantly, as such, DCs are measured (Zahra et al., 2022) according to the Teece et al. (1997) typology. Consistent with earlier studies in the field (Damanpour et al., 1989), 'innovation' is operationalized to account for a broad definition of the capacity to innovate. ...
... The increased pressure demands that organisations continuously evolve their dynamic capabilities (Osmundsen & Bygstad, 2021;Li & Chan, 2019;Vukšić et al., 2018;Tan & Pan, 2003). Teece et al. (1997) describe these capabilities as the company's capacity to amalgamate, develop, and rearrange in-house and external skills to adapt to swiftly shifting surroundings. The literature underlines that organisations need to do things innovatively with more resilience, reflecting adaptability and nimbleness, corresponding to a high degree of flexibility (Goh & Arenas, 2020;Vial, 2019). ...
... This should allow organisations to have more cross-functional teams created and dissolved depending on the needs.' Therefore, the findings from the practitioners were very much aligned with the literature on dynamic capabilities for sensing, seizing and transforming (Teece et al., 1997). Multiple ex-ante studies identify the need for dynamic capabilities in digital transformation (Carcary et al., 2016;Warner & Wäger, 2019;Yeow et al., 2017). ...
... The ability of the organisation to perform in different modes of operation has already been studied in many organisations in the past (e.g., . Overall, findings from the practitioners were closely aligned with the literature on dynamic capabilities for sensing, seizing and transforming (Teece et al., 1997). ...
Purpose: The research aims to understand the coexistence of nimbleness and resilience in a continuous digital transformation, along with the dynamic capabilities needed to balance the challenges of their coexistence. Methodology: The current study draws on Dialogical Action Design Research (D-ADR) to investigate interactions among practitioners and executives. Data is collected from a major Australian Financial Services Organisation (FSO) and many international experts. Findings: The study presents a framework, the Continuous Transformation Model (CTM), to describe digital transformation within an FSO context, emphasizing nimbleness and resilience as its foundational pillars. This framework facilitates the identification of the critical role of organisational capabilities in managing continuous digital transformation, supported by dynamic IT capabilities. More importantly, the findings underscore how these capabilities enable managers to effectively balance the coexistence of nimbleness and resilience. Research implications: The CTM contributes to the enterprise information systems literature by offering a coherent understanding of balancing resilience and nimbleness to succeed in digital transformation. In particular, the research model elucidates the relationship between dynamic capabilities and continuous digital transformations. Practical implications: Digital transformations are not a one-off exercise. Managers in the FSO context must cultivate their organisational capabilities to achieve nimbleness and resilience during their digital transformation journey. Originality: The relationship between dynamic capabilities and continuous digital transformation sheds light on establishing successful management processes within FSOs.
... We believe that organizations must IJCHM have competency management to provide excellent services under uncertain situations. According to dynamic capabilities theory (Teece et al., 1997), organizations' basic competencies can create short-term competitive positions, leading to long-term competitive advantage, which is the core of organizational innovation and creativity. Dynamic capabilities theory asserts that by strengthening organizational competencies, organizations may focus on competitive survival issues in response to rapidly changing business conditions. ...
... Ahn (2020) stated that freedom of action and support for autonomy are needed in the workplace to maximize productivity because this makes employees willing to use their maximum capabilities and perform better. According to dynamic capabilities theory (Teece et al., 1997), it can be claimed that when highly trained, empowered and conscientious employees face uncertainty, they may strive to enact service recovery and act behind their routine responsibilities to find creative solutions to overcome uncertainty. This proactive approach in a competency framework not only demonstrates their commitment to organizational success but also may foster a culture of creativity, where employees are encouraged to explore alternative possibilities and demonstrate novel and useful performance. ...
... More specifically, greater empowerment gives employees greater freedom to act beyond their routine duties, consider customers' satisfaction and devote more attention to searching for and processing information toward CP. The study findings are consistent with and support dynamic capabilities theory (Teece et al., 1997), which posits that organizations must develop their employees' capacity to efficiently and responsively behave and react to uncertainty. The competency package introduced in the present study to cope with three types of uncertainty is a strategic competitive leverage of the organizational dynamic capability model. ...
Purpose-In a dynamic and complex environment, employees' creative performance (CP) can be essential in developing a distinguished and competitive strategy for an organization. Using the lens of competency management, this study aims to examine how employees perceived environmental uncertainty (PEU) and competency formula relate to employee CP, with a focus on the hospitality industry. Design/methodology/approach-The data was collected from employees in the hospitality sector. Both symmetrical (PLS-SEM) and asymmetrical (fuzzy-set qualitative comparative analysis [fsQCA]) tests were performed to gain in-depth knowledge of how individual, organizational and environmental factors can be configured to explain employees' CP. Findings-The symmetrical analysis shows that the competency formula mediates the negative impacts of PEU on two dimensions of creativity-that is, novelty and utility. The fsQCA testing generated contrasting findings and revealed that uncertainty, along with the formula elements, is a unique antecedent condition and opportunity for employees' CP. The inconsistent findings indicate asymmetrical and complex relationships between the proposed antecedents and outcomes in the case of employee creativity. Practical implications-A combination of symmetrical and asymmetrical approaches is necessary to uncover the complex relationships among employees, organizations and the environment. This study shows that organizational agility, competency strategies and comprehensive strategic management processes can be configured to explain positive outcomes for organizations during uncertain circumstances. The findings can be used by human resource practitioners to maximize employee creativity and enhance organizational performance. Originality/value-To the best of the authors' knowledge, this study is the first to use symmetrical and asymmetrical testing to address the inadequacy of explaining employee CP in complex and uncertain The authors would like to express their sincere gratitude to the editor-in-chief of IJCHM and the four anonymous reviewers for their insightful comments and suggestions, which greatly contributed to improving the quality of the initial version of the manuscript. Symmetrical and asymmetrical analysis
... Dynamic capability is reflected in customer orientation within the organization (Winter, 2000) and represents the ability to renew competencies in response to changing market conditions (Salavou, 2005 andTeece, Pisano &Shuen, 1997). In contrast, Zolo and Winter (2002) observed that firms also integrate, build and reconfigure competencies in more stable environments to satisfy the consumer. ...
... Dynamic capability is reflected in customer orientation within the organization (Winter, 2000) and represents the ability to renew competencies in response to changing market conditions (Salavou, 2005 andTeece, Pisano &Shuen, 1997). In contrast, Zolo and Winter (2002) observed that firms also integrate, build and reconfigure competencies in more stable environments to satisfy the consumer. ...
... They suggest that a dynamic capability is "a learned and stable pattern of collective activity through which the organization systematically generates and modifies its operating routines in pursuit of improved effectiveness through customer satisfaction" (Zollo & Winter, 2002;340). This definition characterizes very different views of dynamic capabilities: Teece et al. (1997) seem to envision the dynamic capability-competitive advantage link as spontaneous and generative whereas Zollo and Winter (2002) characterize it as a deliberate and planned process. ...
Customer orientation has been said to involve the analysis of customers' needs, and responsiveness of organization to such needs. Some researchers have raised the issues of the impact of environmental forces on organizational performance, to establish this empirically, the study looks at the relationship between customer orientation and firm performance of some randomly selected firms in the Nigerian economy. Structured questionnaire were distributed to officers responsible for the strategic direction of the firms and the resultant data was subjected to descriptive statistical analysis, analysis of variance, correlation and regression analysis. The results obtained show that competitive intensity affect customer orientation-firm performance relationship. The policy implication of this finding was also discussed and recommendations advanced.
... The original proposition of the DC concept came from Teece. According to authors including Teece et al. (1997), DC constitutes the aptitudes and abilities of companies to integrate, build and reconfigure internal and external competences to respond to changes in their surroundings environment swiftly. DC thus reflect the potential of companies to resolve problems systematically, shaped by the aptitude to detect opportunities and threats and take timely decisions to appropriate changes to their respective resource bases (Barreto, 2010). ...
... Knowledge articulation is a fundamental path for the evolution of the dynamic competitiveness of a company. Teece et al. (1997) also argue that DC should be developed based on the articulation of knowledge and the learning process, and the articulation of knowledge has been increasingly recognized as an important mechanism for DC development in organizational routines (Teece, 2016, Zollo & Winter, 2002, and can promote competitive capacities that can evolve to unique advantages (Eisenhardt & Martin, 2000). ...
In all sectors, whether public or private, the current organizational context is characterized by technological, economic, political, social, and cultural changes, which affect the ongoing relations between countries and companies. In the public sector, the political factor and its political cycles are more present, as well as social and human responsibilities in health allow us to differentiate our study environment from all the others. Currently, during the pandemic phase, according to the need for adaptation and dynamics of the Health Units, this was even more visible. Dynamic capabilities (DCs) need to be renewed to respond to emerging changes in the environment, and organizations must develop their capabilities to sustain good levels of performance. Therefore, CDs play an essential role in the performance of organizations. The main objectives of this study are to study the HC in Health Units during the initial phase of the COVID-19 pandemic, with the objective of developing a mapping of indicators that would allow a more efficient response to the organizational and structural changes of the Health Units, users' needs (whether COVID or non-COVID). This article presents preliminary data from an investigation still ongoing on the topic. As contributions, we highlight how the study helps to identify the relationships between the various capacities, relating the importance of technological capacity, human resources capacity and the special importance given to learning resources (through routine activities).
... In approaching our research question, we adopt an actor-centered perspective while maintaining awareness of the institutional context. Our conceptual framework thus synthesizes the resource-based perspective [12] and the dynamic capability concept [13] at the micro-level with the sociologically based meso-level concept of Strategic Action Fields (SAFs; [11,14]). We view SAFs as an application-oriented concept that amalgamates insights into the interaction of stakeholders in value chains and business networks for the analysis of transformation processes. ...
... Sustaining competitiveness in changing and turbulent environments requires dynamic capabilities [4]. Dynamic capabilities represent internal organizational patterns facilitating knowledge integration, coordination, learning processes, and adaptation to evolving contextual factors, all in pursuit of enduring business goals [13]. Essential dynamic capabilities include the ability to sense opportunities, acquire and integrate necessary resources and skills, and coordinate and cooperate with other businesses and institutions [16]. ...
Rural areas characterized by resource-dependent industries often experience growth but also lock-in and transformation pressures. We ask what strategies industries and businesses pursue that successfully exploit the transformative potential of such a location and what prevents other industries and businesses from doing the same. Based on interviews with stakeholders and experts from the livestock and meat sector in a highly specialized location, we explore the will, resources, and capabilities of industries and actors to transform their businesses and entire value chains in ways that can stabilize the local growth regime. The analysis is based on a conceptual framework derived from resource-based and dynamic capability theories at the micro level and the concept of Strategic Action Fields (SAFs) at the meso level. The results suggest that incumbents from the old industrial core tend to counteract the transformation of the SAF with conservative strategies. Challengers from former support activities, in contrast, want to move away from cost competition towards new markets. Their product variation and horizontal diversification can exploit favorable cluster characteristics to develop future-proof capabilities. This should be encouraged, along with new entrepreneurial activity, even if the region is then no longer hosting the core industries of the transformed field.
... In the past, organizational management strategies were divided into two groups. The first group focuses on market forces, which is a competitive strength approach (Teece, et al., 1997) and the second group emphasizes the importance of organizational effectiveness, Resource-Based View (RBV), which focuses on competitive advantage by using existing resources in the organization. Barney et al. (2011) focus on external changes that result in existing organizational resources and capabilities perhaps no longer being able to create competitive advantages, giving rise to the concept of Dynamic Capabilities (DC) role in supporting this gap, which is divided into two categories, namely strategizing and saving (Teece, et al., 1997;Chumphong, et al., 2020). ...
... The first group focuses on market forces, which is a competitive strength approach (Teece, et al., 1997) and the second group emphasizes the importance of organizational effectiveness, Resource-Based View (RBV), which focuses on competitive advantage by using existing resources in the organization. Barney et al. (2011) focus on external changes that result in existing organizational resources and capabilities perhaps no longer being able to create competitive advantages, giving rise to the concept of Dynamic Capabilities (DC) role in supporting this gap, which is divided into two categories, namely strategizing and saving (Teece, et al., 1997;Chumphong, et al., 2020). ...
... Distinctive competencies are insufficient as a source of competitive advantage. The previous advantage may be lost in an environment marked by growing uncertainty and rapidly changing [75]. Therefore, business requires a leader who can manage the situation in a short-term period. ...
... Additionally, it demonstrates how quickly systems may be disrupted and become completely uncontrollable [81]. When the environment becomes more unpredictable due to rapid changes, the previous advantage may be lost [75] Thus, developing distinct competencies during a pandemic is insufficient. ...
Numerous research have identified factors that contribute to competitive advantages, such as dynamic capabilities and distinctive competencies. However, these factors sometimes fail to perform optimally in turbulent situations, like the current global pandemic. This has made it increasingly difficult to sustain a competitive advantage. Consequently, this study aims to develop a new foundation for competitive advantage after the pandemic. We hypothesize that pandemic leadership and resilience systems will enhance the relationship between distinctive competencies and competitive advantage. Using structural equation modeling, we evaluated our proposed model with a sample of 200 ASEAN multinational firms. The findings show a positive relationship between dynamic capabilities and competitive advantage through distinctive competencies. Furthermore, pandemic leadership and resilience systems beneficially moderate the relationship between distinctive competencies and competitive advantage.
... Complementing this, the resource-based view (Barney, Wright and Ketchen, 2001) posits that coopetition facilitates firms' access to and sharing of unique resources, securing a competitive advantage (Crick, 2019). The Dynamic Capabilities Framework broadens this perspective (Prasertsakul, 2013), highlighting firms' capacity to adapt resources in response to the evolving market demands swiftly, a critical aspect in the agile digital ecosystem (Teece, Pisano and Shuen, 1997). ...
This research explores the dynamics of coopetition among Small and Medium Enterprises (SMEs) during digital transformation, using Design Science Research (DSR) anchored in Service-Dominant (S-D) Logic. It examines the integration challenges of manufacturing SMEs into digital supply chains, highlighting the critical role of coopetition—a blend of competition and collaboration—in driving sustainable growth in this essential sector. Prompted by a consensus on reducing SME vulnerabilities, the study underscores the need for a resilient framework, especially given an 85% attrition rate in digital networks where only a minority, often supported by giants like Amazon and Microsoft, succeeds long-term. The proposed framework focuses on leveraging technology to enhance SMEs' competitiveness, innovation, and growth. This study contributes to academic discourse by suggesting future research directions, such as defining value creation in coopetition networks and assessing the impact of innovative artefacts, but also reveals the potential of coopetition networks as platforms for mutual value creation. This research enriches scholarly discussions on coopetition in the digital age and offers strategic guidance for SMEs navigating digital transformation, aiming to prepare European SMEs for upcoming challenges and opportunities.
... However, in the competitive global environment of the wine industry, firms' key factors for success include timely response, flexibility, speed of product innovation, and effective managerial capabilities to redistribute internal or external competencies [27,28]. Therefore, the dynamic capabilities perspective emphasizes a system's ability to build, integrate, and reconfigure capabilities in response to rapid changes [29]. ...
The multiplicity of factors involved in the innovation process makes its measurement and evaluation a complex endeavor. In this study we propose a new approach to measure and decompose the efficiency of national innovation systems in the wine industry considering the relationship between the innovation environ- ment and economic performance. The analysis applies the data envelopment analy- sis approach to quantify the relative efficiency of each national system using a set of four indicators to describe the innovative environment in the wine industry as model inputs, and an index of international market performance as output. The results dem- onstrate a clear perspective of the innovation process within the wine industry, iden- tifying the systems that efficiently use the available resources and those that encoun- ter difficulties in translating innovation into economic performance. The proposed approach also captures the dynamics of the international innovation landscape in the wine industry, providing potential country-level strategies and opportunities to increase innovation systems’ efficiency.
... This is echoed by Gauzelin and Bentz (2017) who conducted a qualitative study and found several benefits such as an improved decision-making (based on reliable knowledge, timely and complete information), overall, an increased organizational and employee efficiency and productivity and an increased satisfaction among the work force. Interestingly, Yiu et al. (2020), applying a knowledge-based view and capabilities perspective (Grant, 1996;Teece et al., 1997) in their quantitative study, found that the implementation of a BI system increased the operational capabilities, especially in the context of large high-tech firms, which could be related to a facilitated dissemination of knowledge within organization, which often is difficult and inefficient (Yiu et al., 2020). Others examine the impact of BI on the product development process, especially in a service context. ...
Business Intelligence (BI) systems are pivotal for strategic and operational decision-making within organizations, yet our understanding of their practical implementation, particularly from a management accounting perspective, is still at an early stage. This qualitative study employs an inductive, semi-structured interview approach. The study engaged eight subject matter experts with substantial experience in BI systems. The main contribution of this research is a conceptual model that consolidates the major challenges and potential benefits from a management accounting and practitioner perspective. Major challenges include data integration and quality issues, the need for user training, and fostering a data-driven culture (DDC). By addressing a significant gap in existing research, this study contributes a nuanced understanding of BI in practice and offers valuable insights for successful BI implementation. The findings have implications for both academics and practitioners in the field, enriching the discourse on BI and its role in organizational success.
... The theory of competitive advantage and the ways in which enterprises can gain an edge through the effective use of their resources are explained in detail by Resource-based View theory (RBV) (Makadok, 2001;Newbert, 2007;Wernerfelt, 1984). According to Collis (1994), these resources can be either intangible or tangible assets, or they can be capabilities, which are made up of intangible acquired knowledge and skills (Teece et al., 1997). Based on the Resource-Based View, a company can maintain its competitive advantage if it can: (a) produce long-term economic growth; (b) make use of its capacity to locate, develop, deploy, and protect certain resources; and (c) set itself apart from its rivals. ...
... Peteraf (1993) further pointed out that resource heterogeneity, ex-ante limits to competition, ex-post limits to competition, and imperfect resource mobility are the four cornerstones for enterprises to establish competitive advantage based on resources. Teece et al. (1997) proposed the dynamic capabilities theory, emphasizing that in a rapidly changing environment, enterprises need to gain competitive advantage by sensing, seizing, and reconfiguring internal and external resources. The ability to dynamically integrate resources is more important than resource endowments themselves. ...
In the digital economy era, enterprises face unprecedented challenges and opportunities driven by the rapid advancement of digital technologies. To thrive in this dynamic environment, enterprises must continuously innovate their business models to create and capture value in new ways. This paper explores the relationship between business model innovation and corporate competitive advantage in the context of digital transformation. Drawing on the resource-based view, dynamic capabilities framework, and other theoretical perspectives, this paper examines the characteristics, mechanisms, and strategies of business model innovation in the digital age. Through a comprehensive literature review and analysis of representative cases, we identify three key trends shaping business model innovation: digitalization, platformization, and intelligentization. We argue that enterprises need to leverage these trends to design customer-centric value propositions, build digital capabilities, construct open and collaborative value networks, and foster an agile and innovative organizational culture. Our findings highlight the importance of value creation, value capture, and value network effects in driving competitive advantage through business model innovation. We propose a framework that integrates these mechanisms with the core components of business models, providing a holistic and systemic view of business model innovation in the digital economy. We also discuss the implications of our research for theory and practice, emphasizing the need for further studies on the dynamics and outcomes of business model innovation in different contexts and industries. This paper contributes to the growing literature on business model innovation and competitive strategy in the digital age. By bridging the gaps between different theoretical perspectives and providing actionable insights for practitioners, we aim to advance the understanding and application of business model innovation as a key driver of corporate competitive advantage. Our research suggests that enterprises that can effectively align their business models with the evolving digital landscape will be better positioned to create and sustain superior performance in the face of increasing complexity and uncertainty.
... This study is anchored on the dynamic capability theory (DCT) which posit that an organization that has the capacity to integrate, build and reconfigure both internal and external competencies is able to respond to the consistent market changes (Teece et al., 1997). Kapoor and Aggarwal (2020) further noted that DCT was developed following the shortcomings of the resource-based view that mainly focused on internal resources and disregarded the changes in the external environment. ...
In Kenya the supermarkets provide market access for the manufacturers’ and small and medium enterprises’ products. In the recent past renowned supermarket brands such as Nakumatt, Tuskys, Choppies and Uchumi have collapsed due to underperformance. This paper examines the influence of seizing capabilities on the performance of supermarkets in Kenyan cities. The study was anchored on the dynamic capability theory (DCT). The study was grounded on positivism research philosophy and adopted crossectional descriptive research design. A structured questionnaire was used to collect primary data from 629 licensed supermarkets. A sample size of 304 respondents from a population of 1258 senior managers was used. Stratified random sampling method was used to select the sample size in Nairobi, Mombasa, Kisumu, and Nakuru. Descriptive statistics such as mean and standard deviation and inferential statistics which included correlation and regression are the statistical tools that were used to analyse the data. Statistical package for social scientists (SPSS) software version 28 was utilized to explore the data. The findings demonstrated that seizing capabilities have a statistically significance (β = 0.511, t = 12.501, p < 0.05) influence on the performance of supermarkets in the Kenyan cities. The study demonstrated that it is vital for supermarkets’ management to consciously design business models and allocate resources that can facilitate the optimal exploitation of new business opportunities to add value to the supermarkets. The management should develop a resource mobilization strategy to fund long term projects that are aimed at seizing opportunities that will improve supermarket’s survival and performance.
... The literature on organizational design has explored various related concepts. For instance, Teece et al. (1997) highlight the necessity for organizations to adapt to changes in their surroundings, such as shifts in customer demands and market trends, to capitalize on opportunities. Consequently, it is vital for organizational structures to be adaptable and dynamic. ...
In recent times, organizations have increasingly adopted structures in which decision making is distributed rather than centralized. This approach often leads to task allocation emerging from the bottom up, moving away from strict top-down control. This shift raises a key question: How can we guide this emergent task allocation to form an effective organizational structure? To address this question, this paper introduces a model of an organization where task assignment is influenced by agents acting based on either long-term or short-term motivations, facilitating a bottom-up approach. The model incorporates an incentive mechanism designed to steer the emergent task allocation process, offering rewards that range from group-based to individual-focused. The analysis reveals that when task allocation is driven by short-term objectives and aligned with specific incentive systems, it leads to improved organizational performance compared to traditional, top-down organizational designs. Furthermore, the findings suggest that the presence of group-based rewards reduces the necessity of mirroring, i.e., for a precise matching of the organizational structure to task characteristics.
... In this direction, the "dynamic-capability view" (DCV) of the firm has been developed as the most important extension of the RBV for volatile external environments. According to it, a firm's dynamic capabilities, defined as its abilities to build, integrate, and reconfigure internal and external resources in order to cope with volatile environments, are highly important for its competitiveness and performance in such environments (Teece et al. 1997;Teece 2007Teece , 2014Drnevich and Kriauciunas 2011;Dejardin et al. 2023). ...
The economic crises constitute the most important disruptions in firms’ external environment, which have quite negative economic consequences for them, leading to significant reductions of their activities. However, the negative impacts differ significantly among firms, so it is important to identify factors that affect their magnitude at firm level, as they would provide to firms a useful basis for developing strategies for increasing their resilience to crisis. In this study, based on the resource-based view (RBV) of the firm as well as the dynamic-capability view (DCV) as theoretical foundations, we develop a set of research hypotheses concerning the effects of a series of factors on firm overall crisis economic vulnerability as well as crisis vulnerability with respect to several investment categories. We test these hypotheses using Greek firm data for the crisis period 2009–2014. We find evidence for a vulnerability reducing effect of new forms of “organic” workplace organization and human capital endowment, the latter effect particularly for investment in R&D and innovation, a stabilizing effect of a series of dynamic capabilities, a stabilizing effect of export activities, a de-stabilizing role of crisis-induced liquidity restrictions, and a de-stabilizing effect of crisis-induced decrease of overall private and public demand.
... This perspective is grounded in the recognition that firms must adapt to ever-changing environments by enhancing their skills and competencies. The concept of dynamic capabilities, as proposed by Teece, Pisano, and Shuen (1997), highlights the importance of a firm's ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments. In this context, inter-firm networks serve as conduits for the exchange of knowledge and capabilities, enabling firms to adapt and innovate more effectively (Ramkumar et al., 2022). ...
This paper examines the pivotal role of inter-firm networks as complex systems of knowledge and capabilities in data-driven transformation within the hospitality industry. As the sector rapidly embraces digitalization, propelled by unprecedented technological advancements and a surge in data volumes, understanding the role of inter-firm networks on data-driven initiatives becomes paramount for organizational success and competitive advantage. Through a qualitative meta-synthesis of primary data and empirical insights drawn from case studies conducted in Spanish hotels, this research delves into the interplay between network dynamics, the architectural properties of inter-firm networks, and firms' strategies for data-based transformation in hospitality enterprises. The research emphasizes how strategic partnerships, collaborative alliances, and ecosystem orchestration enable data creation, exchange, integration, aggregation, and analysis across diverse functional and operational domains within hospitality firms. Moreover, the research elucidates how effective network management leverages data-driven insights to enhance guest experiences, optimize operational efficiencies, and secure a competitive edge in a crowded marketplace. This analysis contributes to a comprehensive understanding of the evolving role of inter-firm networks in driving data-based transformation strategies, thus empowering hospitality companies to navigate in an increasingly digitalized landscape.
... Christensen [13] explored the challenges that firms face during disruptive innovation and how they can adapt to growth. Strategic management and growth were presented by Volberda et al. [56] where various strategic management frameworks relevant to company growth were analyzed, and earlier Teece et al. [52] where the concept of dynamic capabilities, crucial for firms to adapt, innovate, and achieve sustainable growth was introduced. Balance of growth is possible with the assessment of the threat of bankruptcy. ...
This article covers the topic of the relationship between the growth of companies and their financial condition when different business profiles are surveyed, such as high-tech, growth potential companies included in the NASDAQ Composite Index and traditional, matured companies included in the Dow Jones Industrial Average (DJIA), commonly known as blue-chip stocks. The hypothesis that the relationship between the Altman Z -score and the growth of enterprises as measured by assets, equity, sales, and earnings per share is positive was tested with Granger and VAR models. The main difference was found to be related to the size of the companies size and dynamics of growth. It was also shown that between NASDAQ enterprises there was no relationship between their growth and Altman Z -score, whereas when the DJIA blue chips were taken into account, a positive relationship was identified. It can be concluded that high-tech enterprises grow in a less predictable way not related to their economic condition, but mature enterprises focused on the growth and their condition. The value added of the article is finding that high-tech companies with growth potential and blue chips are managed in a different way due to their strategies of development.
... A dynamically stable organization, as defined by Boynton (1993), can simultaneously serve the broad market of consumers and product demands (dynamic) while building long-term capabilities and collective knowledge (stable). This concept of dynamic stability is closely related to the dynamic capabilities theory (Teece et al., 1997), which enables a firm to revolutionize and redesign other capabilities, such as operational capabilities (dynamic). The latter, on the other hand, allows the firm to function and perform daily activities (stable). ...
... Differentiating the company in a market where clients value the secrecy and honesty of their interactions by offering dependable and secure communication services may be a great asset. In addition, rivals may find it difficult to imitate a resource base that has been built via persistent investment in state-of-the-art security technology and the cultivation of a securityconscious organizational culture (Teece, Pisano, & Shuen, 2017). Consequently, businesses that make good use of information security may gain an advantage in the market by providing customers with more reliable security measures and keeping their confidence. ...
Purpose: In the competitive landscape of Rwanda's telecommunication industry, information security has emerged as a critical factor in maintaining and enhancing market position. The general objective of this study was to investigate the effect of IoT implementation strategies on competitive edge in the Rwandan telecommunication landscape. Specifically, the study determined the effect of information security on competitive edge in the Rwandan telecommunication landscape. Methodology: The research design that the study utilized is descriptive survey research. The target population for this study comprised 187 participants who are currently employed as staff at MTN Rwanda. A sample of 128 were determined using Slovin’s Formula. A stratified sampling technique was employed in the investigation. In this project, questionnaires with closed-ended questions and a five-point Likert scale style was used as the main data gathering instruments. The information was gathered via secondary data collected from a variety of sources, with individuals being requested to fill out questionnaires that were provided. Thirteen individuals made up the sample size for this initial inquiry. Using Cronbach's Alpha, the researcher conducted the reliability assessment. A group of accomplished professionals in the area of strategic management assessed the reliability and validity of the instruments. Using SPSS version 25, the researcher conducted a comprehensive analysis of the data using both qualitative and quantitative methods. The study used a correlation coefficient and a linear regression model. Data presentation was done in Tables and figures. Findings: The regression model reveals several significant predictors of competitive edge within the telecommunications landscape. Notably, integration with existing systems emerges as a substantial negative predictor (β = -0.395, p < .001), indicating that challenges in integrating IoT technologies with legacy systems may hinder competitiveness. In conclusion, the regression analysis highlights the critical role of integration with existing systems and data analytics in shaping competitive edge within the Rwandan telecommunications landscape. While challenges in integrating IoT technologies with legacy systems may pose obstacles, the transformative potential of data-driven decision-making emerges as a significant driver of organizational performance and competitiveness. Unique Contributions to Theory, Practice and Policy: Based on the findings, it is recommended that telecommunication companies in Rwanda prioritize investments in data analytics capabilities to enhance competitive edge and strategic decision-making. Additionally, efforts should be directed towards streamlining integration processes with existing systems to mitigate barriers and capitalize on the potential of emerging technologies, thus fostering innovation and sustainable growth within the industry. This study contributes to theory by providing empirical evidence on the impact of IoT adoption on competitive advantage in the telecommunications sector, particularly within a developing country context. Practically, it offers actionable insights for MTN Rwandacell Plc to enhance operational efficiency and service delivery, while also informing policymakers on the regulatory frameworks needed to support IoT innovation in Rwanda.
... A second approach would be to further develop any dynamic capabilities the organization may possess (Oliver and Holzinger, 2008). These capabilities allow for extensive flexibility that is useful for matching the external environment to increase fit (Teece et al., 1997). For instance, an organization facing increased economic pressure from extensive low-cost foreign competition may be able to move its engineers from capacity improvement to product redesign effectively because they have been cross trained throughout their careers. ...
Firms in developed countries frequently struggle with low-cost foreign competition. This is somewhat perplexing given the historical advantages firms have in developed countries. We examine how these firms respond to market entry by low-cost foreign competitors. Their responses and outcomes vary depending on the government’s degree of intervention. Using the global steel industry as an example, the awareness, motivation, capability (AMC) framework is used to structure firm decision-making. We find that applying the AMC suggests that firm responses depend on government trade interventions, thus recommending firms and their governments integrate their efforts to enhance beneficial outcomes for firms and society.
... Marketing orientation is specifically related to operational strategies (Dobni & Luffman, 2000) as operational functions can help the organizations to build strong market-oriented culture to enhance performance (Wilburn Green et al., 2015) and this culture can enable organizations to develop operational capabilities. Teece et al. (1997) presented the dynamic capability theory, which contends that dynamic capabilities do not directly result in marketable services or goods, but these capabilities are responsible for ''building, integrating and reconfiguring'' the operational capabilities (Ambrosini & Bowman, 2009;Protogerou et al., 2012). The operational capabilities enable the firms to perform basic functional activities (Collis, 1994) by focusing on retention of ''status quo'' (Stadler et al., 2013). ...
SMEs always need survival tools or strategies such as orientation and capabilities to survive in the competitive market, as they can help in improving performance. Therefore, this research has highlighted important capabilities and orientations influencing SMEs’ performance in Oman. It has examined the effect of supply chain orientation and market orientation on SMEs’ performance with mediating role of innovation capabilities and operational capabilities. Moreover, it investigated the role of strategic flexibility as a moderator between innovation capabilities and SMEs’ performance in Oman. The survey method was used to collect primary data from managers and supervisors of SMEs functional in Oman. Data analysis was done using AMOS, and structural equation modeling (SEM) was conducted. The moderation was examined by using the Hayes process macro on SPSS. The results revealed that market orientation and SC orientation positively influence SMEs’ innovation capabilities, operational capabilities, and performance. These capabilities also help in enhancing performance. Moreover, they mediate the relationship between “supply chain orientation and SMEs’ performance” and “market orientation and SMEs’ performance.” Furthermore, strategic flexibility does not moderate the effect of innovation capabilities on SMEs’ performance.
... Este sistema como su nombre en inglés lo indica, re fiere a una cadena de bloques de información, la cual es codificada para realizar transacciones encriptadas en la red. Una de las cualidades más importantes es que permite la transferencia segura de datos, y de valor, al permitir la trazabilidad completa de los componentes de cada bloque de información (Eisenhardt y Graebner, 2007;Teece, 2007;Teece et al., 1997). Y puesto que la información, y el sistema que lo soportan es de amplias dimensiones, el proceso no puede ser realizado por un usuario individual. ...
... Clues were hidden throughout the hotel and the unique designs of the rooms can be adjusted dynamically to meet the needs of the story and achieve an eye-catching effect of getting rid of the old by bringing in something new. It also echoes the new strategic thinking of dynamic capabilities proposed by Teece et al. (1997), indicating that organizations should rebuild their competitive advantages to meet the changing industrial environment. Sirmon and Hitt (2003) also mentioned that it is recommended that enterprises evaluate the strengths and weaknesses of their resources and continuously improve their competitiveness through cross-industry alliances and resource optimization. ...
This study explores the sustainable competitive advantages of theme hotels. The research examined and compared 11 theme-based brand hotels in China and Taiwan as they all possess value as practical management references. In the post-epidemic era, the upgrades to hotels have become the focus of the industry. The reengineering of themed hotel brands and how the industry decides on the priority of focused investments for resource dimensions. This study proposes theme-based management of hotels, the development of sustainable unique competencies, and competitive advantages. The results found that the theme selection can be “combined with local characteristics” to develop “unique competencies,” and intangible assets are the most important priority. “Brand marketing” is conveyed through “employee competencies,” and core competencies are “integrated and upgraded” as well as “continuously evolved” to develop unique competencies and eventually integrate external resources to form “cross-industry alliances” and undergo “dynamic adjustments” to maintain a sustainable competitive advantage.
... Developing DAC requires continuous efforts to address challenges and seize opportunities in a dynamic, data-driven business environment, requiring constant learning and adaptation (Teece et al., 1997). Organizational learning can bridge the gap between the technical/managerial complexities of data analytics and its practical applications in business (Calvard, 2016), thus enabling organizations to navigate the challenges associated with the development of DAC. ...
Organizations are looking for ways to develop their data analytics capabilities (DAC) since DAC can affect their competitive advantages. The relevance of organizational learning for developing organizational capabilities has been highlighted in information systems (IS) literature, however, there is a lack of knowledge on how organizational learning can enhance DAC. To bridge this gap, this study explored how business organizations could develop their DAC through organizational learning. The findings revealed that intuiting, interpreting, integrating, and institutionalizing in organizational learning at individual, group, and organizational levels result in DAC development in organizations. In doing so, this study enriches the literature on DAC development from the standpoint of organizational learning.
... This digital marketing capability is needed because, more than having extraordinary human capital alone, it is necessary to unite this capital for value creation in the organization. Leadership capabilities in digital marketing are essential because managerial and organizational processes can determine competitive advantage (Teece et al., 1997;Teece, 2014). In addition, human resource management and development can influence motivation and loyalty, which in turn can influence strategy implementation. ...
Human resources are considered an important resource for companies today because the knowledge that a person has can be used to become an organisation’s competitive advantage. In addition, digital marketing has an important role in determining the performance of business entities because we have now entered the digital era, which certainly cannot be separated from the influence of technology on marketing through social media. Therefore, this study aims to examine the effect of Strategic Human Resource Management (SHRM) in digital marketing on business entity performance, which is determined by digital marketing in a business entity. The data in this research was collected by distributing questionnaires to 455 Micro Small Medium Enterprises (MSMEs) in Indonesia. Data analysis used the Moderated Regression Analysis (MRA) method. The research results show that strategic human resource management variables influence business performance, and the support of digital marketing capabilities and activities strengthens this influence. Based on the results of this research, existing business entities must strengthen organizational performance by strengthening human resources in basic soft skills and hard skills and skills in digital marketing and improving marketing activities using digitalization.
... Originated by Teece et al. (1997), Dynamic Capabilities Theory focuses on an organization's ability to adapt, integrate, and reconfigure its resources and capabilities in response to changing market conditions and technological advancements. In the context of the suggested topic, Dynamic Capabilities Theory underscores the importance of SMEs' ability to continuously evolve their knowledge management strategies in alignment with dynamic external environments. ...
Purpose: The aim of the study was to assess the impact of knowledge management strategies on innovation performance in small and medium enterprises (SMEs) in Rwanda. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study indicate that effective knowledge management practices within SMEs positively influence innovation performance, leading to enhanced competitiveness and sustainable growth. Implementing knowledge management strategies such as knowledge sharing, creation, and utilization facilitates idea generation, problem-solving, and product/service development. Furthermore, fostering a knowledge-sharing culture among employees promotes collaboration, learning, and creativity, thus fueling innovation within SMEs. Additionally, leveraging technology platforms and tools for knowledge management facilitates seamless information exchange, retrieval, and utilization, further enhancing innovation capabilities. Implications to Theory, Practice and Policy: Resource-based view, social capital theory and dynamic capabilities theory may be used to anchor future studies on assessing the impact of knowledge management strategies on innovation performance in small and medium enterprises (SMEs) in Rwanda. SMEs should prioritize investments in knowledge management initiatives aimed at fostering a culture of innovation, collaboration, and continuous learning within the organization. Policymakers should develop supportive frameworks and incentives to encourage SMEs to invest in knowledge management initiatives.
... The dynamic capability framework of Teece, Pisano, and Shuen (1997) is a commonly used framework for studying challenging and changing environments by providing a mechanism for developing, extending, and adapting existing capabilities. This framework provides a useful theoretical lens for examining MFBs' ability to respond to the disruptive changes caused by the pandemic. ...
The COVID-19 crisis may have a far-reaching impact on the performance of microfinance banks [MFBs], given the opportunities and threats it presents. One of the ways organisations can improve and maintain performance is through innovation, but the factors promoting innovation during a period of crisis are yet to be fully explored and understood in a MFB setting. The study aimed to examine the antecedents of innovation performance at MFBs in Nigeria during the COVID-19 crisis. To carry out this examination, data were collected from 133 top managers of MFBs operating in southern Nigeria and subjected to the two-step procedure for structural equation modelling using the partial least squares [PLS] analytical technique. The PLS results revealed that digital transformation, environmental scanning, strategic alliances, and safety culture positively and significantly enhanced the innovation performance of MFBs. The study recommended that MFBs should deploy a mix of strategies, as there is no one-way, standalone, or best solution to enhance innovation performance in a crisis situation of this nature. However, given their significance for advancing innovation activities in MFBs, managers should consider the identified antecedents.
... Strategy scholars have also emphasized, however, that some firms are able to overcome these frictions and rigidities, respond effectively to new opportunities and threats, and thrive. Such firms are those that possess dynamic capabilities: the ability to sense and seize on those opportunities and threats by reconfiguring resources and capabilities (Teece et al. 1997;Helfat et al. 2007). While the dynamic capabilities concept has captured the imaginations of many strategy scholars, it has proven difficult to operationalize (Arend & Bromiley 2009). ...
The strategy and innovation literatures emphasize that incumbent firms often fail to respond to shocks, yet also point out that some firms can survive by repositioning. The Comparative Adjustment, Transaction and Opportunity Cost (CATO) framework addresses this critical issue by predicting which firms will and will not reposition in response to a shock, when, and to which positions. This paper applies the CATO framework to predict which complementors in the videogame industry repositioned in response to the introduction of the Generation 6 consoles, a major innovation shock, and with which strategy. We find that proxies for comparative adjustment and opportunity costs successfully predict complementors' homing strategies in response to the shock: i.e., the choice of whether to develop games for a single console, multiple consoles sequentially, or multiple consoles simultaneously.
... In this view, firms are seen as institutions that serve to coordinate and integrate diverse and specialized knowledge stocks, which are often held by individual employees (Grant 1996). The literature on dynamic capabilities similarly highlights the firm's ability to continuously upgrade its knowledge base in response to environmental changes (Teece, Pisano & Shuen 1997). ...
Strategy research has long been concerned with how firms build on the technological knowledge they create, and has focused on legal enforcement, complementary assets, and location decisions. Less attention has been paid to how internal firm structures support the appropriation of future cumulative innovations: what has been termed "generative appropriability." Drawing on innovation and social network research, we propose that more integrated intrafirm inventor networks, and those with nearly decomposable structures, facilitate generative appropriability by accelerating within-firm generation of follow-on innovations, thus outpacing rivals. We find evidence for these effects in patent data from 1,417 large corporations over 26 years. The acceleration effect is strongest in the critical first few years after an initial invention. We thank seminar audiences at
... Con la construcción de competencias núcleo se hace más eficiente el empleo de estos factores abundantes, convirtiéndose entonces en determinantes de la competitividad económica de una región. De este modo, la ventaja competitiva de una región depende de sus procesos de innovación, aprendizaje, trabajo en red o networking y procesos de liderazgo configurados por la disponibilidad de activos específicos y los mecanismos para utilizarlos (Teece et al., 1997). Estos procesos tienden a construir capacidades, competencias y competencias núcleo locales basadas en los recursos propios de ese territorio que llevan a incrementos en la productividad e innovación (Sotarauta, 2001). ...
Desde la perspectiva de la competitividad regional cada localidad tiende a fomentar
o limitar su desarrollo en términos de distribución y armonización. Por ende, las
ventajas competitivas de las regiones se centran en sus potencialidades. Una alternativa
para promover las ventajas competitivas de una localidad es el desarrollo de
competencias centrales del sistema productivo local (core competences, en inglés). Este
término se refiere a que las empresas pueden desarrollar áreas clave de conocimiento
o habilidades especiales (expertise) que las distinguan de sus competidores y se vuelvan
críticas para el crecimiento a largo plazo (Prahalad y Hamel, 1990). Para Agha
et al. (2012) las core competences son un conjunto integrado de especialización y tecnología
que se acumula a través del aprendizaje y que lleva a la empresa a obtener una
ventaja competitiva en el mercado.
... x A key firm strategy is to exploit its competencies in order to 'build capacity', that is, the ability to develop and realise strategies to adapt to new circumstances. In order for firms to identify and make effective use of knowledge, ideas and technologies generated elsewhere, what is required is dynamic capability and absorptive capacity, which may be created through the development or acquisition of high levels of workforce skills (Teece et al. 1997, Teece and Pisano 1998, Griffith et al. 2004). ...
Manchester. The project is funded by the National Endowment for Science, Technology and the Arts (NESTA)-an independent body with the mission to make the UK more innovative. The compendium is organised around 20 innovation policy topics categorised primarily according to their policy objectives. Currently, some of these reports are available. All reports are available at http://www.innovation-policy.org.uk. Also at this location is an online strategic intelligence tool with an extensive list of references that present evidence for the effectiveness of each particular innovation policy objective. Summaries and download links are provided for key references. These can also be reached by clicking in the references in this document.
... Dynamic Capabilities Theory: adjusting to change is crucial and proportional to the evolving retail landscape. To be competitive in an AI-driven economy, dynamic capabilities theory emphasizes the significance of learning, reconfiguring, and recognizing market developments (Teece et al., 1997). ...
Within the digital era, the retail industry is witnessing a transformation in consumer behavior, mainly driven by Artificial Intelligence (AI) algorithms. This paper presents the "Algorithmic Retail Consumer" framework, a unique approach devised by the author to examine the impact of AI on customer decision-making and customer engagement. The framework examines three essential dimensions: personalized experiences, predictive decision-making, and satisfactory consumer interactions. With the increasing importance of ethics in the implementation of AI technologies, the "Algorithmic Retail Consumer" framework seeks to empower retailers and consumers alike. By identifying key implications and challenges associated with AI implementation, the research promotes responsible AI practices and encourages informed consumer engagement with these technologies. Through its multidimensional approach and real-world case studies from diverse retail sectors, the paper provides practical insights and recommendations to facilitate effective adaptation to AI-driven consumer behavior.
... Dynamic Capabilities Theory, formulated by Teece et al. (1997), provides a framework for understanding how organizations can develop and leverage their capabilities to adapt and innovate in a rapidly changing environment. The theory suggests that a firm's competitive advantage lies not only in its existing resources but in its ability to integrate, build, and reconfigure these resources dynamically in response to external changes (Ludwig & Pemberton, 2011). ...
Against a backdrop of escalating global competition, health insurance firms grapple with the need to stand out amidst a saturated market. The study recognizes the imperative for organizations to adopt differentiation strategies, with a focus on product, personnel, distribution, and image differentiation. Acknowledging the current dearth of comprehensive research in the Kenyan context, the research problem centres on the critical need to investigate the extent to which differentiation strategies influence the performance of health insurance companies in the region. The general objective of the study was to investigate the effect of differentiation strategy on performance of Health Insurance Companies in Kenya. Drawing on established theories such as Porter's Competitive Advantage Model, Upper Echelons Theory, Resource-Based View, and Transaction Cost Economics, the study employs a multi-theoretical framework to provide a nuanced understanding of the complex relationships between differentiation strategies and organizational outcomes. Adopting the descriptive research design, the target population comprises 980 employees in the medical insurance firms in the top management and middle level management in Nairobi, drawn from the respective insurance firms’ Human Resources Departments. Employing a multi-stage sampling technique, the established sample size is 101 top and middle level management staff who were reached by stratified random sampling. A semi-structured questionnaire was the main data collection instrument and was distributed through a drop-and- pick- latter approach. Data was analyzed using both descriptive and inferential statistics. Descriptive statistics measures of mean and standard deviation was used, while for inferential statistics, regression equations were employed. The study established that product differentiation strategy, personnel differentiation strategy, product differentiation strategy and image differentiation strategy had a positive significant effect on performance of health insurance companies in Kenya. The study concludes that product differentiation is the key aspect distinguishing one company’s products or services from its competition. Personnel differentiation strategy gives an organization the ability to respond in time to the needs of their members through the skills and knowledge of employees. A differentiated distribution strategy allows insurance companies to expand their sale potential by getting their product in front of more potential customers. An effective image establishes the product's character and value proposition and a person responds differently to company and brand images. The study recommends that the insurance companies should consider opportunities for differentiation in all of its production areas: marketing, product management, engineering, sales, and customer support. Organizations looking to build personnel differentiation strategy will need to produce or design extremely unique or distinctive products or services that create increased value for the consumer. The insurance companies should devote resources to channel management preferably at least one dedicated manager whose sole responsibility is to manage those relationships and build the marketing programs to drive revenue through the channel. The insurance companies should identify their brand gaps, which are the discrepancies between their desired and actual brand performance.
... En se référant à la théorie des ressources et son extension les capacités dynamiques (Teece et al., 1997) , l'apprentissage organisationnel et l'innovativité entrepreneuriale peuvent être considérés comme des ressources et des capacités uniques et difficiles à imiter (Hurtado-Palomino et al., 2022;Jiménez-Jiménez & Sanz-Valle, 2011;Pérez et al., 2019;Saunila, 2020). Ces ressources favorisent une meilleure adaptation aux changements du marché, une réaction plus efficace en cas de crise, et une amélioration constante des performances organisationnelles (Gomes et al., 2022;Rehman et al., 2019;Yusoff et al., 2019). ...
L'orientation vers l'apprentissage organisationnel et l'innovativité ont été identifiées comme des pratiques managériales clés contribuant à l'amélioration de la compétitivité et de la performance des PME. Cette étude examine le rôle médiateur de l'innovativité entrepreneuriale dans la relation entre l'orientation vers l'apprentissage et la performance des PME Marocaines. Pour ce faire, une enquête quantitative auprès de 70 dirigeants de PME marocaines opérant dans des secteurs diversifiés a été réalisée. Les données ont été analysées à l'aide de la méthode des équations structurelles « Partial Least Squares (PLS) ». Les résultats de cette étude révèlent la présence d'une relation positive et significative entre l'orientation vers l'apprentissage et la performance des PME marocaines ainsi qu'un effet médiateur partiel de l'innovativité entrepreneuriale. Ces conclusions ont des implications managériales importantes, mettant en évidence la nécessité de renforcer l'orientation vers l'apprentissage et de promouvoir l'innovation pour accroître la compétitivité et la performance des PME marocaines. Summary : Organizational learning orientation and innovativeness have been identified as key managerial practices contributing to improving SME competitiveness and performance. This study examines the mediating role of entrepreneurial innovativeness in the relationship between learning orientation and performance in Moroccan SMEs. To this end, a quantitative survey of 70 Moroccan SME managers operating in diversified sectors was carried out. The data were analyzed using the Partial Least Squares (PLS) structural equation method. The results of this study reveal a positive and significant relationship between learning orientation and the performance of Moroccan SMEs, as well as a partial mediating effect of entrepreneurial innovativeness. These findings have important managerial implications, highlighting the need to strengthen learning orientation and promote innovation to enhance the competitiveness and performance of Moroccan SMEs.
The business value of cloud computing has always been concerned by the academic. From the contingent perspective, the business value is affected by various factors. However, the impact of the objective environment is rarely being discussed. In especial, concerning the ambidextrous innovation value of cloud computing, how to develop targeted cloud-based strategies according to the environment so as to achieve the innovation value better remains unclear. By conducting Propensity Score Matching and Difference-in-Differences-in-Differences analysis on the secondary hand performance data of 182 pairs of listed companies, this study investigates how the exploitative and explorative innovation values of cloud computing are impacted by the three environmental characteristics, namely dynamics, munificence, and complexity. The results show that cloud computing significantly promotes exploitative innovation value in less dynamic environment and explorative innovation in high complex environment. Nevertheless, munificence explains a less significant proportion of the variance in ambidextrous innovation performance. This research empirically reveals the moderation effect of environmental characteristics on the ambidextrous innovation value of cloud computing which enriches the research stream and conclusions of cloud computing business value. It implicates that the cloud investors should develop exploitation-oriented strategy under less dynamic environment and exploration-oriented strategy under high complex environment.
Стаття присвячена дослідженню проблематиці місця та ролі конкурентоспроможності в системі глобального маркетингу. Метою дослідження є розкриття сучасних поглядів на тлумачення конкурентоспроможності, ідентифікація факторів, що зумовлюють її забезпечення на глобальному ринку, виявлення особливої ролі маркетингового інструментарію у її підвищенні. Для досягнення цієї мети було використано різноманітні методи дослідження, такі як аналіз, класифікація, групування, індукція, дедукція та узагальнення. Результати дослідження свідчать про важливість конкурентоспроможності для підприємств у глобальному маркетинговому середовищі. Конкурентоспроможність є ключовим фактором успіху підприємств у контексті зростаючої конкуренції та швидких змін на ринку. Аналіз показує, що підтримка конкурентоспроможності дозволяє підприємствам не лише вижити на ринку, але й активно конкурувати і забезпечувати стійкий розвиток. Конкурентоспроможність підприємства визначається його здібностями та компетентністю, які можуть перетворитися на конкурентні переваги. Автор статті аналізує різноманітні аспекти конкурентоспроможності, включаючи внутрішні та зовнішні чинники, що впливають на неї. Додатково, результати дослідження підкреслюють роль маркетингу у забезпеченні конкурентоспроможності підприємств. Зокрема, вони показують, що маркетинг став ключовим елементом боротьби за лідерство на ринку, що вимагає від підприємств розробки ефективних маркетингових стратегій, спрямованих на створення та реалізацію продукції з більш привабливими перевагами ніж у конкурентів. Наукова новизна визначається у комплексному підході до розуміння розкриття конкурентоспроможності, де інструментарій маркетингу виступає ключовим елементом успішної стратегії. Практичне значення статті полягає у наданні підприємствам засобів для розуміння важливості, аналізу та покращення їхніх маркетингових стратегій з метою підвищення конкурентоспроможності на глобальному ринку. Перспективами подальших досліджень є глибший аналіз взаємозв'язку між маркетингом і конкурентоспроможністю, дослідження новітніх технологій та інновацій у маркетингу, а також розробка стратегій маркетингу, спрямованих на глобальний ринок і забезпечення конкурентних переваг підприємствам.
Kenyan commercial banks face significant challenges in terms of performance, particularly in relation to profitability, capital adequacy, asset quality and customer satisfaction. The Kenyan banking sector has experienced rapid growth over the past decade, but this has also led to increased competition and pressure on banks’ performance. This study established the effect of outsourcing human resource services and the organizational performance of commercial banks in Nakuru City, Kenya. The study was anchored on resource based view theory. The study used explanatory research design. Twenty eight (28) licensed commercial banks in Nakuru City were targeted. Purposive sampling was used to sample the branch managers, credit managers and operational managers in the twenty eight (28) licensed commercial banks in Nakuru City making a sample size of 84 respondents. Data was collected using structured questionnaires. Statistical Package for Social Sciences (SPSS) software aided in analysis of the quantitative data collected where analysis was conducted using both descriptive and inferential statistics. The results indicated that there was a positive and significant correlation between outsourcing human resource services (r=0.295, p=0.013) and performance of commercial banks. The regression results show a positive and significant effect of outsourcing human resource services (β = 0.041, Sig. = 0.046) on performance of commercial banks which implies that outsourcing HR services affects performance of commercial banks positively. The study concludes that the outsourcing HR services allows banks to tap into the expertise and specialized knowledge of HR service providers who have experience in managing these complex HR processes and recommends commercial banks in Nakuru City to outsource employee relations services since they can help maintain confidentiality and impartiality in sensitive employee-related matters.
The study presented in this paper explored the relationship between corporate entrepreneurship and business model innovation of companies in Bosnia and Herzegovina (B&H) after the COVID-19 pandemic. In particular, the authors aimed to analyze how the individual dimensions of corporate entrepreneurship influence business model innovation by using the dynamic capabilities view. The study empirically analysed a sample of 100 companies using regression analysis. The findings revealed that each dimension of corporate entrepreneurship positively and significantly impacts business model innovation. Innovativeness, proactiveness, risk-taking, autonomy, and competitive aggressiveness positively affected the innovation of the business model. The results of this study confirm that entrepreneurial initiative is a good predictor of a company's ability to innovate business models. The implication for management is to deepen the understanding of how corporate entrepreneurship promotes and shapes an innovative business model. This increases companies' success and overall well-being in B&H after the COVID-19 pandemic.
Purpose: This paper explores the impact of Digitalisation (Technology adoption, Digital skills and digital infrastructure) on Logistics Performance among Logistics Related Companies in Cameroon. Materials and Methods: From over 600 accredited logistics related companies in Cameroon, 234 were extracted based on the Krejcie and Morgan sample size table using the purposive sampling technique based on cross-sectional data from questionnaires. Data was analyzed using the Ordinary Least Squares. Findings: The findings revealed that Technology adoption (TA), digital skills (DS) show a significant positive influence on logistics performance while digital infrastructure (DI) has an insignificant positive influence on logistics performance. The control variables of experience of respondents (Esp), and company size (Comsize) all insignificantly influence logistics performance. Implications to Theory, Practice and Policy: This study recommends Organizations to focus on increasing technology adoption (TA) and implement cutting-edge technologies, such as Internet of things and automation, leverage the findings related to digital skills (DS) and recognize the critical role of a digitally skilled workforce in driving logistics performance. Investing in training programs and fostering a culture of continuous learning will contribute to workforce readiness for digital advancements. By understanding the specific relationship between digitization efforts and logistics performance outcomes as per this study, stakeholders would assist logistics related companies in Cameroon in making informed decisions regarding their digitization strategies. The study provides practical recommendations for logistics companies in Cameroon on how to effectively implement digitalization strategies, such as leveraging technology for real-time tracking, automation, and data analysis to improve efficiency and reduce costs and some Best Practices for Digitalization in Logistics.
Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals and can co-operate towards attainment of group goals. Management Study HQ describes Management as a set of principles relating to the functions of planning, directing and controlling, and the application of these principles in harnessing physical, financial, human and informational resources efficiently and effectively to achieve organizational goals. A good management is the backbone of all successful organizations. And to assist business and non-business organizations in their quest for excellence, growth and contribution to the economy and society, Management Book Series covers research knowledge that exists in the world in various management sectors of business through peer review chapters. This book series helps company leaders and key decision-makers to have a clear, impartial, and data-driven perspective of how factors will impact the economy moving forward and to know what they should be doing in response.
Research on business strategy suffers because it often relies on retrospective case studies. Strategic alternatives are discussed without information on the range of existing practices. In addition, the rate at which new strategies are adopted and implemented is unknown. Studying populations of organizations over time avoids these problems and offers promise for a more sophisticated and methodologically rigorous approach to strategic studies for both researcher and practitioner.
An expanded paradigm is needed to explain how competitive advantage is gained and held. Firms resorting to 'resource-based strategy' attempt to accumulate valuable technology assets and employ an aggressive intellectual property stance. However, winners in the global marketplace have been firms demonstrating timely responsiveness and rapid and flexible product innovation, along with the management capability to effectively coordinate and redeploy internal and external competences. This source of competitive advantage, 'dynamic capabilities', emphasizes two aspects. First, it refers to the shifting character of the environment; second, it emphasizes the key role of strategic management in appropriately adapting, integrating, and re-configuring internal and external organizational skills, resources, and functional competences toward changing environment. 5 Only recently have researchers begun to focus on the specifics of developing firm-specific capabilities and the manner in which competences are renewed to respond to shifts in the business environment. The dynamic capabilities approach provides a coherent framework to integrate existing conceptual and empirical knowledge, and facilitate prescription. This paper argues that the competitive advan is tage of firms stems from dynamic capabilities rooted in high performance routines operating inside the firm, embedded in the firm's processes, and conditioned by its history. It offers dynamic capabilities as an emerging paradigm of the modern business firm that draws on multiple disciplines and advances, with the help of industry studies in the USA and elsewhere.
The resource view of the firm has made substantial progress in identifying what attributes of a firm may provide a source of competitive advantage; however, the literature has far less to say about the emergence of these distinctive capabilities. We develop a simple framework based on the role of positive feedback effects of market activity, organizational factors that cause a firm to focus on a particular capability trajectory, and lastly the role of managerial choice with respect to anticipated feedback effects, which we term feedforward effects. We apply this framework to the emergence of competitive positions in the mutual fund-processing business from its inception to 1984.
The resource-based approach is an emerging framework that has stimulated discussion between scholars from three research perspectives. First, the resource-based theory incorporates traditional strategy insights concerning a firm's distinctive competencies and heterogeneous capabilities. The resource-based approach also provides value-added theoretical propositions that are testable within the diversification strategy literature. Second, the resource-based view fits comfortably within the organizational economics paradigm. Third, the resource-based view is complementary to industrial organization research. The resource-based view provides a framework for increasing dialogue between scholars from these important research areas within the conversation of strategic management. Resource-based studies that give simultaneous attention to each of these research programs are suggested.
The capabilities of a firm, or any organization, lie primarily in the organizing principles by which individual and functional expertise is structured, coordinated, and communicated. Firms are social communities which use their relational structure and shared coding schemes to enhance the transfer and communication of new skills and capabilities. To replicate new knowledge in the absence of a social community is difficult. A classic demonstration is the well-studied problem of the transfer across country borders of manufacturing capabilities that support production of new product innovations. We show in this article that the degree of codification and how easily capabilities are taught has a significant influence on the speed of transfer. What makes the question of knowledge codification particularly interesting is that firms compete not only through the creation, replication, and transfer of their own knowledge, but also through their ability to imitate the product innovations of competitors. The capacity to speed the internal transfer of a production capability to new markets (e.g., those in other countries) is, consequently, of fundamental significance in a competitive environment. In the attempt to speed the internal transfer of knowledge, the dilemma arises that capabilities which can be easily communicated within the firm are more likely to be easily imitated by competitors. This relationship is tested by analyzing the effects of the ease of codifying and communicating a manufacturing capability not only on the time to its transfer, but also on the time to imitation of the new product. ’The determinants of the time to imitation are found to be the extent to which knowledge of the manufacturing processes is “common” among competitors, and the degree of continuous recombination of capabilities leading to improvement of the product or the manufacturing process. We support this interpretation by a discussion of the results from field research. A wider implication of these findings is the proposition that the transfer and recombination of organizational capabilities are the foundation of an evolutionary theory of the firm. A critical element limiting the expansion of a firm is that the competitive value of codifying knowledge leads to the selection of organizing principles that are not functional in all competitive environments. The pressure of speed is of critical importance to understand the evolutionary advantage of nonoptimal rules of coordinated action within a social community.
In this model, the effects of advertising are infinitely durable, fixed (and sunk) costs give rise to economies of scale, post-entry behavior is noncooperative, and pre-entry expectations are rational. Despite the obvious resemblance to work on the use of investment in production capacity to deter entry, here the incumbent monopolist never finds it optimal to advertise more if entry is possible than if it is not. This result and other features of this model indicate the dangers of analyzing advertising with analogies to other sorts of investments. The results make clear the need for more theoretical work on advertising and entry deterrence.
This paper develops a framework for analyzing the competitive implications of innovation. The framework is based on the concept of transilience - the capacity of an innovation to influence the established systems of production and marketing. Application of the concept results in a categorization of innovation into four types. Examples from the technical history of the US auto industry are used to illustrate the concepts and their applicability. The analysis shows that the categories of innovation are closely linked to different patterns of evolution and to different managerial environments. Special emphasis is placed on the role of incremental technical change in shaping competition and on the possibilities for a technology based reversal in the process of industrial maturity.
This article reviews the contribution of economic analysis to issues in strategic management. It explores why orthodox economic theory has an uneasy tension with the concerns of strategic managers, outlines some important recent contributions from industrial organizations, and attempts to develop some normative principles from recent theoretical and empirical work in transactions cost economics. The article also attempts an assessment of the respective contributions of different industrial organization paradigms to strategic management issues.
SEMATECH (SEmiconductor MAnufacturing TECHnology) was established in 1987 as a not-for-profit research consortium with an original mission to provide a pilot manufacturing facility where member companies could improve their semiconductor manufacturing process technology. Since its inception, SEMATECH's mission has become more general. This paper presents the findings from a quantitative case-based analysis of the returns to member companies from their investments in SEMATECH. The findings suggest that SEMATECH has provided an organizational structure in which important processes and technologies have been advanced which could not have been justified on economic grounds outside of a collaborative research arrangement.
This article explores the nature of international technology transfer and the operation of the market for know-how. It begins by examining the relationship between codification and transfer costs and then analyzes various imperfections in the market for know-how. The special properties of know-how are shown to confound various aspects of the exchange process when arms-length contracting is involved. The internalization of the exchange process within multinational firms serves to bypass many of these difficulties, and explains why the multinational firm is of such importance. Several forms of regulation of technology imports and exports are examined. It is discovered that the process is insufficiently well understood to permit the design of effective regulation that, moreover, appears unlikely to eliminate inefficiency. An efficiency focus is maintained throughout since I feel no qualification to pontificate on complex and confused distributional issues.
There is a large intellectual discrepancy between most formal growth models described by economists and descriptions of growth in economic history. This paper draws on an evolutionary theory of economic growth that brings together appreciative theorizing regarding growth and formal theorizing. It aims to piece together a relatively coherent appreciative theoretical account of economic development at a sectoral level by laying out a story of the growth, and development, of a manufacturing sector, from birth to maturity, and perhaps until death, that seems to fit many cases and which can serve as a target for formalization. The paper first describes and tries to link two broad bodies of appreciative evolutionary theoretic writing. The first proposes that a new technology develops along a relatively standard track from the time it is born, to its maturity, and that firm and industry structure 'coevolve' with the technology. The other is concerned with the development of institutions in response to changing economic conditions, incentives, and pressures. The paper then considers 'punctuated equilibrium' before concluding with a consideration of two economic developmental implications that appear to flow from the analysis. One concerns the pattern of change of productivity, of capital intensity, and relative variables associated with economic growth, as a technology and industry structure develop. The other is concerned with implicitly cross-country comparisons, and is focused on how 'comparative advantage' develops in a new industry.
The existence of capital that is specific to an industry (its investment cost exceeds its value-in-use in other industries) radically alters the equilibrium in an otherwise straight-forward neoclassical model. In particular, as demand ofalls exit is impeded and as demand rises the entry of new capital is also impeded in the sense that a positive rate of profit at a given point in time need not induce investment. This paper investigates the interplay between capital mobility, demand uncertainty, industry investment, and price. In particular, the existence and uniqueness of a competitive equilibrium in a stationary environment is established. The equilibrium is fully characterized by two thresholds L≤H: entry occurs when the ratio of intrinsic demand to capital is above H and exit occurs when this ratio is below L. Whether or not exit is reversible (it is not when the act of exit renders the capital unsuitable for future use in the industry), equilibrium demands that L increase and H decrease with mobility.
This problem solver offers a wealth of remedies for American industry's neglect of competitive manufacturing strategies and its resulting loss of productivity. Drawing upon the example of world-class and foreign manufacturers, the book illustrates what American industry must do in terms of manufacturing capability to regain a preeminent spot in the marketplace.
It is management, and particularly managers' willingness to learn and change -- not unfair competition or unsupportive economic policies -- that is at the heart of America's manufacturing crisis, contend Robert Hayes, Steven Wheelwright, and Kim Clark. These world-renowned authorities on manufacturing and technology base their conclusion on studies of hundreds of American and foreign firms. Writing for general managers in this long-awaited successor to their award-winning Restoring Our Competitive Edge, the authors go beyond the structural decisions -- the "bricks and mortar" of facilities and equipment -- to the infrastructure of a manufacturing company: the management policies, systems, and practices that must be at the core of a world-class organization. Most importantly, they address the difficulty of creating that infrastructure, emphasizing the management leadership and vision that are required. This thorough and comprehensive volume points out the weaknesses of traditional management practices, which are built into authoritarian, hierarchical organizations. The authors show dramatically how many companies today are breaking out of this "command and control" mentality and creating a whole new set of relationships involving workers and managers, engineering, marketing and manufacturing, and suppliers and customers, which is giving them a competitive advantage in the international marketplace. Comparing the companies that are winning with those that are losing market position, Hayes, Wheelwright, and Clark conclude that the key differences are that the winners focus on creating value for customers, continual improvement, quick adaptability to change, and extracting the full potential of their human resources. They constantly strive to be better, placing great emphasis on experimentation, integration, training, and the building of critical organizational capabilities. They are, in short, "learning" organizations. Dynamic Manufacturing explores in depth such key infrastructure issues as capital budgeting, performance measurement, organizational structure, and human resource management, demonstrating how they interact to foster productivity growth, new product development, and competitive advantage. The book shows today's managers how to implement the changes that must be made if they want to create a truly superior manufacturing company. Taking concerned, committed managers step-by-step on the path toward better products, lower costs, and increased profits, this seminal work provides a road map for manufacturing firms seeking to build a competitive advantage through manufacturing excellence.
A study seeks to examine the mechanics of international corporate technology transfer and to provide evidence on the level and determinants of technology transfer costs. A rather precise ''resource cost'' definition of costs is employed. The focus of the study is limited to transfers both outward from and inward to but one country: the U.S.A. The transferors are corporations, generally U.S. multinational corporations. The study covers a range of corporate transfers, including the licensing of technology to independent corporations and to governments, to joint ventures, and to wholly owned subsidiaries. It does not include the transfer of technology that might occur, for instance, through the export of capital goods. The analysis highlights features common to transfers that are domestic in scope. The domain of this study is restricted to horizontal transfers falling into the design phase. Data on twenty-nine international technology transfer projects are given in briefs in Appendix A. (MCW)
With all the time and resources that American manufacturing companies spend on strategic planning, why has their competitive position been deteriorating. Certainly not because the idea of doing such planning is itself misguided. Nor because the managers involved are not up to the task. Drawing on his long experience with the nuts and bolts of operations deep inside American and foreign companies, the author proposes a different answer. Perhaps the problem lies in how managers typically approach the work of planning: first by selecting objectives or ends, then by defining the strategies or ways of accomplishing them, and lastly by developing the necessary resources or means. A hard look at what the new industrial competition requires might suggest, instead, an approach to planning based on a means-ways-ends sequence. 7 references.
Strategic management has been increasingly characterized by an emphasis on core competences. Firms are advised to divest unrelated businesses and return to core business. Moreover, competitive advantage is now increasingly seen as a matter of efficiently deploying scarce knowledge resources to product markets. Much of this change in emphasis has occurred because of the emergence of a unified and rigorous approach to strategy, often called the resource-based approach. This Reader brings together extracts from the seminal articles that created this dominant perspective in strategic management. It includes the pioneering work of Selznick, Penrose, and Chandler and more recent writing by Wernerfelt, Barney, Teece, and Prahalad and Hamel.
This paper reviews the literature on organizational learning. Organizational learning is viewed as routine-based, history-dependent, and target-oriented. Organizations are seen as learning by encoding inferences from history into routines that guide behavior. Within this perspective on organizational learning, topics covered include how organizations learn from direct experience, how organizations learn from the experience of others, and how organizations develop conceptual frameworks or paradigms for interpreting that experience. The section on organizational memory discusses how organizations encode, store, and retrieve the lessons of history despite the turnover of personnel and the passage of time. Organizational learning is further complicated by the ecological structure of the simultaneously adapting behavior of other organizations, and by an endogenously changing environment. The final section discusses the limitations as well as the possibilities of organizational learning as a form of intelligence.
We propose a new criterion for equilibria of extensive games, in the spirit of Selten's perfectness criteria. This criterion requires that players' strategies be sequentially rational: Every decision must be part of an optimal strategy for the remainder of the game. This entails specification of players' beliefs concerning how the game has evolved for each information set, including informaiton sets off the equilibrium path. The properties of sequential equilibria are developed; in particular, we study the topological structure of the set of sequential equilibria. The connections with Selten's trembling-hand perfect equilibria are given.
Whether and why members of the same strategic group would experience different performance results has received little attention in previous research. These questions are addressed in this paper. First, conventional theory on the relationship between firm performance and strategic group membership is reviewed. Then a theory is developed as to how historical differences among strategic group members may result in performance differences. An empirical analysis of risk and return relationships is conducted, centered on the nature of environmental change characterizing the industry. The empirical setting throughout is the U.S. pharmaceutical industry over the period 1963–82.
The paper explores the usefulness of analysing firms from the resource side rather than from the product side. In analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested. These tools are then used to highlight the new strategic options which naturally emerge from the resource perspective.
The time-series behavior of ROI is examined to assess a central element of competitive markets, the lack of persistence of abnormal profits. The analysis first determines the aggregate dynamic process of ROI and then examines how strategic and market factors influence this process. Consistent with abnormal returns resulting from a disequilibrium phenomenon, a mean reverting time-series process approximates the behavior of ROI. While a variety of factors influence the persistence of return, the conditions under which market forces do not drive return back to its competitive rate seem remote, if present at all. Nonetheless, these factors can insulate a firm from competitive forces and so result in longer-term abnormal profits.
This article argues that strategy, like charity, begins at home. Specifically, economy is the best strategy. That is not to say that strategizing efforts to deter or defeat rivals with clever ploys and positioning are unimportant. In the long run, however, the best strategy is to organize and operate efficiently.
Four antecedents, it is argued, are necessary precursors for a firm to capture rents from innovation. The antecedents are causal understanding; innovation team proficiency; emergence and mobilization of new competences; and creation of competitive advantages, each of which are conceptually distinct and precisely defined in the paper. These constructs are linked together in a stage model and subsequently operationalized and tested using LISREL. Substantial support is found for the central thesis, that achieving each of the four antecedent processes increases the predicted rents from an innovation project.
Discussions of the link between firm size and innovation are outmoded because the boundaries of the firm have become fuzzy in recent decades. Strategic alliances — constellations of bilateral agreements among firms — are increasingly necessary to support innovative activities. Such alliances can facilitate complex coordination beyond what the price system can accomplish, while avoiding the dysfunctional properties sometimes associated with hierarchy. Antitrust law and competition policy need to recognize that these new organizational forms are often the functional antithesis of cartels, though they may have certain structural similarities. A more complete understanding of bilateral contracts and agreements ought to reveal when and how cooperation can support rather than impede innovation and competition.
This paper applies transactions cost principles to the multinational enterprise in order to ascertain its distinctive properties as a mode of economic organization. The analysis helps identify just when and where contractual alternatives to the multinational firm are likely to be viable. This turns out to depend upon the nature of the technology, the regime of appropriability within which the firm operates, and the characteristics of the markets in question. Transactions cost analysis is also extended to the multinational enterprise-host country relationship. Implications for management and public policy are derived.
An alliance is a flexible organization that allows firms with complementary strengths to experiment with new technological, organizational, and marketing strategies. The flexibility is valuable because the project undertaken through the alliance is uncertain. Flexibility is traded off against the weak incentive structure of the alliance. Although the principle goal of the experimental set-up is to learn more about technical and market parameters, learning also occurs about working in an alliance and could lead to greater competence in managing alliances, partially alleviating incentive problems. Through demonstration and externality effects, a few successful alliances can trigger more widespread alliance formation.
This study develops an evolutionary theory of the capabilities and behavior of business firms operating in a market environment. It includes both general discussion and the manipulation of specific simulation models consistent with that theory. The analysis outlines the differences between an evolutionary theory of organizational and industrial change and a neoclassical microeconomic theory. The antecedents to the former are studies by economists like Schumpeter (1934) and Alchian (1950). It is contrasted with the orthodox theory in the following aspects: while the evolutionary theory views firms as motivated by profit, their actions are not assumed to be profit maximizing, as in orthodox theory; the evolutionary theory stresses the tendency of most profitable firms to drive other firms out of business, but, in contrast to orthodox theory, does not concentrate on the state of industry equilibrium; and evolutionary theory is related to behavioral theory: it views firms, at any given time, as having certain capabilities and decision rules, as well as engaging in various ‘search' operations, which determines their behavior; while orthodox theory views firm behavior as relying on the use of the usual calculus maximization techniques. The theory is then made operational by the use of simulation methods. These models use Markov processes and analyze selection equilibrium, responses to changing factor prices, economic growth with endogenous technical change, Schumpeterian competition, and Schumpeterian tradeoff between static Pareto-efficiency and innovation. The study's discussion of search behavior complicates the evolutionary theory. With search, the decision making process in a firm relies as much on past experience as on innovative alternatives to past behavior. This view combines Darwinian and Lamarkian views on evolution; firms are seen as both passive with regard to their environment, and actively seeking alternatives that affect their environment. The simulation techniques used to model Schumpeterian competition reveal that there are usually winners and losers in industries, and that the high productivity and profitability of winners confer advantages that make further success more likely, while decline breeds further decline. This process creates a tendency for concentration to develop even in an industry initially composed of many equal-sized firms. However, the experiments conducted reveal that the growth of concentration is not inevitable; for example, it tends to be smaller when firms focus their searches on imitating rather than innovating. At the same time, industries with rapid technological change tend to grow more concentrated than those with slower progress. The abstract model of Schumpeterian competition presented in the study also allows to see more clearly the public policy issues concerning the relationship between technical progress and market structure. The analysis addresses the pervasive question of whether industry concentration, with its associated monopoly profits and reduced social welfare, is a necessary cost if societies are to obtain the benefits of technological innovation. (AT)
Economic theory has suffered in the past from a failure to state clearly its assumptions. Economists in building up a theory have often omitted to examine the foundations on which it was erected. This examination is, however, essential not only to prevent the misunderstanding and needless controversy which arise from a lack of knowledge of the assumptions on which a theory is based, but also because of the extreme importance for economics of good judgment in choosing between rival sets of assumptions. For instance, it is suggested that the use of the word “firm” in economics may be different from the use of the term by the “plain man.” Since there is apparently a trend in economic theory towards starting analysis with the individual firm and not with the industry, it is all the more necessary not only that a clear definition of the word “firm” should be given but that its difference from a firm in the “real world,” if it exists, should be made clear. Mrs. Robinson has said that “the two questions to be asked of a set of assumptions in economics are: Are they tractable? and: Do they correspond with the real world?” Though, as Mrs. Robinson points out, “more often one set will be manageable and the other realistic,” yet there may well be branches of theory where assumptions may be both manageable and realistic.
Incl. bibliographical notes and references, index, biographical note on the author
Thesis (Ph. D. in Business Administration)--University of California, Berkeley, May 1994. Includes bibliographical references.
This paper attempts to relate the role of information in production to the organization of industry, particularly the organization
into firms and the competitive behavior of these firms. Its emphasis is technical information or the knowledge needed to produce
goods. Information is an economic good but it has many characteristics which differentiate it from the goods usually modeled
in economics. In particular, it is surprising to find how poorly current theories apply to the situation of high fixed costs
which arises when information acquisition becomes a major part of a firm's activity. The paper concludes by conjecturing an
increasing tension between legal relations and fundamental economic determinants. In addition, unresolved problems in the
economic theory of pricing and competition arise in an economy in which information is important for both cost and utility,
producing conditions of competition between firms that are conducted under large fixed costs. Standard paradigms for modeling
this competition are inadequate since they postulate a market price in the sense that buyers can buy at their pleasure at
a fixed price. s The role of information requires a new approach to the theory of oligopoly.
This paper is a preliminary report on a study of the comparative evolution of several major high tech industries in the US,
Japan and Western Europe. In general the paper examines similarities and differences in the ways these industries developed
in different countries, and the factors explaining those differences. The project especially focused on understanding the
instances when firms in a particular country gained a strong competitive advantage over firms based in other countries. The
industries studied are: organic chemical products, computers, semiconductors, software, numerical controlled machine tools,
pharmaceuticals in the age of biotechnology and medical devices.
This paper extends the transaction cost economics framework to examine the contractual hazards that arise in the course of
technological innovation. We identify three main strategic hazards related to future technological opportunities that may
develop in business transactions: loss of technological pacing possibilities on the technological frontier, loss of technological
control at or behind the frontier, and design omissions. In examining these hazards we focus on the increasingly common phenomenon
of vertically integrated firms supplying downstream competitors. We then analyze how constellations of safeguards, particularly
relational safeguards, can augment transaction-specific safeguards in many instances to ensure high-powered incentives are
maintained. We also consider under what conditions downstream divestiture is a desirable economizing option. Supportive illustrations
are drawn from the desktop laser printer and telecommunications industries.
A common observation in the informal literature of economics (and elsewhere) is that is multistage “games,” players may seek early in the game to acquire a reputation for being “tough” or “benevolent” or something else. But this phenomenon is not observed in some formal game-theoretic analyses of finite games, such as Selten's finitely repeated chain-store game or in the finitely repeated prisoners' dilemma. We reexamine Selten's model, adding to it a “small” amount of imperfect (or incomplete) information about players' payoffs, and we find that this addition is sufficient to give rise to the “reputation effect” that one intuitively expects.
This paper outlines a theory of the multiproduct firm. Important building blocks include excess capacity and its creation, market imperfections, and the peculiarities of organizational knowledge, including its fungible and tacit character. A framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets. Neoclassical explanations of the multiproduct firm are shown to be seriously deficient.
This paper develops a framework for analyzing the competitive implications of innovation. The framework is based on the concept of transilience — the capacity of an innovation to influence the established systems of production and marketing. Application of the concept results in a categorization of innovation into four types. Examples from the technical history of the US auto industry are used to illustrate the concepts and their applicability. The analysis shows that the categories of innovation are closely linked to different patterns of evolution and to different managerial environments. Special emphasis is placed on the role of incremental technical change in shaping competition and on the possibilities for a technology based reversal in the process of industrial maturity.