Bridging ties: a source of firm heterogeneity in competitive capabilities

What explains differences in firms’ abilities to acquire competitive capabilities? In this paper we propose that a firm’s embeddedness in a network of ties is an important source of variation in the acquisition of competitive capabilities. We argue that firms in geographical clusters that maintain networks rich in bridging ties and sustain ties to regional institutions are well‐positioned to access new information, ideas, and opportunities. Hypotheses based on these ideas were tested on a stratified random sample of 227 job shop manufacturers located in the Midwest United States. Data were gathered using a mailed questionnaire. Results from structural equation modeling broadly support the embeddedness hypotheses and suggest a number of insights about the link between firms’ networks and the acquisition of competitive capabilities. Copyright © 1999 John Wiley & Sons, Ltd.     

Where can capabilities come from? network ties and capability acquisition in business groups

While strategy researchers have devoted considerable attention to the role of firm‐specific capabilities in the pursuit of competitive advantage, less attention has been directed at how firms obtain these capabilities from outside their boundaries. In this study, we examine how firms' multiplex network ties in business groups represent one important source of capability acquisition. Our focus allows us to go beyond the traditional focus on network structure and offer a novel contingency model that specifies how different types of network ties (e.g., buyer‐supplier, equity, and director), individually and in complementary combination, will differentially affect the process of R&D capability acquisition. We also offer an original analysis of how other aspects of network structure (i.e., network density) in business groups affect the efficacy of network ties on R&D capability. Empirically, we provide an original contribution to the capabilities literature by utilizing a stochastic frontier estimation to rigorously measure firm capabilities, and we demonstrate the value of this approach using longitudinal data on business groups in emerging economies. We close by discussing the implications of our supportive results for future research on firm capabilities, organizational networks, and business groups. Copyright © 2010 John Wiley & Sons, Ltd.     

Leaders’ social ties, knowledge acquisition capability and firm competitive advantage

Drawing on the relational and knowledge-based views of competitive advantage, this study links leaders?? social ties and knowledge acquisition capability to competitive advantage of a firm. Specifically, it posits that leaders?? business ties and government ties have differential effects on firm competitive advantage. It further posits that the effect of leaders?? business ties on firm competitive advantage will be positively moderated by knowledge acquisition capability, and the effect of leaders?? government ties on firm competitive advantage will be negatively moderated by knowledge acquisition capability. The hypotheses are tested based on a survey of 386 firms in China. The results provide support for the hypotheses.     

Joint problem solving and organizational learning capacity in new product innovation

There is a growing need for firms to acquire knowledge externally, but the process has become increasingly complicated. This article studies the mediating roles of the three process dimensions of organizational learning capacity (OLC), namely, knowledge acquisition, transformation, and application capabilities, in the context of a joint problem solving (JPS) arrangement with external collaborators for new product innovation. They employed the structural equation modelling method and analyse a sample of 331 high-tech manufacturers in China. Their results supported a conceptual model that shows (i) JPS exerts a positive impact on knowledge acquisition and transformation capabilities; (ii) these two capabilities promote knowledge application capacity; (iii) knowledge acquisition alone, and the combination of application and transformation capabilities, mediate the effect of JPS on both innovation efficacy and efficiency. Knowledge acquisition and application capabilities also jointly mediate the effect of JPS on innovation efficacy. They added to the existing literature by highlighting the need to consider the mediating roles of different OLC dimensions and the external context of JPS for learning capacity acquisition. Our model provides a practical framework for managers to better understand and influence OLC dimensions to improve innovation when engaging in JPS.     

Building Dynamic Capabilities in New Product Development through Intertemporal Integration

Although successful development of a given product may help explain the current success of a firm, creating longer‐term competitive advantage demands significantly more attention to developing and nurturing dynamic integration capabilities. These capabilities propel product development activities in ways that build on and develop technological and marketing capabilities for future product development efforts and create platforms for future product development. In this article, we develop a conceptual model of a dynamic integration process in product development, which we call intertemporal integration (ITI). In its most general form ITI is defined as the process of collecting, interpreting, and internalizing technological and marketing capabilities from past new product development projects and incorporating that knowledge in a systematic and purposeful manner into the development of future new products. Research propositions outlining the relationship of ITI to performance are presented. We provide specific examples of managerial mechanisms to be used in implementing ITI. We conclude with implications for research and practice. Effective management of ITI can increase new product development success and long‐term competitive advantage. This implies that management needs to engage in activities that gather and transform information and knowledge from prior development projects so that it can be used in future development projects. Project audits, design databases in computer‐aided design (CAD) systems, engineering notebooks, collections of test and experimental results, market research and test market results, project management databases, and other activities will all be important in the acquisition of knowledge from prior new product development (NPD) projects. Managers also should initiate the creation and maintenance of databases of technical and marketing information from prior projects, job performance reports, seminars and workshops related to technological issues and advances, and publication of technical journals to assist in the process of knowledge acquisition. Similarly, techniques such as assigning project managers from earlier development projects, reusing key components and technologies, and developing a company‐wide methodology for managing projects can be used to boost the application and use of knowledge.     

The Effect of "Front-Loading" Problem-Solving on Product Development Performance

In recent years, there has been a growing interest in the link between problem‐solving capabilities and product development performance. In this article, the authors apply a problem‐solving perspective to the management of product development and suggest how shifting the identification and solving of problems—a concept that they define as front‐loading—can reduce development time and cost and thus free up resources to be more innovative in the marketplace. The authors develop a framework of front‐loading problem‐solving and present related examples and case evidence from development practice. These examples include Boeing's and Chrysler's experience with the use of “digital mock‐ups” to identify interference problems that are very costly to solve if identified further downstream—sometimes as late as during or—after first full‐scale assembly. In the article, the authors propose that front‐loading can be achieved using a number of different approaches, two of which are discussed in detail: (1) project‐to‐project knowledge transfer—leverage previous projects by transferring problem and solution‐specific information to new projects; and (2) rapid problem‐solving—leverage advanced technologies and methods to increase the overall rate at which development problems are identified and solved. Methods for improving project‐to‐project knowledge transfer include the effective use of “postmortems,” which are records of post‐project learning and thus can be instrumental in carrying forward the knowledge from current and past projects. As the article suggests, rapid problem‐solving can be achieved by optimally combining new technologies (such as computer simulation) that allow for faster problem‐solving cycles with traditional technologies (such as late stage prototypes), which usually provide higher fidelity. A field study of front‐loading at Toyota Motor Corporation shows how a systematic effort to front‐load its development process has, in effect, shifted problem‐identification and problem‐solving to earlier stages of product development. They conclude the article with a discussion of other approaches to front‐load problem‐solving in product development and propose how a problem‐solving perspective can help managers to build capabilities for higher development performance.     

Performance of Global New Product Development Programs: A Resource-Based View

Gaining a competitive edge in today's turbulent business environment calls for a commitment by firms to two highly interrelated strategies: globalization and new product development (NPD). Although much research has focused on how companies achieve NPD success, little of this deals with NPD in the global setting. The authors use resource‐based theory (RBT)—a model emphasizing the resources and capabilities of the firm as primary determinants of competitive advantage—to explain how companies involved in international NPD realize superior performance. The capabilities RBT model is used to test how firms achieve superior performance by deploying organizational capabilities to take advantage of key organizational resources relevant for developing new products for global markets. Specifically, the study evaluates (1) organizational NPD resources (i.e., the firm's global innovation culture, attitude to resource commitment, top‐management involvement, and NPD process formality); (2) NPD process capabilities or routines for identifying and exploiting new product opportunities (i.e., global knowledge integration, NPD homework activities, and launch preparation); and (3) global NPD program performance. Based on data from 387 global NPD programs (North America and Europe, business‐to‐business), a structural model testing for the hypothesized mediation effects of NPD process capabilities on organizational NPD resources was largely supported. The findings indicate that all four resources considered relevant for effective deployment of global NPD process capabilities play a significant role. Specifically, a positive attitude toward resource commitment as well as NPD process formality is essential for the effective deployment of the three NPD process routines linked to achieving superior global NPD program performance; a strong global innovation culture is needed for ensuring effective global knowledge integration; and top‐management involvement plays a key role in deploying both knowledge integration and launch preparation. Of the three NPD process capabilities, global knowledge integration is the most important, whereas homework and launch preparation also play a significant role in bringing about global NPD program success. Tests for partial mediation suggest that too much process formality may be negative and that top‐management involvement requires careful focus.     

The Vital Role of Problem‐Solving Competence in New Product Success*

Problem solving, a process of seeking, defining, evaluating, and implementing the solutions, is considered a converter that can translate organizational inputs into valuable product and service outputs. A key challenge for the product innovation community is to answer questions about how knowledge competence and problem‐solving competence develop and sustain competitive advantage. The objective of this study is to theoretically examine and empirically test an existing assumption that problem‐solving competence is an important variable connecting market knowledge competence with new product performance. New product projects from 396 firms in the high‐technology zones in China were used to test the study's theoretical model. The results first indicate that problem‐solving speed and creativity matter in new product innovation performance by playing mediator roles between market knowledge competence and positional advantage, which in turn sustains superior performance. This new insight suggest that mere generation of market knowledge and having a marketing–research and development (R&D) interface will not affect new product performance unless project members have the ability to use the information and to interact to identify and solve complex problems speedily and creatively. Second, these results suggest that different market knowledge competences (customers, competitors, and interactions between marketing and R&D) have distinct impacts on problem‐solving speed and creativity (positive, negative, or none), which underscore the need to embrace a more fine‐grained notion of market knowledge competence. The results also reveal that the relative importance of some of these relationships depends on the perceived level of turbulence in the environment. First, competitor knowledge competence decreases problem‐solving speed when perceived environmental turbulence is low but enhances problem‐solving speed when perceived turbulence is high. Second, competitor knowledge competence has a positive relationship with new product performance when the environmental turbulence is high but no relationship when the environmental turbulence is low. Third, the positive relationship between problem‐solving speed and product advantage is stronger when the perceived environmental turbulence is high than when it is low, which implies that problem solving is more important for creating product advantage when environmental turbulence is high and change is fast and unpredictable. Fourth, the negative relationship between problem‐solving speed and new product performance is stronger when the perceived environmental turbulence is high than when it is low, which means that problem‐solving speed is more harmful for new product performance when change is fast and unpredictable. And fifth, the positive relationship between product quality and new product performance is stronger when perceived environmental turbulence is low than when it is high, which implies that product quality may more likely lead to new product performance when the environment is stable and changes are easy to predict, analyze, and comprehend.     

Incumbent and non-incumbent salesperson consultation in the pre-decision stage of organizational purchasing

Given the complexity (e.g., digitization, customization, and scale) of modern business solutions, salespeople increasingly seek to influence the pre-planning stages of buyer decision making to increase effectiveness. During the early stage of organizational buying, salespeople can align their firm's capabilities and expertise by offering input on problem definition, before a solution is sought. However, surprisingly little is known about the role of salespeople in the period before a buying firm decides to officially address a problem and seek vendor solutions. Thus, our research focuses on the inclusion of both incumbent salespeople (strong ties to the buying organization) and non-incumbent salespeople (limited, or non-existent, ties to the buying organization) in pre-decision phase information sourcing of buyers. Drawing upon theory from social network and problem solving literatures, we develop a contingency model to illustrate pre-decision phase conditions based on problem framing, structure, and urgency that make incumbent or non-incumbent salespeople more likely to be sources of information. We test our hypotheses across a series of scenario-based experimental studies conducted with purchasing managers. Our findings suggest situations where incumbent and non-incumbent salespeople have a greater likelihood of being positioned to engage in pre-decision stage planning with customers.     

Opening the Black Box of Upper Echelons in China: TMT Attributes and Strategic Flexibility

Many scholars have suggested that strategic flexibility is a critical firm capability to survive in today's competitive arena. The decision to take strategic actions to make the firm more strategically flexible typically originates in the top management team (TMT). As the principal decision‐making unit of the firm, TMT members' information acquisition and processing capabilities and subsequent interpretation of environmental changes critically influence the decision to make the firm more strategically flexible to achieve a better fit with its market environment. Therefore, in order to understand how firms can adapt to environmental changes, scholars must study the sociopsychological processes of interaction among members of the TMT. This study examines the relationships between TMT's sociopsychological attributes (shared vision, social integration, and political ties) and strategic flexibility, which is decomposed into organizational flexibility and technological flexibility. The study further investigates how the level of competitive intensity can moderate the relationships. All the hypotheses are tested using structural equation models based on the survey data from 227 firms in China. The results show that organizational flexibility mediates the impact of TMT's social integration and political ties on technological flexibility. Surprisingly, a TMT's shared vision for the firm neither impedes nor facilitates the firm's effort in attaining the desired degree of organizational flexibility. However, TMT's shared vision does have a positive and direct impact on technological flexibility. Moreover, intense competition amplifies the positive impact of TMT social integration on the degree of organizational flexibility, but there is no significant moderating effect of competitive intensity on the relationship between a TMT's political ties and organizational flexibility. The results extend previous research by highlighting the importance of TMTs' sociopsychological attributes in driving technological flexibility, through the mediating impact of organizational flexibility.     

The effect of institutional ties on knowledge acquisition in uncertain environments

Institutional ties can contribute to a firm??s performance in emerging economies because of the existence of ambiguous laws and unclear regulations. The main thrust of our argument is that a firm??s choice of institutional ties needs to be congruent with the external environment and with industry characteristics. We test our proposed framework with survey data from 308 firms in China. The results indicate that, first, environmental uncertainty has a direct influence on institutional ties and knowledge acquisition, but second, a firm??s industry position, although it likewise has an effect on knowledge acquisition, influences institutional ties in a U-shaped manner. Third, we find that institutional ties are positively related to knowledge acquisition.     

Antecedents and consequences of new venture growth strategy: An empirical study in China

Although current literature on new venture growth has focused on why new ventures grow, relatively less attention has been paid to how that growth is occurring. This article adopts the resource-based view to investigate the antecedents and consequences of new venture growth strategy in an emerging economy context. We identify three generic growth patterns of Chinese high-tech new ventures—organic growth, partnership growth and acquisition growth, based on 252 completed questionnaires. Consideration has been given to identify respective resources and capabilities associated with different growth strategies. Technological capabilities, strong and weak network ties, marketing capabilities and financial resources are found to have different effects on different new venture growth strategies. In addition, the growth strategies show differentiated effects on performance in terms of survival, competitive advantages and profits. Research and practical implications of new venture growth strategies and performance in China are also discussed in the paper.     

Reverse knowledge diffusion: Competitive dynamics and the knowledge seeking behavior of Korean high-tech firms

This paper endeavors to enrich the existing knowledge acquisition literatures by specifically highlighting downsides of external ties of individuals. We introduce the concept of reverse knowledge diffusion (RKD) through external ties of individuals, and develop theoretical propositions to explain how the risks of RKD vary based on competitive dynamics and status of firms as innovation market leaders or market followers. We develop the construct of RKD to help explain why rivals may pursue contrasting knowledge seeking strategies with regards to leverage external ties of individuals, the timing of establishing these ties, and ex ante control mechanisms designed to regulate these relationships. We also discuss how our propositions advance the theory of knowledge seeking behaviors and generate future research opportunities.     

The leveraging of interfirm relationships as a distinctive organizational capability: a longitudinal study

In this paper we present a study of the structure of three lead firm‐network relationships at two points in time. Using data on companies in the packaging machine industry, we study the process of vertical disintegration and focus on the ability to coordinate competencies and combine knowledge across corporate boundaries. We argue that the capability to interact with other companies—which we call relational capability—accelerates the lead firm’s knowledge access and transfer with relevant effects on company growth and innovativeness. This study provides evidence that interfirm networks can be shaped and deliberately designed: over time managers develop a specialized supplier network and build a narrower and more competitive set of core competencies. The ability to integrate knowledge residing both inside and outside the firm’s boundaries emerges as a distinctive organizational capability. Our main goal is to contribute to the current discussion of cooperative ties and dynamic aspects of interfirm networks, adding new dimensions to resource‐based and knowledge‐based interpretations of company performance. Copyright © 1999 John Wiley & Sons, Ltd.     

Network structure and innovation: The leveraging of a dual network as a distinctive relational capability

This paper employs comparative longitudinal case study research to investigate why and how strong dyadic interfirm ties and two alternative network architectures (a ‘strong ties network’ and a ‘dual network’) impact the innovative capability of the lead firm in an alliance network. I answer these intrinsically cross‐level research questions by examining how three design‐intensive furnishings manufacturers managed their networks of joint‐design alliances with consulting industrial design firms over more than 30 years. Initially, in order to explore the sample lead firms' alliance behavior, I advance an operationalization of interorganizational tie strength. Next, I unveil the strengths of strong ties and the weaknesses of a strong ties network. Finally, I show that the ability to integrate a large periphery of heterogeneous weak ties and a core of strong ties is a distinctive lead firm's relational capability, one that provides fertile ground for leading firms in knowledge‐intensive alliance networks to gain competitive advantages whose sustainability is primarily based on the dynamic innovative capability resulting from leveraging a dual network architecture. Copyright © 2007 John Wiley & Sons, Ltd.     

Comparing the resource‐based and relational views: knowledge transfer and spillover in vertical alliances

We compare resource‐based and relational perspectives to examine competitive advantages within the context of vertical learning alliances. Previous research has shown that through such alliances suppliers acquire knowledge to forge new capabilities and attain performance improvements. We ask whether such improvements are exclusive to the learning partnership, or are available in other average partnerships of this supplier. We posit that the extent to which such performance improvements are partnership exclusive depends on whether the newly forged capabilities lie entirely within the supplier firm's boundaries, or at the learning dyad level. As such, we untie two forms of performance improvements arising from learning dyads. While the resource‐based view helps explain the performance gains learning suppliers deploy across average partners, the relational view reveals the additional performance edge that remains exclusive to the learning partnership. Based on empirical evidence from a survey of 253 suppliers to the equipment industry, we find that partnership exclusive performance (i.e., ‘relational performance’), the true source of learning dyads' competitive advantage, is a function of suppliers acquiring know‐how within the dyad, developing dyad‐specific assets and capabilities, and structuring buyer‐supplier relational governance mechanisms. We discuss implications for research and practice. Copyright © 2008 John Wiley & Sons, Ltd.     

Playing a double game? Pursuing innovation through ambidexterity in an international acquisition program from the Arabian Gulf Region

Acquisitions represent a strategy for enhancing competitive responsiveness in the global management of technology and innovation. Even more than single and domestic acquisitions, cross‐border acquisition programs present opportunities for firms seeking to sustain innovation. Yet, scant attention has been paid to the innovation dynamics of pursuing multiple, international acquisitions. We remedy this gap by investigating a multinational logistics firm enacting a multi‐decade program of cross‐border, technology intensive acquisitions and achieving dual competencies in (1) innovation and ambidexterity, (2) the exploration and exploitation capabilities of ambidexterity, and (3) tight and loose integration approaches. We determine that the firm relied on contextual, temporal, and structural manifestations of ambidexterity in acquisition integration. Findings illuminate the processual nature of an international acquisition program and suggest how ambidexterity benefits the acquisition of both innovation and innovative capabilities, when a firm applies a portfolio of tight‐to‐loose integration approaches.     

Managerial ties and firm performance in an emerging economy: Tests of the mediating and moderating effects

Although the literature documents the direct effects of managerial ties on firm performance, the empirical results are divergent and inconclusive. To explain these disparities, this study (1) develops and tests a model that establishes the role of external resource acquisition as a salient mediating mechanism through which managers’ business and political ties influence firm performance; and (2) examines the moderating role of environmental turbulence that further explains the impact of managerial ties on resource acquisition (the mediator). Results from a survey of 253 firms in China indicate that resource acquisition plays a partial mediating role in the relationships between the two sub-dimensions of managerial ties and firm performance. Environmental turbulence shows a curvilinear (i.e., inverted U-shaped) moderating effect on the business ties–resource acquisition relationship, whereas it dampens the positive effect of political ties on resource acquisition. Theoretical and managerial implications are discussed.     

Strategy,human capital investments,business‐domain capabilities,and performance: a study in the global software services industry

Research summary : In knowledge‐based industries, continuous human capital investments are essential for firms to enhance capabilities and sustain competitive advantage. However, such investments present a dilemma for firms, because human resources are mobile. Using detailed project‐level operational, financial, and human capital data from a leading multinational firm in the global IT services industry, this study finds that deliberate investments in improving general human capital can help firms develop superior capabilities and maintain high profits. This paper identifies two types of capabilities essential for success in this industry—technological and business‐domain capabilities—and provides empirical evidence justifying such investments. Theoretical and practical implications of capability‐seeking general human capital investments are discussed. Managerial summary : The primary managerial implication of this research is that capability‐seeking investments in developing general human capital through strategic learning (training and internal certifications) can enhance firm performance. Although investing in general human capital is risky, the firm considered this a strategic necessity in order to thrive in the fast paced IT services industry. By leveraging general technological skills in combination with business‐domain knowledge to address customer's business problems firms can earn and sustain higher profits. Our study also demonstrates how a developing‐country firm responded to strong competitive challenge from global rivals possessing superior capabilities by upgrading the capabilities of its employees through internal development. In doing so the firm was able to narrow the capability gap vis‐à‐vis its foreign peers and expand its business globally. Copyright © 2016 John Wiley & Sons, Ltd.     

The development of capabilities in new firms

This research explores evidence of corporate capabilities for conducting acquisition and alliance deals in young firms. We hypothesize that investors conjecture about the future based on information about a firm's capabilities. Each successive deal carries intrinsic value, creates experience, generates feedback, and yields information about the firm's underlying capabilities. We evaluate whether stock prices impute expectations that firms will capably pursue particular programs of acquisitions and alliances. The analysis covers how investor responses change across successive deals on the theory that firms with a concentrated program of deals may develop capabilities more intensively than those with programs that involve both acquisitions and alliances. The dataset covers the population of firms that went through an initial public offering (IPO) in the United States between 1988 and 1999. It contains information on all of their post‐IPO acquisitions and alliances, and on how their stock prices changed in response to the announcement of each deal. The results suggest that within the first year after IPO, investors expect firms to execute particular streams of alliances and acquisitions that reflect their unique histories of demonstrated capabilities. We also find evidence that investors cannot fully anticipate deal programs. The findings support a capabilities‐based view of the firm and also show that accurate inference using event‐study methods may require digging deep into the early histories of firms. Copyright © 2009 John Wiley & Sons, Ltd.