HETEROGENEITY OF FIRM CAPABILITIES AND COOPERATIVE RESEARCH AND DEVELOPMENT: AN EMPIRICAL EXAMINATION OF MOTIVES

This article proposes capability heterogeneity of R&D consortia participants as a condition to distinguish two competing motives for cooperative R&D: cost-sharing vs. skill-sharing. An analysis of 398 questionnaire responses from participants in Japanese government-sponsored R&D consortia finds that the relative importance of the cost-sharing motive in R&D consortia increases when participants’ capabilities are homogeneous or projects are large, while the relative importance of the skill-sharing motive in R&D consortia increases with heterogeneous capabilities. The skill-sharing motive is likely to increase a firm’s R&D spending, implying an additional consideration for management’s evaluation of cooperative R&D participation, as well as adding a new public policy implication of cooperative R&D. © 1997 by John Wiley & Sons, Ltd.     

A dynamic capability view of marketing analytics: Evidence from UK firms

While marketing analytics plays an important role in generating insights from big data to improve marketing decision-making and firm competitiveness, few academic studies have investigated the mechanisms through which it can be used to achieve sustained competitive advantage. To close this gap, this study draws on the dynamic capability view to posit that a firm can attain sustained competitive advantage from its sensing, seizing and reconfiguring capabilities, which are manifested by the use of marketing analytics, marketing decision-making, and product development management. This study also examines the impact of the antecedents of marketing analytics use on marketing related processes. The analysis of a survey of 221 UK firm managers demonstrates: (a) the positive impact of marketing analytics use on both marketing decision-making and product development management; (b) the effect of the latter two on sustained competitive advantage; (c) the indirect effect of data availability on both marketing decision-making and production development management; and (d) the indirect effect of managerial support on marketing decision-making. The research model proposed in this study provides insights into how marketing analytics can be used to achieve sustained competitive advantage.     

The right speed and its value

Slow investments cause substantial revenue losses, yet acceleration increases costs. This tradeoff implies that an optimal investment speed usually exists; it is faster the higher a firm's intrinsic speed capability. We hypothesize that it is a firm's intrinsic speed capability, rather than its speed relative to industry competitors per se, that boosts firm value. Using data on oil and gas facilities (1996–2005), we find that intrinsic speed capabilities augment firm value in a varied way: their value is larger with better corporate governance, lower cost of capital, and higher ability to draw value from R&D investment. Our work elevates the discussion of speed from a project‐level consideration to a firm‐level competitive advantage issue and raises the need to further explore its strategic value. Copyright © 2013 John Wiley & Sons, Ltd.     

Dynamic capabilities and strategic management

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 difficult-to-trade knowledge assets and complementary assets), and the evolution path(s) it has adopted or inherited. The importance of path dependencies is amplified where conditions of increasing returns exist. Whether and how a firm’s competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding internally) 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 internal 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.     

Firm survival through a crisis: The influence of market orientation,marketing innovation and business strategy

As an outcome of the economic crisis, the global manufacturing sector is collapsing. Focusing on Chinese manufacturing small and medium enterprises (SMEs), this study investigates whether marketing innovation, defined as improvements in the marketing mix, can assist in withstanding the challenges of operating under the current economic conditions. A conceptual model linking market orientation, marketing innovation, competitive advantage and firm survival is tested using structural equation modelling. Three key findings are derived. First, the examined Chinese manufacturing SMEs had a greater perceived likelihood of survival had they developed and sustained a competitive advantage. Second, marketing innovation assisted in developing and sustaining competitive advantages based on differentiation and cost leadership strategies. Third, marketing innovation capabilities improved when the examined manufacturing SMEs were competitor oriented and had good inter-functional capabilities.     

Conceptualizing and measuring capabilities: methodology and empirical application

This paper attempts to operationalize and measure firm‐specific capabilities using an extant conceptualization in the resource‐based view (RBV) literature. Capabilities are conceived as the efficiency with which a firm employs a given set of resources (inputs) at its disposal to achieve certain objectives (outputs). We expand on extant theoretical literature on relative capabilities, by delineating the conditions that have to be met for relative capabilities to be measured non‐tautologically. We then proceed to suggest an estimation methodology, stochastic frontier estimation (SFE), that allows us to infer firm capabilities. We illustrate this technique with a sample of firms in the semiconductor industry. Our findings underscore the heterogeneity in R& D capability across firms in this industry, as well as the persistence in these capabilities over time. We also find that the market rewards high R& D capability firms, in that they show the highest average values of Tobin's q. Copyright © 2004 John Wiley & Sons, Ltd.     

Where do capabilities come from and how do they matter? A study in the software services industry

Recent years have witnessed a surge of interest in the notion of capabilities as an important source of competitive advantage. This recognition has, in turn, placed emphasis on the question of where and how these capabilities emerge and how they influence firm performance. The present paper is an attempt to address this question. Using a large sample of detailed project‐level data from a leading firm in the global software services industry, we attempt to empirically study the importance of capabilities. We find that two broad classes of capabilities are significant. The first class, which we label client‐specific capabilities, is a function of repeated interactions with clients over time and across different projects. This learning from repeated interactions with a given client reduces project execution costs and helps improve project contribution. The second class, termed project management capabilities, is acquired through deliberate and persistent investments in infrastructure and systems to improve the firm's software development process. Our empirical results suggest that the marginal returns to acquiring different capabilities may be different and an understanding of such trade‐offs can improve firm decisions to improve and/or acquire such capabilities. We discuss the key contributions of our paper and the implications for future research on capabilities. Copyright © 2004 John Wiley & Sons, Ltd.     

Mapping technological capabilities into product markets and competitive advantage: the case of cholesterol drugs

While a lot of attention has been paid to those characteristics of capabilities that give firms a competitive advantage, a lot less attention has been given to supporting empirical evidence and to the deployment of these capabilities. This paper presents a model for mapping firm capabilities into customer value and competitive advantage in different markets. With empirical evidence from cholesterol drugs, I illustrate how the model can be used to estimate customer value and competitive advantage from technological capabilities. Copyright © 2002 John Wiley & Sons, Ltd.     

Firm performance,rent appropriation,and the strategic resource divestment capability

Dynamic capabilities manifest the organizational capacity to purposefully create or modify the firm's resource base. In this paper, we consider resource divestment an important firm‐level resource management capability that manifests a two‐step organizational change routine. Firms must first be motivated to engage in resource divestment, and then decide which resources should be ‘sold off.’ In exploring this firm‐level capability, we employ factor market theory to consider the ‘seller side’ of the market, and provide a useful framework for conceptualizing how firms generate competitive advantage through resource divestment. We test our model of the resource divestment capability with a dataset of professional baseball franchises during the period 1969–83. Copyright © 2007 John Wiley & Sons, Ltd.     

Towards a model of dynamic capabilities in innovation-based competitive strategy: Insights from project-oriented service firms

With the growing significance of services in most developed economies, there is an increased interest in the role of service innovation in service firm competitive strategy. Despite growing literature on service innovation, it remains fragmented reflecting the need for a model that captures key antecedents driving the service innovation-based competitive advantage process. Building on extant literature and using thirteen in-depth interviews with CEOs of project-oriented service firms, this paper presents a model of innovation-based competitive advantage. The emergent model suggests that entrepreneurial service firms pursuing innovation carefully select and use dynamic capabilities that enable them to achieve greater innovation and sustained competitive advantage. Our findings indicate that firms purposefully use create, extend and modify processes to build and nurture key dynamic capabilities. The paper presents a set of theoretical propositions to guide future research. Implications for theory and practice are discussed. Finally, directions for future research are outlined.     

Why some firms never invest in formal R&D

In this paper we study the frequency of formal R&D investments. We link real options theory to the knowledge‐based view to explain how a firm's knowledge resources influence its frequency of investing in R&D to establish technological options. Specifically, we propose that a firm that lacks internal knowledge resources is more likely to never invest in R&D, a firm that has both internal and external knowledge resources is more likely to sometimes invest in R&D, while a firm that has internal knowledge resources but lacks external knowledge resources is more likely to always invest in R&D. Copyright © 2010 John Wiley & Sons, Ltd.     

On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism

This article suggests that dynamic capabilities can give the firm competitive advantage, but this effect is contingent on the level of dynamism of the firm's external environment. A nonlinear, inverse U‐shaped moderation is proposed, implying that the relationship between dynamic capabilities and competitive advantage is strongest under intermediate levels of dynamism but comparatively weaker when dynamism is low or high. This proposition is tested using data on alliance management capability and new product development capability, two specific dynamic capabilities widely recognized in prior research. Results based on longitudinal key informant data from 279 firms support the account that these dynamic capabilities are more strongly associated with competitive advantage in moderately dynamic than in stable or highly dynamic environments. Copyright © 2013 John Wiley & Sons, Ltd.     

The Immediate Impact of New Product Introductions on Stock Price: The Role of Firm Resources and Size*

New product development and introduction is an ongoing important issue to facilitate a firm's success. To demonstrate the financial impact of new product introductions and the supporting role of firm resources and organizational structure, the authors collected 409 new product announcements from 1990 to 1998 and used event methodology and regression models in this research. Building on resources and capabilities perspectives, the present study argues that firm resources with emphases on research and development (R&D) are imperative to materialize new product concepts. However, the research revealed that R&D resources have dual effects on immediate shareholder value (i.e., abnormal stock returns). On one hand, when the firm commits only lower to moderate levels of R&D, investors would have perceived such R&D as expenditures reducing the firm's profit margin and thereby negatively evaluate R&D resources. Nevertheless, when the firm has dedicated its resources to R&D significant enough to signal investors its potential benefits can outweigh its costs, it generates positive shareholder value. Further, the study found that investors honor positive marketing resources that are critical to promote and launch new products to customers. Apart from resources perspectives, according to the organizational structure literature, firm size reflects the layers of bureaucracy within an organization. The research found a negative effect on shareholder value, indicating that investors evaluate more optimistically smaller firms that are likely to be more innovative and entrepreneurial resulted in more breakthrough products. In conclusion, this study provides value to practitioners in understanding the impact of firm size and, more importantly, to what extent they dedicate their resources in R&D and marketing to generate different performance outcomes.     

Marketing capabilities and innovation-based strategies for environmental sustainability: An exploratory investigation of B2B firms

While emerging literature on sustainability shows that environmentally responsible strategies can contribute to competitive advantage and enhanced financial performance, little is known about specific marketing capabilities that lead to sustainable consumption behavior, and whether implementing such strategies leads to firm competitive advantage. Using the case method approach, this study explores marketing-related strategies and practices pertaining to sustainable consumption as reported by leading sustainable firms in the B2B context. We examine case studies of forty seven B2B firms and identify key marketing capabilities that tie to innovation-based sustainability strategies, sustainable consumption behavior and firm performance. We use our findings to develop a conceptual framework linking marketing capabilities to innovation strategies for firm sustainability, sustainable consumption behavior and firm competitive advantage, and put forward propositions for future research.     

COST,VALUE AND FOREIGN MARKET ENTRY MODE: THE TRANSACTION AND THE FIRM

This paper compares and contrasts the mode of foreign market entry decision from the transaction cost/internalization and organizational capability perspectives. Each of these perspectives operates at a different level of analysis, respectively the transaction and the firm, and consequently differs in the primary arena of attention, namely transaction characteristics and the capabilities of firms. In making the comparison, a key distinction is made between the cost and the value aspects in the management of know-how, based on which issues pertaining to the transfer of knowledge within and across firm boundaries and the exploitation and enhancement of competitive advantage are closely examined. The main purpose of this paper is to demonstrate the implications of a shift in frame from cost to value in the analysis of decisions related to firm boundaries. Entry into foreign markets is used primarily as a vehicle for the accomplishment of this purpose. The paper shows how the value-based framework of the organizational capability perspective radically and fundamentally shifts the approach towards the governance of firm boundaries and argues that, even though TC/internalization theory raises some valid concerns, the organizational capability framework may be more in tune with today’s business context. Some of the assumptions of the TC/internalization perspective, both direct—–opportunism, exploitation of existing advantage—and indirect—preservation of the value of know-how across locational contexts, asymmetry between bounded rationality for transaction and production purposes—are critically examined and questioned. Implications of a shift from a cost to a value-based framework are discussed and the need for a shift in research focus is emphasized. © 1997 by John Wiley & Sons, Ltd.     

A framework linking intangible resources and capabiliites to sustainable competitive advantage

This article is concerned with the role of intangible resources in business strategy. In particular it is concerned with identifying the intangible sources of sustainable competitive advantage. Sustainable competitive advantage results from the possession of relevant capability differentials. Regulatory and positional capabilities are concerned with intangible assets; functional and cultural capabilities are concerned with competencies. A framework linking intangible resources to capabilities has been devised and is used as the basis of a new technique for identifying the relative contribution which the different intangible resources make to competitive advantage. The results of the use of this technique in six case studies are reported.     

CAPABILITIES,TECHNOLOGICAL DIVERSIFICATION AND DIVISIONALIZATION

This paper develops and tests the hypothesis that greater R&D diversification is associated with less divisionalization in multidivisional firms. It argues, from transaction cost theory, that the extent of divisionalization of a large firm is indicative of its emphasis on interdivisional coordination, since fewer divisional boundaries reduce interdivisional bargaining costs. Also, greater interdivisional coordination is required to pursue strategies which exploit R&D undertaken in diverse but complementary fields, that is, strategies aimed at broadening technological capabilities. Conversely, less interdivisional coordination is required for more specialized R&D, that is, for strategies aimed at deepening existing capabilities. The hypothesis finds support in patent and organizational data.     

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.     

Exploring the Motivational and Behavioral Foundations of External Technology Experts’ Knowledge Sharing in Collaborative R&D Projects: The Contingency Role of Project Formalization

High‐tech manufacturers increasingly rely on the knowledge contributions of external technology experts (ETEs), who contribute to collaborative R&D projects on behalf of suppliers. Many scholars have considered knowledge sharing in R&D collaborations from a firm‐level or project‐level perspective and focused on formalization as a potential remedy. While individual supplier employees at the operative level make the decision to share critical knowledge, the individual‐level perspective in literature on knowledge sharing in collaborative R&D projects is virtually nonexistent. Because knowledge sharing in collaborative R&D is a largely discretionary act on behalf of the supplier employee, personal motivations rather than inter‐firm relationship elements (e.g., network position or dependency) become the primary determinant of one’s sharing behavior. Abstracting from or ignoring these motivations of supplier employees in studies on collaborative R&D may obscure important insights for R&D managers. This study is an important first step in providing the empirical evidence needed to uncover the motivational and behavioral foundations for ETEs’ knowledge sharing in a collaborative R&D setting. Building on theories of gift and social exchange, this article identifies customer stewardship and distributive fairness as two important personal motivations of ETEs to share knowledge. Project formalization is considered as a key contingency condition. Analyzing survey responses of 186 ETEs, a multilevel regression‐based moderated‐mediation analysis of direct and indirect effects shows that customer stewardship predicts an ETE’s knowledge sharing behavior under (very) low levels of project formalization, and distributive fairness predicts knowledge sharing behavior under medium to high levels of formalization. Together, the results provide R&D project managers who aim to leverage external knowledge contributions with valuable insights that have been obscured in past firm‐level collaborative R&D studies.     

How dynamics,management, and governance of resource deployments influence firm‐level performance

To help understand how firms develop and maintain dynamic capabilities, we examine the effects of the dynamics, management, and governance of R & D and marketing resource deployments on firm‐level economic performance. In a sample of technology‐based entrepreneurial firms, we find that a history of increased investments in marketing is an enduring source of competitive advantage. We also find that managers' firm‐specific experience positively moderates the relationship between R & D deployment intensity and economic returns. In addition, institutional ownership boosts economic returns from marketing deployments by subjecting these deployments to increased scrutiny and by sending positive signals to the market about the firm. Copyright © 2005 John Wiley & Sons, Ltd.