Models of causal inference: Imperfect but applicable is better than perfect but inapplicable

We assess a recent paper by Durand and Vaara (2009) that advances causal graph modeling as a tool for inferring causes in strategy research. We focus on the Markov condition, a key assumption on which causal graph modeling is based, and show why this condition is invariably violated in strategic management in general and the resource‐based view of the firm in particular. We then introduce vector space modeling as a quantitative alternative to causal graph modeling, and consider how improved methods of causal inference might enhance our ability to test some of the central propositions of the resource‐based view. Copyright © 2013 John Wiley & Sons, Ltd.     

Rethinking research methods for the resource‐based perspective: isolating sources of sustainable competitive advantage

An exploration of traditional perspectives and contemporary propositions regarding sustainable competitive advantage points to the conclusion that the locus of advantage is located specifically within organizational effects. The key issue emerges that research investigating sources of sustainable competitive advantage must be done not only on organizations but also in organizations. The fallout from this conclusion is, however, that the research methodologies traditionally used in strategy research will not unambiguously uncover these sources of sustainable advantage. Using organizational culture as an example of a possible source of sustainable advantage within a resource‐based paradigm, a four‐step research framework is suggested for isolating these organizational effects. Copyright © 1999 John Wiley & Sons, Ltd.     

Competencies and firm performance: examining the causal ambiguity paradox

Resource‐based theory argues that resources must be valuable, rare, inimitable, and lack substitutes to confer competitive advantage. Inimitability is a lynchpin of resource‐based theory and central to understanding the sustainability of competitive advantage. Although scholars recognize a positive relationship between causal ambiguity and inimitability, the relationship among critical resources called competencies, causal ambiguity, and firm performance remains an unresolved conundrum. One perspective suggests that causal ambiguity regarding competencies and performance is necessary among internal and external managers for sustainable competitive advantage because it severely limits imitation. Causal ambiguity, therefore, enhances firm performance. Another view holds that causal ambiguity places a constraint on the transfer and leveraging of these competencies within a firm. In this case, causal ambiguity may adversely influence firm performance. This paper takes a resource‐based view to develop and test hypotheses that relate managers' perceptions of causal ambiguity to their firm's performance. The hypotheses examine relationships between firm performance and (1) causal ambiguity regarding the link between competencies and competitive advantage, and (2) causally ambiguous characteristics of competencies. Research involving 224 executives in 17 organizations provides valuable insights into the relationships between causal ambiguity and firm performance. A model is then developed based on these findings. Particular consideration is given to the differing ways top and middle managers in a firm may experience causal ambiguity and to how these differences may be understood and managed. Copyright © 2001 John Wiley & Sons, Ltd.     

Does firm performance reveal its own causes? the role of Bayesian inference

A central problem in strategic management is how the inference ‘sustainable competitive advantage generates sustainable superior performance’ can be put into practice. In this article we develop a theoretical framework to understand the causal relationships among (1) sustainable competitive advantage, (2) configuration, (3) dynamic capability, and (4) sustainable superior performance. We propose that a firm's competitive advantage, resource bundle configuration, and dynamic learning capability cannot be comprehended by outsiders. Its operational performance, however, can be captured by financial indicators. We promote an inductive Bayesian interpretation of the sustainable competitive advantage proposition. From this viewpoint, the presence or absence of competitive advantage may be reflected in the causal relationship between resource configuration, dynamic capability, and observable financial performance. We apply this theoretical framework to an example drawn from the global semiconductor industry, an area in which resource configuration and dynamic capability are essential to performance. The paper concludes with a summary of the proposed model and suggestions for future theoretical development of strategic management. Copyright © 2009 John Wiley & Sons, Ltd.     

Value,rareness, competitive advantage,and performance: a conceptual‐level empirical investigation of the resource‐based view of the firm

The resource‐based view of the firm (RBV) hypothesizes that the exploitation of valuable, rare resources and capabilities contributes to a firm's competitive advantage, which in turn contributes to its performance. Despite this notion, few empirical studies test these hypotheses at the conceptual level. In response to this gap, this study empirically examines the relationships between value, rareness, competitive advantage, and performance. The results suggest that value and rareness are related to competitive advantage, that competitive advantage is related to performance, and that competitive advantage mediates the rareness‐performance relationship. These findings have important academic and practitioner implications which are then discussed. Copyright © 2008 John Wiley & Sons, Ltd.     

Competitive dynamics,strategic consistency,and organizational survival

This study investigates strategic consistency in competitive behavior. We construct a logically consistent evolutionary model, providing a causal argument to link a level of strategic consistency to long‐term organizational survival. According to our results, strategic consistency seems to be related to both organizational survival and the most efficient change over time concerning the key elements of a firm's strategy. One of the benefits of the model is that some of the components and processes may be manipulated through experimental or simulation interventions. This means that the model can be formally tested in future studies and managers can use it to fine‐tune patterns of competitive behavior. Copyright © 2008 John Wiley & Sons, Ltd.     

Technology roadmapping (TRM) and strategic alignment for an applied research centre: a case study with methodological contributions

Technology roadmapping provides a strategic tool to help companies develop an outside‐in view and challenge their current competitive perspectives. In this paper, the authors describe the roadmapping process, which is aligned, with the research and development (R&D) strategy of an applied research centre. This process is based in an adapted combination of state‐of‐the‐art methodologies, and as a result, the case study shows interesting findings in terms of R&D strategy, technology strategy and roadmapping processes and methodology.     

Identifying a distinctive competence: forecasting ability in the money fund industry

Testing the causal link between a firm‐specific competence and its antecedents or consequences has become a key objective for strategy research over the past decade. On one hand, case studies can identify a competence, but with their small sample size, their retrospective research design, and their tendency toward sampling on the dependent variable, they can not reliably test the causal connection between a competence and its antecedents or its consequences. On the other hand, variance decomposition studies demonstrate the existence of firm‐specific performance differentials but have not identified which particular competencies are responsible for them. The present paper avoids both of these problems by measuring a particular competence across a large sample of organizations over a long period of time, so that a test of statistical causality can be applied to the relationship of this competence to both its antecedents and its consequences. The particular competence studied is the ability of money market mutual funds to forecast changes in short‐term interest rates—a competence known from prior research to be both valuable and rare. In particular, we test the effect of forecasting ability on the economic surplus generated by the fund and its growth. Conversely, we also test the effect of growth on the subsequent development of forecasting ability. Copyright © 2000 John Wiley & Sons, Ltd.     

The Roles of Sustainability Orientation and Market Knowledge Competence in New Product Development Success

Firms’ sustainability orientation (SO) is widely understood as a strategic resource, which can lead to competitive advantage and superior (financial) performance. While recent empirical evidence suggests a moderate and positive relationship between SO and financial performance on a corporate level, little is understood about the influence of SO on new product development (NPD) success. Building on the natural‐resource‐based view (NRBV) of the firm, we hypothesize that firms’ SO positively influences NPD success, because of efficiency gains and differentiation advantages. However, scholars have also argued that the win–win paradigm postulated by NRBV might not always hold because NPD managers might find it difficult to balance sustainability objectives with the needs of their customer and the competitive dynamics in their markets. It is, therefore, proposed that market knowledge competence (MKC) is an important capability, which helps firms to balance social and ecological objectives with economic goals such as profitability and market share. Using data from 343 international firms from 24 countries that was collected by the Product Development and Management Association, structural equation modeling results suggest that (1) SO positively influences NPD and that (2) this relationship is partially mediated by firms’ market knowledge capabilities. The findings suggest that strategic‐level SO and MKC are complementary in that they help in balancing trade‐offs between sustainaility objectives and profitability goals. In this way, the study contributes to a better understanding of how critical NPD practices can help managers to translate firms’ SO into NPD success. The article concludes by highlighting implications for product innovation managers.     

Knowledge management and innovation in knowledge-based and high-tech industrial markets: The role of openness and absorptive capacity

Knowledge, as resource, and technological innovation, as a dynamic capability, are key sources for firm's sustained competitive advantage and survival in knowledge-based and high-tech industries. Under this rationale has emerged a research stream where knowledge management, organizational learning, or intellectual capital, help to understand and constitute the key pieces of one of the most complex business phenomena; the ‘firm's technological advantage’. This being so, it is also true that in knowledge-based and high-tech industrial markets, competitive success comes directly from continuous technological innovations, where a single organization cannot successfully innovate in isolation; therefore, firms should rely on external relationships and networks in order to complement its knowledge domains, and then, develop better and faster innovations. In this sense, I would like to highlight the cross-fertilizing role of three constructs that are nurtured by different research traditions: ‘collaborative/open innovation’, from Strategy and Innovation Management research; ‘absorptive capacity’, from ‘A Knowledge-Based View’; and ‘market orientation’, from Marketing research.     

Strategic change and termination of interfirm partnerships

An evolutionary perspective of the resource‐based view is adopted to understand how changes in a partner firm's overall strategy may influence the firm's interfirm partnerships over time. We contend that changes in a partner firm's overall resource deployment strategy and partnering strategy influence the value and uniqueness of partnership resources. These changes alter the competitive advantage associated with partnership resources, affecting the propensity of partnership termination. An event history analysis is employed with 150 joint ventures over the period 1990 to 2001 to examine partnership termination within a longitudinal dataset. With initial partnership conditions controlled for, the results indicate significant influences of various changes in partner firm overall resource deployment strategy and partnering strategy on the propensity of termination. Further, competitor imitative activities are found to increase the propensity of termination as they reduce the uniqueness of partnership resources. This study provides support for an evolutionary perspective of resource value and competitive advantage that incorporates strategic change over time. Copyright © 2010 John Wiley & Sons, Ltd.     

Realizing a hybrid competitive strategy and achieving superior financial performance while internationalizing in the high-technology market

Previous marketing research has called for enhanced understanding of the antecedents contributing to realization of a competitive strategy leading to superior performance. In particular, this research has been inconclusive about the conditions under which a multinational corporation (MNC) can realize a ‘hybrid’ competitive strategy. Our study examines the achievability and performance of a hybrid strategy compared with a single strategy as firms internationalize in the high-technology market. The evolutionary theory of the MNC and the resource-based view were applied. Our empirical results indicate that realization of a hybrid competitive strategy is dependent on both the globalization phase of the high-technology MNC and its key resources. We also found that hybrid strategies mediate these contextual factors and thereby contribute to superior financial performance.     

An examination into the causal logic of rent generation: contrasting Porter's competitive strategy framework and the resource‐based perspective

In this study we revisit some fundamental questions that are increasingly at the heart of current strategic management discourse regarding the relative impact of industry and firm‐specific factors on sustainable competitive advantage. We explore this issue by referring to respective assertions of two major perspectives that dominate the literature over the last two decades: the Porter framework of competitive strategy and the more recent resource‐based view of the firm. A composite model is proposed which elaborates upon both perspectives' divergent causal logic with respect to the conditions relevant for firm success. Empirical findings suggest that industry and firm specific effects are both important but explain different dimensions of performance. Where industry forces influence market performance and profitability, firm assets act upon accomplishments in the market arena (i.e., market performance), and via the latter, to profitability. The paper concludes with directions for future research that will seek to integrate both content and process aspects of firm behavior. Copyright © 2001 John Wiley & Sons, Ltd.     

Sources of capabilities,integration and technology commercialization

In recent years, companies have increased their use of internal and external sources in pursuit of a competitive advantage through the effective and timely commercialization of new technology. Grounded in the resource‐based view of the firm, this study examines the effect of a company's use of internal and external sources on multiple dimensions of successful technology commercialization (TC). The study also explores the moderating role of formal vs. informal integration mechanisms on these relationships. Applying a longitudinal design and data from 119 companies, the results show that internal human and technology‐based manufacturing sources are positively associated with successful TC. Formal and informal integration mechanisms also significantly moderate the relationships observed between capability sources and TC. Copyright © 2002 John Wiley & Sons, Ltd.     

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.     

Strategic frameworks for understanding employer participation in school‐to‐work programs

The knowledge and skills inherent in human capital are increasingly recognized as the essence of competitive advantage. Extending the emerging literature on capability building, this paper explores the strategic decision of participating in school‐to‐work programs from the transaction cost and resource‐based view of the firm. Using data from a national sample, we find that both strategic perspectives help to explain decisions to participate in school‐to‐work activities. Our findings indicate that school‐to‐work programs and activities may be understood as interorganizational strategies from a transaction cost view and evidence of a firm's motivation to develop human capital to build competitive advantage from a resource‐based view. Implications for school‐to‐work public policy development in the United States and future research are identified. Copyright © 2005 John Wiley & Sons, Ltd.     

Managing New Product Development Teams in a Globally Dispersed NPD Program

Globalization is a major market trend today, one characterized by both increased international competition as well as extensive opportunities for firms to expand their operations beyond current boundaries. Effectively dealing with this important change, however, makes the management of global new product development (NPD) a major concern. To ensure success in this complex and competitive endeavor, companies must rely on global NPD teams that make use of the talents and knowledge available in different parts of the global organization. Thus, cohesive and well‐functioning global NPD teams become a critical capability by which firms can effectively leverage this much more diverse set of perspectives, experiences, and cultural sensitivities for the global NPD effort. The present research addresses the global NPD team and its impact on performance from both an antecedent and a contingency perspective. Using the resource‐based view (RBV) as a theoretical framework, the study clarifies how the internal, or behavioral, environment of the firm—specifically, resource commitment and senior management involvement—and the global NPD team are interrelated and contribute to global NPD program performance. In addition, the proposed performance relationships are viewed as being contingent on certain explicit, or strategic, factors. In particular, the degree of global dispersion of the firm's NPD effort is seen as influencing the management approach and thus altering the relationships among company background resources, team, and performance. For the empirical analysis, data are collected through a survey of 467 corporate global new product programs (North America and Europe, business‐to‐business). A structural model testing for the hypothesized effects was substantially supported. The results show that creating and effectively managing global NPD teams offers opportunities for leveraging a diverse but unique combination of talents and knowledge‐based resources, thereby enhancing the firm's ability to achieve a sustained competitive advantage in international markets. To function effectively, the global NPD team must be nested in a corporate environment in which there is a commitment of sufficient resources and where senior management plays an active role in leading, championing, and coordinating the global NPD effort. This need for commitment and global team integration becomes even more important for success as the NPD effort becomes more globally dispersed.     

Institutions,resources, and entry strategies in emerging economies

We investigate the impact of market‐supporting institutions on business strategies by analyzing the entry strategies of foreign investors entering emerging economies. We apply and advance the institution‐based view of strategy by integrating it with resource‐based considerations. In particular, we show how resource‐seeking strategies are pursued using different entry modes in different institutional contexts. Alternative modes of entry—greenfield, acquisition, and joint venture (JV)—allow firms to overcome different kinds of market inefficiencies related to both characteristics of the resources and to the institutional context. In a weaker institutional framework, JVs are used to access many resources, but in a stronger institutional framework, JVs become less important while acquisitions can play a more important role in accessing resources that are intangible and organizationally embedded. Combining survey and archival data from four emerging economies, India, Vietnam, South Africa, and Egypt, we provide empirical support for our hypotheses. Copyright © 2008 John Wiley & Sons, Ltd.     

Help or Hindrance? Causal Ambiguity and Supplier Involvement in New Product Development Teams

Suppliers are increasingly being involved in interorganizational new product development (NPD) teams. Successful management of this involvement is critical both to the performance of the new product and to meeting the project's goals. Yet the transfer of knowledge between buyer and supplier may be subject to varying degrees of causal ambiguity, potentially limiting the effect of supplier involvement on performance. Understanding the dynamics of causal ambiguity within interorganizational product development is thus an important unanswered empirical question. A theoretical model is developed exploring the effect of supplier involvement practices (supplier involvement orientation, relationship commitment, and involvement depth) on the level of causal ambiguity experienced within interorganizational NPD teams, and the subsequent impact on time to competitor imitation, new product advantage, and project performance. The model also serves as a test of the paradox that causal ambiguity both inhibits imitation by competitors, but adversely affects organizational outcomes. Survey data collected from 119 research and development‐intensive manufacturing firms in the United Kingdom largely support these hypotheses. Results from structural equation modeling show that supplier involvement orientation and long‐term relationship commitment lower causal ambiguity within interorganizational NPD teams. The results also shed light on the causal ambiguity paradox showing that causal ambiguity during interorganizational NPD decreases both product and project performance, but has no significant effect on time to competitor imitation. Instead, competitor imitation is delayed by the extent to which the firm develops a new product advantage within the market. A product development strategy based upon maintaining interfirm causal ambiguity to delay competitor imitation is thus unlikely to result in a sustainable competitive advantage. Instead, managers are encouraged to undertake supplier involvement practices aimed at minimizing the level of knowledge ambiguity in the NPD project, and in doing so, improve product and project‐related performance.