Capabilities, innovation and competitive advantage

This special issue was aimed at advancing the literature examining the role of capabilities in innovation-based competitive strategy. Whilst the innovation literature has over the years moved away from its ‘product innovation’ pre-occupation to capture the role of other forms of innovation in value creation, the capability view has progressed from its ‘rigid’ or ‘static’ view to a ‘dynamic’ view in an effort to capture market dynamism. Despite the recent theoretical advancements the dynamic capability view still lacks a strong empirical base. Contributors to the capability literature over the recent years have adopted multiple research methods to capture capabilities that include cross-sectional designs, case studies and longitudinal studies. Within this backdrop, the articles that were selected for this special issue covers both conceptual and empirical approaches to examine the relationship between capabilities and technical and non-technical innovations and performance outcomes. This essay provides a future research agenda to advance this promising research field. It highlights the need for clearer conceptualizations and development of measures of dynamic capabilities, environmental conditions that underpin the development of dynamic capabilities within the firm and research into the much debated relationship between dynamic capabilities and competitive advantage and organizational performance.     

The effects of perceived industry competitive intensity and marketing-related capabilities: Drivers of superior brand performance

Since the early 1990s the theoretical and practical issues associated with organizational capabilities have been a major research focus in marketing. However, there has been little focus simultaneously on industry environment and internal competitive capability development. A manager's perception of his/her industry environment has the potential to impact the firm's marketing-related capability development through their strategic responses to their perception of the environment. This paper advocates that managers (i.e., firms) perceiving their industry environment as turbulent will develop superior market learning and marketing capabilities. Market learning will assist in the process of building superior marketing capabilities. Both capabilities lead to higher brand performance. To explore these issues a study was designed to measure perceived industry competitive intensity, market learning and marketing capabilities. Data were gathered from senior managers of commercial firms and the results largely support the hypothesized theoretical relationship that industry competitive intensity influences market learning activity and marketing capability development. Interestingly, the study findings suggest that market learning impacts brand performance through marketing capability. The findings significantly contribute to the debate on the influence of the competitive environment on a firm's internal capability development which suggests the need for further research to examine the industry competitive intensity-internal capabilities-firm performance relationship.     

Total quality management as competitive advantage: A review and empirical study

Total Quality Management (TQM) has become, according to one source, ‘as pervasive a part of business thinking as quarterly financial results,’ and yet TQM's role as a strategic resource remains virtually unexamined in strategic management research. Drawing on the resource approach and other theoretical perspectives, this article examines TQM as a potential source of sustainable competitive advantage, reviews existing empirical evidence, and reports findings from a new empirical study of TQM's performance consequences. The findings suggest that most features generally associated with TQM—such as quality training, process improvement, and benchmarking—do not generally produce advantage, but that certain tacit, behavioral, imperfectly imitable features—such as open culture, employee empowerment, and executive commitment—can produce advantage. The author concludes that these tacit resources, and not TQM tools and techniques, drive TQM success, and that organizations that acquire them can outperform competitors with or without the accompanying TQM ideology.     

Organizational learning and market orientation: interface and effects on performance

This paper discusses the relationship between market orientation and organizational learning and, in particular, the former's contribution to the generation of double-loop learning. Although prior contributions on this topic have been controversial, the authors, departing from the principles of RBV, consider market orientation a resource capable of generating higher order organizational learning and, in this way, capable of additionally reinforcing firms' sustainable competitive advantage. The empirical study provides evidence on the existing relationship between a firm's learning and market orientation degree and the organization's economic and non-economic results. Findings indicate that learning orientation stimulates the market-oriented behavior and that it also positively affects the establishment of long-term relationships with strategic clients. Contrary to prior research a significant and positive effect on business performance is only contrasted in the case of market orientation.     

The positive effects of relationship learning and absorptive capacity on innovation performance and competitive advantage in industrial markets

This study utilized structural equations modeling (SEM) to explore the positive effects of relationship learning and absorptive capacity on competitive advantages of companies through their innovation performances in Taiwanese manufacturing industry. The results of this study showed that relationship learning and absorptive capacity positively influence upon innovation performances of companies, and further have positive effects on competitive advantages of companies. In addition, this study divided the sample into three groups by the levels of relationship learning and absorptive capacity and found that there was a significant difference of innovation performance among these three groups: ‘Highly Capable Companies’, ‘Medially Capable Companies’, and ‘Lowly Capable Companies’. It is important for ‘Lowly Capable Companies’ to increase both of their relationship learning and absorptive capacity to enhance their innovation performances.     

Relationship learning and innovation: The role of relationship-specific memory

This study investigates the relationship between relationship learning and innovation. It discusses the difference and relationship between knowledge flow and knowledge stock as embodied in relationship learning. Results show that information sharing and joint sensemaking (knowledge flow) are positively associated with relationship-specific memory (knowledge stock), and indirectly influence both explorative and exploitative innovation through their effects on relationship-specific memory. This study also examines the role of learning intent of individual firms in relationship learning. Results indicate that stronger learning intent enhances the effect of information sharing on relationship-specific memory. Finally, the study discusses several implications of this research and offers suggestions for future research.     

Information technology as competitive advantage: the role of human,business, and technology resources

This paper investigates linkages between information technology (IT) and firm performance. Although showing recent signs of advance, the existing IT literature still relies heavily on case studies, anecdotes, and consultants’ frameworks, with little solid empirical work or synthesis of findings. This paper examines the IT literature, develops an integrative, resource-based theoretical framework, and presents results from a new empirical study in the retail industry. The findings show that ITs alone have not produced sustainable performance advantages in the retail industry, but that some firms have gained advantages by using ITs to leverage intangible, complementary human and business resources such as flexible culture, strategic planning–IT integration, and supplier relationships. The results support the resource-based approach, and help to explain why some firms outperform others using the same ITs, and why successful IT users often fail to sustain IT-based competitive advantages. © 1997 by John Wiley & Sons, Ltd.     

The effects of customer and supplier involvement on competitive advantage: An empirical study in China

The focus of this paper is on the effects of customer and supplier involvement on competitive advantage in the firm. Using the resource-based view and knowledge-based view of the firm, hypotheses are developed concerning customer involvement, supplier involvement, and competitive advantage. Hierarchical multiple regressions are employed to test the hypothesized relationships. The data used was collected from 139 Chinese manufacturing firms across different industries. Each variable except control variables in the model is measured by a number of scale items. Both reliability and validity (content validity, convergent validity, and discriminate validity) are demonstrated. The results of the regression analysis show that (1) customer involvement has positive impact on product quality, delivery reliability, process flexibility, and customer service; and (2) supplier involvement leads to decreased cost. These findings are interpreted in the context of Chinese manufacturing setting and enhance the understanding of the roles of customer and supplier involvement in China's business environment.     

Cooperation with competitors and product innovation: Moderating effects of technological capability and alliances with universities

The relationship between cooperation with competitors and product innovation performance was investigated along with the moderating effect of the innovating firm's technological capability and its alliances with universities. The hypothesis that cooperation with competitors has an inverted U-shaped relationship with product innovation performance was tested using data on new product introductions from 1499 Chinese firms. The results support the existence of a bell-shaped relationship between co-opetition and product innovation performance. Technological capability and alliances with universities were shown to weaken the relationship. The findings add significantly to the emerging literature on dynamic co-opetition.