Effects of Firm-specific and Country-specific Advantages on Relative Acquisition Size in Service Sector Cross-Border Acquisitions: An Empirical Examination

Using a sample of 348 service sector cross-border acquisitions by U.S. firms in 44 countries during 1990–2006, our study seeks to identify factors that influence relative acquisition size (acquisition transaction value as a percentage of acquiring firm's asset value). Our findings indicate that firm-specific advantages (FSAs) in the form of available financial slack and target industry knowledge were positively associated with relative acquisition size. However, contrary to expectations, we observed a negative relationship between cross-border acquisition experience and relative acquisition size. In addition, our results suggest that country-specific advantages (CSAs) associated with higher market potential, lower political risk, and greater cultural similarity contributed to increased relative acquisition size in service industry cross-border acquisitions. Finally, our analysis reveals that the relationship between available financial slack and relative acquisition size is contingent on cultural similarity with the relationship being more pronounced when cultural similarity is high.     

The extended dynamic capabilities model: A meta-analysis

This paper investigates, from meta-analytic approach, some topics that were unexplored in others dynamic capabilities meta-analysis. Hence, our research advances to identify and test the main antecedents of dynamic capabilities, the possible moderation effects of economic and cultural contexts in the relationship between dynamic capabilities and firm performance and the mediation effects between the antecedents of dynamic capabilities and firm performance. (1) The elements that stimulate dynamic capabilities development are resources, knowledge and learning, alliances and environmental dynamism. However, entrepreneurial orientation has no direct relationship with dynamic capabilities. (2) Dynamic capabilities play a mediating role between resources, knowledge and learning, alliances and firm performance. Curiously, entrepreneurial orientation is not mediated by dynamic capabilities in relation to performance. (3) Economic and cultural moderation affect the relation between dynamic capabilities and performance. Surprisingly, we detected that an Eastern orientation, presenting a high level of power distance and a low level of individualism, promotes stronger effects in the relationship between dynamic capabilities and firm performance than a Western orientation. Thus, our main contribution is to broaden the previous research on dynamic capabilities and to propose a future research agenda. In addition, this study adds new empirical evidence to the study of dynamic capabilities, which reduces the heterogeneity of previous results.     

Dynamic Capability Building in Service Value Networks for Achieving Service Innovation

Service organizations increasingly create new service offerings that are the result of collaborative arrangements operating on a value network level. This leads to the notion of “elevated service offerings,” our definition of service innovation, implying new or enhanced service offerings that can only be eventuated as a result of partnering, and one that could not be delivered on individual organizational merits. Using empirical data from a large telecommunications company, we demonstrate through structural equation modeling (SEM) that higher‐order dynamic capabilities in services are generated as a result of collaboration between stakeholders. Furthermore, it is through collaboration and education of the stakeholders that additional higher‐order capabilities emerge (customer engagement [CuE], collaborative agility [CA], entrepreneurial alertness [EA], and collaborative innovative capacity), all of which influence the service innovation outcome. Our study also reveals empirical evidence for an ongoing process of continuous dynamic capability building in accordance with the changing dynamics of business. Managers of service organizations should recognize the potential embedded in these higher‐order skill sets, starting from collaboration, learning, and management of creative ideas for both strategic and operational benefits. Moreover, the capabilities of CA, EA, and CuE are even more important in managing the flexibility, timely delivery, and reliability of service offerings. Managers should take measures to inculcate, promote, and manage these dynamic capability skill sets to foster innovation in services.     

企业动态能力及其功效:环境不确定性的影响

当前关于动态能力的维度及其功效还存在较大分歧,有些学者甚至认为动态能力毫无价值,应该摒弃动态能力研究.本文从战略过程视角,依据相关文献与访谈调查,将动态能力分解为组织意会能力、柔性决策能力及动态执行能力,探讨了动态能力与持续优势的关系及环境不确定性在其中的影响作用.通过对中国地区217家企业的实证研究发现,动态能力确实对持续优势有显著的正向影响,环境不确定性是动态能力的驱动因素而非调节变量,环境动态性对企业持续优势有显著的正向影响,敌对性则对持续优势有显著的负向影响.本研究的结论澄清了动态能力的价值前提,探明了环境不确定性的影响机理,对理论研究与实践操作都有一定的启发意义.     

The Evolving Firm: How Dynamic and Operating Capabilities Interact to Enable Entrepreneurship

In this study, we expand our understanding of firm evolution by focusing on how operating and dynamic capabilities interact through endogenously led changes. The focus on endogenous change complements the current emphasis in the literature on how dynamic capabilities help firms cope with the risk of core rigidities following an exogenous shock. Our comparison of two collaborating firms shows that, at the operating capability level, firms build absorptive capacity in value networks during their product development experiences and this learning needs to be captured at the product portfolio planning level. When this learning is captured and transformed, product portfolio planning acts as a dynamic capability reconfiguring operating capabilities based on beliefs about follow-on entrepreneurial opportunities. Under conditions of endogenous change, dynamic capabilities are guided by a proactive entrepreneurial logic, complementing the need for reactive adaptive responses in circumstances of exogenous change. A key implication is that dynamic capabilities have a more expansive and critical role in the adaptation of firms than previously considered. Our theorizing shows how interactions between dynamic and operating capabilities build the adaptive capacity of the organization.     

Rules of the Game for Emerging Market Multinational Companies from China and India

The prominence of Emerging Market Multinational Companies (EMNCs) in the global marketplace has challenged our assumptions about the nature of global competition and corresponding strategy. We use an inductive approach to conduct historical analysis of eight companies that originated from key emerging markets viz China and India. We examine the various strategies that EMNCs devise to circumvent the resource challenges faced in their home markets and develop routines and key capabilities that lead to their competitive advantage in developed nations. Our results suggest that EMNCs' foreign expansion is, on the one hand, based on their capability to acquire resources and absorb them to build their own advantage (supply-side-argument). On the other hand, it is also based on EMNCs' capability to find some market niches, i.e., entering into markets untapped by traditional MNCs (demand-side-argument). Finally, based on our analysis we propose a dynamic stages model suggesting that EMNCs' foreign expansion can be explained in three stages — licking the dirt to carve out the way; taking off with speed and strength; and around the world with excellence.     

The effect of supply chain integration, modular production, and cultural distance on new product development: A dynamic capabilities approach

Little research has examined how international firms' operations strategies affect dynamic capability creation or how cultural distance affects operations management. This study addresses these gaps by bridging the work on dynamic capabilities, two operations management techniques (product modularization and supplier integration) and cultural distance. Using a sample of 111 Brazilian automobile suppliers, the study finds that new product development is marginally increased by product modularization but decreased by supplier integration. Cultural distance negatively moderated these relationships. This research extends the dynamic capabilities literature and indicates that operations management strategy is an important part of the dynamic capability formation process.     

Explaining the Causes and Effects of Dynamic Capabilities Generation: A Multiple‐Indicator Multiple‐Cause Modelling Approach

The purpose of this paper is to develop a multiple‐indicator multiple‐cause model to explain dynamic capabilities generation. We use one of the main common effects of dynamic capabilities (operational, structural and strategic flexibility) to design a measurement tool for dynamic capabilities generation. Based on this measurement tool, we test the influence of several factors identified in the specialized literature as potential causes that trigger and promote dynamic capabilities generation. We use data from a survey of 200 CEOs of Spanish firms to test the model. The results show that only organizations whose managers have perceived a high degree of environmental dynamism have generated dynamic capabilities. The results also show that knowledge codification and technical innovation are significantly related to dynamic capabilities generation. We attempt to shed light on current theoretical debates about dynamic capabilities generation and provide a practical guide to explain the origin and results of dynamic capabilities that have been tested empirically.     

Linking Dynamic Absorptive Capacity and Service Innovation for Born Global Service Firms: An Organization Innovation Lens Perspective

Grounded in the dynamic capabilities approach and organizational sub-system view on internationalization, this quantitative study develops and empirically tests a model of international market performance of born global service firms. While several scholars highlighted innovativeness as a driver of competitiveness for born global firms, the capacities underlying the born global firm's innovativeness have received limited scholarly attention, specifically, dynamic absorptive capacities (exploratory, transformative, and exploitative learning capacities). The uniqueness of this paper posits that dynamic absorptive capacities in a born global service firm have contributed to innovation and resulted in international market outcomes. The data was collected using the survey method from born global service firms and was analyzed using structured equation modeling. The findings of this study reveal that service innovation and business strategy are critical drivers of international performance for born global service firms. The paper contributes to the literature on the significance of absorptive capacity in born global service firms by identifying those dynamic absorptive capacities that operate in a composite set of relationships with other capabilities and significantly contribute to their innovation, impacting their internationalization outcomes. This study also supplements the theoretical and practical implications derived from the key findings of this study and provides future research directions.     

The changing dynamics of Thai multinationals after the Asian economic crisis

This paper investigates the dynamic of Thai multinationals after the Asian economic crisis through the analysis of FDI statistics and two in-depth case studies. The paper concludes that there was a shift in the dynamic of Thai multinationals’ international expansion. While the pre-crisis international expansion relied more on networking capabilities rather than industry-specific technological skills, the post-crisis adjustments of Thai multinationals displayed a different strategy that placed much more emphasis on strengthening their industry-specific technological capabilities. In particular, Thai multinationals have placed more emphasis and commitment to the development of industry-specific technological capabilities, as well as transforming their personalised, relationship-based networks to more transparent and formal ties. The paper bears implications on the emerging multinational literature. Unlike the incremental nature of their predecessors from East Asia, the rapid rise of Thai multinationals before 1997 bypassed gradual technological process through the use of networking capabilities. However, the sustainability of networks-based competitive advantages will depend on its flexibility to change, as well as its complementary role toward industry-specific technological capabilities.     

Ambidexterity as a dynamic capability: Resolving the innovator's dilemma

How do organizations survive in the face of change? Underlying this question is a rich debate about whether organizations can adapt—and if so how. One perspective, organizational ecology, presents evidence suggesting that most organizations are largely inert and ultimately fail. A second perspective argues that some firms do learn and adapt to shifting environmental contexts. Recently, this latter view has coalesced around two themes. The first, based on research in strategy suggests that dynamic capabilities, the ability of a firm to reconfigure assets and existing capabilities, explains long-term competitive advantage. The second, based on organizational design, argues that ambidexterity, the ability of a firm to simultaneously explore and exploit, enables a firm to adapt over time. In this paper, we review and integrate these comparatively new research streams and identify a set of propositions that suggest how ambidexterity acts as a dynamic capability. We suggest that efficiency and innovation need not be strategic tradeoffs and highlight the substantive role of senior teams in building dynamic capabilities.     

Cultural Chameleons

This paper uses an empirical case study to present a new way of thinking about the dynamics of multicultural relationships within organizations. The paper initially uses subcultural analysis to identify how doctors became clinical directors and how their culture emerged as they learned to cope with problems of external adaptation and internal integration. Clinical directors were unique in working within and between the medical and managerial cultures, mediating the process of cultural learning and balancing the multicultural dynamics of the organization. They sustained this dynamic by becoming 'cultural chameleons' in both the medical and managerial cultures. It is also argued that clinical directors formed a 'cell culture' rather than a 'subculture' as they developed directly from the medical culture but emerged as different from it. The conclusions reveal how the empirical data describe a complex and dynamic pattern of multicultural relationships that are more interdependent than hierarchical. Consequently an alternative concept of cultural coconstitutionality is used to describe how these three cultures exist alongside each other in a relationship of asymmetric complementarity.     

Network closure's impact on firms’ competitive advantage: The mediating roles of knowledge processes

This study draws on the knowledge management and social network disciplines to examine the effect of network closure on organizations’ competitive advantage. We hypothesize that the level of network closure affects an organization's capability of knowledge identification, knowledge transfer, knowledge protection and knowledge institutionalization; these capabilities in turn affect an organization's competitive advantage. Thus, we model network closure as indirectly affecting an organization's competitive advantage. A Partial Least Square (PLS) analysis of the survey data of 78 Chinese petrochemical firms shows that network closure can both enhance and decrease an organization's competitive advantage. Network closure enhances an organization's competitive advantage by facilitating knowledge protection and transfer (via institutionalization), but decreases competitive advantage by hindering knowledge identification. Environmental dynamics that the organizations encounter are observed to moderate the effect of network closure. Combining our results with the findings from the literature, we propose that organizations operating in a dynamic environment, where the domain knowledge is in a state of flux, need to place great importance on knowledge identification; such organizations should choose a sparse network that allows them to receive diverse knowledge. In contrast, organizations operating in a stable environment should opt for a dense network to protect their knowledge and facilitate transfer of required knowledge.     

A Value Measure for Public‐Sector Enterprise Risk Management: A TSA Case Study

This article presents a public value measure that can be used to aid executives in the public sector to better assess policy decisions and maximize value to the American people. Using Transportation Security Administration (TSA) programs as an example, we first identify the basic components of public value. We then propose a public value account to quantify the outcomes of various risk scenarios, and we determine the certain equivalent of several important TSA programs. We illustrate how this proposed measure can quantify the effects of two main challenges that government organizations face when conducting enterprise risk management: (1) short‐term versus long‐term incentives and (2) avoiding potential negative consequences even if they occur with low probability. Finally, we illustrate how this measure enables the use of various tools from decision analysis to be applied in government settings, such as stochastic dominance arguments and certain equivalent calculations. Regarding the TSA case study, our analysis demonstrates the value of continued expansion of the TSA trusted traveler initiative and increasing the background vetting for passengers who are afforded expedited security screening.     

Beyond appearances – Do dynamic capabilities of innovative firms actually differ?

Dynamic capabilities are the higher-order capabilities needed for changing operational-level capabilities and learning in new domains, and thus they are critical for innovation activities. The aim of this study is to explore heterogeneity of dynamic capabilities in a comparative setting. We chose four innovative case firms representing a single industry, namely magazine publishing. The similarity of the cases provided a solid foundation for comparing their dynamic capabilities. Based on the results it seems that the practices comprising sensing capabilities are likely to be similar across firms within a single industry, while practices comprising seizing and reconfiguring types of capabilities may differ more between companies. Thus dynamic capabilities have both idiosyncratic and common features across an industry. These findings are relevant to practicing managers in that they illustrate that competing companies within the same industry tend to develop similar types of practices to match the changing requirement of the operating environment. Hence, managers should not be falsely comforted by the current situation within their firms, but proactively develop their unique capabilities to gain advantage over their competitors.     

动态能力如何影响企业绩效——基于中国企业的实证研究

本研究以中国企业为样本对动态能力如何影响企业绩效的问题进行了分析和探讨。数据分析结果表明,战略过程对动态能力与企业绩效的正向作用关系具有明显的中介作用。但是,不同的动态能力维度对绩效的不同方面影响程度也不同,动态外部协调能力对企业绩效各个方面影响的显著程度在所有维度中最为突出,是企业在超竞争环境中树立竞争优势的关键。此外,动态能力构成维度间的路径关系表明,动态信息利用能力在企业动态适应外部环境变化过程中具有非常重要的节点作用,是企业培育动态能力路径的关键。     

Reconsidering ordinary and dynamic capabilities in strategic change

Dynamic capabilities research explains the ability of firms to respond to dynamic environments by reconfiguring inert and insufficiently flexible ordinary capabilities. However, more recent research ascribes the routines that constitute ordinary capabilities the ability to evolve endogenously. This study aims to develop dynamic capability research by increasing our understanding of the relations between and the roles played by ordinary and dynamic capabilities in producing purposeful responses to environmental dynamism. Drawing on longitudinal, qualitative data, we show how ordinary capabilities make important contributions to organizational responses to dynamic environments. Our findings pose challenges to key assumptions of extant dynamic capabilities research and allow us to explicate new roles for ordinary and dynamic capabilities, thus advancing the understanding of the relation between dynamic and ordinary capabilities and advancing understanding of one of the central issues in dynamic capabilities research: firms’ capacity to respond to changing environments.     

When Cooperation is the Norm of Appropriateness: How Does CEO Cooperative Behaviour Affect Organizational Performance?

The current study has tested the prediction that CEO cooperative behaviour has an impact upon organizational performance. This is a fundamental organizational issue that is in clear need of illumination through studies of practice. We pursued the issue through a study of leadership in organizations located in the Norwegian socio‐cultural context in which cooperation has been, and still is, a norm of appropriateness. The study provided empirical evidence of a positive relationship between CEO cooperative behaviour and organizational performance. This relationship appeared to be stronger in organizational contexts in which CEOs are perceived to have legitimacy and managerial discretion, and it appeared to be weaker in organizations in which individual performance pay is the rule. Since some organizational characteristics have the potential to enhance the impact of CEO cooperative behaviour while other characteristics might inhibit this impact, leaders have to consider carefully how to develop and maintain individual and organizational capabilities that are needed to act appropriately.     

Dynamic capabilities and firm performance

This paper juxtaposes conflicting claims about the relationship between codified dynamic capabilities and firm performance at different levels of environmental dynamism. Furthermore, it argues that the contradictory propositions and findings in prior research are due to said relationship being contingent on key, yet thus far overlooked and unaccounted for, factors internal to the firm such as dynamism exposure and asset base complexity. Empirical tests in the context of the mutual funds industry provide evidence that the performance contribution of codified dynamic capabilities does decline as environmental dynamism increases, yet for any given level of environmental dynamism the magnitude and even the sign of the performance contribution of codified dynamic capabilities are significantly influenced by firms’ dynamism exposure and asset base complexity. Going beyond received wisdom, this study advances a more nuanced contingency approach to dynamic capabilities which contributes to a better understanding of how the value of dynamic capabilities is shaped by a complex interplay of environmental and internal factors.     

Emerging global contenders: The South African experience

The global strategies of three major South African MNEs are examined with a view to understanding the applicability of existing theories to developing country firms and their emergence as global industry leaders.Emerging market MNEs are motivated by both defensive and offensive considerations. At the same time, home market domination allows potential contenders to develop competitive firm-specific advantages that are non-location based.We propose that successful emerging market MNEs start to build their global positions on the back of asset exploitation, but soon follow with asset seeking behavior. When country specific advantages are less important, contenders can accelerate their development of non-location based FSAs rapidly. Finally, leadership and domestic dominance may be more important than country specific advantages in explaining the success of emerging market MNEs.