Heterogeneous effects of heterogeneity: Disentangling heterogeneity positive and negative effects on performance

Abstract

Purpose

The aim of the paper is to test the Heterogeneity Construct as a second‐order construct determined by dimensions expressing the resource utilization process carried out by firms, and to test the different impacts of Heterogeneity sub‐dimensions on firm's performance.

Design/methodology/approach

After collecting data on the machine tools industry, two models are tested by Lisrel. The first model is a second order confirmatory model. The second one is a structural model testing the causal relations between Heterogeneity components and Performance.

Findings

It is found that Heterogeneity is a second order construct, whose dimensions differently contribute to firm performance: two of them positively and a third dimension negatively.

Research limitations/implications

Limitations of the study refer to single industry used, limited sample size, and single respondents. Even if the sample size is low, it allows to run the model and to estimates results. The single respondent bias is mitigated by interviewing managers involved in the resource utilization process. Future research could improve our comprehension of the heterogeneity construct by testing the model in other industries.

Practical implications

By discovering the different effect of the Heterogeneity dimensions on firm performance, we provide some useful implications for managers involved in the resource utilization process. To reach a competitive advantage, firms should orient their decisions to leverage on “contextuality” and “complexity”, while mitigating the effect of “intertwinedness”.

Originality/value

Studies in the strategic management field of study measure Heterogeneity by using single variables. This paper fills in this gap by providing a measure of the Heterogeneity construct on a multidimensional basis, showing the different role played by each dimension on firm performance.

Citation

Lanza, A., Pellegrino, A. and Simone, G. (2008), "Heterogeneous effects of heterogeneity: Disentangling heterogeneity positive and negative effects on performance", International Journal of Organizational Analysis, Vol. 16 No. 1/2, pp. 18-41. https://doi.org/10.1108/19348830810915479