To read this content please select one of the options below:

Resource Reconfiguration: Learning from Performance Feedback

Resource Redeployment and Corporate Strategy

ISBN: 978-1-78635-508-9, eISBN: 978-1-78635-507-2

Publication date: 31 August 2016

Abstract

Resource reconfiguration enables firms to adapt in dynamic environments by supplementing, removing, recombining, or redeploying resources. Whereas prior research has underscored the merits of resource reconfiguration and the modes for implementing it, little is known about the antecedents of this practice. According to prior research, under given industry conditions, resource reconfiguration is prompted by a firm’s corporate strategy and by characteristics of its knowledge assets. We complement this research by identifying learning from performance feedback as a fundamental driver of resource reconfiguration. We claim that performance decline relative to aspiration motivates the firm’s investment in knowledge reconfiguration, and that this investment is reinforced by the munificence of complementary resources in its industry, although uncertainty about the availability of such resources limits that investment. Testing our conjectures with a sample of 248 electronics firms during the period 1993–2001, we reveal a clear distinction between exploitative reconfiguration, which combines existing knowledge elements, and exploratory reconfiguration, which incorporates new knowledge elements. We demonstrate that performance decline relative to aspiration motivates a shift from exploitative reconfiguration to exploratory reconfiguration. Moreover, munificence of complementary resources mitigates the tradeoff between exploratory and exploitative reconfigurations, whereas uncertainty weakens the motivation to engage in both types of reconfiguration, despite the performance gap. Nevertheless, codeployment, which extends the deployment of knowledge assets to additional domains, is more susceptible to uncertainty than redeployment, which withdraws those assets from their original domain and reallocates them to new domains. Our study contributes to emerging research on resource reconfiguration, extends the literature on learning from performance feedback, and advances research on balancing exploration and exploitation.

Keywords

Acknowledgements

Acknowledgment

We appreciate the feedback received from Peter Bamberger, Ido Erev, Moshe Farjoun, Henrich Greve, and Zur Shapira. Additional feedback was received from participants in the 3rd Israel Strategy Conference in Beer Sheva, 2009, the 6th Israel Strategy Conference in Jerusalem, 2015, the 15th Organization Science Winter Conference in Colorado, 2009, the Academy of Management conferences in Orlando, 2013, Philadelphia, 2014, and Anaheim, 2016, and the Advances in Strategic Management Conference in Strasbourg, 2015. We acknowledge the assistance and technical advice received from Uriel Stettner and the contribution of the late Avi Fiegenbaum, who guided Ari Dothan during the early phases of his dissertation research, which served as the basis for this paper.

Citation

Dothan, A. and Lavie, D. (2016), "Resource Reconfiguration: Learning from Performance Feedback", Resource Redeployment and Corporate Strategy (Advances in Strategic Management, Vol. 35), Emerald Group Publishing Limited, Leeds, pp. 319-369. https://doi.org/10.1108/S0742-332220160000035011

Publisher

:

Emerald Group Publishing Limited