Ali Omar Jifri, Paul Drnevich and Larry Tribble
While previous strategy research has provided significant attention to resource slack and its important roles in firm performance, particularly through strategic agility and…
Abstract
Purpose
While previous strategy research has provided significant attention to resource slack and its important roles in firm performance, particularly through strategic agility and flexibility in responding to environmental conditions, the majority of such theory and empirical work was developed for large business contexts. Therefore, the understanding of the relative contributions of absorbed and potential slack, particularly for resource-constrained small businesses, remains largely under theorized and unexamined. As many small businesses often face internal resource limitations, the ability to access external resources, in addition to internal resources, is likely significant, for firm performance, especially when small firms face high economic uncertainty. The paper aims to discuss these issues.
Design/methodology/approach
In this paper the authors utilize a data set from National Federation of Independent Business on small business economic trends. The sample consists of approximately 13,000 US-based small and medium businesses.
Findings
The findings highlight the importance of resource slack in firm performance offering general support for the applicability of classic management theories to the small business context. Environmental hostility and competitive intensity appear to positively moderate the observed relationship between both absorbed and potential resource slack and performance, but in different ways. Environmental hostility positively moderates the relationship between potential slack and firm performance, while competitive intensity positively moderates the relationship between absorbed slack and firm performance.
Research limitations/implications
Because most classic theories in strategic management were only theorized for, and examined through, large organizations, entrepreneurship research should consider these potential limitations and carefully consider factors differing between large and small firms.
Practical implications
Business owners and managers should be aware that not all types of slack have equal performance implications. Absorbed slack is extremely valuable in highly competitive situation. Therefore, business owners should develop plans to recover absorbed slack during highly competitive situations as a defensive strategy. One the other hand, potential slack forces more accountability, which lowers the possibility of small firms using it to engage in price wars, but it is extremely valuable during worsening economic conditions.
Originality/value
In this paper the authors separate absorbed slack from potential slack conceptually and then test their individual effects on firm performance. Through this study, the authors establish boundary conditions for the important role of resource slack on performance through the moderating roles of environmental hostility and competitive intensity.
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Paul Drnevich and Mark Shanley
In this reply to the articles about “Multi-level Issues for Strategic Management Research: Implications for Creating Value and Competitive Advantage” (Drnevich and Shanley, this…
Abstract
In this reply to the articles about “Multi-level Issues for Strategic Management Research: Implications for Creating Value and Competitive Advantage” (Drnevich and Shanley, this volume), we consider and applaud the applications of our ideas presented by Mackey and Barney (this volume) and Peteraf (this volume). We also note three general issues that arise from considering the two articles together: (1) the complexity of multi-level constructs of management; (2) the importance of strategic decision processes (and process approaches to strategy) in a multi-level approach; and (3) the need for dynamic approaches to bridge temporal periods in crafting strategic theories.
1. INNOVATION IN ORGANIZATIONS: A MULTI-LEVEL PERSPECTIVE ON CREATIVITY
Paul Drnevich and Mark Shanley
Most research issues in strategic management are essentially problem focused. To one extent or another, these problems often span levels of analysis, may align with different…
Abstract
Most research issues in strategic management are essentially problem focused. To one extent or another, these problems often span levels of analysis, may align with different performance metrics, and likely hold different implications from various theoretical perspectives. Despite these variations, research has generally approached questions by taking a single perspective or by contrasting one perspective with a single alternative rather than exploring integrative implications. As such, very few efforts have sought to consider the performance implications of using combined, integrated, or multi-level perspectives. Given this reality, what actually constitutes “good” performance, how performance is effectively measured, and how performance measures align with different perspectives remain thorny problems in strategic management research. This paper discusses potential extensions by which strategic management research and theory might begin to address these conflicts. We first consider the multi-level nature of strategic management phenomena, focusing in particular on competitive advantage and value creation as core concepts. We next present three approaches in which strategic management theories tend to link levels of analysis (transaction, management, and atmosphere). We then examine the implications arising from these multi-level approaches and conclude with suggestions for future research.
Jay Barney is a Professor of Management and holds the Bank One Chair for Excellence in Corporate Strategy at the Max M. Fisher College of Business, The Ohio State University. He…
Abstract
Jay Barney is a Professor of Management and holds the Bank One Chair for Excellence in Corporate Strategy at the Max M. Fisher College of Business, The Ohio State University. He received his undergraduate degree from Brigham Young University, and his master's and doctorate from Yale University. He taught at the Anderson Graduate School of Management at UCLA and Texas A&M University before joining the faculty at Ohio State in 1994, where Professor Barney teaches organizational strategy and policy to MBA and Ph.D. students.
Research in strategic management has provided a wealth of contributions to the study of competition between firms, yet most strategic management theories were developed and…
Abstract
Purpose
Research in strategic management has provided a wealth of contributions to the study of competition between firms, yet most strategic management theories were developed and refined for large firm contexts. This suggests the assumed theoretical relationships between strategy preference and performance may break down in the small business setting.
Design/methodology/approach
The paper uses a data set from the National Federation of Independent Businesses to test hypotheses relating the strategy preferences of 754 small firms with the performance outcomes of survival and expected growth.
Findings
Small businesses can focus on both survival and growth when they pursue competency-based strategies, but they risk their very survival when pursuing flexibility-based strategies. Virtually all small firms pursue strategies to compete, but some of the strategies they follow to pursue growth endanger their survival.
Research limitations/implications
Because of life-cycle and resource endowment factors, researchers should carefully parse differences between large and small firms when studying the relationship between strategy preferences and organizational performance.
Practical implications
Small business owners should be aware that their choices of strategies to pursue growth may lead to unintended consequences, such as the demise of their firms.
Originality/value
The paper demonstrates to researchers and practitioners how strategic preferences that presumably allow larger firms both to survive and grow do not have the same effects for smaller firms. The paper establishes boundary conditions for the effectiveness of flexibility strategies on performance in terms of firm size.
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Dina Abdelzaher and Nora Ramadan
Despite the increased level of national conflict around the world, outward foreign direct investment (FDI) targeting these areas has increased. This study aims to adopt a dynamic…
Abstract
Purpose
Despite the increased level of national conflict around the world, outward foreign direct investment (FDI) targeting these areas has increased. This study aims to adopt a dynamic capability lens to examine the relationship between firm capabilities and the level of conflict in their FDI portfolio. The paper argues that conflict zones may be an attractive destination for a subset of firms, given their capability profile.
Design/methodology/approach
The authors draw from a sample of US Fortune 500 firms (2019) to examine their FDI destinations; specifically, they collected data on the locations of their foreign subsidiaries, which resulted into a final sample of 118 diversified US firms. The model was analyzed using ordinary least squares multiple regression to predict the extent to which their FDI portfolios have ongoing domestic and international conflict and the impact of expansion in such conflict-stricken markets on firm financial performance (ROA).
Findings
The authors find that firms with greater international geographical diversification capabilities, as depicted by their geographic spread, and those with greater local stock management capability, as depicted by their initial public offering maturity, are more likely to launch subsidiaries in high ongoing conflict zones. Furthermore, the authors find that while it may be unprofitable for firms to seek FDI in high-conflict zones, firms that operate in strategic industries (manufacturing, infrastructure, natural resource extraction) experienced positive performance. This can be attributed to the fact that firms operating in these sectors are more likely to directly profit in the reconstruction/rebuilding of such conflict-stricken markets.
Originality/value
While previous literature focused on macro-level factors, this study sought to highlight firm-level factors that determine FDI decision in conflict zones. The authors capture different dimensions/sources of firms’ dynamic capability, one resulting from foreign experience (i.e. geographic diversification) and the other from local experience (i.e. domestic stock management) to assess how each correlate with multinational corporations’ level of conflict in their FDI portfolio. Furthermore, the authors contribute to the understanding of the relationship between expansion in conflict zones and firm performance and highlight that industry does matter. Implications from this study highlight the importance of building risk management capabilities to handle not just expansion in conflict zones but also during challenging times like those brought about by pandemics.
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Cemal Zehir and Sümeyye Çiçek Vural
This study aims to explain the relationships between dynamic capabilities, product innovation, firm performance and technology uncertainty.
Abstract
Purpose
This study aims to explain the relationships between dynamic capabilities, product innovation, firm performance and technology uncertainty.
Design/methodology/approach
The quantitative research method was the preferred approach. Data were collected through a questionnaire from managers working in different sectors. The study’s sample consists of 619 managers from 226 different firms.
Findings
The findings show that there is a positive relationship between dynamic capabilities and product innovation and that dynamic capabilities have a positive relationship with firm performance. In addition, the findings indicate a significant positive mediating effect of product innovation on the relationship between dynamic capabilities and firm performance. Another key finding is the positive moderation effect of technology uncertainty on the relationship between product innovation and firm performance.
Research limitations/implications
Using a single sample (country) limits generalizability due to differences in economic structure and market dynamics. Furthermore, by focusing only on product innovation, the role of other types of innovation is not considered.
Practical implications
This study emphasizes that, especially in environments with high technology uncertainty, it is important to develop dynamic capabilities for better firm performance as well as turn these capabilities into tangible outputs such as product innovation.
Originality/value
This study examines the relationship between dynamic capabilities and firm performance, which is frequently discussed and extremely important for the literature, from different perspectives within the context of an emerging economy. In addition to the direct relationship between dynamic capabilities and firm performance, the contribution of dynamic capabilities to performance through product innovation, which is an ordinary capability, (together with the moderating effect of technological uncertainty) was investigated.
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This research endeavors to conduct a thorough and holistic analysis of the foundational elements that empower the cultivation of dynamic capabilities in micro, small and…
Abstract
Purpose
This research endeavors to conduct a thorough and holistic analysis of the foundational elements that empower the cultivation of dynamic capabilities in micro, small and medium-sized enterprises (MSMEs). The purpose of this study is to determine whether these capabilities have a noticeable impact on the sustainable performance of these enterprises. The study aims to support future research efforts in understanding this phenomenon by filling this knowledge gap and presenting a conceptual framework, thereby enhancing the scholarly discourse in this field.
Design/methodology/approach
The study consists of a systematic review of 126 articles meticulously chosen through a series of screening stages employing the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework. This examination is conducted within the organized framework of antecedents, decisions and outcomes-theory, context and methods (ADO-TCM), ensuring a structured and comprehensive analysis.
Findings
The study uncovers significant insights, identifying four key antecedents: resource base, organizational learning, managerial expertise and external environment management. These factors are instrumental in fostering dynamic capabilities within the enterprise, leading to sustainable entrepreneurial success and a competitive advantage over rivals.
Research limitations/implications
By comprehending the mechanisms by which dynamic capabilities are established within the enterprise, this study provides a valuable resource for entrepreneurs, professionals and managers, offering them practical insights to leverage.
Originality/value
This systematic literature review is the initial attempt to explain how dynamic capabilities can be used to enhance and accomplish sustainable performance in the context of MSMEs.
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Gregor Pfajfar, Maciej Mitręga and Aviv Shoham
This study aims to conduct a thorough literature review to map current studies on international marketing capabilities (IMCs) applying dynamic capabilities view (DCV). The aim of…
Abstract
Purpose
This study aims to conduct a thorough literature review to map current studies on international marketing capabilities (IMCs) applying dynamic capabilities view (DCV). The aim of this study is to increase the chances for more conceptual and terminological rigor in future research in this particular research area.
Design/methodology/approach
This is a systematic literature review following the established review process of reviews in leading (international) marketing journals. A multilevel analytical approach was adopted, combining inductive coding with deductive coding and following the logic of antecedents-phenomena-consequences.
Findings
Synthesis of 20 rigorously selected previous empirical studies on IMCs applying DCV reveals that academic interest in these capabilities is well justified and growing and there are some well researched antecedents to focal capabilities (e.g. inter-organizational capabilities, outside-in market orientation) as well as their prevalent consequences (e.g. export and innovation performance). There is little knowledge of moderators to these links, especially with regard to consequences. This review illustrates that the current research lacks consistency in how key constructs are defined and measured, provides the guide to future conceptualization and measurement of so-called International Dynamic Marketing Capabilities (IDMCs) and proposes some concrete research directions.
Originality/value
The authors extend prior research in the investigated topic by critically evaluating prior works, providing improved conceptualization of IDMCs as well as concrete research agenda for IDMCs structured along recommendations for Theory, Context and Methods (TCM framework).