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

Organizational learning has been an important topic for the journal Organization Science and for the field. We provide a theoretical framework for analyzing organizational learning. According to the framework, organizational experience interacts with the context to create knowledge. The context is conceived as having both a latent component and an active component through which learning occurs. We also discuss current and emerging research themes related to components of our framework. Promising future research directions are identified. We hope that our perspective will stimulate future work on organizational learning and knowledge.

http://disciplinas.stoa.usp.br/pluginfile.php/3502/mod_resource/content/1/2011%20Organizational%20learning%20-%20form%20experience%20to%20knowledge.pdf

Organizational Learning: From Experience to Knowledge

Investor Psychology and Security Market Under- and Overreactions

This paper seeks to identify the sources of wide and persistent variations in learning performance in the semiconductor manufacturing industry. In the resource-based view of the firm, human capital is frequently assumed to contribute to competitive advantage due to its inimitability based on its intangible, firm-specific, and socially complex nature. Consistent with this view, we find that investments in firm-specific human capital have a significant impact on learning and firm performance. More specifically, human capital selection (education requirements and screening), development through training, and deployment significantly improve learning by doing, which in turn improves performance. However, we find that acquiring human capital with prior industry experience from external sources significantly reduces learning performance. We also find that firms with high turnover significantly underperform their rivals, revealing the time-compression diseconomies that protect firm-specific human capital from imitation. These results provide new empirical evidence of the inimitability of human capital. Copyright © 2004 John Wiley & Sons, Ltd.

Human capital and learning as a source of sustainable competitive advantage

https://research.sabanciuniv.edu/13660/1/Gunday_et_al_Effects_of_Innovation_on_Firm_Performance.pdf

Effects of innovation types on firm performance

This paper attempts to reconcile the risk-bearing characterization of entrepreneurs with the stylized fact that entrepreneurs exhibit conventional risk-aversion profiles. We propose that the disparity arises from confounding two distinct dimensions of uncertainty: demand uncertainty and ability uncertainty. We further propose that entrepreneurs will be risk averse with respect to demand uncertainty, yet “apparent risk seeking” (or overconfident) with respect to ability uncertainty. To examine this view, we construct a reduced-form model of the entrepreneur's entry decision, which we aggregate to the market level, then test empirically. We find that entrepreneurs in aggregate behave as we predict. Accordingly, risk-averse entrepreneurs are willing to bear market risk when the degree of ability uncertainty is comparable to the degree of demand uncertainty. Potential market failures exist in instances where there is a high demand uncertainty but low performance dispersion (insufficient entry), or low demand uncertainty but high performance dispersion (excess entry).

Entrepreneurial Risk and Market Entry

The resource-based view (RBV) of strategy holds that superior organizational routines can be a source of value if and only if there is an isolating mechanism preventing their diffusion throughout industry. Generally this isolating mechanism is taken to be the tacitness of the routines. However, the existence of franchises, a market for organizational routines, poses a challenge to this RBV—if the routine is to be conveyed across a market, it can't be tacit. This paper examines the necessary and sufficient conditions of the RBV to find the weak link leading to the paradox of explicit, yet valuable franchise routines. Copyright © 2003 John Wiley & Sons, Ltd.

The organizational routines factor market paradox

Approximately 80-90 percent of new firms ultimately fail. The tendency is to think of this failure as wasteful. We, however, examine whether there are economic benefits to offset the waste. We characterize three potential mechanisms through which excess entry affects market structure, firm behavior, and efficiency, then test them in the banking industry. Results indicate that failed firms generate externalities that significantly and substantially reduce industry cost. On average these benefits exceed the private costs of the entrants. Thus failure appears to be good for the economy.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID905616_code382991.pdf?abstractid=901472&mirid=1&type=2

Is Failure Good

The resource-based view holds that firms can earn supranormal returns if and only if they have superior resources and those resources are protected by some form of isolating mechanism preventing their diffusion throughout industry. One isolating mechanism that has been proposed for intangible assets is their accumulation process. The hypothesis is that intangible assets are inherently inimitable because would-be imitators need to replicate the entire accumulation path to achieve the same resource position. Thus, entrants can never catch up to incumbents.An interesting challenge to this hypothesis is counterfactual evidence that entrants sometimes outperform incumbents. Such counterfactual evidence should not exist if the theory is strictly correct. This paper attempts to reconcile resource accumulation theory with the counterfactual evidence. We do so by building an intermediate good-production function for a firm's intangible asset stocks. We test the contribution of the intangible asset stock to the firm's final good-production function and examine the extent to which that asset stock deters rival mobility in the pharmaceutical industry.We find that the asset accumulation process itself cannot deter rivals, because asset stocks reach steady state rather quickly. Entrants can achieve an incumbent's intangible asset stock merely by matching its investment until steady state. Thus, we conclude that the accumulation process per se is not an isolating mechanism. While this is perhaps the most important contribution, another contribution is an empirical methodology for characterizing the accumulation function.

On the Strategic Accumulation of Intangible Assets

One of the concerns with strategy as a field is that its goal (durable profits) appears at odds with that of microeconomics (homogeneous firms with zero profits). Thus even if we can find sources of durable profits, maybe we shouldn't—because doing so comes at the expense of social welfare. In this sense, strategy is an ‘economic bad.’ Probably the most vivid evidence of this tension is the fact that Porter's Competitive Strategy (1982) is Industrial Organization turned on its head—exploiting indications of anti-competitive behavior to create prescriptions for durable profits. This study presents a parallax view in which the field of strategy is an economic good. In this view, heterogeneity stimulates innovation and economic growth. The underlying logic is that heterogeneity fuels diffusion; diffusion erodes leaders' shares; the loss of shares stimulates innovation, which in turn fuels new diffusion. I develop this view through a simple model of firms embedded in an industry, and then evaluate the model via simulation. The key issue for the model is whether there are steady states that sustain heterogeneity and innovation. Results indicate that heterogeneity persists in roughly half the industry conditions I examined. Furthermore innovation and growth are sustained under those conditions. What is comforting about the set of conditions is that they accommodate (and indeed require) all the things we hold dear: industrial policy, and strategic as well as routine behavior by firms. The new insights are as follows: (1) heterogeneity fuels growth (thus ‘strategy’ is an economic good, rather than anathema to allocative efficiency); (2) persistent heterogeneity is feasible even in the presence of spillovers (without isolating mechanisms); (3) but this heterogeneity (while persistent) requires managers to actively preserve the inherent value of their resource advantages—firms can't rest on their laurels; (4) policy prescriptions differ from those of prior innovation models. Copyright © 2003 John Wiley & Sons, Ltd.

Anne Marie Knott

Papers

Entrepreneurial Risk and Market Entry

The organizational routines factor market paradox

Is Failure Good

On the Strategic Accumulation of Intangible Assets

Persistent heterogeneity and sustainable innovation