Researchers have used the absorptive capacity construct to explain various organizational phenomena. In this article we review the literature to identify key dimensions of absorptive capacity and offer a reconceptualization of this construct. Building upon the dynamic capabilities view of the firm, we distinguish between a firm's potential and realized capacity. We then advance a model outlining the conditions when the firm's potential and realized capacities can differentially influence the creation and sustenance of its competitive advantage.

https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=5629&context=lkcsb_research

Absorptive Capacity: A Review, Reconceptualization, and Extension

The primary purpose of this article is to clarify the nature of the entrepreneurial orientation (EO) construct and to propose a contingency framework for investigating the relationship between EO and firm performance. We first explore and refine the dimensions of EO and discuss the usefulness of viewing a firm's EO as a multidimensional construct. Then, drawing on examples from the EO-related contingencies literature, we suggest alternative models (moderating effects, mediating effects, independent effects, interaction effects) for testing the EO-performance relationship.

Clarifying the Entrepreneurial Orientation Construct and Linking It To Performance

How has Japan become a major economic power, a world leader in the automotive and electronics industries? What is the secret of their success? The consensus has been that, though the Japanese are not particularly innovative, they are exceptionally skilful at imitation, at improving products that already exist. But now two leading Japanese business experts, Ikujiro Nonaka and Hiro Takeuchi, turn this conventional wisdom on its head: Japanese firms are successful, they contend, precisely because they are innovative, because they create new knowledge and use it to produce successful products and technologies. Examining case studies drawn from such firms as Honda, Canon, Matsushita, NEC, 3M, GE, and the U.S. Marines, this book reveals how Japanese companies translate tacit to explicit knowledge and use it to produce new processes, products, and services.

The knowledge-creating company : how Japanese companies create the dynamics of innovation

This article summarizes an extensive literature review addressing the question, How can we spread and sustain innovations in health service delivery and organization? It considers both content (defining and measuring the diffusion of innovation in organizations) and process (reviewing the literature in a systematic and reproducible way). This article discusses (1) a parsimonious and evidence-based model for considering the diffusion of innovations in health service organizations, (2) clear knowledge gaps where further research should be focused, and (3) a robust and transferable methodology for systematically reviewing health service policy and management. Both the model and the method should be tested more widely in a range of contexts.

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Diffusion of Innovations in Service Organizations: Systematic Review and Recommendations

Defining ordinary or ‘zero-level’ capabilities as those that permit a firm to ‘make a living’ in the short term, one can define dynamic capabilities as those that operate to extend, modify or create ordinary capabilities. Logically, one can then proceed to elaborate a hierarchy of higher-order capabilities. However, it is argued here that the strategic substance of capabilities involves patterning of activity, and that costly investments are typically required to create and sustain such patterning—for example, in product development. Firms can accomplish change without reliance on dynamic capability, by means here termed ‘ad hoc problem solving.’ Whether higher-order capabilities are created or not depends on the costs and benefits of the investments relative to ad hoc problem solving, and so does the ‘level of the game’ at which strategic competition effectively occurs. Copyright © 2003 John Wiley & Sons, Ltd.

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Understanding dynamic capabilities

Investigates the association among the firm's external environment, financial performance, and corporate entrepreneurship. Three propositions are emphasized to examine environmental munificence and hostility and their association to corporate entrepreneurship: (1) perceived characteristics of the environment play an important role in pursuits of corporate entrepreneurship; (2) environments within and across industries are heterogeneous; and (3) there is a need to use multiple dimensions to capture a company's perceptions of its environments. Corporate entrepreneurship may involve new ventures (e.g., new products or new businesses), or corporate renewal (e.g., reorganization). On the premise that the perceived characteristics of a firm's external environment are an important predecessor of corporate entrepreneurship, the following six hypotheses are presented and explored: (1) companies will emphasize new business creation and innovation in dynamic and growth environments; (2) the redefinition of business through venturing activities is positively related to environmental hostility; (3) hospitable environments are positively associated with both business venturing and renewal activities; (4) static environments are inversely associated with corporate venturing and renewal activities; (5) company financial performance and corporate entrepreneurship are positively related; and (6) the corporate entrepreneurship activities mentioned in the first four hypotheses will be significantly and positively connected with company financial performance in their respective environmental settings. Data from 102 firms in six four-digit industrial classification codes (SIC) were used with cluster analysis to distinguish four environmental settings: dynamic growth; hostile and rivalrous but technologically rich; hospitable, product-driven growth; and static and impoverished. These four environmental clusters (derived from top executives' perceptions about their firm environment) were used to examine variations in corporate entrepreneurship, and to test the six hypotheses. Findings demonstrate that each environmental cluster has a distinct combination of activities relating to corporate innovation, venturing, and renewal; that corporate entrepreneurship activities vary in their association with measures of company growth and profitability; and that the associations between corporate entrepreneurship and company financial performance vary among the four environmental clusters. (SFL)

Environment, Corporate Entrepreneurship, and Financial Performance: A Taxonomic Approach

The article reviews the book ‘The Dynamic Firm: The Role of Technology, Strategy, Organization and Regions,’ edited by Alfred D. Chandler Jr., Peter Hagstrom and Orjan Solvell.

The dynamic firm : the role of technology, strategy, organization, and regions

Presents and tests a model of the precursors and effects of corporate entrepreneurship in order to determine the antecedents of corporate entrepreneurship and the association between corporate entrepreneurship and company performance. The proposed model suggests that three variable sets influence the pursuit of corporate entrepreneurship: environment, strategy and internal organization. Five hypotheses are presented to operationalize the model: (1) environmental dynamism, hostility, and heterogeneity are associated positively with corporate entrepreneurship; (2) growth-oriented grand corporate strategies will be positively associated with pursuit of corporate entrepreneurship. In contrast, a stability strategy will be negatively associated with corporate entrepreneurship; (3) formal communication, scanning and differentiation will be positively associated with corporate entrepreneurship; (4) clearly articulated organizational values that are employee (person)-supportive and competition-oriented are positively associate with corporate entrepreneurship; and (5) corporate entrepreneurship is positively associated with corporate financial performance -- that is, positively with accounting measures and negatively with market-based criteria. Data were gathered from 119 responses to questionnaires sent to U.S. industrial corporations appearing on the Fortune 500 list. Results indicate that firms promoted corporate entrepreneurship when they considered their environment as becoming more dynamic, hostile, and heterogeneous. Growth-oriented strategies were positively related to corporate entrepreneurship, while stability strategies were negatively associated with corporate entrepreneurship. Increased firm controls were also negatively associated with corporate entrepreneurship activities. In contrast, both person-related and competition-oriented values were positively associated with corporate entrepreneurship. Finally, results suggest a positive associate between corporate entrepreneurship and company performance. (SFL)

Shaker A. Zahra

Papers

Environment, Corporate Entrepreneurship, and Financial Performance: A Taxonomic Approach

The dynamic firm : the role of technology, strategy, organization, and regions

Predictors and Financial Outcomes of Corporate Entrepreneurship: An Exploratory Study

Emerging research issues in international entrepreneurship

Boundary Spanning, Boundary Objects, and Innovation