Competitive strategy revisited: contested concepts and dynamic capabilities

Strategy is a contested concept. The generic literature is characterized by a diverse range of competing theories and alternative perspectives. Traditional models of the competitive strategy of construction firms have tended to focus on exogenous factors. In contrast, the resource-based view of strategic management emphasizes the importance of endogenous factors. The more recently espoused concept of dynamic capabilities extends consideration beyond static resources to focus on the ability of firms to reconfigure their operating routines to enable responses to changing environments. The relevance of the dynamics capabilities framework to the construction sector is investigated through an exploratory case study of a regional contractor. The focus on how firms continuously adapt to changing environments provides new insights into competitive strategy in the construction sector. Strong support is found for the importance of path dependency in shaping strategic choice. The case study further suggests that strategy is a collective endeavour enacted by a loosely defined group of individual actors. Dynamic capabilities are characterized by an empirical elusiveness and as such are best construed as situated practices embedded within a social and physical context.

Intrafirm causal ambiguity in an international context

This paper examined the incidence of intrafirmcausalambiguity in the management's perception concerning the critical drivers of their firms’ performance. Building on insights from the resource-based view we developed and tested hypotheses that examine (1) linkage ambiguity as a discrepancy between perceived and measured resource–performance linkages, (2) characteristic ambiguity for resources and capabilities with a high degree of complexity and tacitness, and (3) the negative association between linkage ambiguity and performance. The observations based on the explicit perceptions of 356 surveyed managers were contrasted with the empirical findings of the resource/performance relationship derived by structural equation modelling from the same data sample. The findings validate the presence of linkage ambiguity particularly in the case of resources and capabilities with higher degree of characteristic ambiguity. The findings also provide empirical evidence in support of the advocacy for a negative relationship between intrafirmcausalambiguity and performance. The paper discusses the potential reasons for the disparities between empirical findings and management's perceptions of the key determinants of export success and makes recommendations for future research.

Towards a framework for managing IT-enabled change, sourcing and governance

In the resource-based view, organisations are represented by the sum of their physical, human and organisational assets, resources and capabilities. Operational capabilities maintain the status quo and allow an organisation to execute their existing business. Dynamic capabilities, otherwise, allow an organisation to change this status quo including a change of the operational ones. Competitive advantage, in this context, is an effect of continuously developing and reconfiguring these firm-specific assets through dynamic capabilities. Deciding where and how to source the core operational capabilities is a key success factor. Furthermore, developing its dynamic capabilities allows an organisation to effectively manage change its operational capabilities. Many organisations are asserted to have a high dependency on - as well as a high benefit from - the use of information technology (IT), making it a crucial and overarching resource. Furthermore, the IT function is assigned the role as a change enabler and so IT sourcing affects the capability of managing business change. IT sourcing means that organisations need to decide how to source their IT capabilities. Outsourcing of parts of the IT function will also outsource some of the IT capabilities and therefore some of the business capabilities. As a result, IT sourcing has an impact on the organisation's capabilities and consequently on the business success. And finally, a turbulent and fast moving business environment challenges organisations to effectively and efficiently managing business change. Our research builds on the existing theory of dynamic and operational capabilities by considering the interdependencies between the dynamic capabilities of business change and IT sourcing. Further it examines the decision-making oversight of these areas as implemented through IT governance. We introduce a new conceptual framework derived from the existing theory and extended through an illustrative case study conducted in a German bank. Under a philosophical paradigm of constructivism, we collected data from eight semi-structured interviews and used additional sources of evidence in form of annual accounts, strategy papers and IT benchmark reports. We applied an Interpretative Phenomenological Analysis (IPA), which emerged the superordinate themes for our tentative capabilities framework. An understanding of these interdependencies enables scholars and professionals to improve business success through effectively managing business change and evaluating the impact of IT sourcing decisions on the organisation's operational and dynamic capabilities.

Supply management capabilities, routine bundles and their impact on firm performance

Despite the generally positive contribution of supply management capabilities to firm performance their respective routines require more depth of assessment. Using the resource-based view we examine four routines bundles comprising ostensive and performative aspects of supply management capability – supply management integration, coordinated sourcing, collaboration management and performance assessment. Using structural equation modelling we measure supply management capability empirically as a second-order latent variable and estimate its effect on a series of financial and operational performance measures. The routines-based approach allows us to demonstrate a different, more fine-grained approach for assessing consistent bundles of homogeneous patterns of activity across firms. The results suggest supply management capability is formed of internally consistent routine bundles, which are significantly related to financial performance, mediated by operational performance. Our results confirm an indirect effect of firm performance for ‘core’ routines forming the architecture of a supply management capability. Supply management capability primarily improves the operational performance of the business, which is subsequently translated into improved financial performance. The study is significant for practice as it offers a different view about the face-valid rationale of supply management directly influencing firm financial performance. We confound this assumption, prompting caution when placing too much importance on directly assessing supply management capability using financial performance of the business.

Making internalization theory good for practice: the essence of Alan Rugman’s contributions to international business

This perspectives paper and its associated commentaries examine Alan Rugman's conceptual contribution to international business scholarship. Most significantly, we highlight Rugman's version of internalization theory as an approach that integrates transaction cost economics and ‘classical’ internalization theory with elements from the resource-based view, such that it is especially relevant to strategic management. In reviewing his oeuvre, we also offer observations on his ideas for ‘new internalization theory’. We classify his other novel insights into four categories: Network Multinationals; National competitiveness; Development and public policy; and Emerging Economy MNEs. This special section offers multiple views on how his work informed the larger academic debate and considers how these ideas might evolve in the longer term.

The future of stakeholder management theory: a temporal perspective

We propose adding a temporal dimension to stakeholder management theory, and assess the implications thereof for firm-level competitive advantage. We argue that a firm’s competitive advantage fundamentally depends on its capacity for stakeholder management related, transformational adaptation over time. Our new temporal stakeholder management approach builds upon insights from both the resource-based view (RBV) in strategic management and institutional theory. Stakeholder agendas and their relative salience to the firm evolve over time, a phenomenon well understood in the literature, and requiring what we call level 1 adaptation. However, the dominant direction of stakeholder pressures can also change, namely, from supporting resource heterogeneity at the firm level to fostering industry homogeneity, and vice versa. When dominant stakeholder pressures shift from supporting heterogeneity towards stimulating homogeneity in industry, the firm must engage in level 2 or transformational adaptation. Stakeholders typically provide valuable resources to the firm in an early stage. Without these resources, which foster heterogeneity (in line with RBV thinking), the firm would not exist. At a later stage, stakeholders also contribute to inter-firm homogeneity via isomorphism pressures (in line with institutional theory thinking). Adding a temporal dimension to stakeholder management theory has far reaching implications for this theory’s practical relevance to senior level management in business.

Global, local, or regional? The locus of MNE strategies

This paper provides an overview of the main insights arising from the ‘regional strategy’ literature. It also develops the contours of a new, rich research agenda for future international strategy scholarship, whereby the region should be introduced as an explicit, third geographic level of analysis, in addition to the country-level and the global level. Regional strategy analysis requires a fundamental rethink of mainstream theories in the international strategy sphere. This rethink involves, inter alia, internalization theory, with its resource-based view and transaction cost economics components, as well as the integration (I) – national responsiveness (NR) framework.

Relational architecture and relational capability: organisational levers to support strategic supplier relationships

The resource based view of strategy suggests that competitiveness in part derives from a firms ability to collaborate with a subset of its supply network to co-create highly valued products and services. This relational capability relies on a foundational intra and inter-organisational architecture, the manifestation of strategic, people, and process decisions facilitating the interface between the firm and its strategic suppliers. Using covariance-based structural equation modelling we examine the relationships between internal and external features of relational architecture, and their relationship with relational capability and relational quality. This is undertaken on data collected by mail survey. We find significant relationships between both internal and external relational architecture and relational capability and between relational capability and relational quality. Novel constructs for internal and external elements of relational architecture are specified to demonstrate their positive influence on relational capability and relationship quality.

A model for the implementation of strategic human resource management

This paper has been developed out of an action research project involving the Australian Taxation Office (ATO). One of the outcomes of this project was the development of a model for the implementation of Strategic Human Resource Management (SHRM) for the purpose of cultural change and/or alignment to business strategy.

The paper brings together many of the theories that have arisen in SHRM in the last decade or so, including theories around human capital, the resource-based view, HR configuration, HR architecture, vertical and horizontal fit, HR systems and HR roles.

Buyer-supplier relationships and brand strategy within commoditised industries : a suggested theoretical framework

Research into commodity markets has identified an increase in non-price based competition. In pursuit of sustainable bases for differentiation, many commodity industries including fresh produce, dairy and meat are introducing branded products. Using the Resource-Based View (RBV), this paper postulates that such branding is influenced by the nature of the buyer-supplier relationship. We suggest that the individual resources and capabilities of trade partners, in addition to the capabilities of that relationship, influence the brand strategies pursued. Moreover, we propose that by combining organisational resources and capabilities and brand strategy in an holistic framework, we may explain variations in buyer-supplier relationship performance.

Relational capabilities and brand strategy within commoditised industries

In many traditionally commoditised industries, organisations are recognising that their product offering alone does not cultivate a competitive advantage. As commoditised products face greater price competition, many are looking for a more sustainable form of differentiation. Within the fresh fruit and vegetable, dairy and meat industries, organisations are increasingly value-adding and focusing on branded offerings to gain such advantage. Whilst this is witnessed within industry, there is little academic evidence that discusses the relationship between dyad partners and how this impacts their branding strategy. This paper conceptually discusses how relationships between buyer and supplier trade partners can impact the branding strategies that are ultimately pursued by dyad participants. The relationship between trade partners is conceptualised using the resource-based view. Consideration is given to relationship complexities, the external environment and performance measurement.

Interpreting risk allocation mechanism in public-private partnership projects : an empirical study in a transaction cost economics perspective

Risk allocation in public-private partnership (PPP) projects is currently claimed as capability driven. While lacking theoretical support, the claim is often 'violated' by current industrial practice. There is thus a need for formal mechanisms to interpret why a particular risk is retained by government in one project while transferred to private partners in another. From the viewpoint of transaction cost economics (TCE), integrated with the resource-based view (RBV) of organizational capabilities, this paper proposed a theoretical framework for understanding risk allocation practice in PPP projects. The theories underlying the major constructs and their links were articulated. Data gathered from an industry-wide survey were used to test the framework. The results of multiple linear regression (MLR) generally support the proposed framework. It has been found that partners' risk management routine, mechanism, commitment, cooperation history, and uncertainties associated with project risk management could serve to determine the risk allocation strategies adopted in a PPP project. This theoretical framework thus provides both government and private agencies with a logical and complete understanding of the process of selecting the allocation strategy for a particular risk in PPP projects. Moreover, it could be utilized to steer the risk allocation strategy by controlling certain critical determinants identified in the study. Study limitations and future research directions have also been set out.

A strategy taxonomy for foreign direct investment in China

Taxonomies explaining internationalisation strategy are effective in relating connected variables to the decisionmaking process and entry mode strategies of organisations. Almost no taxonomies for entry modes into China exist, where the local conditions affecting entry are significantly different to those in other countries have been developed. The taxonomy developed in this paper from research into 40 Australian companies which had successfully and unsuccessfully internationalised into China identified resource transferability and international experience as connected variables that can categorise the factors of entry choice. High levels of resource transferability lead to contracting partnerships or wholly owned foreign enterprises. Low levels led to importing or joint ventures. High levels of international experience led to wholly-owned foreign enterprises or joint ventures. Low levels led to contracting partnerships or importing. The factors that drive these decisions were developed using a framework of resource-based view constructs, supporting the application of the resource-based view to internationalisation strategy.

An international strategy taxonomy for entry into China

Taxonomies explaining internationalisation strategy are effective in relating connected variables to the decision-making process and entry mode strategies of organisations. The taxonomy developed in this paper from research into 40 Australian companies which had successfully and unsuccessfully internationalised into China identified resource transferability and international experience as connected variables that can categorise the factors of entry choice. High levels of resource transferability lead to joint ventures or wholly-owned foreign enterprises. Low levels led to exporting/importing or project/client based/licensing. High levels of international experience led to wholly-owned foreign enterprises or joint ventures. Low levels led to project/client based/licensing or exporting/importing.

Determinants of efficient risk allocation in privately financed public infrastructure projects in Australia

Risk allocation in privately financed public infrastructure projects, which are mainly referred to as public-private partnership (PPP) projects, is a challenging job due to the nature of incomplete contracting. An investigation into the mechanism that guides the formation of efficient risk allocation strategies is thus desirable. Drawing on the transaction cost economics and resource-based view of organizational capability, this paper has identified five main features of the transactions associated with risk allocation in PPP projects. They include partners’ risk management routine, partners’ risk management mechanism, partners’ cooperation history, risk management environmental uncertainty, and partners’ risk management commitment. For achieving cost efficiency, different risk allocation strategies may suit different conditions of the features. Accordingly, a theoretical framework and five hypotheses were proposed for testing. Data collected in an industrywide survey were analyzed using multiple linear regression technique. It was found that generally, the identified features are determinants in the decision-making process of efficient risk allocation. Therefore, the proposed theoretical framework provides both government and private agencies with not only a logical and holistic understanding of but also a support tool for decision making on risk allocation strategy in PPP projects. Study limitations and future research directions are also set out.