Ability-based view in action: a software corporation study.

AutorNobre, Farley Simon
CargoReport

Introduction

In a similar way to that in which Simon (1977) distinguished between non-programmed and programmed decisions, March and Simon (1958) distinguished higher-level and lower-level programs (and routines), Argyris and Schon (1978) distinguished double-loop and single-loop learning, and March (1991) distinguished knowledge exploration and exploitation, advancements in the field of strategic management have distinguished the concepts of dynamic and operational capabilities (Eisenhardt & Martin, 2000; Helfat & Peteraf, 2003, 2009; Helfat & Winter, 2011; Leiblein, 2011; Sirmon, Hitt, Ireland & Gilbert, 2011; Teece, 2007; Teece, Pisano, & Shuen, 1997; Winter, 2003). The first concept has been associated with the firm capabilities of renewal, management and orchestration of resources and operational capabilities, and is also associated with the organizational capacity to solve ill-structured or complicated problems, to learn, change and adapt to turbulent and complex environments. Examples of dynamic capabilities include sensing-seizing-reconfiguring (Teece, 2007) along with sensing-learning-integrating-coordinating capabilities (Pavlou & El Sawy, 2011). Most of these dynamic capabilities are developed from cognitive processes and representations at the individual, group and organizational levels (Nobre, Tobias, & Walker, 2010; Nobre & Walker, 2011a, 2011b). The second concept has the meaning of ordinary competencies, processes and basic routines of standardized and repetitive patterns which can find better applications to well-structured situations with predetermined decision rules. Examples of operational capabilities involve activities such as manufacturing a product, inspection procedures and quality assurance norms. Additionally, capabilities are built on different levels of organizational activity, for instance at departmental, divisional, or corporate levels (Schreyogg & Kliesch-Eberl, 2007).

This paper supports all these developments. Nevertheless, as emphasized by other authors (Wang & Ahmed, 2007), this work recognizes the existence of ambiguity in the concepts of the main elements within the vast literature of dynamic capabilities. Moreover, it advocates there is a lack of literature perspectives which contribute with measurements in dynamic capabilities and general management research (Scherbaum & Meade, 2013). In light of contribution to these concerns, this research investigates antecedents, developments and consequences of dynamic capabilities in organizations that pursue competitive advantage. It searches for theoretical and empirical answers to the questions: (a) What are the antecedents which can provide an organization with dynamic and ordinary capabilities?; (b) How do these antecedents contribute to create organizational capabilities?; (c) How do they affect an organization's competitive advantage?; (d) Can we assess and measure the antecedents and consequences to an organization? From a first (theoretical) perspective, this paper. searches for answers to the first, second and third questions by reviewing concepts of an ability-based view that nourishes the development of core competencies and capabilities in an organization. From a second (empirical) perspective, this paper reinforces and delivers findings to the second, third and fourth questions by presenting a case study in order to investigate: (a) the development of capabilities in the organization; (b) the effects of the new capabilities on the organization; and (c) the assessment and measurement of the abilities and consequences. The development of this paper is structured as follows: (a) key concepts of the ability-based view, (b) research methodology, (c) entering the field, (d) operational definitions of key constructs, (e) analyzing data and shaping hypotheses, (f) conclusions.

Ability-Based View (ABV)

Ability-Based View (ABV) represents a conceptual framework for the analysis of the antecedents of competencies and capabilities in organizations that pursue competitive advantage (Nobre et al., 2010; Nobre & Walker, 2011a, 2011b). It is based mostly on the perspectives of resource (Barney, 1991; Barney, Ketchen, & Wright, 2011) and knowledge-based views (Grant, 1996; Spender, 1996) along with dynamic capabilities (Teece, 2007; Teece et al., 1997) of the firm. The ABV's key concepts subsume abilities, core competencies and capabilities, resources and competitive advantage. Their conceptual definitions along with the ABV framework are presented in the subsequent subsections.

ABV's key concepts

Competitive advantage

Competitive advantage involves a set of states which represent an organization's capability to create superior value for its customers and superior profits for itself. In such a view, the organization must conceive of value creating strategies that are not simultaneously being implemented by another competitor (Barney, 1991).

Strategic resources

Resources are inputs into an organization's production system and they involve tangible and intangible assets (Helfat & Peteraf, 2003; Hitt, Ireland, & Hoskisson, 2012; Teece, 2007). When integrated and coordinated in a proper manner, a set of resources can benefit the organization with efficiency, effectiveness and superior value. Resources can subsume competencies and capabilities (Barney, 1991). In this paper, resources are the set of organizational elements which involve social structure, goals, technology and participants (Scott, 1998), and, therefore, they can encompass competencies and capabilities.

Core competencies and capabilities

Tracing back to the seminal paper by Prahalad and Hamel (1990), this research understands that core competencies involve a set of collective knowledge in an organization, and including how to coordinate diverse production skills and integrate multiple streams of technologies. Core competencies are sources of innovation, customer benefits and competitive advantage (Hitt et al., 2012; Lei, Hitt, & Bettis, 1996; Tidd, 2006). In this paper, they are treated as special classes of dynamic and ordinary capabilities (Nobre & Walker, 2011a). They are capabilities which are valuable and unique from a customer's point of view, and also inimitable and non-substitutable from the competitor's eyes (Hitt et al., 2012).

Similarly to capabilities which can be built on different levels of organizational activity (Schreyogg & Kliesch-Eberl, 2007), core competencies are developed on different levels of firm activity, such as at technical, managerial and organizational levels (Nobre, Walker, & Harris, 2012); whereas at lower levels they are mostly equivalent to ordinary capabilities, at higher levels they mostly have the meaning of dynamic capabilities. Nevertheless, all these levels can involve ordinary and dynamic capabilities.

At the technical level for instance, ordinary capabilities would include the individual routines of hundreds of single manufacturing cells within a firm; dynamic capabilities would include processes of reconfiguration and combination of these cells in order to form an integrated and profitable production system. The same reasoning applies to the managerial and organizational levels; whereas elements, resources, competencies, capabilities, and so forth, can be reconfigured and integrated to create new strategies and value for the organization (Eisenhardt & Martin, 2000; Teece et al., 1997). In such a design, managerial core competencies support the managerial layer when mediating and orchestrating resources between organizational and technical levels. Figure 1 illustrates the levels of core competencies and their linkages to capabilities.

Organizational abilities

Abilities are distinct from competencies and capabilities because the former concept represents the antecedent and the source of development of the two latter concepts. Abilities involve cognition, intelligence, autonomy, learning and knowledge management, all of which are distinct but complementary concepts in the organization. Together these concepts form the set of abilities which are the sources of creation, management and orchestration of competencies and capabilities in organizations that pursue competitive advantage. Under such a view, cognition is the core ability which supports individuals, groups and organizations with the other abilities of intelligence, autonomy, learning and knowledge management (Nobre et al., 2010; Nobre & Walker, 2011a, 2011b). These premises are also grounded in literature findings and empirical evidences which explain the role of managerial cognition in capability development (Gavetti, 2005; Laamanen & Wallin, 2009; Tripsas & Gavetti, 2000).

Definitions of the organizational abilities were developed and introduced in Nobre, Tobias, and Walker (2010) and, Nobre and Walker (2011b). Nevertheless, this subsection summarizes the concepts as used in this research.

Cognition

Cognition involves processes and representations in an organization (Nobre et al., 2010; Nobre, Tobias, & Walker, 2009a; Nobre & Walker, 2011b). On one side, when viewed as processes, cognition mediates the effect of external events or stimuli on individuals', groups' and organizations' decisions, behaviors and actions, in response to their experiences. On the other side, as representations, cognition is synonymous with mental images, knowledge models and cognitive maps constructed from individuals', groups' and organizations' experiences and learning. Representations have a major role in directing behavior in the absence of environmental stimuli (Brewer & Hewstone, 2004).

Intelligence

Rational process or rationality is the ability to follow procedures for decision making and problem solving in the pursuit of goals (Simon, 1997a, 1997b). When rational processes lead individuals to satisfactory outcomes, rationality can be associated with intelligence. Therefore, in this paper, intelligence is associated with the degree to which an organization satisfies its goals...

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