Where Can Capabilities Come From? How the Content of Network Ties Affects Capability Acquisition

Ishtiaq P. Mahmood, Hong-Jin Zhu and Edward J. Zajac

No 2008-14, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: While strategy researchers have devoted considerable attention to the role of firm-specific capabilities in the pursuit of competitive advantage, less attention has been directed at how firms obtain these capabilities from outside a firm's boundaries. This study analyzes how firms' network ties represent one important source of capability acquisition. Theoretically, we go beyond the traditional focus on network structure and offer a novel contingency model that specifies how differences in the content of network ties (e.g., buyer-supplier, equity, and director ties) will differentially affect the process of R&D capability acquisition. Empirically, we also seek to provide an original contribution to the capabilities literature by utilizing a stochastic frontier estimation to rigorously measure firm capabilities, and we demonstrate the value of this approach using longitudinal data on business groups in emerging economies. The supportive results of our analysis show that the effect of network ties on the acquisition of new affiliate capabilities is clearly and predictably contingent on the content of the ties.

Pages: 37 pages
Date: 2008-04
New Economics Papers: this item is included in nep-cse, nep-ipr, nep-pr~, nep-mic and nep-net
Note: An earlier version of this paper was presented at the 2006 National Academy of Management meetings, Atlanta.
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