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Know-How and Asset Know-How and Asset Complementarity and Dynamic Complementarity and Dynamic

Capability Accumulation: Capability Accumulation: The Case of R&DThe Case of R&D

Constance E. Helfat (1997): SMJ, 18(5), 339-360Constance E. Helfat (1997): SMJ, 18(5), 339-360

Prepared by: Prepared by: Enrique, Lihong, John, JongkukEnrique, Lihong, John, Jongkuk

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Some ConceptsSome Concepts

Asset Stock: the cumulative result of adhering to a set of consistent policies of choosing appropriate time paths of asset flows over a period of time (Dierickx & Cool, 1989)

Dynamic Capability: a subset of the competences/capabilities which allows the firm to create new products and processes and respond to changing market circumstances (Teece and Pisano, 1994: 541)

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Conceptual Integration

Look at the complementarity between asset stock and dynamic capabilities accumulation

Use R&D as an example of new knowledge accumulation

Embed this complementary relationship into a changing market

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Research Setting

26 largest U.S. energy firms (primarily petroleum companies)

R&D expenditures from 1976 to 1981

Historical context: increasing oil price and decreasing supply called for alternative cost- effective fuels technologies

Coal conversion technology as an example of R&D

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Complementarity and Coal ConversionComplementarity and Coal Conversion

Technological complementarity leads to larger amount of coal conversion R&D:

H1a: Firms that had larger stocks of knowledge from past refining R&D were likely to have undertaken larger amount of coal gasification/liquefaction R&D.

H1b: Firms that had larger accumulated refinery assets were likely to have undertaken larger amount of coal gasification/liquefaction R&D.

H1c: Firms that had larger stocks of knowledge from past R&D on other synthetic fuels were likely to have undertaken larger amount of coal gasification/liquefaction R&D.

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Complementarity and Coal ConversionComplementarity and Coal Conversion

Asset complementarity facilitates commercialization of R&D outcome

H2: Firms that had larger accumulated coal assets were likely to have undertaken larger amount of coal gasification/liquefaction R&D

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Empirical Model

DV:

IVs:

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Tobit Regression and Results

R&D = f (complementary knowledge, complementary physical assets, other knowledge and resources, control variables)

H1a is supported statistically, and substantially, refining R&D capital stock intensity is positively related to coal conversion R&D

H2 is supported statistically, and substantially, coal asset is positively related to coal conversion R&D

H1b and H1c are not supported statistically

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Discussion and Conclusions

Significance of know-how with complementarity, and insignificance of assets with few complementarities lend support to the general proposition that “know-how and asset complementarities facilitate dynamic capabilities accumulation.”

Firms with complementary technology and asset stock are more able to adapt to the dynamic environment by accumulating R&D capabilities.