aimilia protogerou and yannis caloghirou
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The relevance of the dynamic capabilities concept in low and high-tech sectors: An empirical Approach. Aimilia Protogerou and Yannis Caloghirou Laboratory of Industrial and Energy Economics, National Technical University of Athens. - PowerPoint PPT PresentationTRANSCRIPT
THE RELEVANCE OF THE DYNAMIC CAPABILITIES CONCEPT IN LOW AND HIGH-TECH SECTORS: AN EMPIRICAL
APPROACH
Aimilia Protogerou and Yannis Caloghirou
Laboratory of Industrial and Energy Economics, National Technical
University of Athens
MAIN AIM AND POSITIONING OF THE PAPER AND THE CURRENT DCS DEBATE
Despite the intense research work related to the Dynamic Capabilities (DCs) framework there is still no general agreement on the DCs construct and boundry conditions among scholars
Empirical work remains limited, with sparse and disjoint empirical findings (e.g. Zahra et al., 2006; Ambrosini and Bowman, 2009; Wu, 2010, Peteraf et al., 2012)
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MAIN AIM AND POSITIONING OF THE PAPER IN THE CURRENT DCS DEBATE
Taking into consideration that there is significant variation in the literature regarding the kind of external business environments that are relevant to DCs:
many scholars clearly suggest that DCs are synonymous to rapidly changing conditions (e.g. Teece, 1997; Teece 2007), some acknowledge their role in moderately changing environments (e.g. Eisenhardt and Martin, 2000; Helfat et al., 2007),others choose not to include environmental conditions in their research (e.g. Makadok, 2001)
this paper empirically explores the role of DCs on young firms’ performance in two distinct environmental conditions i.e. high and low-tech sectors.
3
A WORKING DEFINITION OF DCS
Dynamic capabilities can be defined as “the capacity of an organization to purposefully and systematically create, extend or modify its resource base”(Helfat et al., 2007).
“Creating” a resource includes all forms of resource creation, such as obtaining new resources through acquisitions and alliances, as well as through innovation and entrepreneurial activity.
“Extending” their resource base may result in promoting growth in an ongoing business.
“Modifying” their resource base includes any reaction to change, e.g. response to external environment changes
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DYNAMIC CAPABILITIES IN LOW-TECH SECTORS
Much theoretical and empirical research on DCs has been focused on large, established firms operating in high-tech sectors However, frequent use of DCs can also be justified in moderately changing environmental contexts (e.g. Eisenhardt and Martin, 2000; Helfat et al., 2007; Helfat and Peteraf, 2009),mature, traditional industries although not dynamic by definition they cannot be characterized as perfectly stable contexts as they have to confront major elements of change in the global arena such as globalization, trade liberalization, changing industry structures and regulations, increasing social pressures and the recent financial crisisDCs can apply both to newly formed as well as to established organizations (Helfat et al., 2007) 5
DYNAMIC CAPABILITIES AND YOUNG FIRMS
Limited attention on young firms (McKelvie and Davidsson, 2009; Zahra et al, 2006 ) because it is assumed that established firms with their size and age ensure an adequate organizational structure and the required resources to develop and exercise dynamic routines.
Nevertheless, DCs can be important to young firms’ survival and growth by expanding their limited set of resources and/or by reconfiguring their resources to adapt to technology changes, uncertain markets, better resourced rivals or even to internal organizational changes.
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THE DATA ORIGINATE FROM THE AEGIS PROJECT SURVEY
High & medium-high tech manufacturing firms 425Low & medium-low tech manufacturing firms 1288
Total 1713
Telephone interview with one of the firm founders in 10 European countries (2011)
Sample firms: young independent entities founded between 2001 and 2007 with an average age of 7.1 years (min: 4; max: 11 years)
Distribution by sector group Survey design
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THE SECTORAL DIMENSION: SELECTED HIGH-TECH SECTORS (OECD CLASSIFICATION BASED ON TECHNOLOGICAL/ RTD INTENSITY)
Selected Sectors NACE (rev. 1)
High-technology manufacturing sectors
Aerospace 35.3
Computers and office machinery 30
Radio-television and communication equipment 32
Manufacture of medical, precision & optical instruments (scientific instruments)
33
Pharmaceuticals 24.4
Medium to high-technology manufacturing sectors
Manufacture of electrical machinery & apparatus 31
Manufacture of machinery and equipment 29
Chemical industry (excl pharma) 24 8
THE SECTORAL DIMENSION: SELECTED LOW-TECH SECTORS (OECD CLASSIFICATION)
Selected Sectors NACE (rev.
1)
Low-technology manufacturing sectors
Paper and printing 21,22
Textile and clothing 17, 18, 19
Food, beverages and tobacco 15+16
Wood and furniture 20+36.1
Medium to low technology manufacturing sectors
Basic metals 27
Fabricated metal products 28
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THE DYNAMIC CAPABILITIES CONSTRUCTS INDICATORS (1)
New product development capabilities Capability to offer novel products/services Capability to adapt products/services to the specific needs of
different customers/market niches Marketing and promotion activities
Market sensing capability Adaptation of best practices Rapid response to competitive moves Change of practices based on customer feedback Frequent consideration of the consequences of changing market
demand Quick recognition of shifts in the market Quick understanding of new opportunities to better serve customers
Technology sensing capability Practical experience sharing on a regular basis Formal R&D department in the firm Formal engineering and technical studies department in our firm Significant design activity to introduce new products/services in the
market
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THE DYNAMIC CAPABILITIES CONSTRUCTS INDICATORS (2)
Networking Market processes (collecting information about
competitors, accessing distribution channels, explore export opportunities, advertising and promotion)
Technology & production (development of new products, management of production and operations, access to skilled personnel)
Financial and legal support (obtaining business loans, attracting funds, support on legal issues)
Participation in technology collaborations Strategic alliances R&D agreements Technical cooperation agreements Licensing agreements Research contract-out 11
THE IMPACT OF SECTORAL GROUP ON THE DEVELOPMENT OF DYNAMIC CAPABILITIES
Product developmen
t capability
Technology sensing
Market sensing
NetworkingParticipation in technology collaboration
s
Low-tech 3.7 2.5 3.6 3.2 1.7
Medium-low 3.6 2.5 3.8 3.1 1.7
Medium-high 3.8 2.9 3.9 3.1 2.0
High-tech 3.9 3.0 3.9 3.2 2.0
Total 3.7 2.6 3.7 3.1 1.8
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DYNAMIC CAPABILITIES HAVE A SIGNIFICANT IMPACT ON YOUNG FIRMS INNOVATIVE PERFORMANCE
Independent variables
LMT group (N=1276)
HMT group (N=423)
B coefficient
Sig B coefficient
Sig
(Constant) -0.635 0.000*** -0.907 0.010**Product development capability 0.232 0.000*** 0.175 0.025*Market sensing 0.049 0.114 ns 0.054 0.439 nsTechnology sensing 0.135 0.000*** 0.309 0.000***Networking 0.049 0.179 ns -0.018 0.779 nsParticipation in technology collaborations 0.118 0.003** 0.132 0.033*F-team avrg edu attainment 0.019 0.566 ns 0.137 0.010**Full-time employees 0.001 0.662 ns -0.001 0.675 ns* p < 0.05, ** p < 0.01, *** p < 0.001 R=0.332, R2=0.110 R=0.507, R2= 0.257
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DYNAMIC CAPABILITIES HAVE A SIGNIFICANT IMPACT ON YOUNG FIRMS R&D ACTIVITY
Independent variables
LMT group (N=1225)
HMT group (N=415)
B coefficient
Sig B coefficient
Sig
(Constant) -16.097 0.000*** -11.888 0.106 nsProduct development capability 2.288 0.000*** 3.445 0.035*Market sensing 1.250 0.006** -0.294 0.839nsTechnology sensing 2.496 0.000*** 4.074 0.000***Networking 0.082 0.879 ns -5.289 0.000***Participation in technology collaborations 2.959 0.000*** 4.782 0.000***F-team avrg edu attainment 0.571 0.244 ns 4.557 0.000***Full-time employees -0.024 0.229 ns -0.079 0.080* p < 0.05, ** p < 0.01, *** p < 0.001 R=0.349, R2=0.122 R=0.477, R2= 0.227
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DYNAMIC CAPABILITIES HAVE A POSITIVE IMPACT ON YOUNG LMT FIRMS AVERAGE TURNOVER
Independent variables
LMT group (N=1124)
HMT group (N=396)
B coefficient
Sig B coefficient
Sig
(Constant) 2.354 0.000*** 1.854 0.000***Product development capability 0.127 0.019* -0.045 0.622 nsMarket sensing 0.286 0.000*** 0.097 0.241 nsTechnology sensing 0.225 0.000*** 0.089 0.123 nsNetworking -0.035 0.503 ns 0.042 0.582 nsParticipation in technology collaborations 0.083 0.143 ns 0.056 0.442 nsF-team avrg edu attainment -0.042 0.380 ns -0.093 0.134 nsFull-time employees 0.036 0.000*** 0.028 0.000**** p < 0.05, ** p < 0.01, *** p < 0.001 R=0.498, R2=0.248 R=0.525, R2= 0.275
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DYNAMIC CAPABILITIES HAVE A POSITIVE IMPACT ON YOUNG FIRMS INTERNATIONAL SALES
Independent variables
LMT group (N=1276)
HMT group (N=423)
B coefficient
Sig B coefficient
Sig
(Constant) -1.750 0.701 ns -6.558 0.541 nsProduct development capability -1.598 0.086 ns 3.823 0.108 nsMarket sensing 0.436 0.573 ns -3.412 0.106 nsTechnology sensing 1.430 0.050* 4.815 0.001 ***Networking 1.964 0.033* -2.311 0.247 nsParticipation in technology collaborations 3.250 0.001*** 3.003 0.112 nsF-team avrg edu attainment 1.145 0.172 5.098 0.002 **Full-time employees 0.183 0.000*** 0.214 0.001 **** p < 0.05, ** p < 0.01, *** p < 0.001 R=0.231, R2=0.053 R=0.385, R2= 0.148
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CONCLUDING REMARKS DCs may exist in both LMT and HMT firms although
capabilities such as technology sensing and participation in collaborative technology agreements seem to be present to a relatively smaller degree in LMT firms.
DCs appear to have a significant positive impact on young firms innovative performance in both high and low-tech sectors.
DCs appear to have a significant positive impact on the average turnover of firms operating in LMT sectors while the relevant effect on HMT firms appears to be insignificant.
Certain DCs appear to have a significant positive impact on the international sales of LMT and HMT firms.
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CONCLUDING REMARKS
Dynamic capabilities can be present in newly-established firms that in their majority are micro and small firms.
Managers in young firms: should draw up a ‘dynamic capabilities portfolio’
of their firm to help them assess their actual and potential DC use in relation to their capacity for adding value to the business.
better understand the role of knowledge creation and capability development in LMT sectors as a way to foster their competitiveness and strengthen their role in highly competitive international markets. 18
