Abstract
AbstractWe study if dynamic capabilities alleviate enterprises' revenue losses after an external shock. Contextually, we study Norwegian enterprises before and after the price decline of crude oil in 2014, which strongly affected economic activities across industries in some regions, while others were practically unaffected. Empirically, we combine data of regional oil dependency and enterprise‐ and person‐level data before the decline and enterprise‐level revenues before and after the decline. Analyses of 4,060 enterprises in 51 labor market regions show that unrelated education diversity alleviates revenue losses for enterprises in strongly affected regions, while related education diversity has an opposite negative effect. R&D investments and innovation alter revenue growth, but as the effects are consistent across more or less affected regions, the concepts are static enterprise resources and not dynamic capabilities.
Highlights
When the price of crude oil declined steeply in 2014, many Norwegian enterprises in affected regions experienced revenue losses due to their direct or indirect dependency on a commodity of much lower value than before the decline
Other research has highlighted how enterprises respond to an external shock or crisis (Wenzel et al, 2020), but we study if pre-crisis dynamic capabilities have alleviated revenue losses in the crisis' aftermath
Our results show that unrelated education diversity alleviates revenue losses for enterprises in strongly affected regions, while related education diversity has an opposite negative effect
Summary
When the price of crude oil declined steeply in 2014, many Norwegian enterprises in affected regions experienced revenue losses due to their direct or indirect dependency on a commodity of much lower value than before the decline. 83) affirm that strategic alliances are a flexible vehicle for learning, an efficient knowledge transfer mechanism between firms, and “a superior means of access to technological capabilities and other complex capabilities.” Consistent with these studies, we conclude that if exposed to an external shock, innovation in the enterprise and innovation collaboration with external partners alleviate revenue losses as such activities reflect internal and external scanning, the updating of business models for new products and services, and restructuring “to maintain evolutionary fitness” A likely reason, according to Dyer and Singh (1998, p. 665), is that “a firm's alliance partners are, in many cases, the most important source of new ideas and information that result in performance-enhancing technology and innovations.” Gulati (1998, p. 296) likewise asserts that alliance partners “develop a shared understanding of the utility of certain behavior due to discussing opinions in strong, socializing relations, which in turn influence their actions.” In a literature review, Mamedio et al (2019, p. 83) affirm that strategic alliances are a flexible vehicle for learning, an efficient knowledge transfer mechanism between firms, and “a superior means of access to technological capabilities and other complex capabilities.” Consistent with these studies, we conclude that if exposed to an external shock, innovation in the enterprise and innovation collaboration with external partners alleviate revenue losses as such activities reflect internal and external scanning, the updating of business models for new products and services, and restructuring “to maintain evolutionary fitness” (Teece, 2020, p. 11)
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