Abstract
The resource-based view (RBV) posits that the sustainability of a firm’s success depends upon the creation, development, and implementation of a given organization’s unique resources and capabilities. Based on this theoretical framework, this article analyzes the relationship between organizational capabilities, business strategy, and profitability in the Portuguese textile industry. The strong relationship between these variables suggests that the organizational capabilities and the choice of business strategy may be the key to increase the profitability in this study context. So, the ability of the Portuguese textile organizations to change their business strategy based on their organizational capabilities affects profitability in a number of ways. Concretely, the results of this study highlight the importance of the choice of the business strategy as a partial mediator between the organizational capabilities and the profitability, a point that is crucial to understanding the success of a given organization and how resources and capabilities contribute to the process. The article concludes with a number of managerial implications and directions for future research.
Highlights
Business strategy is one of top management’s primary concerns as it is crucial for a given firm’s survival and for creating wealth in today’s highly competitive global market
This study focuses on business strategy; the view that a given firm’s resources and capabilities are of utmost importance
The direct impact of possessing a certain and superior set of capabilities on a firm’s profitability has been shown to be significant. These results are in line with previous studies that examined different types of capabilities with results largely coinciding with the classification proposed in the present study (Piercy et al, 1998; Tayles et al, 2007)
Summary
Business strategy is one of top management’s primary concerns as it is crucial for a given firm’s survival and for creating wealth in today’s highly competitive global market. Organizations are in constant competition for production factors, resources, customers, and the revenue necessary to guarantee their continued functioning As they navigate this uncertainty, managers must make choices. Some choices are strategic, such as the selection of resources and products, the firm’s position in the market, the level of diversification, the organizational layout, and the leadership profile These choices contribute to the success or failure of the organization (Rumelt, Schendel, & Teece, 1994). This study focuses on business strategy; the view that a given firm’s resources and capabilities are of utmost importance Organizations differ because they possess a distinct set of tangible and intangible resources that contribute decisively to strategic advantages. These advantages only emerge and endure if several activities and resources are complementary and the organization is able to create the type of sustainable competitive advantages that have a significant impact on profitability
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