Abstract
The aim of this research was to explore one of the most intriguing dimensions of every firm’s business—its performance. Aside from analysing the influence of industry’s characteristics on the firm’s performance, the authors addressed the characteristics of dynamic capabilities and their role in contribution to the firm’s ultimate success. The analysis was conducted on a sample of 118 small Croatian manufacturing companies. The application of the Structural Equation Modelling (SEM) approach revealed a statistically significant influence of both the industry’s characteristics (represented by Porter’s five forces framework) and dynamic capabilities (based on Teece’s theory) on the firm’s performance, where the influence of dynamic capabilities is proven to be larger than that of the industry.
Highlights
From a strategic management perspective, theoretical approaches seeking to explain a firm’s ability to outperform its competitors, among other things, include Porter’s industrial paradigm (Porter 1979, 1981) and the resource-based theory
The analysis is based on a sample of 118 small companies operating in the manufacturing industry in Croatia, for which the data have been obtained from the questionnaire and have been analysed by applying Structural Equation Modelling (SEM). Encompassing both industry characteristics and dynamic capabilities, this study provides an empirical contribution to the concept of the integrated research of the firm’s performance
Some e-mail addresses were provided by Amadeus databases, most of them were obtained directly by the Central office of the Croatian Chamber of Commerce
Summary
From a strategic management perspective, theoretical approaches seeking to explain a firm’s ability to outperform its competitors, among other things, include Porter’s industrial paradigm (Porter 1979, 1981) and the resource-based theory. The first approach, based on the structure-conduct-performance (SCP) paradigm, is focused on the industrial structure and ability of the firm to exploit its market power in order to obtain superior performance. As opposed to the industrial organisation view, which focuses on external factors, the resource-based theory attempts to explain the heterogeneity of performance among firms based on firm-specific factors (Barney 1991). The dynamic capabilities approach, as an extension of the resource-based view of the firm’s success, states that the sustainability of the firm’s competitive advantage and performance depends on the firm’s ability to renew resources as its external environment changes (Teece et al 1997; Teece 2007). According to Teece (2007), capabilities that are important for the firm’s competitiveness and improved performance encompass the capability to sense and seize opportunities, and the capability to reconfigure the firm’s resources
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