Abstract

PurposeIn this study, the authors explore how sensing and seizing of market opportunities, asset reconfiguration and top management team (TMT) consensus on these elements jointly relate to a firm's international expansion. By doing this, the authors contribute to the existing literature by addressing dynamic managerial capabilities at the TMT level instead of considering them as individual executives' traits. The authors use the qualitative comparative analysis (QCA) method to analyze our data from 261 TMT executives in 63 firms. The findings indicate that sensing, seizing and reconfiguration capabilities are highly relevant for internationalization but in different configurations for specific stages and elements of international business. Presence of sensing as a part of configurations is observable, especially in connection to a firm having foreign customers and explicit internationalization strategies, while configurations where seizing and reconfiguration emerge are connected to firms showing continuity in the international markets. The authors’ results also indicate that a lack of TMT consensus in connection to dynamic managerial capabilities is a driving force that allows the firm not to stagnate with regards to internationalization. Yet, lack of TMT consensus combined with low reconfiguration capabilities seems to generate negative results, which suggests that different views are not helpful if the firm is incapable of changing its approaches.Design/methodology/approachThis study uses data gathered with a questionnaire where the executives select either “yes” or “no” in response to statements describing the firm situation with regard different managerial aspects and progress of international growth. The authors analyze these data from 261 TMT executives from 63 firms using the QCA method.FindingsThe findings indicate that sensing, seizing and reconfiguration capabilities are highly relevant for internationalization but to different extents for specific elements of international business; generally, while sensing is needed, in particular, for having foreign customers and internationalization strategies in the first place, seizing and reconfiguration became relevant for continuity in the international markets. Consensus or rather lack of it on these elements also plays a role. It seems that some disagreement is a driving force that allows the firm not to stagnate with regards to internationalization. However, TMT disagreement combined with low reconfiguration capabilities seems to generate negative results, which suggests that different views are not helpful if the firm is incapable of changing its approaches.Research limitations/implicationsThe findings contribute to existing knowledge by exploring how managerial capabilities influence firm-level dynamic capabilities from the point of view of the TMT. The authors also add to existing research that has often focused on the relationships between TMT executives' demographic traits and TMT consensus and, further, the (subsequent) firm performance by looking at different configuration rather than linear linkages. Together, these notions further mean that the authors change the point of view on diversity. The authors consider the consensus on existing managerial dynamic capabilities rather than evaluate the functional diversity or the TMT executives' agreement on strategic moves.Practical implicationsAll capabilities are important. TMT does not need to agree on everything, as long as they acknowledge where their problem areas are, and they can capture at least some of the relevant trends and opportunities. In fact, having some lack of consensus seems to be a driving force that allows capabilities to be questioned and potentially keeps (false) under-appreciation of existing capabilities from becoming a barrier to international expansion.Originality/valueUnlike previous studies that have focused on the relationship between the TMT executives' demographic characteristics and firm performance or the relationship of the demographics and TMT strategic consensus at a general level – or studies that have explained international performance with TMT consensus (or with dynamic managerial capabilities), this study brings forth how the dynamic managerial capabilities and the TMT executives' strategic consensus with regard to these capabilities influence the firm's international expansion. Here, the authors consider internationalization widely, looking at whether the firm has foreign customers or international expansion strategy in place, and whether there this activity is sustained and continuous (with repeated trading and long-term international contracts, in particular). To our knowledge, there is no research on TMT strategic consensus that explains how the unanimity among executives on dynamic managerial capabilities connects to the firm's international expansion.

Highlights

  • Earlier theorization suggests that expansion into foreign markets requires specific resources (Zachary et al, 2015) and calls for managerial capabilities of sensing opportunities and threats, seizing recognized opportunities and reconfiguration of resources and capabilities (Augier and Teece, 2009; Prange and Verdier, 2011; Teece, 2007; Weerawardena et al, 2007)

  • Theoretical contributions and managerial implications In our study, we aimed to find out how the dynamic managerial capabilities and the top management team (TMT) executives’ strategic consensus with regard to these capabilities jointly influence a firm’s international expansion

  • We examined the configurations of sensing, seizing and reconfiguration, and the top management team’s strategic consensus with respect to different dimensions of international expansion

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Summary

Introduction

Earlier theorization suggests that expansion into foreign markets requires specific resources (Zachary et al, 2015) and calls for managerial capabilities of sensing opportunities and threats, seizing recognized opportunities and reconfiguration of resources and capabilities (Augier and Teece, 2009; Prange and Verdier, 2011; Teece, 2007; Weerawardena et al, 2007). To succeed in foreign markets, firms need to make prudent decisions on allocating suitable resources and capabilities to capitalize on emerging opportunities (Aharoni et al, 2011; Woldesenbet et al, 2012) Such resource orchestration is a manifestation of the dynamic managerial capabilities that reside in the top management team (TMT) (Adner and Helfat, 2003; Sirmon and Hitt, 2009; Helfat and Martin, 2014). How a TMT makes decisions and allocates firm resources so that they are used optimally is a fundamental issue (Ferguson et al, 2016; Teece, 2014) In this regard, Martin (2011) has suggested that dynamic managerial capabilities should not be studied at the individual level only, but research should be targeted at observing the interactions between these capabilities at the TMT level. Trying to tap into these issues, previous studies have explored the links between TMT, managerial capabilities and firm performance (Adner and Helfat, 2003; Helfat and Martin, 2014)

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