Firm Capabilities Research Articles

Family influence and dynamic capabilities in family firms: the moderating effects of knowledge scope and knowledge newness

Purpose The purpose of this study is to examine how family influence affects dynamic capabilities in family firms. This study also aims to analyze whether knowledge scope and knowledge newness serve as moderating factors in this relationship. Design/methodology/approach This study examines the dynamic capabilities of family businesses listed in both the Shanghai and Shenzhen Stock Exchanges from 2009 to 2022. This study identifies businesses belonging to family firms based on family influence. In total, the sample covers 2,934 Chinese family firms accounting for 20,324 firm-year observations. Besides, this study identifies family firms by manually searching for annual reports that reveal the kinship of directors and executives, and other financial variables are collected from the China Stock Market Accounting Research Database. Findings This study empirically reveals that family influence is negatively associated with dynamic capabilities. Moreover, the effect of family influence on dynamic capabilities is weakened with more knowledge scope and knowledge newness. Originality/value The findings contribute to two streams of literature. First, this study extends the theoretical framework of dynamic capabilities from the perspective of socioemotional wealth theory. This study recognizes that family influence is negatively associated with dynamic capabilities. The results offer novel empirical evidence to better understand the dynamic capabilities of family businesses and make it valuable to expand the theoretical framework of dynamic capabilities. Second, this study contributes to the literature in the field of knowledge management. The results provide new findings on the positive moderating role of knowledge management, shedding light on embracing knowledge scope and newness, especially in family businesses with higher level of family engagement.

Capabilities and Resources for Value Creation and Sustainable Competitive Advantage: A Study of the Chinese Video Game Industry

Amidst rapid technological progress and increasing regulatory demands, the Chinese video game industry has undergone rapid changes that have provided a fruitful context for examining corporate competencies. Drawing on the Resource-Based View (RBV) and Dynamic Capability View (DCV) theories, this study investigates how firm capabilities (FC) and firm resources (FR) contribute to value creation (VC), which subsequently influences firm performance (FP) and sustainable competitive advantage (SCA). A quantitative research approach was employed, utilizing the data collected from a questionnaire survey of 241 video game firms. The data analysis was conducted using SmartPLS4 software, revealing that FC/FR has a significant effect on VC, which, in turn, mediates the relationship between FC/FR and FP. This study identifies three dimensions of VC—customer value (CV), employee value (EV), and shareholder value (SV)—with EV showing stronger mediating effects than CV and SV. It then uses the BSC framework to assess FP’s intermediary role in bridging VC with SCA through the integration of both financial and non-financial performance indicators relevant to the dynamic video game industry. These results have strong theoretical and practical implications, offering valuable guidance for fostering sustainable development. Specifically, they provide actionable insights for managers to enhance value creation and firm performance while also offering policy recommendations to support regulatory compliance and promote sustainable practices in China’s dynamic video game industry.

Leveraging the capabilities of multinational firms to address climate change: a finance perspective

Leveraging the capabilities of multinational firms to address climate change: a finance perspective

Supply and demand prediction by 3PL for assortment planning

To underscore the critical role of predictive capabilities in third-party logistics (3PL) companies for assortment planning, particularly within the rapidly evolving e-commerce sector and business to business (B2B) flows. This study employs a comprehensive literature review on the forecasting capabilities of 3PL firms, enriched by empirical research across nine logistics facilities. It leverages statistical tools and the ARIMA_PLUS algorithm to evaluate the precision and dependability of demand and supply forecasts generated by these companies. The research reveals that 3PLs possess the ability to generate accurate demand and supply forecasts utilizing advanced forecasting tools. The effectiveness of these forecasts is closely linked to the quality of data available, and the expertise of the personnel involved. Challenges arise in forecasting for smaller order volumes, which are more common in e-commerce flows. The study also highlights that technological advancements and investments in data analytics are pivotal in enhancing forecast accuracy. The investigation focuses on a select group of 3PL companies, potentially limiting the generalizability of the findings. Moreover, the study underscores the necessity for further exploration into how technological innovations impact forecasting capabilities. By emphasizing the significance of 3PL firms' predictive abilities, also for e-commerce assortment planning, this paper addresses a notable gap in existing research. Its insights are invaluable for businesses contemplating logistics outsourcing and for 3PL providers aiming to advance their forecasting proficiency. The findings stress the importance of integrating advanced forecasting models and analytics to stay competitive in the dynamic e-commerce landscape.

The masking effect of green innovation: A study based on carbon market shocks

Previous empirical evidence indicates that the carbon market exerts a positive influence on the performance of corporate green innovation. In light of the proposition that there are differences in the green innovation capabilities of firms, we propose a masking effect hypothesis which suggests that the carbon market does, in fact, improve firms' green innovation performance at the overall level. However, separately, this improvement effect is only observed for high-capability firms, and not for ordinary firms. We test the hypothesis and explore the potential mechanism. The results show that, firstly, the outstanding green innovation performance of high-capability firms leads to a masking effect, which is robust to different estimation methods and variable settings. Secondly, the high innovation capability increases the positive effect of the carbon market on green innovation, irrespective of whether the capability is brown or green, which means a weak version of the masking effect. Finally, the different propensities towards co-innovation lead to the masking effect.

Management Control System and Firm Performance: A Strategic Approach

This research aims to examine the relationship between management control systems and firm performance through firm capability. The research used a survey method in processing industrial companies with a population of 137. The number of samples analyzed was 63 samples. The analytical tool used to test the hypothesis is Partial Least Square (PLS) with the help of smart PLS software version 4.0. The research results succeeded in proving a direct relationship between the management control system affecting firm capability, the management control system on firm performance, and firm capability on firm performance. Apart from that, the results of this research also prove that firm capability can mediate the relationship between the management control system and firm performance. This indicates that the company’s success in achieving optimal performance and achieving competitive advantage lies in the strategy of implementing the management control system and firm capability. Therefore, the company continues to improve its management control system and capability so that firm performance can improve and achieve competitive advantage.

Unveiling structural and emotional drivers of dynamic capabilities in family firms: the contingent role of firm size

PurposeThis study investigates the influence of family involvement in firm ownership on the deployment of dynamic capabilities, differentiating between the more structural aspects of family ownership (i.e. ownership dispersion) and the more emotional aspects (i.e. wealth concentration).Design/methodology/approachWe test our hypotheses on a large base of Spanish family-owned tourism firms. The idiosyncratic characteristics of this economic sector, mainly composed of family-owned firms, make it an excellent context for the purposes of this research.FindingsBuilding on this contextual approach, our study finds that both sides of family ownership have ambivalent effects on the development of dynamic capabilities considering the size of family business.Originality/valueCompetitive pressures force companies to capitalize on dynamic capabilities, as they empower firms to increase their distinctiveness through new products, processes and business management models. However, research remains particularly ambiguous regarding the commitment to innovation and learning capabilities for family businesses, where different aspects of family ownership might alter innovation processes.

Unlocking innovation potential: the impact of artificial intelligence transformation on enterprise innovation capacity

PurposeBuilding upon the resource-based view (RBV) and related research, this paper empirically examines the impact and specific mechanisms of artificial intelligence transformation on corporate innovation capabilities. It provides micro-level evidence of AI’s influence on innovation behavior.Design/methodology/approachDrawing upon data from Chinese listed companies spanning the period from 2011 to 2022, this study employs a dual fixed-effects model and a mediation effects model to empirically analyze the influence of enterprise AI transformation on its innovation capability as well as the specific mechanisms involved.FindingsThe research reveals that AI transformation significantly enhances the innovation capability of enterprises. Heterogeneity analysis indicates that AI transformation exerts a stronger promoting effect on the innovation capability of non-technology firms, large enterprises and those within the manufacturing sector. Mechanism analysis further reveals that AI transformation enhances innovation capability by boosting enterprise profits, reducing costs and reinforcing internal control mechanisms. Further examination demonstrates that AI transformation elevates the quality, efficiency and eco-friendliness of enterprise innovation.Originality/valueFirstly, this study employs text analysis methods from machine learning to construct artificial intelligence indicators at the firm level, providing stronger evidence of AI’s impact on corporate innovation capabilities. Secondly, it extends corporate innovation behavior to include innovation quality, efficiency and green innovation practices, offering a more comprehensive validation of AI’s role in fostering corporate innovation.

Disruptive Technology and Firm Capability of Some Selected Oil and Gas Organizations in Rivers State Nigeria

Disruptive Technology and Firm Capability of Some Selected Oil and Gas Organizations in Rivers State Nigeria

Risk propagation in supply-chain network considering node heterogeneity

In the current highly interconnected global economy, risk propagation within supply-chain networks has drawn significant attention from researchers because of its profound impact. Given the varying risk-propagation capabilities of different firms within the supply chain, we propose a risk-propagation model that considers the heterogeneity between nodes, referred to as the Degree-Dependent Risk Propagation (DDRP) model. We analyze the effects of different heterogeneity parameters on the performance of risk propagation in the supply-chain network and further explore how these effects influence the efficiency of logistics within the supply-chain network. The results indicate that the heterogeneity between nodes significantly increases the vulnerability of the supply-chain network, making it less efficient when facing risk propagation. In a highly heterogeneous network, more nodes become infected, leading to a notable decline in logistics-transportation efficiency, which severely disrupts the normal functioning of the entire supply chain. Our research not only provides a novel theoretical model for risk propagation in supply-chain networks, but also offers valuable practical insights for managers and decision-makers. By identifying and understanding the influence of heterogeneity on risk propagation, decision-makers can formulate more effective risk-management strategies, thereby enhancing supply-chain resilience and efficiency.

Unveiling the potential of digital human avatars in modern marketing strategies

PurposeThis study aims to develop a theoretical framework that marketing practitioners and scholars can adopt to enhance their understanding of how firms can effectively deploy and use digital human avatars as part of their global digital marketing strategy. By doing so, we inform investors of ongoing digital transformations of marketing practices that will equip marketeers to provide scalable, tailored, reliable and relevant digital self-service interactions to users, consequently improving the user/customer experience.Design/methodology/approachThematic analysis was used to discover factors to enable the successful implementation of digital human avatars, drawing on in-depth interviews with fourteen executives of digital human avatars developer companies worldwide and analysis of ten podcasts and webinars with artificial intelligence (AI) experts.FindingsDigital human avatars revitalise the international dynamic marketing capabilities (IDMCs) of firms by integrating advanced technologies that transform user interactions, improve engagement and facilitate knowledge acquisition, dissemination and usage across various sectors and business units globally. This integration promotes a dynamic approach to international brands, customer relationships and marketing knowledge management capabilities, offering profound value to users and firms.Research limitations/implicationsOur first limitation is a lack of diversity in data sources. As digital human avatars are an emerging field, we had to limit our study to 14 experts in AI and 10 podcasts. While this method provides deep insights into the perspectives of those directly involved in the development and implementation of digital human avatars, it may not capture the views of end-users or consumers who interact with these avatars, which can be an avenue for further research. Our second limitation is the potential bias in the interpretation of our interview data and podcasts. This study’s approach to data analysis, where themes are derived from the data itself, carries a risk of subjective interpretation by the researchers. Future studies are encouraged to investigate the impact of digital human avatars across different organisational contexts and ecosystems, especially focusing on how these technologies are integrated and perceived in various international markets.Practical implicationsThe novel framework has direct implications for innovators and marketing practitioners who aim to adopt digital human avatars in their marketing practices to enhance the effectiveness of international marketing strategies.Social implicationsThe adoption of digital human avatars can alleviate loneliest elderly and vulnerable people by being a companion. The human-like characteristics can impact sense of presence and attachment.Originality/valueThe novelty of our study lies in exploring the characteristics of technologies and practical factors that maximise the successful adoption of digital human avatars. We advance and contribute to the emerging theory of avatar marketing, IDMCs and absorptive capacity by demonstrating how digital human avatars could be adopted as part of a firm’s global digital marketing strategy. We focus specifically on six dimensions: outcomes and benefits, enhancements and capabilities, applications and domains, future implications, foundational elements and challenges and considerations. This framework has direct implications for innovators and marketing practitioners who aim to adopt digital human avatars in their marketing practices to enhance the effectiveness of international marketing strategies.

National innovation policy, entrepreneurial activity, managerial ability and green innovation of agribusinesses

This study examines the impact of national innovation policy on the breakthrough green innovation capabilities of agribusiness firms. Despite the global shift toward sustainable development and innovation-driven strategies, research on the mechanisms through which national policies influence green innovation in the agricultural sector is limited. By investigating the mediating role of urban entrepreneurial activity and the moderating effect of managerial ability, this study provides novel insights into the complex relationships among policy, entrepreneurship, and innovation in agribusiness. The findings contribute to the theoretical understanding of green innovation capabilities and offer valuable insights for policymakers to promote sustainable development in the agricultural sector. Furthermore, this study unveils asymmetric effects across ownership types and regions, emphasizing the need for targeted policy interventions. By bridging these research gaps, this study significantly advances the knowledge of green innovation in agribusiness and informs evidence-based policymaking for an increasingly sustainable future.

The COVID-19 pandemic and firms’ E-learning use: implications for inequality in training opportunities

This paper investigates whether the adoption of E-learning by firms contributed to offset the decrease in firm-sponsored training during the COVID-19 pandemic. Using a novel firm level survey linked with administrative data on the universe of workers within those firms, I study the role of E-learning in firms’ training activities during the crisis. I find that the COVID-19 pandemic substantially decreased firm-sponsored training by up to 11 percentage points. However, firms’ ability to use E-learning nullifies this negative effect. Furthermore, the differential capabilities of firms to apply E-learning might exacerbate already prevalent inequalities in training opportunities.

Patent opposition, IP firm capabilities, and technology entry: empirical evidence from European patent data

Patent opposition, IP firm capabilities, and technology entry: empirical evidence from European patent data

The impact of marketing leaders on firm’s market orientation: evidence from a small emerging economy

PurposeThis study seeks to investigate the impact of marketing leaders in (in terms of marketing education, experience and knowledge/skills) generating firm capabilities (market orientation) necessary to compete in a small emerging economy.Design/methodology/approachA survey was conducted with top marketing executives in Macau. Questionnaires were disturbed to and completed online by 125 top marketing executives from various industrial sectors in Macau. Structural equation modeling was employed to test the hypotheses.FindingsResults suggest that top marketing executives with marketing-specific education and functional marketing skills allow them to foster an overall market orientation of the firm. Marketing experience as well as other types of skills, however, are found to be unrelated to market orientation. Results also show a positive relationship between market orientation and firm performance.Originality/valueThis study seeks to address the void in the current literature which focus mainly on the mere presence of top marketing executive in generating favorable outcome with insufficient attention given to how this persona can play a key role in firms. While there is empirical evidence in the developed markets, this study aims to explicate the important role of marketing leaders in a small economy which is understudied. By showing that marketing leaders can actualize their benefits through the cultivation of market orientation of firms, this study also strive to address the call for more research in investigating the antecedents of market orientation.

Decoding Sustainability Reporting: Insights from Text Mining and Classification Models for SDGs

Objective: This study aims to investigate the signaling effects of Sustainability Reporting (SR) in listed Singapore firms, particularly in demonstrating firm capitalization and sustainability performance. The research focuses on identifying distinct SR signals using advanced text mining and classification techniques, and their alignment with the United Nations' Sustainable Development Goals (SDGs). Theoretical Framework: The study is grounded in signaling theory, which posits that firms communicate observable characteristics (SR content) to signal unobservable attributes (firm capabilities and sustainability performance). By applying this framework, we analyze how SR may act as a signaling mechanism for large-cap firms and sustainability leaders. Method: This research collects 1,844 sustainability reports from listed Singapore firms between 2016 and 2022. Using a combination of Structural Topic Modeling (STM) and Random Forest (RF) classification models, we extracted and analyzed the key SR signals that differentiate firms by size and sustainability performance. Results: The results indicate that SR signals such as community engagement, climate risk, and compliance are effective in distinguishing between large firms and firms with strong sustainability performance. The Random Forest models achieved high accuracy in identifying these groups. Community engagement, compliance with the Global Reporting Initiative (GRI), and sustainable construction were among the most impactful topics, with large firms focusing more on scope and governance, while sustainability leaders emphasized environmental risks and compliance. Research Implications: The findings provide insights into the practical and theoretical implications of SR as a signaling tool. Key SR topics are identified as critical signals for firms with large capitalization and high sustainability performance, guiding firms in utilizing SR in the context of SDGs. Originality/Value: The findings show that SR topics such as community engagement, climate risk, and compliance serve as key signals for differentiating firms by size and sustainability performance. Firms can strategically emphasize these areas to enhance their SR practices while contributing to broader SDGs.The findings provide insights into the practical and theoretical implications of SR as a signaling tool. Key SR topics are identified as critical signals for firms with large capitalization and high sustainability performance, guiding firms in enhancing their SR strategies.

Unlocking New Product Performance Through Market Orientation and Firm Capabilities in Malaysian Manufacturing SMEs

In Malaysia, small and medium enterprises (SMEs) are critical to the economic transformation as they form the key domestic source of growth and the bedrock of private sector activity. Moreover, SMEs are also important in stimulating innovation and stabilizing growth during the economic slowdown. Therefore, this paper investigates how the relationships between a firm’s market orientation and its new product performance are mediated by such capabilities (marketing and technological capabilities). Embedded in the firm's Resource-based View (RBV), a theoretical framework for new product performance was developed. The empirical results demonstrate that a firm’s market orientation positively impacts new product performance. Also confirms that marketing capabilities do have a direct impact on new product performance. Besides, marketing capabilities serve as an indirect-only mediator (full mediation) for the relationship between market orientation and new product performance. A clear message for managers and owners is that they should develop strong firm capabilities to achieve superior new product performance.

Environmental regulations and firms’ trade-offs between innovations: Empirical evidence from the quasi-experiment in China

This paper uses firm-level panel data to study the quasi-experiment of China's low carbon city (LCC) pilots and to estimate the dynamic impact of environmental regulations on firms' trade-offs between green innovation and digital innovation. The results indicate that environmental regulations lead to an increase in firms' green innovation in the short run and promote firms' digital transformation in the long run. Moreover, the key factors influencing firms' trade-offs are their size and the pollution levels of their primary businesses, highlighting the importance of both capability and immediacy for firms when making decisions. Furthermore, the event study shows that environmental regulations initially impact firms' profits in heavily polluting industries in the short run. However, environmental regulations can gradually enhance those profits in the long run by reducing marginal costs and upgrading industrial structures in treated regions. This paper provides insights for a deeper understanding of firms' heterogeneous choices and dynamic effects of innovation behaviors.

How knowledge-based HRM practices affects aspects of innovation capability through knowledge management: the moderating role of innovative culture

Purpose Given the important of knowledge resource and human capital for improving innovation competence, the purpose of this study is to examine the influence of knowledge-based HRM practices on product and process innovation of firms via the mediating role of knowledge management capability and moderating role of innovative culture. Design/methodology/approach The paper used structural equation modeling and empirical data collected from 271 participants in 156 manufacturing and service firms to examine the level of how knowledge-based HRM practices and knowledge management affect product and process innovation under the moderating role of innovative culture. Findings The research findings confirm the mediating roles of knowledge management between knowledge-based HRM practices and two specific types of innovation namely product and process innovation. It also firstly reveals the positive moderating role of innovative culture in enhancing the effects of knowledge management on product innovation. The results underline the necessity of building an innovative climate and knowledge-based HRM practices to stimulate knowledge management for improving innovation capability of firms in the developing and emerging markets. Research limitations/implications The paper helps bring deeper insights to leaders and practitioners about the new knowledge-based approach that enhances innovation competence for organizations. Originality/value The paper significantly contributed to theoretical and practical initiatives on theory of HRM practices and knowledge management by showing different moderating and mediating mechanism thereby firms can follow to enhance innovation capability of firms in developing and emerging markets.

Firm Capabilities and Performance of Parastatals in Kenya: A Case Study of Kenya Ports Authority

Firm Capabilities and Performance of Parastatals in Kenya: A Case Study of Kenya Ports Authority