Firm Capabilities Research Articles

Mapping service capabilities using ISM and fuzzy DEMATEL

In the present competitive landscape, small enterprises (SEs) must consistently strive to enhance and sustain their position by utilizing suitable capabilities. Recognizing such advancements is mostly linked to service capabilities and resources. Nonetheless, there is a lack of research focused on evaluating service capabilities in isolation or from a purely functional perspective to ascertain the criteria associated with service capabilities in small firms supported by hybrid methodologies. Consequently, employing the resource-based view (RBV), the current study examined the links among these criteria and analyzed their interdependencies and strengths. The present study utilized interpretive structural modeling (ISM) and fuzzy decision-making trial and evaluation laboratory (fuzzy DEMATEL) methodologies for this objective. The findings indicated that the criterion analysis and formulation of the strategy is of greater significance than other criteria. The research findings about service capacities are examined for practical insights.

Skills Training, Corruption and Organisational Capabilities: An Analysis of Bangladesh’s Garment Industry

Skills training programmes are critical for job creation and structural transformation in developing countries. However, they often achieve poor results because of corruption. By looking at evidence of fraud in a group of training providers in Bangladesh, we identify a deeper problem. Many firms have low productivity due to low organisational capabilities and prefer to employ cheaper untrained workers because their production lines do not move fast enough for training to make a difference. At the other end, very high-capability firms also have limited demand for trainees from average training providers. Without addressing this problem, skills training may fail to create employment. What is worse, outcome-based reward schemes create incentives for providers to fraudulently overstate trainee placements, hiding the source of the problem. We test the hypothesis that providers supplying lower-capability firms and very high-capability firms are compelled to engage in higher levels of fraud. We test this non-linear relationship between the propensity to misreport by training providers and the organisational capabilities of firms by utilising a unique dataset from the Sudokkho skills programme, covering the first half of 2018. Our regression results support the hypothesis and demonstrate the importance of jointly addressing firm capabilities with skills training.

The role of firm resources, capabilities, and export promotion programs in enhancing export performance: the mediating effect of product adaptation in Ethiopia’s leather industry

This study investigates the drivers of export performance in Ethiopia’s leather industry, focusing on firm resources, export promotion programs, and firm capabilities. Motivated by the need to improve Ethiopia's competitiveness in global leather markets, the study examines how these internal and external factors influence export success, with a particular emphasis on the mediating role of product adaptation strategies. Employing a quantitative approach, survey data were collected from 187 top-level managers across 97 medium and large leather-exporting firms. Partial Least Squares Structural Equation Modeling (PLS-SEM) was applied to test the hypothesized relationships. The findings reveal that firm resources and capabilities significantly enhance export performance both directly and indirectly through product adaptation strategies. While export promotion programs positively influence export performance, they do not significantly influence product adaptation. Furthermore, product adaptation mediates the relationships between firm resources, capabilities, and export performance, but not between export promotion programs and export performance. These results underscore the importance of aligning internal resources and capabilities with product adaptation strategies to enhance global competitiveness. The study offers valuable insights for policymakers and industry stakeholders, suggesting that targeted support for firm-level competencies and product adaptation can foster sustainable growth in international markets.

Exploring the dynamic impact patterns of R&D on firm capability: asymmetric impact analysis

Purpose The purpose of this study is to explore the complex impact of research and development (R&D) on firm performance, as represented by firm capabilities. Specifically, it focuses on predictive impact analysis and delineates the versatile impact patterns of R&D, contingent on resource conditions and the level of capabilities. Design/methodology/approach This study presents an innovative three-stage data envelopment (DEA)-Tobit regression (Tobit)-multi-layer perceptron neural network (MLP) approach. The integrated analytic process includes an evaluation of firm capabilities (DEA), explanatory analysis (Tobit) and predictive pattern analysis (MLP). Findings This study finds that the effect of R&D on firm capabilities is significant, in general, with a quadratic effect (U-shaped). However, the delineated impact analysis reveals that the effect size varies, contingent on firm-specific conditions and the divergent impact patterns showing that one-size-fits-all solutions are not applicable. Practical implications The study’s methodological advancement provides industry managers with a meaningful decision-making aid. By understanding these complex impact patterns, managers can take advantage of what-if scenario testing for resource deployment and pursue feasible options best suited to firm-specific conditions. Originality/value By proposing a cascading analytic process, this study presents an innovative empirical approach in that it delves into the complex impact mechanism of R&D on capabilities as a holistic performance measure. Unlike prior efforts, this study focuses on capturing asymmetric impact patterns and predicting the interpretable effect size, which holds significant pragmatic value.

Navigating the supply chain life cycle: a roadmap for growth and transitional strategies across the stages of organizational evolution

Purpose This paper aims to understand how managers confront challenges associated with building and implementing supply chain capabilities in nascent firms and how supply chain competitive priorities, structure and processes evolve as a firm matures. Design/methodology/approach For this study, this paper used a grounded theory approach to develop a theoretical understanding of supply chain competitive priorities, structure and process linkages. This paper interviewed 29 managers from 15 firms across multiple geographic locations and used a constant comparison process to develop theoretical categories, dimensions and propositions for future research. Findings The findings, contrary to predictions of congruence theory, suggest that supply chain competitive priorities, structure and methods are more aligned with firm strategy during periods of instability and less aligned during periods of stability. This unexpected discovery significantly contributes to the field, sparking further interest and debate. Furthermore, the findings suggest that, while a firm’s strategic priorities shift toward efficiency and compliance in the latter stages of organizational development as predicted by organizational life cycle theory, supply chain competitive priorities focus on customer service and quality throughout the maturation process, creating a strategic rift. Originality/value From a theoretical standpoint, the findings in this study provide much clarity on how organizations successfully transition supply chain structures to support organizational growth and maturity. As such, this study moves beyond staged development models and builds a theoretical pathway to understand successful transitions between stages. These implications of this research guide managers in aligning their supply chain strategies with their firm’s overall strategy.

Empowering Startup Supply Chain: Exploring the Integration of SCF, AI, Blockchain, and Trust

Background: This research aims to comprehensively evaluate the influence of firm capabilities, resources, and Artificial Intelligence (AI) on supply chain financing within the Jordanian context. It also analyzes the mediating role of blockchain technology and trust in these relationships. Methods: A conceptual model was utilized to empirically examine the suggested relationships. Data were gathered from a sample of 349 Jordanian start-ups focusing on AI and blockchain technologies via a five-point Likert scale questionnaire. Partial Least Square regression-based Structural Equation Modeling (PLS-SEM) facilitated by SmartPLS4 was used to perform the analysis. Results: The findings reveal that firm capabilities/resources and AI positively impact supply chain financing. Blockchain technology and trust serve as mediators, enhancing the effects of these factors on supply chain financing. Conclusions: The study highlights the role of innovative technologies in improving financial information security and collaboration among supply chain partners. It emphasizes how firm capabilities, resources, and emerging technologies such as AI and blockchain influence supply chain financing as they foster trust and security in financial transactions, offering valuable insights for decision-makers in the supply chain domain.

The effects of state-owned strategic investors on ambidextrous innovation in private firms

ABSTRACT We conducted a data collection from privately-listed companies on China’s A-share market within the Shanghai and Shenzhen stock exchanges, spanning from 2007 to 2020. This resulted in a comprehensive sample size of 13,486 unique firm-year observations. Our primary objective was to scrutinise the influence of state-owned strategic investors on the ambidextrous innovation of private firms. Empirical analyses were performed using methodologies such as ordinary least squares (OLS) regression and fixed effects models. The findings reveal that the presence of state-owned strategic investors significantly bolsters the ambidextrous innovation capabilities of private firms. Specifically, these investors foster an environment conducive to innovation through the augmentation of government subsidies and the alleviation of financing constraints, thus demonstrating the resource effect pathway. However, it is noteworthy that the involvement of state-owned strategic investors also escalates agency costs within private firms. Consequently, this heightened governance burden mitigates the positive impact that these investors initially have on ambidextrous innovation. Additionally, the promotion effect of introducing state-owned strategic investors on ambidextrous innovation in private firms is better in small and medium-sized firms and those with a low level of marketisation and in competitive industries.

Modeling the determinants of Insurtech Adoption: Evidence from the Saudi Insurance Industry

This research examines the determinants of InsurTech adoption in the insurance sector in Saudi Arabia and their alignment with the Kingdom's Vision 2030 objective of transforming the economy digitally and diversifying it. Employing a previously unutilized, manually created panel dataset of 23 Saudi insurance companies from 2020 to 2022, the research formulates an InsurTech Adoption Index using annual report keyword frequency. The three models of Multiple Linear Regression (MLR), Generalized Additive Models (GAM), and Random Forest (RF) are used to test the impact of firm age, size, profitability, and capital adequacy on the level of InsurTech uptake. The MLR model considers firm age as a linear predictor of increased InsurTech adoption, as a sign of organizational maturity. The GAM model discovers a nonlinear effect of firm size on digital uptake with declining marginal returns at larger sizes. The RF model shows profitability and capital adequacy as prime predictors and demonstrates how interaction terms imply that digitally inclined firms with robust capital buffers are more active in terms of InsurTech uptake. The research concludes that InsurTech uptake is influenced by subtle but multifaceted interactions between structural and financial firm attributes. The linear models might mask vital dynamics and highlight the importance of elastic and machine learning models to comprehend diffusion in insurance. The insights presented are valuable to insurers and policymakers to formulate targeted digitalization plans. Aligning the firm capabilities with the country's goals of digitalization could better foster InsurTech uptake in the Saudi market and contribute to overall financial sector modernization under Vision 2030.

Impact of ArcelorMittal’s Sustainability and Digitalization Initiatives on Environmental Performance

This study examines the impact of digitalization and sustainability initiatives on environmental efficiency performance at ArcelorMittal Temirtau, a steel manufacturing company in Kazakhstan. Using an explanatory case study design, the research applies Innovation Diffusion Theory (IDT), Resource-Based View (RBV), and Institutional Theory. Data was collected through a structured questionnaire from 123 employees with at least three years of relevant experience. Statistical analysis, including SEM, CFA, and correlation analysis, was conducted using SPSS and AMOS. Findings indicate that sustainability efforts, particularly collaboration with external stakeholders, are well-received, while employee training needs improvement. Digital transformation enhances production efficiency, decision-making, and waste management, yet training gaps persist. Hypothesis testing reveals that firm capabilities do not significantly benefit from digitalization alone, and institutional pressure does not moderate its environmental impact. However, sustainability efforts, digitalization, and R&D investments contribute positively to environmental outcomes, with internal resources acting as a mediator. The study recommends structured employee training, AI-powered analytics, blockchain-enabled supply chains, and digital twin technologies for optimizing sustainability and operational efficiency. Future research should explore long-term sustainability impacts and industry-specific regulatory responses. The findings provide valuable insights for companies and policymakers aiming to enhance sustainability through digital innovation.

Optimizing Logistics Capability: Integrating Human Resources, Technology, and Cooperative Efforts

The logistics sector in Indonesia is grappling with significant challenges, marked by high logistics costs and a decreasing Logistics Performance Index (LPI), which dropped from 46th in 2018 to 61st in 2023. This study aims to fill the gap in the existing literature by exploring human resources, technological resources, and collaboration as interconnected factors that collectively influence the capability of logistics firms. The research highlights the critical role of effective human resource management in enhancing logistics capabilities, as skilled and well-trained personnel contribute significantly to operational efficiency. Additionally, the study underscores the importance of leveraging advanced technological resources, such as automation and data analytics, to improve process efficiency and decision-making. While collaboration among logistics firms, suppliers, and customers is identified as a vital component, the findings indicate that it tends to have a comparatively lower impact on logistics capability. Nevertheless, fostering effective collaboration can still lead to improved coordination and information flow within the supply chain. Overall, the insights from this study suggest that logistics service providers in Indonesia should prioritize the development of human capital, invest in modern technologies, and strengthen collaborative partnerships to enhance their capabilities and competitiveness in a rapidly evolving market.

The Role of Strategic Orientations in the Relationship Between Adaptive Marketing Capabilities and Ambidexterity in Digital Services Firms: The Case of a Highly Competitive Digital Economy

As the digital economy progresses aggressively in the UAE, the ways in which different players in the economy interact with each other are changing. Therefore, strategic orientations that enable successful interactions have become a necessity. This study aims to investigate the impact of adaptive marketing capability on market ambidexterity in the presence of strategic orientations. It examines the outside-in and inside-out strategies that form the dynamic capabilities of firms. Furthermore, this study identifies how strategic orientations enable higher firm ambidexterity in highly competitive digital business environments as in the case of the UAE. A quantitative deductive approach using a survey is followed in order to test the proposed hypotheses. The data were collected from senior management-level individuals in 75 firms with the careful selection of demographics. Our study demonstrates a strong correlation between adaptive marketing capability and market ambidexterity. Furthermore, strategic orientations, which are characterised by a culture of proactiveness, responsiveness, and innovativeness, are found to positively mediate the relationship between adaptive marketing capability and market ambidexterity. Additionally, there exists a positive and direct relationship between adaptive marketing capability and market ambidexterity. Finally, this study provides important contributions regarding new forms of dynamic capabilities, such as adaptive marketing capability and market ambidexterity, under the specific intervention of strategic orientations, thus enhancing the body of knowledge on ambidexterity and dynamic capability, which is vital in the digital era. It also presents an enhanced empirical model reflecting the relationships between adaptive marketing capabilities, strategic orientations, and market ambidexterity from both the inside-out and outside-in perspectives.

Aligning Firm Capabilities and Business Environment in a Managerial Context: Evidence from the 2016 Presidential Election and Dodd-Frank Rollback

Studies examining firm capabilities under abrupt discontinuities are scarce. To contribute to this literature, we focus on the effect of matching firm capabilities to business environments. In doing so, we explore strategic and environmental alignment and its impact on firm performance within the banking industry before and after the 2016 presidential election. We demonstrate that firm capabilities need to match a specific environment to attain a competitive advantage. However, these same capabilities are not necessarily the source of a competitive advantage in a different environment. Specifically, we find that during the post-election era (the Dodd-Frank rollback era), the group of banks labeled rollback winners adequately aligned their capabilities to their environment, whereas the group of banks labeled rollback losers failed to do so. The winner group outperformed their counterparts because their capabilities aligned with their environment, which rewarded riskier behavior and intensive lending. However, roles were reversed during the pre-election period (the Dodd-Frank era), which demanded regulatory compliance and lending prudence. Our paper suggests that successful managers not only anticipate environmental opportunities, but that they also develop the capabilities needed to align with them. For investors, we prescribe using our matching capabilities rationale to go beyond economic and industry trends.

Big data analytics and firm performance: The effects of human capital and mediating firm capabilities

Big data analytics and firm performance: The effects of human capital and mediating firm capabilities

Explorative or exploitative innovation? The moderating effect of big data marketing capability

PurposeThis study aims to examine the role of big data marketing capability (BDMC) in shaping firms’ innovation behavior within the context of digital innovation. By defining BDMC and identifying its core dimensions, the study provides a framework for understanding how BDMC moderates the inverted U-shaped relationship between two key types of innovation – explorative and exploitative innovation – and their impact on innovation performance.Design/methodology/approachBDMC is conceptualized through five key dimensions: (1) big data-driven specialized marketing capability, (2) big data-driven customer relationship management (CRM) capability, (3) big data-driven channel and alliance management capability, (4) big data-driven brand management capability and (5) big data-driven market information and knowledge capability. A refined measurement scale for BDMC is developed based on these dimensions. Using hierarchical regression analysis and U-shaped tests, this study investigates how BDMC moderates the nonlinear (inverted U-shaped) relationship between explorative and exploitative innovation and innovation performance. Empirical analysis is conducted using data from 151 firms in the Chinese automotive manufacturing industry.FindingsThe results confirm the distinct effects of explorative and exploitative innovation on innovation performance, with these relationships significantly moderated by BDMC. Under experience-driven marketing capability, explorative innovation exhibits a positive linear effect on performance, while exploitative innovation follows an inverted U-shaped pattern. However, with BDMC, the relationship between explorative innovation and performance shifts to an inverted U-shape, while exploitative innovation transitions from an inverted U-shape to a U-shape, highlighting BDMC’s moderating role.Originality/valueThis study advances the literature by clearly defining BDMC, refining its measurement scale and assessing its moderating influence on innovation strategies. It contributes to the behavioral theory of the firm, the capability-based view and digital innovation theory by positioning BDMC as a pivotal capability that shapes firms’ ability to balance explorative and exploitative innovation. The study provides practical insights for firms undergoing digital transformation, offering a strategic framework for leveraging BDMC to enhance innovation performance.

Impact of regional characteristics on firm capabilities and new product performance

This study investigates the impact of various corporate capabilities on market performance among firms in Korea, with a particular focus on the disparities between those located in capital and non-capital regions. Specifically, the study examines how research and development (R&D), dynamic capability, network capability, and technology commercialization capability contribute to market performance. New product performance is incorporated as a mediating variable to better understand the pathway through which these capabilities exert their influence. In addition, dynamic capability is explored not only as a direct factor but also as a moderating variable that potentially enhances the relationship between R&D and new product performance. Methodologically, the study adopts a multi-analytical approach, utilizing importance-performance map analysis (IPMA), multigroup analysis (MGA), and fuzzy-set qualitative comparative analysis (fsQCA) to uncover key drivers and combinations of capabilities that lead to superior market outcomes across different regional contexts. The findings underscore significant regional heterogeneity, emphasizing the need for region-specific business strategies and policy interventions to enhance firm competitiveness and innovation outcomes.

Innovation and Agility in Emerging Market E-commerce: The Case of Vietnam

This research seeks to explore the connections among external innovation sources, the integration of digital technologies, customer engagement, internal innovation sources, and their influence on perceived organizational agility and market dynamics within emerging market e-commerce. The research method employed in this paper is systematic and includes the use of well-developed structured questionnaires distributed among e-commerce vendors and the logistics workforce. As a result, PLS-SEM was used to analyze the investigated factors and examine the relationships between the variables and the ability of governmental policies to influence them. Field evidence indicates that external sources of innovation and the application of digital technologies significantly enhance the firm's ability to respond to the market. At the same time, internal resources are beneficial but with some complexities. Absorptive policies are a crucial enabling system that sustains or hinders the diffusion of innovative ideas. The study highlights the importance of collaborative work between organizations, the integration of technologies, innovations into processes enhancing work, and supportive governmental policies. The findings reveal several managerial, social, and theoretical implications that contribute to the increased flexibility and growth capability of e-commerce firms in emergent markets.

The context-dependent role of innovation as a mediator between firm capabilities and performance

ABSTRACT This study investigates the context-dependent mediating role of innovation in the relationship between the three primary firm capabilities (absorptive capacity, export orientation, and sustainable practices) and financial performance via a mixed method that combines classical meta-analysis with meta-analytic structural equation modelling. Our analysis of 555 effect sizes from 280 distinct samples published from 2001 to 2022 supports the dynamic capabilities perspective by revealing a nuanced connection between firm capabilities, innovation, and financial performance. The classical meta-analysis identifies statistically significant positive associations among the three firm capabilities, innovation, and financial performance. Grounded in three well-established theoretical lenses – Resource-based View, Exogenous Growth Theory, and Stakeholder Theory, our meta-analytic structural equation modelling results indicate that innovation mediates the positive effects of absorptive capacity, export orientation, and sustainable practices on financial performance. Effect size estimates are quite different according to three subgroups: innovation type (conventional vs. eco-innovation), industry type (knowledge/technology-intensive vs. labour-intensive industries), and country type (developed vs. developing countries), highlighting innovation’s context-dependent role in linking firm resources/capabilities with financial outcomes. Our results indicate that innovation’s mediating effect is especially prominent in knowledge- and technology-intensive industries and in developing economies, and internal capabilities, such as absorptive capacity and knowledge assimilation, are more critical to innovation and financial performance than external market exposure.

Complementary assets, dual learning and innovative capabilities: examining the catch-up process of late-start firms in emerging economies

PurposeComplementary resources and dual learning play crucial roles in enhancing the innovation capabilities of latecomer firms. However, the precise processes through which they contribute to this enhancement remain unclear. The aim of this study was to elucidate the underlying mechanisms involved.Design/methodology/approachA longitudinal case study spanning the period from 1986 to 2022 was conducted to examine Haier water heaters from the perspective of the catch-up process of latecomer firms in emerging economies.FindingsThe development of digital infrastructure has not shown a notable ability to advance the transformation and modernization of the small home appliance industry. Additionally, digital industrialization has had a minimal constraining effect on this process. Nonetheless, digital governance has persistently exhibited substantial influence in facilitating the transformation and modernization of the small home appliance industry. Although both industrial digitization and digital innovation possess significant potential for promoting the transformation and modernization of the small home appliance industry, their sustainability remains limited.Practical implicationsIt is crucial for late-developed enterprises to concentrate on building complementary assets while simultaneously alternating between exploratory learning and utilization learning. Additionally, it is essential to consider the dynamic relationship between complementary assets and dual learning during the catch-up process.Originality/valueThis study addresses the inadequacy in the literature concerning the operational process of complementary assets and dual learning in fostering the innovation capacity of late-developing companies, thereby augmenting the theoretical frameworks pertaining to complementary assets and technological catch-up, as well as extending the scope of dual learning to some extent.

High earnings through firm influence: the role of hierarchical structures in public procurement

Public procurement, a critical but often overlooked aspect of governance, plays a pivotal role in steering the acquisition of goods, services and the commissioning of public works. Our study, analyzing over one million public procurement contracts from the Portuguese public administration, applies network science to unravel the complexities of this market. We uncover a market characterized by highly modular and hierarchical networks, with notable service specialization, regional diversity, and entity diversification. Our findings reveal a clear pattern: firms occupying influential positions within the networks consistently achieve higher earnings per bid. This disparity in earnings indicates a market where competition is constrained and entry barriers for new firms are high. Similarly, markets in the Portuguese public procurement system exhibit high levels of concentration, which raises both integrity and supplier risks that should be monitored by policymakers. The empirical framework developed in this article contributes to a growing body of literature that analyzes the levels of competition in public procurement systems. The network-based method applied here facilitates the analysis of firms’ positioning within their network of competitors and helps to quantify firm capabilities in a way that moves beyond a monolithic view of firm size and market power.

Intellectual Capital, Innovation Capability, Knowledge Integration of Hi-Tech firms in Thailand

Innovation is a crucial strategic component that enables firms to gain a sustainable competitive advantage and achieve long-term success. This research aimed to 1) examine the relationships between human capital, organizational capital, relational capital, and knowledge integration effect on innovation capability of Hi-Tech firms; 2) determine knowledge integration play the mediating role impact between human capital, organizational capital, relational capital on innovation capability of Hi-Tech firms in Bangkok, Thailand. This study used a quantitative research method to fully utilize the advantages of answer the research questions more comprehensively. Population was executive from to 10 Hi-Tech in Bangkok and sample 280 respondent via on simple random sampling, Statistic analyze by SEM. The research reveals that 1. human capital, organizational capital, relational capital, and knowledge integration positive effect on innovation capability 2) knowledge integration play the mediating role impact between human capital, organizational capital, relational capital on innovation capability of Hi-Tech firms in Bangkok, Thailand. These study results had various theoretical, practical, and policymaking implications as discussed by the authors