Academic journal article Entrepreneurship: Theory and Practice

Corporate Entrepreneurship as Resource Capital Configuration in Emerging Market Firms

Academic journal article Entrepreneurship: Theory and Practice

Corporate Entrepreneurship as Resource Capital Configuration in Emerging Market Firms

Article excerpt

Network-based resource capital such as political capital, social capital, and reputational capital are critical in providing firms with special access to various resources and legitimacy in emerging markets. However, how these generic nonmarket forms of capital are transformed into value-adding, industry-specific, and firm-specific uses, which subsequently enhance firm competitiveness, remained unanswered. Adopting a dynamic capability approach, this paper posits that corporate entrepreneurship performs a unique role of resource capital configuration and transformation in emerging market firms by continuously renewing firm competences so that congruence with the changing environment can be achieved. Building on this conceptualization, we argue that the positive effects of network-based resource capital on firm performance are channeled through the resource configuration process given by various corporate entrepreneurial activities such as product and organizational innovations as well as new venturing. Empirical evidence of the proposed mediation model is obtained from a survey of established firms in China.

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In emerging markets, the need for the acquisition and configuration of resources in established firms may be similar to those in matured markets. However, the sources of such resource acquisition and the subsequent resource configuration process may be different. The importance of networks has been highlighted in extant literatures, and it has been argued that networks provide the needed resource capital for firms in emerging markets (Peng & Zhou, 2005). Oliver (1997) defines resource capital as "the value-enhancing assets and competencies of the firm" (p. 709). One critical way of enhancing resource capital is to develop interfirm linkages in order to maximize the potential for accessing specialized resources. Nevertheless, how resource capital is reconfigured and transformed has not been closely examined.

There are two primary motivations in this study. First, this study attempts to specify exactly what type of resource capital firms can derive from their network ties in emerging markets. Building on the institutional embeddedness perspective, three different types of resource capital obtained from informal institutions and network ties, namely political, social, and reputational capital, are proposed. It is argued that the extent of a firm's emebeddedness in informal institutions in the emerging market context allows firms to derive nonmarket forms of capital including political, social, and reputational capital from either institutional or business networks, or both (Peng, Lee, & Wang, 2005).

Second, how resource capital derived from different types of networks are employed and transformed to realize firm performance has not been widely studied. Particularly in an emerging market context, established firms often face strategic issues related not just to the development of new products and markets, but also to the transformation of current organizational structure and management systems. Due to continuous marketization and market liberalization policies in these countries, this is the appropriate path for many firms to take in order to sustain their competitiveness in the increasingly competitive domestic market. Emerging market firms share some similarities with new start-ups in the market economies in terms of market opportunity seeking, but they often differ from the developed market counterparts in terms of size, age, as well as the portfolio of resource capital possessed. Thus, it is important to understand how the values of network resource capital are realized in order to sustain competitiveness in the market.

We aim to fill this research gap by examining how firms in emerging markets configure and transform different types of network resource capital for the realization of firm performance via carrying out different corporate entrepreneurial actions. …

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