Academic journal article Academy of Strategic Management Journal

The Influence of Organizational Capacity and Environmental Dynamism on the First Move-Performance Relationship

Academic journal article Academy of Strategic Management Journal

The Influence of Organizational Capacity and Environmental Dynamism on the First Move-Performance Relationship

Article excerpt

ABSTRACT

The success of first moves is based on contingencies. Thus, we describe a multidimensional contingency variable, organizational capacity, and argue that it aids the firm in creating advantages from a first move. We also discuss environmental dynamism's role as it relates to this process. We rely on the resource-based view of the firm to help build our model of first moves and develop corresponding propositions. We conclude with a discussion of the implications for scholars and managers.

INTRODUCTION

A central concern of strategic management research involves understanding those factors that drive superior firm performance (Hoskisson, Hitt, Wan, & Yiu, 1999). One specific area of focus concerns the timing of market entry and its impact on firm performance (e.g. Kerin, Varadarajan, & Peterson, 1992; Lieberman & Montgomery, 1998). Many scholars have suggested that firms that adopt a "first-mover" strategy may be able to secure sustainable, positive economic outcomes (Lieberman & Montgomery, 1998). In the strategic management literature, the term "first moves" (a.k.a. "pioneering moves") commonly refers to organizational efforts to create new markets through the introduction of new products or services, though it can also refer to entry into new markets, the development and implementation of new work processes (Kerin et al., 1992), and the implementation of new business models (e.g., Jackson, 2008). Thus, the willingness to adopt a pioneering attitude rather than a wait-andsee, follower's perspective can be a vital part of a firm's overall competitive strategy.

Although there is evidence pro and contra regarding a "first-mover advantage," many researchers believe that advantages are more likely to occur only under certain conditions (e.g. Lieberman & Montgomery, 1998). For example, researchers have found evidence that the firm's internal characteristics play a key role in the extent to which the firm realizes first-mover advantages. Though some researchers do highlight the importance of specific internal characteristics and first moves (e.g. Lilien & Yoon, 1990; Szymanski, Troy, & Bharadwaj, 1995), the exact nature of the relationship between internal organizational characteristics, first moves, and finn performance is unclear (Lieberman & Montgomery, 1998; VanderWerf&Mahon, 1997).

This is an important gap in the literature and its illustration represents one of our main goals for this paper. Specifically, we will try to provide conceptual clarification on the relationship between internal organizational characteristics - here, we specifically examine components of organizational capacity - and their impact on the first move-firm performance relationship. External environmental contingencies also have been shown to play a role in the first move - performance relationship (e.g. Covin, Slevin, & Heeley, 2000; McNamara, Haleblian, & Dykes, 2008). Thus, another goal is to discuss organizational capacity's role under differing environmental conditions; specifically under dynamic vs. stable environments. A final goal is to present a comprehensive model of the first move-firm performance relationship. This model not only synthesizes current first-mover research, but also provides the foundation for a series of propositions designed to provide insight into the conditions under which entry timing will positively impact firm performance. In order to accomplish our goals, we employ the resource-based view (RBV) paradigm, which, in the strategic management literature, is a dominant approach to understanding firm performance (Barney, Wright, & Ketchen, 2001; Crook, Ketchen, Combs, & Todd, 2008; Hoopes, Madsen, & Walker, 2003). Indeed, research has been initiated linking first moves and the resource-based view (e.g., Finney, Lueg, & Campbell 2008, Lieberman & Montgomery, 1998, Ruiz-Ortega & Garcia- Villaverde, 2008).

According to scholars of the RBV, the firm is a bundle or network of resources and capabilities linked together to create value (Black & Boal, 1994; Conner, 1991; Madhok, 1996). …

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