Session 207

How Do Capabilities Develop?

Track I

Date: Tuesday, October 13, 2009


Time: 14:30 – 15:45


Room: Auditorium

Session Chair:
Gianmario Verona, Bocconi University

Title: (De-)Institutionalizing Organizational Competence: Olivetti’s Transition from Mechanical to Electronic Technology


  • Erwin Danneels, University of South Florida
  • Gianmario Verona, Bocconi University
  • Bernardino Provera, Mercer Consulting

Abstract: This article analyzes the competence-destroying transition from mechanical to electronic technology at Olivetti, a leading Italian office machines firm. It develops a unifying framework of the organizational process by which a new technological competence displaces an existing technological competence. It shows how a technological competence becomes institutionalized through the increasing convergence of its cognitive, moral, and pragmatic legitimacy, the power of organizational agents, and attainment and allocation of organizational resources. However, the reinforcing relationships between legitimacy, power, and resources may also be broken to aid in de-institutionalization of an incumbent technology while placing the building blocks of its alternate. The study identifies four levers of technological transition: physical separation, cooptation, exploiting contradictions and dissensus, and resource diversion.

Title: Capability Development and Performance Impact: Evidence from the Global Software Services Industry


  • Joydeep Chatterjee, University of Washington Bothell

Abstract: How do firms develop capabilities and how do these capabilities impact performance? This paper examines one potential source of capability development drawing upon the strategy literature to examine how deliberate investments in developing the competencies of employees influence the development of firm capabilities. Using large sample of project-level data from a leading global IT services firm, I identify and measure three types of capabilities that are essential for superior performance in this industry: Global Service Delivery Capabilities,Architectural Capabilities, andTechnological Capabilities. I find that deliberate investments to develop capabilities through learning, and evaluation through certification exams have positive performance impact and different capabilities have different marginal contributions to performance.

Title: Learning the Hard Way: Organizational Learning and Task Complexity in British Fertility Clinics


  • Mihaela Stan, University College London
  • Freek Vermeulen, London Business School

Abstract: Research on organizational learning has shown that firms can improve their performance with experience. Studying fertility clinics, we examine how experience with IVF treatments is associated with an increase in their success rate. Our findings indicate that clinics learn from complex tasks – e.g. the treatment of patients with more complex profiles – to increase their overall performance. A second effect is that task complexity positively moderates a firm’s learning curve; clinics learn more from relatively simple experiences when they also perform complex tasks. In general, this paper contributes to our understanding of what enables some organizations to learn quicker than others.

Title: Where Does Architectural Knowledge Come From? Key Processes Under Bounded Rationality and Uncertainty


  • Chih Liu, University of Illinois-Urbana Champaign
  • Douglas Miller, Rutgers University

Abstract: Modularity as a design strategy has been recognized to have tremendous benefits of flexibility and adaptability in turbulent environment. However, a detailed account of the actual creation of the enabling architectural knowledge is missing in the extant research literature. This paper proposes to specify the key processes for knowledge compression and partitioning, which identify ways that architectural knowledge can be created. Recognizing the reality of bounded rationality, this paper posits that architectural knowledge is generated by engaging in dialectic interplay between top-down and bottom-up perspectives. The proposed process of architectural knowledge creation represents one ingenious invention to ‘escape’ bounded rationality and cushion our journey in an uncertain, turbulent world.

All Sessions in Track I...

Sun: 10:00 – 11:30
Session 264: Strategy in an Uncertain World: “Black Swan” Implications for K&I Scholars
Sun: 13:00 – 14:30
Session 265: The Changing Governance Landscape: Implications for Knowledge and Innovation Scholars
Sun: 15:00 – 16:30
Session 266: Integrating Theories of Problem Formation
Sun: 16:30 – 17:30
Session 313: Knowledge & Innovation, IG Meeting
Mon: 12:45 – 14:00
Session 201: 50th Anniversary of Penrose's (1959) The Theory of the Growth of the Firm
Session 212: Technological Innovation
Mon: 15:45 – 17:00
Session 218: Let the Knowledge Flow...
Session 223: Exploration and Novelty
Mon: 17:15 – 18:30
Session 209: Learning and Collaboration
Session 221: Innovation and Management Practice
Tue: 10:00 – 11:15
Session 202: Microfoundations of Knowledge and Learning
Session 235: Regulating the Market for Ideas: The Role of Communities, Norms, and Networks
Tue: 11:30 – 12:45
Session 203: Dynamic Capabilities
Session 224: Governing Knowledge
Tue: 14:30 – 15:45
Session 207: How Do Capabilities Develop?
Session 210: The Complex Roles of Experience
Wed: 10:00 – 11:15
Session 211: Knowledge Transfer
Session 215: Knowledge-Based Strategic Interaction
Wed: 11:30 – 12:45
Session 213: The Human Factor in Knowledge and Innovation
Session 219: Ambidexterity

Strategic Management Society

Washington DC