The dynamic interplay of capability strengths and weaknesses: investigating, страница 14

Table 2.      Strength and weakness sets effects on relative performance

Variable		Model 1                  Model 2               Model 3               Model 4               Model 5 Relative                  Relative               Relative               Relative               Relative performance        performance        performance        performance          performance
	×	17.559+
		001; directional hypotheses use single-tailed tests; industry dummies included but not
Table 3.	Firm and environmental effects on strength and weakness set change
	Model 6 Strength set change                               Model 7 Weakness set change
Constant	0.043                                                                   0.042
Years between surveys Year 1 Year 2 Size Age			−0.018 −0.1480.077 0.016 0.001	−0.0720.183 −0.2560.115 −0.000
Group Public
Product diversification Initial strength set Initial weakness set Munificence Prior performance F			−0.365 −0.487∗∗∗ 6.340 0.109∗ 21.07∗∗∗	0.292 −1.1119.240∗∗∗∗∗ −0.140∗ 143.98− ∗∗∗
R2			0.15	0.53
n			1.578	1.578

⁺ p < 0.10, ^∗ p < 0.05, ^∗∗ p < 0.01, ^∗∗∗ p < 0.001; industry dummies included but not listed.

highest potential performance, but analyses show that the coefficients for these two groups of firms, found in Model 4, are not statistically different (f = 0.739; ns). Second, we examined the differences in the variation between these two combinations to test Hypothesis 3d. The results indicate that firms with a robust advantage (high strength/low weakness) have far less variance in their performance outcomes than do the firms with a precarious advantage (high strength/high

Figure 3. Response surface of the integration of strength and weakness sets

weaknesses) (f = 1.873, p < 0.001). More specifically, the standard deviation for performance in firms with a robust advantage is approximately 37 percent smaller than for firms possessing a precarious advantage. These results provide support for Hypothesis 3d and have important implications for the riskiness and durability of these two forms of advantage.

The results for the hypotheses related to change in strength and weakness hypotheses are listed in Table 3, Models 6 and 7. Hypothesis 4a suggested that environmental munificence helps firms reduce their weakness sets over time. As depicted in Model 7, munificence has a negative and statistically significant coefficient, providing support for this hypothesis. Hypothesis 4b suggested that higher prior performance would allow firms to increase their strength sets over time. The positive and statistically significant coefficient listed in Model 6 provides support for this hypothesis. Finally, Hypothesis 4c suggested that higher prior performance would allow firms to reduce their weakness sets over time. The negative and statistically significant coefficient for prior performance in Model 7 provides support for this hypothesis. Additionally, it is worth noting that consistent with our logic, the results shown in Model 6 indicate the lack of a statistically significant relationship between munificence and change in a firm’s strength set.

Lastly, the strong effect for the initial strength variable in Model 6 and initial weakness variable in Model 7 indicate that, indeed, strong competitive efforts are being put forth by rivals.