The dynamic interplay of capability strengths and weaknesses: investigating, страница 4

Figures 1a and 1b graphically display the implications of variance in the value of a single capability across competitors. These figures model different frequency distributions based on the value of industry members’ research and development (R&D) capability. As shown in Figure 1b, despite a high absolute level of value for all competitors’ R&D (perhaps common in some high-technology industries), as the variance between competitors’ R&D value approaches zero, the capability can offer only parity for the firms. For these firms, R&D will have little effect on a firm’s competitive outcomes regardless of its absolute value. Thus, in this industry, rarity is neither in presence of capability as all competitors have a R&D capability, nor in level, as the variance in the value of competitors’ R&D capability is close to zero. In this example, the possession of R&D capability by a firm can be thought of as a necessary condition for maintaining a competitive position, but an insufficient one to achieve competitive advantage.

However, as demonstrated in Figure 1a, increased variance in the value of competitors’ R&D capability gives rise to rarity in the level of the capability. The distribution of value for the R&D capability in the industry specified in Figure 1a has several important competitive implications. First, a R&D capability that is above parity represents a strength for those firms. Moreover, the degree of strength increases as its relative value continues to increase beyond parity. Describing strength as a capability that is more valuable than rivals’ corresponding capability fits well in the recent lens of comparative RBV research (Jacobides and Winter, 2005; Peteraf and Barney; 2003, Sirmon, Gove, and Hitt, 2008). Second, while this comparative approach allows for more complete and accurate identification of when a capability is likely to contribute to an advantage over competitors, it also allows for the modeling of weakness. Specifically, as shown in Figure 1a, a weakness exists when a capability’s relative value is below parity with rivals. Moreover, the degree of weakness increases as its relative value continues to decline further below parity. Thus, as the variance increases among competitors’ R&D capability value, so does its potential effect on performance outcomes.

Importantly, this conceptualization of weakness does not necessarily mean that the capability has a negative value, but instead suggests that its value is less than similar capabilities held by rivals. Also, if a firm does not possess a requisite capability, it would represent a weakness. In total then, as increasing capability strengths lead to greater competitive advantage, increasing capability weaknesses are expected to contribute to competitive disadvantage. Thus, although we build on Arend’s concept of strategic liabilities, in our conceptualization, weaknesses (1) do not have to be absolutely costly, only less valuable than competitors’ and (2) can be converted from weakness to parity or strength over time with a net benefit to the firm. However, we acknowledge that the specification of a capability along the continuum between weakness and strength is contextually dependent and that converting a capability weakness into a strength involves costs.

Thus, in total, we argue that when the value of a firm’s capability is below parity, it is a weakness and that the disadvantage associated with that weakness increases as its value decreases. The parallel and opposite effect operates for strengths and advantage. Therefore, instead of considering competitive disadvantage as the lack of competitive advantage, similar to Powell, we argue that competitive disadvantage exists when an underlying capability fails ‘to satisfy the minimum success requirements...required of any firm’ (Powell, 2001: 877).