What explains differences in firms' abilities to acquire competitive capabilities? In this paper we propose that embeddedness, in terms of firms' network of bridging ties and linkages to regional institutions, are important sources of variation in firms' acquisition of competitive capabilities. We argue that firm networks rich in bridging ties and firms' participation in regional institutions are critical vehicles for accessing new information, ideas, and opportunities leading to the acquisition of competitive capabilities in geographical clusters. Hypotheses are tested on a stratified random sample of 227 job shop manufacturers located in several regions of the US Midwest using data gathered from a mailed questionnaire. Results from structural equation modeling broadly support the embeddedness hypotheses and suggest a number of novel insights about the link between firms' networks and competitive capabilities.

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This paper studies how firms use acquisitions to achieve long-term business reconfiguration. We base the study in a routine-based perspective on business dynamics. We develop and test hypotheses concerning the relative extent of change by acquiring and non-acquiring businesses, focusing on product line addition, retention, and deletion as forms of changing resources. We develop and test hypotheses that compare and contrast resource-deepening and resource extension arguments. We test the hypotheses with data from more than 3000 firms that offered more than 200 product lines in the U.S. medical sector between 1978 and 1995. We find that acquisitions play a major role in business reconfiguration, offering opportunities for firms to both build on existing resources and obtain substantially different resources. Copyright © 2000 John Wiley & Sons, Ltd. This paper studies how firms use acquisitions to reconfigure their business resources. Reconfiguration involves the retention, deletion, and addition of resources (Capron, Dussauge, and Mitchell, 1998). We view acquisitions as a key mechanism through which firms attempt to change their businesses (Capron and Mitchell, 1999). Our immediate conceptual goal is to study acquisitions as means of attempting to change both targets and acquirers. This study is a step towards understanding the broader issues surrounding successful and failed business change. The conceptual base for the study derives from what we refer to as a routine-based perspective on strategy, drawing on Williamson (1999). As we describe below, this perspective views firms as bundles of routines, which both provide firm value and create constraints on how businesses Key words: acquisitions; business change; resource reconfiguration; routine-based perspective on strategy

This paper studies redeployment of resources between target and acquiring businesses following horizontal acquisitions. The analysis draws from perspectives that emphasize the strategic importance of resources that are subject to market failure. We define a five-part typology of R&D, manufacturing, marketing, managerial, and financial resources. We show that targets and acquirers frequently redeploy resources following horizontal acquisitions, especially resources that frequently face market failure. We then show that the magnitude of redeployment of each type of resource increases with the asymmetry of the merging businesses ’ relative strength on the resource dimension. The research stresses evolutionary perspectives on business organizations that emphasize the importance of organizational differences in competitive markets. The central premise of our research is that the market for businesses is often more robust than the market for resources. © 1998 John Wiley & Sons, Ltd. Strat. Mgmt. J. Vol. 19, 631–661 (1998)

This paper investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We show that alliance outcomes vary systematically across link and scale alliances. Link alliances are interfirm partnerships to which partners contribute different capabilities, while scale alliances are partnerships to which partners contribute similar capabilities. We find that partners are more likely to reorganize or take over link alliances than scale alliances. By contrast, scale alliances are more likely to continue without material changes. The two types of alliances are equally likely to shut down, at similar ages. These results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances. Copyright © 2000 John Wiley & Sons, Ltd. This study investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We define strategic alliances as arrangements between two or more

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Businesses often benefit by forming alliances with other firms but risk becoming dependent on their partners. We discuss two situations in which dependence may create serious problems: first. if a partner shuts down and. second. if a partner forms a relationship with a new partner. We examine collaborative relationships fo rmed by businesses operating in the U.S. hospital software systems industry during the 1961-91 period. We find that businesses faced increased risk of dissolution if they did not form new partnerships after partners shut down or formed collaborative relationships with new pa rtners. The results have implications for del-eloping an evolutionary theory of business strategy and performance. Our approach implies that the performance of a focal business often depends 011 how the strategies of its business partners evolve over time. An evolutionary theory of strategy must incorporate key characteristics of actions and relationships throughout a web of business partnerships. The dual nature of interfirm relationships. which both help a business survive at one time and inhibit its ability to adapt at another. helps explain why so many successful businesses fail when their environments change. Formal interfirm collaboration has become an important means by wh ich busine sses in many industries gain access to capabilities needed to compete in changing markets. Empirical research suggests that collaborating firms sometimes realize corporate financial benefits (Berg, Duncan,

Acknowledgements: The development of NeBIC theory has benefited greatly from the detailed guidance of the editor, associate editor, and reviewers. I also wish to thank research associate Michael Williams and Arvin Sayam for their valuable assistance and healthy debate in maturing the ideas presented here. NeBIC: A Dynamic Capabilities Theory for Assessing Net-enablement We propose the Net-enabled Business Innovation Cycle as an applied dynamic capabilities theory for measuring, predicting, and understanding a firm’s ability to create customer value through the business use of digital networks. The theory incorporates both a variance and process view of netenabled business innovation. It identifies four sequenced constructs: Choosing new IT, Matching with Economic Opportunities, Executing Business Innovation for Growth, and Assessing Customer Value, along with the processes and events that inter-relate them as a cycle. The sequence of these theorized relationships for net-enablement asserts that choosing IT precedes rather than aligns with corporate strategy. The theory offers a logically consistent and falsifiable basis for grounding research programs on metrics of net-enabled business innovation. NeBIC Page 1 1

Research at the University of Texas at Austin for financial support. Prabhudev Konana

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