This paper details an empirical pilot study that explores the development of several conceptual measures and models regarding intellectual capital and its impact on business performance. The objective of this pilot study is to explore the development of items and constructs through principal components analysis and partial least squares (PLS). The final retained, subjective measures and optimal structural specification show a valid, reliable, significant and substantive causal link between dimensions of intellectual capital and business performance. These results should help both academics and practitioners more readily understand the components of intellectual capital and provide insight into developing and increasing it within an organization. Suggestions are then made to advance and improve this research programme

through Information Technology Assets Claims that information technology can be a source of competitive advantage, which populated business literature in the late 1980s, have been largely discredited. Nonetheless, business executives continue to look for ways to apply information technology strategically to their businesses. Reporting on a two-year study of IT management practices, the authors note that some firms do appear to generate competitive advantage from their IT, but the advantage results from their IT capabilities, not from their IT applications. Specifically, a firm delivers value from IT by building and leveraging three assets: highly competent IT human resources, a reusable technology infrastructure, and a strong IT-business partner relationship. These three assets are interrelated in the sense that they tend to strengthen- or weaken- one another. Together, they allow a firm to apply information technology to strategic business needs faster and more cost effectively than the competition. This paper describes the characteristics of strong IT assets and offers strategies for developing them. Developing Long-term Competitiveness through Information Technology Assets

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)

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A growing body of empirical literature supports key assertions of the resource-based view. However, most of this work examines the impact of firm-specific resources on the overall performance of a firm. In this paper it is argued that, in some circumstances, adopting the effectiveness of business processes as a dependent variable may be more appropriate than adopting overall firm performance as a dependent variable. This idea is tested by examining the determinants of the effectiveness of the customer service business process in a sample of North American insurance companies. Results are consistent with resource-based expectations, and they show that distinctive advantages observable at the process level are not necessarily reflected in firm level performance. The implications of these findings for research and practice are discussed along with a discussion of the relationship between resources and capabilities, on the one hand, and business processes, activities, and routines, on the other. Copyright © 2003 John Wiley & Sons, Ltd. The resource-based view (RBV) asserts that firms gain and sustain competitive advantages by deploying valuable resources and capabilities that are

We have benefited from our discussions with Kristian Kreiner, Paul Hirsch and Roger Dunbar. We have also benefited from inputs that were offered by participants at the Path Dependence and Creation workshop,

The recent decade has witnessed a strong expansion of work on the firm, both from a capabilities perspective and from a contractual perspective. These two bodies of theories are often thought to be fundamentally different, because their domains of applications are different (knowledge-accumulation vs contracts and incentives). However, we need to integrate propositions from capabilities perspectives with ideas about economic organization (markets, hybrids, firms). This is because only a more unified theory will allow us to understand such issues as the dynamics of the modern corporation, and, more topically, the costs and benefits of outsourcing. I discuss the relations between these two bodies of theories. It is possible to argue in favor of a relation of complementarity between the two and pursue a research strategy on this basis. However, it is also possible two claim that they are rivals. Along this line, it is argued that the capabilities perspective contains propositions about economic organization that are not to be found within the modern Coasian approach to economic organization, and thus may be seen as a distinct emerging perspective on economic organization.

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

This paper proposes that transaction costs and capabilities are fundamentally intertwined in the determination of vertical scope, and identifies the key mechanisms of their co-evolution. Specifically, we argue that capability differences are a necessary condition for vertical specialization; and that transaction cost reductions only lead to specialization when capabilities along the value chain are heterogeneous. Furthermore, we argue that there are four evolutionary mechanisms that shape vertical scope over time. First, the selection process, itself driven by capability differences, dynamically shapes vertical scope; second, transaction costs are endogenously changed by firms that try to reshape the transactional environment to increase their profit and market share; third, changes in vertical scope affect the nature of the capability development process, i.e., the way in which firms improve their operations over time; and finally, the changes in the capability development process reshape the capability pool in the industry, changing the roster of qualified participants. These dynamics of capability and transaction cost co-evolution are illustrated through two contrasting examples: the mortgage banking industry in the United States, which shows the shift from integrated to disintegrated production; and the Swiss watch-manufacturing industry, which went from disintegration to integration. Copyright © 2005 John Wiley & Sons,