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Conceptualizing and measuring capabilities: methodology and empirical application

Published on Mar 1, 2005in Strategic Management Journal5.57
· DOI :10.1002/smj.442
Shantanu Dutta34
Estimated H-index: 34
(SC: University of Southern California),
Om Narasimhan10
Estimated H-index: 10
(UMN: University of Minnesota),
Surendra Rajiv15
Estimated H-index: 15
(NUS: National University of Singapore)
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Abstract
This paper attempts to operationalize and measure firm-specific capabilities using an extant conceptualization in the resource-based view (RBV) literature. Capabilities are conceived as the efficiency with which a firm employs a given set of resources (inputs) at its disposal to achieve certain objectives (outputs). We expand on extant theoretical literature on relative capabilities, by delineating the conditions that have to be met for relative capabilities to be measured non-tautologically. We then proceed to suggest an estimation methodology, stochastic frontier estimation (SFE), that allows us to infer firm capabilities. We illustrate this technique with a sample of firms in the semiconductor industry. Our findings underscore the heterogeneity in R& D capability across firms in this industry, as well as the persistence in these capabilities over time. We also find that the market rewards high R& D capability firms, in that they show the highest average values of Tobin's q. Copyright © 2004 John Wiley & Sons, Ltd.
  • References (24)
  • Citations (306)
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References24
Newest
#1Shantanu Dutta (SC: University of Southern California)H-Index: 34
#2Om Narasimhan (SC: University of Southern California)H-Index: 10
Last.Surendra Rajiv (U of C: University of Chicago)H-Index: 15
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#1David J. Collis (Harvard University)H-Index: 15
#2Cynthia A. Montgomery (Harvard University)H-Index: 19
#1Rita Gunther McGrath (Columbia University)H-Index: 29
#2Ian C. MacMillan (UPenn: University of Pennsylvania)H-Index: 41
Last.S. Venkataraman (UPenn: University of Pennsylvania)H-Index: 28
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#1Rebecca Henderson (MIT: Massachusetts Institute of Technology)H-Index: 36
#2Iain M. Cockburn (UBC: University of British Columbia)H-Index: 41
Cited By306
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#1Jiawen Chen (JNU: Jinan University)H-Index: 1
#2Jiawen Chen (JNU: Jinan University)
Last.Linlin Liu (SCUT: South China University of Technology)
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#1Leopoldo J. Gutierrez-Gutierrez (UGR: University of Granada)H-Index: 9
#2Vanesa Barrales-Molina (UGR: University of Granada)H-Index: 9
Last.Beatriz López-Morales (UGR: University of Granada)
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