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Dynamic capabilities and sustained innovation: strategic control and financial commitment at Rolls-Royce plc

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  • William Lazonick
  • Andrea Prencipe

Abstract

Rolls-Royce plc is currently a powerful competitor in the turbofan engine industry, notwithstanding its own troubled history and the relative lack of international success of British companies in high-technology manufacturing over the past half-century. This paper seeks to contribute to the development of a theory of innovative enterprise by analyzing the roles of strategy and finance in sustaining the innovation process at Rolls-Royce over four decades from the mid-1960s. Through an analysis of 'strategic control' and 'financial commitment' as conditions of innovative enterprise at different stages in Rolls-Royce's evolution, we adduce evidence that innovation depends in part on who strategic managers are and how they gain control over financial resources. Copyright 2005, Oxford University Press.

Suggested Citation

  • William Lazonick & Andrea Prencipe, 2005. "Dynamic capabilities and sustained innovation: strategic control and financial commitment at Rolls-Royce plc," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(3), pages 501-542, June.
    • Handle: RePEc:oup:indcch:v:14:y:2005:i:3:p:501-542
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    Cited by:

    1. Simon Deakin, 2013. "The Legal Framework Governing Business Firms & its Implications for Manufacturing Scale & Performance: The UK Experience in International Perspective," Working Papers wp449, Centre for Business Research, University of Cambridge.
    2. Crafts, Nicholas, 2012. "Creating Competitive Advantage: Policy Lessons from History," CAGE Online Working Paper Series 91, Competitive Advantage in the Global Economy (CAGE).
    3. William Lazonick, 2018. "Comments on Gary Pisano: “toward a prescriptive theory of dynamic capabilities”," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(6), pages 1165-1174.
    4. Dominic Chai & Simon Deakin & Prabirjit Sarkar & Ajit Singh, 2014. "Corporate Governance, Legal Origin & the Persistence of Profits," Working Papers wp465, Centre for Business Research, University of Cambridge.
    5. Philippe Aghion & Terra Allas & Timothy Besley & John Browne & Francesco Caselli & Richard Davies & Richard Lambert & Rachel Lomax & Stephen Machin & Gianmarco I. P. Ottaviano & Christopher A. Pissari, 2017. "UK growth: a new chapter," CEP Reports 28b, Centre for Economic Performance, LSE.
    6. Nhat Strøm-Andersen, 2019. "Incumbents in the Transition Towards the Bioeconomy: The Role of Dynamic Capabilities and Innovation Strategies," Sustainability, MDPI, vol. 11(18), pages 1-20, September.
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    8. Miočević, Dario & Talaja, Anita & Alfirević, Nikša, 2021. "Disentangling performance outcomes of a firm’s innovativeness: A resource-advantage perspective," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 26(3), pages 392-414.
    9. Stefano Brusoni & Andrea Prencipe, 2006. "Making Design Rules: A Multidomain Perspective," Organization Science, INFORMS, vol. 17(2), pages 179-189, April.
    10. Kaivanto, Kim & Stoneman, Paul, 2007. "Public provision of sales contingent claims backed finance to SMEs: A policy alternative," Research Policy, Elsevier, vol. 36(5), pages 637-651, June.
    11. Ping Sun & Xiaoming Zhou & Cui Shao & Wenli Wang & Jinkun Sun, 2022. "The Impacts of Environmental Dynamism on Chinese Tour Guides’ Sustainable Performance: Factors Related to Vitality, Positive Stress Mindset and Supportive Policy," IJERPH, MDPI, vol. 19(15), pages 1-15, July.
    12. William Lazonick, 2010. "The Chandlerian corporation and the theory of innovative enterprise," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(2), pages 317-349, April.
    13. Belloc, Filippo, 2010. "Corporate governance and innovation: an organizational perspective," MPRA Paper 21495, University Library of Munich, Germany.
    14. Neil Rollings, 2007. "British business history: A review of the periodical literature for 2005," Business History, Taylor & Francis Journals, vol. 49(3), pages 271-292.
    15. Ibrahim Abosag & David Ross Brennan, 2017. "Understanding marketing innovativeness in Asia: a research agenda," Asian Business & Management, Palgrave Macmillan, vol. 16(4), pages 212-225, December.
    16. Rosa Jordá-Borrell & Francisca Ruiz-Rodríguez & Reyes González-Relaño, 2015. "Factors and taxonomy of technology purchase (TP) by internationalized innovative companies in peripheral European regions," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 139-174, November.
    17. Bruno AMABLE & Yannick LUNG, 2008. "The European Socio-Economic Models of a Knowledge-based society. \r\nMain findings and conclusion \r\n," Cahiers du GREThA (2007-2019) 2008-26, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    18. Lin, Hai-Fen & Su, Jing-Qin & Higgins, Angela, 2016. "How dynamic capabilities affect adoption of management innovations," Journal of Business Research, Elsevier, vol. 69(2), pages 862-876.
    19. Nicholas Crafts & Alan Hughes, 2013. "Industrial Policy for the Medium to Long-term," Working Papers wp455, Centre for Business Research, University of Cambridge.
    20. Hameed, Kamran & Arshed, Noman & Yazdani, Naveed & Munir, Mubbasher, 2021. "Motivating business towards innovation: A panel data study using dynamic capability framework," Technology in Society, Elsevier, vol. 65(C).
    21. Carmen De-Pablos-Heredero & Gonzalo Fernández-Valero & Miguel Blanco-Callejo, 2017. "Supplier Qualification Sub-Process from a Sustained Perspective: Generation of Dynamic Capabilities," Sustainability, MDPI, vol. 9(5), pages 1-15, May.
    22. William Lazonick, 2006. "Corporate Governance, Innovative Enterprise, and Economic Development," WIDER Working Paper Series RP2006-71, World Institute for Development Economic Research (UNU-WIDER).
    23. Kamran Hameed & Noman Arshed & Kenneth A. Grant & Mubbasher Munir & Osama Aziz, 2023. "Forces of Dynamic Capability and Incidence of Entrepreneurship: A Macroeconomic Policy Intervention Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 3573-3597, December.
    24. Vincent Frigant & Bernard Jullien, 2011. "L'inéluctable incomplétude des politiques industrielles régionales et européennes : les leçons de la reconversion des industries de la Défense dans les années 90," Post-Print hal-00675076, HAL.

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