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Building micro-foundations for the routines, capabilities, and performance links

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  • Peter Abell

    (London School of Economics, London, UK)

  • Teppo Felin

    (Marriott School of Management, Brigham Young University, Provo, UT, USA)

  • Nicolai Foss

    (Copenhagen Business School, Center for Strategic Management and Globalization, Porcelainshaven 24, Frederiksberg, Denmark)

Abstract

Micro-foundations have become an important emerging theme in strategic management. This paper addresses micro-foundations in two related ways. First, we argue that the kind of macro (or 'collectivist') explanation that is presently utilized in the capabilities view in strategic management-which implies a neglect of micro-foundations-is incomplete. There are no mechanisms that work solely on the macro-level, directly connecting routines and capabilities to firm-level outcomes. While routines and capabilities are useful shorthand for complicated patterns of individual action and interaction, ultimately they are best understood at the micro-level. Second, we provide a formal model that shows precisely why macro-explanation is incomplete and which exemplifies how explicit micro-foundations may be built for notions of routines and capabilities and how these impact firm performance. Copyright © 2008 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 29 (2008)
Issue (Month): 6 ()
Pages: 489-502

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Handle: RePEc:wly:mgtdec:v:29:y:2008:i:6:p:489-502

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. Nicolai J. Foss, 2003. "Bounded rationality and tacit knowledge in the organizational capabilities approach: an assessment and a re-evaluation," Industrial and Corporate Change, Oxford University Press, vol. 12(2), pages 185-201, April.
  2. Markus C. Becker, 2004. "Organizational routines: a review of the literature," Industrial and Corporate Change, Oxford University Press, vol. 13(4), pages 643-678, August.
  3. Michael D. Cohen & Roger Burkhart & Giovanni Dosi & Massimo Egidi & Luigi Marengo & Massimo Warglien & Sidney Winter & with comments by Benjamin Coriat, 1995. "Routines and Other Recurring Action Patterns of Organizations: Contemporary Research Issues," Working Papers, Santa Fe Institute 95-11-101, Santa Fe Institute.
  4. Argote, Linda & Ingram, Paul, 2000. "Knowledge Transfer: A Basis for Competitive Advantage in Firms," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 82(1), pages 150-169, May.
  5. Cowan, Robin & Rizzo, Mario J, 1996. "The Genetic-Causal Tradition and Modern Economic Theory," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 49(3), pages 273-317.
  6. Richard Makadok & Jay B. Barney, 2001. "Strategic Factor Market Intelligence: An Application of Information Economics to Strategy Formulation and Competitor Intelligence," Management Science, INFORMS, INFORMS, vol. 47(12), pages 1621-1638, December.
  7. Lucas, Robert E., 1977. "Understanding business cycles," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 5(1), pages 7-29, January.
  8. Teppo Felin & Nicolai Foss, 2006. "Individuals and Organizations Thoughts on a Micro-Foundations Project for Strategic Management and Organizational Analysis," DRUID Working Papers, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies 06-01, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  9. Rebecca Henderson & Sarah Kaplan, 2005. "Inertia and Incentives: Bridging Organizational Economics and Organizational Theory," NBER Working Papers 11849, National Bureau of Economic Research, Inc.
  10. Hodgson, Geoffrey M. & Knudsen, Thorbjorn, 2004. "The complex evolution of a simple traffic convention: the functions and implications of habit," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 54(1), pages 19-47, May.
  11. repec:att:wimass:9217 is not listed on IDEAS
  12. Cowan, R.A. & Rizzo, M.J., 1995. "The Genetic causal Tradition of Modern Economic History," Working Papers, C.V. Starr Center for Applied Economics, New York University 95-29, C.V. Starr Center for Applied Economics, New York University.
  13. Marco Valente & Andrea Bassanini & Luigi Marengo & Giovanni Dosi, 1999. "Norms as emergent properties of adaptive learning: The case of economic routines," Journal of Evolutionary Economics, Springer, Springer, vol. 9(1), pages 5-26.
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Cited by:
  1. Meier, Matthias & Weller, Ingo, 2010. "Wissensmanagement und unternehmensinterner Wissenstransfer," Discussion Papers 2010/16, Free University Berlin, School of Business & Economics.
  2. Lazaric, Nathalie, 2011. "Organizational routines and cognition: an introduction to empirical and analytical contributions," Journal of Institutional Economics, Cambridge University Press, Cambridge University Press, vol. 7(02), pages 147-156, June.
  3. Mircea Epure, 2012. "Benchmarking for routines and organizational knowledge," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1399, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2013.
  4. Howard Aldrich & Tiantian Yang, 2014. "How do entrepreneurs know what to do? learning and organizing in new ventures," Journal of Evolutionary Economics, Springer, Springer, vol. 24(1), pages 59-82, January.
  5. Nathalie Lazaric, 2007. "Are Routines Reducible or Mere Cognitive Automatisms? Some contributions from cognitive science to help shed light on change in routines," DRUID Working Papers, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies 07-13, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  6. Peter T. Bryant & Nathalie Lazaric & Moustapha Niang, 2013. "Routines Resistance: How Conflicts within Transactive Memory Obstruct Routinization," GREDEG Working Papers, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis 2013-43, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  7. Ben-Ner, Avner, 2013. "Preferences and organization structure: Toward behavioral economics micro-foundations of organizational analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 46(C), pages 87-96.
  8. Huang, Tsu-Te (Andrew) & Chen, Le & Stewart, Rodney A. & Panuwatwanich, Kriengsak, 2013. "Leveraging power of learning capability upon manufacturing operations," International Journal of Production Economics, Elsevier, Elsevier, vol. 145(1), pages 233-252.

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