Firm Capability, Corporate Governance, and Firm Competitive Behavior: A Multi-theoretic Framework
AbstractThis paper identifies firm-level competitive activity, one of the key units of analysis in competitive dynamics research, as the fundamental mediation between corporate governance and firm-level financial performance. By employing the "Motivation-Capability" logic embodied in the competitive dynamics research literature, we reclassify various practices of corporate governance into motivational mechanisms ("motivation") and resource acquisition and securing mechanisms ("capability"). Based on this reclassification, the current paper develops a multi-theoretic framework for studying the relationships among firm-level capability, corporate governance, and firm-level competitive behavior (which are characterized both by the level and variety of firm-level competitive activity). We maintain that the firm's capability influences the potential scale and scope of its competitive activity. And, the "motivation" components of corporate governance system moderate such a relationship. In addition, the "capability" components of corporate governance supplement firm capability, thus having direct effects on firm-level competitive behavior as well.
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Bibliographic InfoPaper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 06-0103.
Date of creation: 2006
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