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Building Micro-Foundations for the Routines, Capabilities, and Performance Links

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  • Peter Abell
  • Teppo Felin
  • Nicolai Foss

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 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 for how these impact firm performance.

Suggested Citation

  • Peter Abell & Teppo Felin & Nicolai Foss, 2007. "Building Micro-Foundations for the Routines, Capabilities, and Performance Links," DRUID Working Papers 07-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:07-02
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    Keywords

    Routines; capabilities; micro-foundations; production function;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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