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Technological Capabilities and Firm Performance: The Case of Small Manufacturing Firms in Japan

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Listed:
  • Montgomery, David B.

    (Stanford U)

  • Isobe, Takehiko

    (Keio U)

  • Makino, Shige

    (Chinese U of Hong Kong)

  • Lee, Kong Chian

Abstract

The purpose of this study is to investigate the relationship between technological capabilities and firm performance. We divide technological capabilities into two types--refinement capability, which involves the improvement of the existing asset portfolio, and reconfiguration capability, which involves the restructuring of the asset portfolio through the integration of new assets. The results of an analysis of a sample of 302 small and medium-sized manufacturing firms in Japan suggest that refinement capability relates more positively to operational efficiency than does reconfiguration capability, and that reconfiguration capability relates more positively to strategic performance than does refinement capability. The results also suggest that firms with superior refinement capability tend to possess superior reconfiguration capability. Our findings show that both external and internal factors, such as technological volatility, inter-firm collaboration, and firm age and size, are significantly associated with the level of refinement and reconfiguration capabilities possessed by a firm.

Suggested Citation

  • Montgomery, David B. & Isobe, Takehiko & Makino, Shige & Lee, Kong Chian, 2007. "Technological Capabilities and Firm Performance: The Case of Small Manufacturing Firms in Japan," Research Papers 1980, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:1980
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    References listed on IDEAS

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    1. JS Armstrong & Terry Overton, 2005. "Estimating Nonresponse Bias in Mail Surveys," General Economics and Teaching 0502044, EconWPA.
    2. Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    3. Richard N. Langlois, 1993. "Capabilities and Coherence in Firms and Markets," Industrial Organization 9309003, EconWPA.
    4. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    5. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and Sustainability of Competitive Advantage," Management Science, INFORMS, vol. 35(12), pages 1504-1511, December.
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