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Where Can Capabilities Come From? How the Content of Network Ties Affects Capability Acquisition


  • Mahmood, Ishtiaq P.
  • Zhu, Hong-Jin
  • Zajac, Edward J.


While strategy researchers have devoted considerable attention to the role of firm-specific capabilities in the pursuit of competitive advantage, less attention has been directed at how firms obtain these capabilities from outside a firm's boundaries. This study analyzes how firms' network ties represent one important source of capability acquisition. Theoretically, we go beyond the traditional focus on network structure and offer a novel contingency model that specifies how differences in the content of network ties (e.g., buyer-supplier, equity, and director ties) will differentially affect the process of R&D capability acquisition. Empirically, we also seek to provide an original contribution to the capabilities literature by utilizing a stochastic frontier estimation to rigorously measure firm capabilities, and we demonstrate the value of this approach using longitudinal data on business groups in emerging economies. The supportive results of our analysis show that the effect of network ties on the acquisition of new affiliate capabilities is clearly and predictably contingent on the content of the ties.

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  • Mahmood, Ishtiaq P. & Zhu, Hong-Jin & Zajac, Edward J., 2008. "Where Can Capabilities Come From? How the Content of Network Ties Affects Capability Acquisition," CEI Working Paper Series 2008-14, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:hitcei:2008-14
    Note: An earlier version of this paper was presented at the 2006 National Academy of Management meetings, Atlanta.

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    1. Randall Morck & Bernard Yeung, 2003. "Family Control and the Rent-Seeking Society," William Davidson Institute Working Papers Series 585, William Davidson Institute at the University of Michigan.
    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.
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