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“Dominance by birthright”? Reconfiguration of firm boundaries to acquire new resources and capabilities

Jin Hooi Chan (Faculty of Business, University of Greenwich, London, UK) (Energy Policy Research Group, Judge Business School, University of Cambridge, Cambridge, UK)
David Reiner (Judge Business School, University of Cambridge, Cambridge, UK)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 8 October 2019

Issue publication date: 6 November 2019

257

Abstract

Purpose

The purpose of this paper is to examine pre-entry resources and capabilities (R&Cs) of de alio and de novo entrants in an emerging industry. Then, the authors investigate how entrants modify their firm boundaries, after entering a new industry, to acquire the R&Cs deemed critical to be competitive and survive in the industry.

Design/methodology/approach

The analysis uses the global biofuel industry as a case study. The authors use multiple sets of data, including primary data collected from semi-structured interviews with industry stakeholders and experts across major biofuel-producing countries as well as quantitative data from industry reports.

Findings

Firms typically deploy two successive strategies in order to survive and grow. First, they extend vertical boundaries to capitalize on their own pre-entry R&Cs. Then they move quickly to acquire new R&Cs, which are classified as critical in the value chain of the industry. A new taxonomy of pre-entry R&Cs is proposed to distinguish critical and non-critical forms of R&Cs, and to reflect the ease of acquisition of any requisite R&Cs, which are context specific. These strategic moves lead to the bi-directional vertical integration observed in the biofuel industry.

Research limitations/implications

Managers need to be able to assess the opportunities for entry and subsequent strategies to be competitive by assessing their R&Cs in terms of criticality and ease of acquisition in their entry decision making.

Originality/value

A new taxonomy of R&Cs of the firm is proposed which has theoretical significance and practical implications for new entrants.

Keywords

Citation

Chan, J.H. and Reiner, D. (2019), "“Dominance by birthright”? Reconfiguration of firm boundaries to acquire new resources and capabilities", Industrial Management & Data Systems, Vol. 119 No. 9, pp. 1888-1907. https://doi.org/10.1108/IMDS-04-2019-0258

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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