“Dominance by birthright”? Reconfiguration of firm boundaries to acquire new resources and capabilities
Industrial Management & Data Systems
ISSN: 0263-5577
Article publication date: 8 October 2019
Issue publication date: 6 November 2019
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
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited