RESOURCES, DYNAMIC CAPABILITIES, AND COMPETENCIES

AS A DRIVER FOR VALUE CREATION

Harris Turino

ABSTRACT

Resources, capabilities, especially dynamic capability, and firm core competencies have become popular topics for a long time and, until now: in a transition economy. This studies focusing on the comprehensive discussion about role the dynamic capabilities impact to firm performance through valuable resources ellaboration, capabilities, and competencies. This study aims to elaborate these role using three fundamental questions: WHAT (what makes a resource, capabilities, and competencies valuable), WHY (why valuable resources role, competencies as well capabilities, are crucial), HOW (how this valuable capabilities, resources, competencies impact firms performance). The objective of those papers is to contribute giving a holistic meaning of the critical role for these three main core: resource, capabilities, and competencies. As an addition, the impact of these three main core will shape the competitive outcome in a very high uncertainty environment and industry that change rapidly. In order to answer the three question above, this study collaborates seven journals for the literature and empirical study and make synthesizing from it. This seven journals emphasized Resources Based View (RBV) from identifying and conceptualized idiosyncratic resource value, the connection and linkage among management of decision making and resource building or firm performance, resource management, sources of dynamism and how to manage Dynamic Capabilities include its connection to Strategic Choice, learning, competition, and a Capability Theory of the firm.

INTRODUCTION

What makes a resource valuable? Keil, T and Schmidt, J (2013) identified the drivers firm idiosyncratic resource value. Referring to the RBV concept (Resource Base View) at strategic management, firm strong performance comes from strong resources. This resources necessary to be rare and valuable (Barney, 1991); it has to be difficult for other to substitute and replicate (Peteraf, 1993, Barney, 1991); firms also required to adapt, manage then deploy the resource into their product markets for value creation (Ireland, Hitt, &, Simon 2007, Mahoney, 1995). Morecroft and Kunc 2010, examining managerial decision process making, under resource base approach by explaining resource-based strategy implementation. Peteraf, in 1993, mentioned that the resource endowments characteristic for implementing strategy, while Barney, 1986 mentioned about each resource value are different, and will impact strategy of the firm. The behavioral characteristic of making the decision process will reflect to the bounded rationality, is very essential and determine firm heterogeneity performance source (Busenitz and Alvarez, 2001).

“The Sources Of Dynamism In Dynamic Capabilities” mentioned that Dynamic capabilities (DC) as important part of company resources has now gained increased more attention (Vassolo, R and Salvato, C, 2018). It is about company’s ability on detecting opportunities within environment that surrounding them, and then grasp these chances through adjusting, incorporating, and re-setting their resources and projects (Teece, 2007, Helfat et al, 2007; Pisano, Teece, and Shuen, 1997). Helfat Martin (2015) emphasize the topic of Dynamic managerial capabilities focuses on theoretical and empirical articles explaining linking evidence directly on strategic change or performance together with conditions. There are 34 theoretical/ conceptual and empirical studies ranging from 1980 until 2013 in prominent journals of management, such as "Administrative Science Quarterly, The Academy of Management Annals, Academy of Management Journal, Academy of Management Review, British Journal of Management, Industrial and Corporate Change, Journal of International Business Studies, Journal of Business Venturing, Journal of Management, Journal of Management Studies, Management Science, Organization Science, Strategic Entrepreneurship Journal, and Strategic Management Journal, and other selective sources."

“Towards a Prescriptive Theory of Dynamic Capabilities: Connecting Strategic Choice, Learning, and Competition” (Pisano, G., 2016) stated that vast effort has been made by previous research in, defining, understanding, measuring how organizational capabilities change competition advantage (Andrew, 1971), also how capabilities could influence strategy. Lastly, In his paper, Teece (2019) “A Capability theory of the firm” he developed a framework, of organization capabilities, and the theory about how is the firms make an innovation and agility on maintaining disruption. Companies will make differentiation through entrepreneurship, learning, innovation as well as decision making.

LITERATURE REVIEW

Identify the firm indiosyncratic resource value driver

Several works in Resource Based View (RBV) tried to conceptualize the value of resources, such as among others, the works of Barney in 1991, Peteraf in 1993, Mahoney in 1995, Hitt et al in 2007. Hence, according to Kraaijenbrink, Spender, and Groen (2010) as well as Priem and Butler (2001) this issue is still unsolved/ problematic as it could only determine whether a resource is valuable when it could generate a value to customers through firms output. This means that the research are still on an ex-post basis (after resource is acquired/ built/ deployed). As Barney (1986) and Coff (1999) stretches the importance for firms to not over-invest in resources (as rare resource suppliers could bargain on the resource value), it becomes crucial to define the value of the resources on an exante basis (prior to acquiring/ building/ deploying the resource). Keil, T. and Schmidt, J. (2013) in its journal “What makes a resource valuable? Identifying the drivers of firm-idiosyncratic resource value” published in “Management Review Academy” tried to fill in this gap in existing literatures on resources, through determining both mechanisms and conditions making a resource considered as valuable, to a “firm ex ante”. Having elaborated the background RBV theories, the paper outlines the assumptions for the model: (1) firms have perfect information and identical expectation of the future states – with this condition, ex ante and ex post value of resource is identical, and (2) asymmetry of information (including access to it) and different manager’s interpretation on the same information – with this condition ex ante and ex post value of resource is not identical. It then continued with defining several key concepts: (1) value creation and value capture, (2) market position – highlighting that only the endogenous one is being considered in the paper, not the exogenous (luck) one, competitive advantage, and (4) competitive improvement.

Using assumption (1) mentioned above, the paper described several propositions. First (proposition 1a), firms with market positions that are strong (determined by variable level cost and customers willingness to pay – no fixed cost is assumed here) is capable to value resources higher and consequently is more capable to attain it. Second (proposition 1b), that firms with higher ex post product position in the market (determined by variable cost level and price of the outcomes sold) is capable to value resource higher. Both of these propositions emphasized that the value of resource is depending on the overall “product market value creation” of a resource, which is not only the price, but also the willingness to pay of customers. Third (proposition 1c), that either decreasing cost or increasing the willingness of customers to pay, has an indifferent impact to the value of resource. Proposition 1a, 1b and 2 concluded that firms with strong market position (if compared to that with weaker one) is more willing to pay for a resource on a higher price, even though it will result to the same improvement for both (strong and weak) firms. Fourth, (proposition 2) supported 1a-c, as it stated: “The higher the level of complementarity allowed by a firm’s existing resource, the greater the value of the resource to a firm”. Whereas proposition 3 challenged proposition 1a-c and 2, by incorporating “resource with discontinuous change”. This for examples are when the firm (with strong market position) already possess new technologies that made the resource available in the market no longer compatible with the technology, and thus will value the resource lower.

Using assumption (2) mentioned above, the paper provided propositions (4 a-c) stating that firms position is social networks does matter, in terms of acquiring access to accurate information, which thus will lead to more accurate expectation of a resource value within the product market. Consequently “willingness to pay (ex ante value) certainly closer to the impact of product market (ex post value)”. Then it also provided propositions (5 and b) linking managerial judgment to expectations. These propositions were based on Priem, Love, & Shaffer (2002), stating that “firms are subject to uncertainty both in terms of their external environment and in terms of internal factors”. Therefore, these propositions suggested that firm manager’s knowledge and experience of both the internal and external environment is correlated when judging a value of research.

Decision making and correlation with Firm Performance

This study presented the connection and linkage between managing decision making to the resource building and also performance of the firm. From the behavior point of view, there is two decision-making process. There are (1) resource configurations creative conceptualization to achieve competitive of advantage (Resource conceptualization) and (2) developing of required resources in order to implement strategy (Resource development). Resources conceptualization usually precedes resource development as shown in the picture below.

Heterogeneity in resources creates differentiation in performance where it can be explained ex ante from the managerial decision-making process. This study using a behavioral simulation experiment approach conducted with MBA students and executives. The result shows that with the same and identical resource position at the start, there are differences in performance among firms. How these differences occur will be explained in the literature and empirical study of this paper.

The purpose of this study is to examine how boundedly rational manager makes a crucial decision about resource-based strategy related to a firm's performance. In uncertain conditions or unclear and conflicting information, it's not easy for the manager to make strategic decisions (King 2007). There is an effect from internal and external ambiguity on enhancing decision making related to resource conceptualization and firm performance (King, 2007). This study using behavioral experiments from a well-known fisheries simulator, Fish Bank, Ltd. The aim and objective of this experiment are to maximize the firm's asset value. This study focus only to one condition: using managerial decision making from homogenous resources to achieve heterogeneous performance. The member of the group is self-selected, and each team consists of five or six people. There are ten experiments, and there are more than 320 total decisions that have been made from this experiment. The resource is only one tangible resource and homogeneous (the fishing fleet). One of the uncertain factors is population of the fish. This population is provided with all fishing company. The demand assumes equal to all firms. The productivity of the fishing fleet is a causal ambiguity factor. The simulation period was maximum for ten periods, but on average, the experiment lasted six periods cause the stock of fish was depleted. There are two stages of the team's decision-making process; resource configuration and resource development. The performance of each team is capture by 'total asset' variables. The sum balance of Bank account and the value of salvage of the fish fleet are the 'total asset' of this experiment. The result, there is four quadrant consist of (1) the most significant resource in firm and level of industry this team showing bad performance as a result (14 teams). (2) an abundant total resource in industries but a low resource at the firm level. This teams mostly represent positive performance, but highly heterogegeneous (7 teams). (3) A low level of resources and also total resource level. The teams mainly achieve strong and heterogeneous performance (26 teams). (4) A low of total resources at industries, but have high resource accumulation levels (6 teams). These teams have better performance among others, they ignoring their resource position when facing strong competition. (See figure 2).

Managing Firm Resources

The main purpose of the business is creating and maintaining value (Conner, 1991). Refer to RBV theory, “the resources of firm” suggested to drive creation of value process through competitive advantage development. (Sirmon, Hitt Ireland 2003) by capturing rare and valuable resources that provides value creation basis. This can become sustainable if the resources inimitable with lack of difficult substitutes (Narney, 1991). Resource management is the process to structure company resources, leveraging capabilities and resource bundling to build the capabilities and optimize capabilities for creating value to stakeholders. To structure firm resource portfolio, it requires some action such as accumulation, acquiring, and divesting). Bundling requires the processes of pioneering, enriching, stabilizing) necessary to integrate resources and then forming capabilities. Leveraging consist some action (i.e. mobilizing, deploying, and coordinating).

The value creation start from providing value to customers. When company produces higher value then competitor, this called as competitive advantage. Figure 3 showed the flow of causal of the model in resource management. This model includes a temporary dimension. Since the firm required to own resources to be bundled into the capabilities and this has to exist to crete the leverage, process of managing resource should at least partly sequential in nature. This model also includes feedback circle to allow fit adaptation and then synchronize with environment. Causal flow of the resource management model incorporates some temporal dimension. Its important to ensure resource management to bundle set of capabilities, where this capability must exist to occur leverage and its at least sequential in nature.

The amount of uncertainty is a concern within Environmental dynamism and its emanating from external environment (Wally and Baum 2003). This uncertainty comes from environment instability and cause information deficit needed to understand and identify effect and cause of relationship (Fredickson and Carpenter, 2001). This deficit affects the firm to manage resource on creating value. The degree of rivalry competition and also uncertainty affected by structure of industry. Extent of barriers within industry will affects competition amount on a firm experiences (Porter, 1980, 1985). On the other side, the competition degree as well as rivalry amount enhances the potential for uncertainty. Demand of the market can shape competitive dynamic of industry such as when demand growing, less rivalry may exist as it create opportunity for all firm.

On the other hand, this situation is valid vice versa. Unexpected even may create discontinuities in industry (Anderson and Tushman, 1986). Competitive action took by firm at outside of the focal industry will create an environmental shock. This represent a form of creative destruction by Schumpeterian (1934). Munificent of environment is defined as the scarcity or abundance of critical resources needed by firms (Castrogiovanni, 1991). The managerial skills in developing or selecting resources become important when the environmental munificence is low to keep the success of the firm.

Bundling Resources is the process where capabilities is developed through bundling firm’s resources. Each capability created having variety combination of resources and this helps the action to be taken (R&D, Marketing, etc). Major intention is creating value to end customers. Stabilizing or coasting purpose is to ensure minor but incremental improvements at the existing of capabilities, one of the examples is to conduct training hour for employee to enhance their knowledge. Enriching is about the process to enrich bundling process by elaborate and extend the current capability through new skills learning or complementary resources addition to existing bundle. Pioneering process is suggested to be done instead of building existing knowledge (Lampert and Ahuja, 2001). The pioneering may include new resources with intention to create new competitive advantage.

The Sources of Dynamism In Dynamic Capabilities

There is emerging query in strategic management as to why few companies are good at maintaining resources and projects despite the evolving environmental changes when other companies are not (Helfat and Winter, 2011). Dynamic capabilities concept reinforces companies’ important functions, including planning, research and development, as well as product development among many others (Helfat and Winter, 2011 and Eisenhardt and Martin, 2000;).

Any DCs theory is unable to describe how employees’ innovation actions develop a company-level ability for an effective and dependable dynamism (micro level to macro level connection). Likewise, absence of lower-level mechanism, it is difficult for a DC theory to justify how companies’ routines for innovative action could strive without limiting individual’s creativity, where the DC practice is actually take place (macro-to-micro connection) (Salvato, and Vassolo, 2018). Through presenting a lower level linkage between dynamic practices and the personal participation in the practices, the framework suggests: (1) how Dynamic Capabilities found in the integration of concurrent attitudes, feelings and understanding of individual workforces, letting individual to realize the requirement for transformation in their practice and skills; (2) how personal-level skills can be improved when they are engaged in transformative events act together through cooperation supportive to constructive dialogue, thus establishing a greater-level, shared social occurrences; and (3) how the numerous, company-specific mixtures of individual-level incorporation and interpersonal-level relations create diverse DCs which is able to trigger resource relocation at different levels of strength and environmental dynamism (stable vs. high-velocity), and which in turn create the potential for sustainable competitive advantage (at the macro level) (Salvato, and Vassolo, 2018).

The first questions to address When developing some DC’s multi-level theory (Winter, 2013), the first question are: How can we imagine on individual actors whenever the objective is to describe about how DCs attainment resource dynamism going through the processes of path dependence? How the employee think inside of firms characterized by the act of DCs, feel and think? To answer the questions, researcher developed dynamic managerial domain capabilities and their underpinnings cognitive (Helfat and Martin, 2015, Eggers and Kaplan, 2013 Adner and Helfat, 2003;). Two extension of this work is suggested. One, complement focus on cognition through integrating of two human action determinants: emotion and learned behaviour. Two, expanding individual role in DCs from “entrepreneurial ability top management to persuade others within organization to take new initiatives” (Peteraf and Helfat , 2015).

How integrating cognition, habits, and emotion at the level of individual employees will results in the firm level dynamic capability (Vassolo and Salvato, 2018). There are two reasons; One, the proposals incorporate rarely the interpretation and information, it may conflict with formulated proposal by others, Second, establishing routines effort for realignment of systematic asset could reduce the integration level of individual employees that involved in the practices through putting much more emphasis within procedures, hierarchy, procedures (Salvato, and Vassolo, 2018).

A multi-level theory is developed to explain DC’s paradoxical nature simultaneously dynamic and patterned, to allows them become sustainable competitive advantage source. By that, to become competitive advantage source, DCs necessary need to become harmony across three levels starting from individual to the interpersonal, interpersonal the organization (Vassolo and Salvato, 2018). To create a research design DCs multi level nature must be aligned with choices on research design: (a) measurement choices and construct; (b) choices of model; (c) choices of sample; and (d) choices of analysis (Kozlowski et al., 2013, Kozlowski and Klein, 2000 Hitt et al., 2007;).

Dynamic Managerial Capability

To have a concise dynamic managerial capabilities understanding, this study underpinning the three cores; cognition, social capital, and human capital. These three cores create the capacity of the firm to strategic change, as a mention from Helfat and Adner studies in 2003. Dynamic managerial capabilities definition according to Adner and Helfat (2003), "The capabilities with which managers create, extend, and modify the ways in which firms make a living." This study focuses on theoretical and empirical articles explaining dynamic managerial capabilities that link evidence directly to performance under change conditions or strategic change. There are 34 theoretical/ conceptual and empirical studies range since 1980 to 2013 in prominent management journals, such as "Administrative Science Quarterly, The Academy of Management Annals, Academy of Management Journal, Academy of Management Review, British Journal of Management, Industrial and Corporate Change, Journal of International Business Studies, Journal of Business Venturing, Journal of Management, Journal of Management Studies, Management Science, Organization Science, Strategic Entrepreneurship Journal, and Strategic Management Journal, and other selective sources." (Helfat and Martin, 2015). This study also found another 70 additional empirical studies that enhance the understanding from upper echelons paradigm, entrepreneurship point of view, the RBV and theory, the ambidexterity, renewal strategy of the firm, innovation, cross border business, , diversification, dynamics competitiveness, and also the three core as focus on this paper; cognition, social capital, and human capital.

General concept of dynamic capability, as explained by Teece et al. (1997). Several CEO may have dynamic capabilities that are used to develop strategic change (Rosenbloom, 2000). This general concept is the underlying definition of dynamic managerial capabilities, which is mention above. The internal and external environment can be affected by dynamic managerial capabilities. "Asset orchestration" included within the function of dynamic of managerial capabilities (Helfat et al., 2013). Closely related to "asset orchestration" Teece in 2007 divided "micro foundations" of dynamic capabilities at three categorize; "(1) sense opportunities and threats; (2) seize opportunities by choosing among possible actions, making investments, and deploying resources; and (3) reconfigure and transform organizations and their resources and capabilities." O'Reilly and Tushman (2008), on their framework of ambidexterity, explain the critical of dynamic managerial capabilities. O'Reilly and Tushman's work was also underlining the senior managers capacity to establish an environment learning, reconfiguration, integration, & transformation activity. Helfat and Agrawal (2009) describe the significant highlight of dynamic managerial capabilities in strategic renewal. Other scholars, Helfat and Petegraf, 2009), also have related works. The dynamic managerial capabilities concept link to entrepreneurship, (Teece 2012). Entrepreneurial managers can orchestrate the firm resources and create new markets for its growth. Zahra, et al., (2006) underpinning the function of the entrepreneur when reconfiguring resources of the firm as well as some routines in dynamic capabilities analysis.

This study found 21 works related managerial cognition to strategic change. As studied by Eggers and Kaplan in 2013 and Walsh (1995), beliefs and mental model or known as "knowledge structures" are the structure of managerial cognition. According to Helfat & Peteraf, managerial cognition is a mental processes. Hodgkinson and Healey in 2011 stated managerial cognition as managerial cognitive capabilities and emotions. Social capital managerial include goodwill as informal and formal relationships that manager or senior manager have with others. This social capital can derive and enhance firm's resources and obtain information.there are 13 studies on the linkage between strategic change and social capital. Managerial human capital refers to individual development through learning skills and knowledge related to their experience, education, and training. There are 51 studies related to managerial human capital that is mentioned in this paper. These dynamic managerial capabilities core are related and supporting one another. Education and work experience includes social capital or cognition, but no studies include all these three together; see figure 4 as a detail explanation.

Perspective Theory of Dynamic Capability

Pisano, G. (2016) in its journal “Towards a Prescriptive Theory of Dynamic Capabilities: Connecting Strategic Choice, Learning, and Competition” published in “Working paper of Harvard Business School” stated that vast effort has been made by previous research to understand, define, predict, as well as measure how organizational capabilities could shape competitive advantage (starting from 1971 through Andrew’s piece of work), as well as how capabilities could influence strategy. The later topic is triggered especially since 26 years, through the works of Pisano and Teece in 1994, Teece, Shuen,and Pisano in 1997, and Eisenhardt and Martin in 2000. Though, according to Peteraf et al (2013), disappointingly there are no common comprehending yet on dynamic capabilities, despite of such an enormous and intense research made upon. This includes its definition. Pisano, G. (2016) further found out that researches made on dynamic capabilities needs to be “re-arranged” in a way that it needs to go back to the fundamental that is faced by strategic problem, which is “how to identify and select capabilities that lead to competitive advantage”. To answer this question, Pisano, G. (2016) in his paper tried to develop a framework, which tries to connect the capability search (as strategic being chosen among the different varieties of capabilities) of the firms with their strategies within the product markets. Pisano’s framework’s foundation was using Pisano and Tees (1994) and Shueen, Pisano and Teece, Pisano (1997)’s original concept of dynamic capabilities as basis, who stated that “Capability identification, selection, and creation is an important strategic decision. Just as important to competitive performance as decisions about which markets to enter, how to position, in which markets to exploit existing resource position, how to deter entry, and other traditional strategic variables”. As the first and the later statements are closely linked from one to another, it is then becoming crucial to search for the most suitable capabilities for a firm to achieve its strategic objectives.

Pisano, G. (2016) stated that “The key distinguishing feature of capabilities in this framework is their degree of fungibility”. Fungibility as defined here, means that capabilities is ranging from a highly market specific (i.e the know how to produce the wing of an airplane, to design a car, and to manufacture a high-volume semiconductor) to highly general-purpose (i.e quality and financial management). When already possessing these capabilities, the choice for a firm as stated in the journal is either to “deepening” the capabilities that already exist, or to broaden it with new capabilities. These are called the choices of capability search. If firm decided to do both, it is not impossible as well. Though they need to think about the constraints. Figure 5. illustrates samples of these choices in capability search, showing that “A firm’s capability strategy is defined by its pattern of search and the allocation of its efforts across these different types of capabilities” (Pisano, 2016). This shows that the way of search comprises an “inter-play” between 2 uncertainty types: (1) on the supply to develop new capabilities as well as (2) on the demand side concerned with capability value.

As diversification has been considered as the main focus of strategy researches as well as practices, to demonstrate the potential of the aforementioned framework, the paper tried to explore the strategy of existing firm to diversify into new markets. This is derived by the Penrose’s growth theory, mentioning that firms first invest in resources for initial market and when those resources has a high fixed costs at the same time cannot be fully utilized), then firms might want to use it in the new market, through diversification. This shows that the diversification need access to new market specific capabilities. The journal quoted the hypothesis of Teece et al. (1994) stated that “If firms try to enter new markets with new technologies, failure is likely to happen, as the effort is likely to be outside the learning range of the firm”. Yet, learning rage there was not specified and the journal further added that current Penrosian entry theory is unable to predict, which “new market specific capabilities” (that are outside this learning range) are able to be developed by a firm. Therefore this paper tried to provide a starting point to fill this gap through its framework, which in summary suggest that diversification consisted of 3 basic capability strategy: “(1) Develop new market specific capabilities using current general-purpose capabilities – called as “application expanding search only”, (2) Develop new market specific capabilities, as well as to deep existing general purpose capabilities – called as domain-fortifying plus an application expanding search, and (3) Develop new market specific capabilities requiring the firm to broaden its general-purpose capabilities”.

Figure 5. Mapping capability strategy choices (Pisano, 2016)

The firm Capability Theory

Teece (2019) describes dynamic capabilities as a theoretical framework , how firms are organized, created, and grow, also how firms compete and innovate, and how to manage. He states capability theory application, such as allows removal intellectual blinders, understanding resource allocation of differential firm level, and emerge performance. Hence, profit is core to capitalism, generated through entrepreneurship and innovation. Main element to understand capitalism and modern economy is how firms to build Create, Grow, Capabilities, competitive advantage and to lead for higher profits and wages. Economic system create value that the share between various stakeholders and society (include employees and shareholder) and produce or adopt innovations

Main questions in economic theory and reality is; how the individual company to build and to manage its capabilities to grow and innovate, result to zero profit, competitive equilibrium trap to slowly dissapear, that provide advice to firms on developing decision about resource allocation or to understand the company and create better outcomes. How firms organize their activities? how to capture, create, as well as to protect the value?

Teece develop a framework, capabilities of the firm, and also the theory of how cam firms make an innovation as well as agile to keep disruption. Firms makes different by innovation, learning, and entrepreneurship, and prepare good decision making. The capabilities to innovate, decide, and change is firm differentiation.

Teece, first of all starts with shortcomings analysis of the firm major microeconomic theory. Then introduce the view capabilities of the firm as well as provides framework of dynamic capabilities, guiding manager capability to be better. His journal then make comparison between mainstream economic models and the capabilities framework in several areas, including boundaries and market of the firm. It was identified few areas where the framework might be used better for inform policy, including corporate governance, antitrust, as well as economic development. The view of capability help to explain enterprise evolution, heterogeneity, and organizational interfirm longevity. There are two type of capabilities, one is ordinary capability attached in skilled personnel combination, equipment and facilities, administrative coordination, process and routines. Second one is consist of assessment and identification of threat, customer needs and opportunities, resources mobilization, to address transformation and opportunities organization

Figure 6. The logical structure of the dynamicFigure 7. Business model distance vs market

capability’s framework (Teece, 2019).Distance

DISCUSSION AND CONCLUSION

In conclusion, to answer the first question: “What makes a resource, capabilities, and competencies valuable” with the following answer ; First, Internal and external factors are considered capable of elaborating on which resource is valuable and why firms invest more or less on a resource in terms of value. Second, managerial decision making, such as the decision making of “boundedly rational managers” under the resource based view. This includes processes of conceptualization of resources, resource management, and development. “Decision-making processes for managing resources, as micro-level analysis of managerial capabilities, lead to the heterogeneous distribution of resources and subsequent performance differences” (Kunc, 2010). The capabilities develop in learning part, such as resources combining and complementary assets exploiting. There are many capabilities then become parts in routines, but some other reside on the team of top management.

The role of valuable resources, capabilities, and competencies is crucial. A firm will have the ability to detect opportunities in the environment surrounding them and grasp these chances through adjusting, incorporating, and re-setting their resources and projects. The resources which are fundamental to the firm performance, is identified by dynamic managerial capabilities and then to be reconfigure. Within the leveraging context, uncertainty is referring to inability predicting different variables effect on a firm’s that try to coordinate, deploy and mobilize, its capabilities more effectively. In a highly uncertain environment, especially during unknown or rapidly changing industry recipes, fluctuating or growing market demand, as well as highly probability of environmental shocks, learning is very critical on helping firm to understand leveraging capabilities in order to create customer maximum value. Each and every component of the process for resource management is important, but has to be synchronized balance and integrate. The concept of Dynamic capabilities reinforces essential functions of the firm, including R&D and planning, as well as product development, among many others (Martin and Eisenhardt, 2000; Winter and Helfat, 2011).

All of the valuable resources, capabilities, and competencies will impact firms performance and create value through the company’s strategies such as strategic choice, learning, entrepreneurship, and innovation. The core of capabilities approach is a recognition of the firm as an organization on its strategies and capabilities. Capabilities in innovation create new process, new product, and new function of production. Managers and Entrepreneurs play important roles in directing, sustaining, developing, capabilities of organization. The capabilities are always diverse.Administration, operation, and governance ordinary capability can sometime be bought, or ‘rented,’ and then they may relatively diffuse quickly. Dynamic capability is not easy to develop as it must be built and could not be bought. Strong dynamic capabilities will enable the deployment of ordinary capabilities effective selection while strengthening the ordinary capabilities, may consequently undermine dynamic capabilities (unless skilfully managed) by the reduced of organizational flexibility. A lot more scope to further elaborate their interactions, the typology of capabilities as well as their measurement. Some companies are systematically capable to keep their activities and resources aligned with dynamic of environmental changing while some others are not.

APPENDIX

BIBLIOGRAPHY

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