A capability-based view of organisational renewal: Combining opportunity- and advantage-seeking growth in large, established European and North American wood-industry companies
Korhonen S. (2006). A capability-based view of organisational renewal: Combining opportunity- and advantage-seeking growth in large, established European and North American wood-industry companies. https://doi.org/10.14214/df.20
Abstract
The purpose of this study was to extend understanding of how large firms pursuing sustained and profitable growth manage organisational renewal. A multiple-case study was conducted in 27 North American and European wood-industry companies, of which 11 were chosen for closer study. The study combined the organisational-capabilities approach to strategic management with corporate-entrepreneurship thinking. It charted the further development of an identification and classification system for capabilities comprising three dimensions: (i) the dynamism between firm-specific and industry-significant capabilities, (ii) hierarchies of capabilities and capability portfolios, and (iii) their internal structure. Capability building was analysed in the context of the organisational design, the technological systems and the type of resource-bundling process (creating new vs. entrenching existing capabilities). The thesis describes the current capability portfolios and the organisational changes in the case companies. It also clarifies the mechanisms through which companies can influence the balance between knowledge search and the efficiency of knowledge transfer and integration in their daily business activities, and consequently the diversity of their capability portfolio and the breadth and novelty of their product/service range. The largest wood-industry companies of today must develop a seemingly dual strategic focus: they have to combine leading-edge, innovative solutions with cost-efficient, large-scale production. The use of modern technology in production was no longer a primary source of competitiveness in the case companies, but rather belonged to the portfolio of basic capabilities. Knowledge and information management had become an industry imperative, on a par with cost effectiveness. Yet, during the period of this research, the case companies were better in supporting growth in volume of the existing activity than growth through new economic activities. Customer-driven, incremental innovation was preferred over firm-driven innovation through experimentation. The three main constraints on organisational renewal were the lack of slack resources, the aim for lean, centralised designs, and the inward-bound communication climate.
Keywords
corporate entrepreneurship;
organisational change;
social networks;
formal structure;
knowledge processes;
forest industry
Published 24 May 2006
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Available at https://doi.org/10.14214/df.20 | Download PDF
Original articles
Korhonen, S. & Niemelä, J.S. 2004. Guidelines for sustainable, external corporate growth: a case study of the leading European and North American wood-industry companies. Journal of Forest Products Business Research 1.
http://www.forestprod.org/jfpbr-online.html
Korhonen, S. & Niemelä, J.S. 2005. A conceptual analysis of capabilities: identifying and classifying the sources of competitive advantage in the wood industry. The Finnish Journal of Business Economics 54(1): 11-47.
Korhonen, S. 2005. Diversity or efficiency: structural premises for knowledge processes in established, large companies. (Submitted manuscript).
Korhonen, S. 2005. A capability-based view on organisational renewal: maintaining long- and short-term potential for growth in large, established companies. (Submitted manuscript).