The Dynamic Model of Intellectual Capital Creation in Family Business: The Dynamic Capabilities Perspective

Authors

  • Tung-Shan Liao College of Management, Yuan Ze University, 32003,Taiwan, China
  • Thi Thuy Dung Pham College of Management, Yuan Ze University, 32003,Taiwan, China
  • Juin-Cherng Lu Department of Educational Management, National Taipei University of Education,10617, Taiwan, China

DOI:

https://doi.org/10.30564/jbar.v4i2.2635

Abstract

The paper’s purpose is to examine the role of knowledge and learning as a dynamic capability that leads to competitive advantage in family firms. It further conceptually develops a model showing the relationship between intellectual capital, firm performance, and dynamic capabilities in family firms. Using past case studies related to the subject, this study highlights the importance of knowledge accumulation, integration, codification, and the preservation of socioemotional wealth as dynamic capabilities that allow a family firm to sense and seize business opportunities that transform the business to a competitive advantage. Findings from the case applications reveal that family businesses benefit from the accumulation of knowledge through expertise, skills, and employment of non-family members and having family involvement as important strategic assets that lead to increased value in family firms’ performance.

Keywords:

Family business (FB), Dynamic capabilities, Knowledge, Intellectual capital

References

[1] Nicholson, N. (2008). Evolutionary psychology, organizational culture, and the family firm. Academy of Management Perspectives, 22(2), 73-84.

[2] Poza, E. J., & Daugherty, M. S. (2014). Family Business. Mason: South-Western Cengage Learning.

[3] Eisenhardt, K. M., and Martin, J. A., (2000). Dynamic capabilities: What are they? Strategic Management Journal. 21 (10-11), 1105-1121.

[4] Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), 1319-1350.

[5] Helfat, C.E. , Finkelstein, S. , Mitchell, W. , Peteraf, M.A., Singh, H. , Teece, D.J. and Winter, S.G. (2007) Dynamic Capabilities: Understanding Strategic Change in Organizations. Malden, MA: Blackwell.

[6] Teece, D. J., Pisano, G., &Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533.

[7] Easterby‐Smith, M., Lyles, M. A., &Peteraf, M. A. (2009). Dynamic capabilities: Current debates and future directions. British Journal of Management, 20, S1-S8.

[8] König, A., Kammerlander, N., & Enders, A. (2013). The family innovator’s dilemma: How family influence affects the adoption of discontinuous technologies by incumbent firms. Academy of Management Review, 38(3), 418-441.

[9] Chang, H.-J., Lin, S.-J., &Hou, J.-J. (2014). An Investigation of Family Business from the Perspective of Dynamic Capabilities. Journal of Chinese Management Review, 17(1).

[10] Barros, I., Hernangómez, J., & Martin-Cruz, N. (2016). A theoretical model of strategic management of family firms. A dynamic capabilities approach. Journal of Family Business Strategy, 7(3), 149-159.

[11] Sirmon, D. G., &Hitt, M. A. (2003). Managing resources: Linking unique resources, management, and wealth creation in family firms. Entrepreneurship theory and practice, 27(4), 339-358.

[12] Alagöz, A., Ortakarpuz, M., &Ceran, M. B. Dynamic Capabilities of Enterprises in Accounting Perspective and Evaluation of the Scope of Ias 38 Intangible Assets Standard.

[13] Kuo, M.-H., & Yang, C. (2012). Does intellectual capital matter? Assessing the profitability and marketability of IC design companies. Quality and Quantity, 46(6), 1865-1881. DOI: http://dx.doi.org/10.1007/s11135-011-9562-6.

[14] Grant, R., (1996). Prospering in dynamically competitive environments: organisation capability as knowledge integration. Organizational Science, 7 (4), 375-387.

[15] Edvinsson, L., & Malone, M. (1997). Intellectual capital: Realising your company’s true value by finding its hidden brainpower. New York, NY: Harper Collins.

[16] Khan, H. U. Z., & Ali, M. (2010). An empirical investigation and users’ perceptions on intellectual capital reporting in banks: Evidence from Bangladesh. Journal of Human Resource Costing & Accounting, 14(1), 48-69. DOI: 10.1108/14013381011039799.

[17] Meritum Project (2002), Guidelines for Managing and Reporting on Intangibles, Fundación Airtel Móvil, Madrid.

[18] Nahapiet, J., &Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242-266.

[19] Bontis, N. (1998). Intellectual capital: an exploratory study that develops measures and models. Management Decision, 36(2), 63-76. DOI: 10.1108/00251749810204142.

[20] Hosomi, S. (2014). Study on the relation between intellectual capital and corporate performance for the management of organisational capital.

[21] Arregle, J. L., Hitt, M. A., Sirmon, D. G., & Very, P. (2007). The development of organizational social capital: Attributes of family firms. Journal of management studies, 44(1), 73-95.

[22] Carr, J. C., Cole, M. S., Ring, J. K., &Blettner, D. P. (2011). A measure of variations in internal social capital among family firms. Entrepreneurship theory and practice, 35(6), 1207-1227.

[23] Cabrera-Suárez, M. K., de la Cruz Déniz-Déniz, M., & Martín-Santana, J. D. (2011). Familiness and market orientation: A stakeholder approach. Journal of Family Business Strategy, 2(1), 34-42.

[24] Hoffman, J., Hoelscher, M., & Sorenson, R. (2006). Achieving sustained competitive advantage: A family capital theory. Family business review, 19(2), 135- 145.

[25] Kellermanns, F. W., Eddleston, K. A., Barnett, T., & Pearson, A. (2008). An exploratory study of family member characteristics and involvement: Effects on entrepreneurial behavior in the family firm. Family Business Review, 21(1), 1-14.

[26] Miller, D., & Le Breton-Miller, I. (2006). Family governance and firm performance: Agency, stewardship, and capabilities. Family business review, 19(1), 73-87.

[27] Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of management, 16(1), 49-64.

[28] Davis, J. H., Allen, M. R., & Hayes, H. D. (2010). Is blood thicker than water? A study of stewardship perceptions in family business. Entrepreneurship theory and practice, 34(6), 1093-1116.

[29] Teece, D. J. (2012). Dynamic capabilities: Routines versus entrepreneurial action. Journal of Management Studies, 49(8), 1395-1401.

[30] Kump, B., Engelmann, A., Kessler, A., &Schweiger, C. (2019). Toward a dynamic capabilities scale: measuring organizational sensing, seizing, and transforming capacities. Industrial and Corporate Change, 28(5), 1149-1172.

[31] Gomez‐Mejia, L. R., Makri, M., &Kintana, M. L. (2010). Diversification decisions in family‐controlled firms. Journal of management studies, 47(2), 223-252.

[32] Gomez Mejia, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J., &Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative science quarterly, 52(1), 106- 137.

[33] Berrone, P., Cruz, C., Gomez-Mejia, L. R., &Larraza-Kintana, M. (2010). Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less?. Administrative science quarterly, 55(1), 82-113.

[34] Arend, R. J., &Bromiley, P. (2009). Assessing the dynamic capabilities view: spare change, everyone?. Strategic Organization, 7(1), 75-90. DOI: 10.1177/1476127008100132.

[35] Pavlou, P. A., & El Sawy, O. A. (2011). Understanding the elusive black box of dynamic capabilities. Decision sciences, 42(1), 239-273.

[36] Cucculelli, M., Mannarino, L., Pupo, V., & Ricotta, F. (2014). Owner‐management, firm age, and productivity in Italian family firms. Journal of Small Business Management, 52(2), 325-343.

[37] Barros, I., Hernangómez, J., & Martin-Cruz, N. (2016). A theoretical model of strategic management of family firms. A dynamic capabilities approach. Journal of Family Business Strategy, 7(3), 149-159.

[38] Jones, O., Ghobadian, A., O’Regan, N., &Antcliff, V. (2013). Dynamic capabilities in a sixth-generation family firm: Entrepreneurship and the Bibby Line. Business History, 55(6), 910-941.

[39] Laaksonen, O., &Peltoniemi, M. (2018). The Essence of Dynamic Capabilities and their Measurement. International Journal of Management Reviews, 20(2), 184-205. DOI: 10.1111/ijmr.12122.

[40] Zahra, S. A., Sapienza, H. J., &Davidsson, P. (2006). Entrepreneurship and dynamic capabilities: A review, model and research agenda. Journal of Management Studies, 43(4), 917-955.

[41] Liao, T.S. (2019). The Role of R&D Leverage as a Dynamic Capability in Performance Creation: Evidence from SMEs in Taiwan. Journal of Business Administration Research, 2(2), 20-39.

[42] Winter, S. G. (2003). Understanding dynamic capabilities. Strategic management journal, 24(10), 991- 995.

[43] Szulanski, G., Ringov, D., & Jensen, R. J. (2016). Overcoming stickiness: How the timing of knowledge transfer methods affects transfer difficulty. Organization Science, 27(2), 304-322.

[44] Al-Khalil, S. S., Dahiyat, S. E., & Al-dalahmeh, M. A. (2014). Intellectual capital development and its effect on technical innovation in banks operating in Jordan. Journal of Management Research, 6(1), 211-238.

[45] Zollo, M., &Winter, S. G. (2002). Deliberate learning and the evolution of dynamic capabilities. Organization science, 13(3), 339-351.

[46] Helfat, C. E., &Winter, S. G. (2011). Untangling dynamic and operational capabilities: Strategy for the (N) ever‐changing world. Strategic management journal, 32(11), 1243-1250.

[47] Teece, D. J. (2014). The foundations of enterprise performance: Dynamic and ordinary capabilities in an (economic) theory of firms. The Academy of Management Perspectives, 28(4), 328-352. https :// doi.org/10.5465/amp.2013.0116.

[48] Felin T., and Foss N.J. (2005). Strategic organization: a field in search of micro-foundations. Strategic Organization, 3(4), 441-455.

[49] Mondal, A., & Ghosh, S. K. (2012). Intellectual capital and financial performance of Indian banks. Journal of Intellectual Capital. 13(4), 515-530.

[50] Barros, I., Hernangómez, J., & Martin Cruz, N. (2016). A theoretical model of strategic management of family firms. A dynamic capabilities approach. Journal of Family Business Strategy, 7. DOI:10.1016/j.jfbs.2016.06.002.

[51] Chirico, F. (2008). Knowledge accumulation in family firms. Evidence from four case studies. International Small Business Journal, 26(4), 433-462.

[52] Habbershon, T.G., and Williams, M.L., (1999): A resource-based framework for assessing the strategic advantages of family firms. Family Business Review, (7)1 ,1-25.

[53] Sharma, P. (2008). Commentary: Familiness: Capital stocks and flows between family and business. Entrepreneurship Theory and Practice, 32(6), 971-977.

[54] Habbershon, T. G., &Pistrui, J. (2002). Enterprising families domain: Family‐influenced ownership groups in pursuit of transgenerational wealth. Family Business Review, 15(3), 223-237.

[55] Hawass, H. H. (2010). Exploring the determinants of the reconfiguration capability: a dynamic capability perspective. European Journal of Innovation Management.

[56] Beckhard, R., & Dyer Jr, W. G. (1983). Managing continuity in the family-owned business. Organizational dynamics, 12(1), 5-12.

[57] Alonso, A., Kok, S. K., & O’Shea, M. (2018). Family Businesses and Adaptation: A Dynamic Capabilities Approach. Journal of Family and Economic Issues, 39. DOI:10.1007/s10834-018-9586-3.

[58] Chirico F. and Nordqvist M. (2010). Dynamic capabilities and transgenerational value creation in family firms. The role of organizational culture. International Small Business Journal, vol. 28, no. 5, pp. 487- 504.

Downloads

Issue

Vol. 4 , Iss. 2 (April 2021)

Article Type

Articles

License

Copyright and Licensing

The authors shall retain the copyright of their work but allow the Publisher to publish, copy, distribute, and convey the work.

Journal of Business Administration Research publishes accepted manuscripts under Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0). Authors who submit their papers for publication by Journal of Business Administration Research agree to have the CC BY-NC 4.0 license applied to their work, and that anyone is allowed to reuse the article or part of it free of charge for non-commercial use. As long as you follow the license terms and original source is properly cited, anyone may copy, redistribute the material in any medium or format, remix, transform, and build upon the material.

License Policy for Reuse of Third-Party Materials

If a manuscript submitted to the journal contains the materials which are held in copyright by a third-party, authors are responsible for obtaining permissions from the copyright holder to reuse or republish any previously published figures, illustrations, charts, tables, photographs, and text excerpts, etc. When submitting a manuscript, official written proof of permission must be provided and clearly stated in the cover letter.
The editorial office of the journal has the right to reject/retract articles that reuse third-party materials without permission.

Journal Policies on Data Sharing

We encourage authors to share articles published in our journal to other data platforms, but only if it is noted that it has been published in this journal.