Compositional capability as a mean to improve performance in an uncertain environment

Abstract

Dynamic capabilities are widely regarded to be critical to ensure the growth and survival of firms in an uncertain environment. Recently, the concept of compositional capability has been proposed which is described as the ability to skillfully integrate disparate resources to develop unique value propositions for the target market. Scholars regard compositional capability as a form of dynamic capability. The present study investigates the impact of compositional capability on a firm’s performance. Furthermore, it has been hypothesized that this effect is likely to improve in an uncertain environment. To test the conceptual model, data was collected from a cross-section of 185 retail stores located in Lahore, Pakistan through the survey. The collected data was later analyzed through Structural Equation Modelling. Results of the study reveal that compositional capability is positively associated with a firm’s performance. Also, compositional capability leads to superior firm performance under a highly uncertain environment. The paper discusses these findings and concludes with implications for future research.

Understanding the Efforts of Cross-Border Search and Knowledge Co-Creation on Manufacturing Enterprises’ Service Innovation Performance

“…A more robust compositional capability enables an enterprise to integrate knowledge at a higher speed, bring the enterprise opportunities of integrating the new service innovation knowledge system learned in knowledge co-creation with its internal knowledge base, and drive the enterprise to build a solid knowledge foundation for the transformation and upgrading of service innovation. It is also worth noting that enterprises with prominent compositional capability can better match and recombine their internal knowledge with high potential and cost-effective external knowledge resources [46]. In this way, they can lower their R&D cost of service innovation and transform or develop new services or new product services according to an enterprise's characteristics and market demand [18].…”