Contingencies within Dynamic Managerial Capabilities: Interdependent Effects of Resource Investment and Deployment on Firm Performance
Strategic Management Journal, Vol. 30, No. 13, pp. 1375-1394, 2009
20 Pages Posted: 14 Feb 2009 Last revised: 22 Oct 2011
Date Written: February 13, 2009
Dynamic managerial capabilities focus on managers' resource-related decisions. Asset orchestration, a central component of dynamic managerial capabilities, highlights the importance of integrating (matching) resource investment and deployment decisions. Building on these recent theoretical advances, we examine the contingent nature of resource investment and deployment decisions. The results, based on a sample of banking firms, indicate that firm performance suffers when managers' investment decisions deviate from the norms of rivals for both human and physical capital. However, when deployment decisions support investment decisions, greater investment deviation from rivals, both high and low, generally enhance performance. Specifically, firm performance is optimized by making congruent resource investment and deployment decisions as opposed to maximizing or economizing either decision independently. Therefore, resource management via asset orchestration is vital for superior performance.
Keywords: Dynamic managerial capabilities, Asset orchestration, Resource management, Resource investment, Resource deployment, Contingency theory
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