Toward a Pecking Order Theory of Strategic Resource Deployment
35 Pages Posted: 8 Aug 2015
Date Written: August 6, 2015
A premise of the capabilities perspective in strategy is that firm-specific capabilities allow some firms to be unusually adept at exploiting growth opportunities. Since few firms have the capacity to internally generate the quantity or variety of strategic resources needed to exploit growth opportunities, the ability to externally acquire complementary resources is critical to the acquisition of competitive advantage. However, the external sourcing of resources exposes the firm’s strategic resources to risks of expropriation. We argue this threat gives capable firms incentive to use internally generated strategic resources to pursue growth opportunities before turning to external sources. A pecking order theory of strategic resource deployment is implied. Data from a 22-year sample of cross-border investment partnership decisions made by U.S.-based venture capital firms provide strong support for our theory.
Keywords: Resource Acquisition, Dynamic Capabilities, Venture Capital, Pecking Order Theory
JEL Classification: G24, D23
Suggested Citation: Suggested Citation