Building Micro-Foundations for the Routines, Capabilities, and Performance Links

40 Pages Posted: 2 May 2007

See all articles by Peter Malcolm Abell

Peter Malcolm Abell

London School of Economics & Political Science (LSE) - Interdisciplinary Institute of Management

Teppo Felin

University of Oxford - Said Business School

Nicolai J. Foss

Bocconi University - Department of Management and Technology

Date Written: February 2007

Abstract

Micro-foundations have become an important emerging theme in strategic management. This paper addresses micro-foundations in two related ways. First, we argue that the kind of macro (or "collectivist") explanation that is utilized in the capabilities view in strategic management - which implies a neglect of micro-foundations - is incomplete. There are no mechanisms that work solely on the macro-level, directly connecting routines and capabilities to firm-level outcomes. While routines and capabilities are useful shorthand for complicated patterns of individual action and interaction, ultimately they are best understood at the micro-level. Second, we provide a formal model that shows precisely why macro explanation is incomplete and which exemplifies how explicit micro-foundations may be built for notions of routines and capabilities and for how these impact firm performance.

Keywords: Routines, capabilities, micro-foundations, production function

JEL Classification: L2, M1

Suggested Citation

Abell, Peter Malcolm and Felin, Teppo and Foss, Nicolai J., Building Micro-Foundations for the Routines, Capabilities, and Performance Links (February 2007). Available at SSRN: https://ssrn.com/abstract=982823 or http://dx.doi.org/10.2139/ssrn.982823

Peter Malcolm Abell

London School of Economics & Political Science (LSE) - Interdisciplinary Institute of Management ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Teppo Felin

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://sites.google.com/site/teppofelin2/

Nicolai J. Foss (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

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