The Influence of Organizational Capacity and Environmental Dynamism on the First Move–Performance Relationship Vera L
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Florida State University Libraries Electronic Theses, Treatises and Dissertations The Graduate School 2006 The Influence of Organizational Capacity and Environmental Dynamism on the First Move–Performance Relationship Vera L. Street Follow this and additional works at the FSU Digital Library. For more information, please contact [email protected] THE FLORIDA STATE UNIVERSITY COLLEGE OF BUSINESS THE INFLUENCE OF ORGANIZATIONAL CAPACITY AND ENVIRONMENTAL DYNAMISM ON THE FIRST MOVE–PERFORMANCE RELATIONSHIP By VERA L. STREET A Dissertation submitted to the Department of Management in partial fulfillment of the requirements for the degree of Doctor of Philosophy Degree Awarded: Fall Semester, 2006 The members of the Committee approve the dissertation of Vera L. Street defended on August 8, 2006. _______________________________ Bruce T. Lamont Professor Directing Dissertation _______________________________ Susan S. Fiorito Outside Committee Member _______________________________ Jack Fiorito Committee Member _______________________________ K. Michele Kacmar Committee Member _______________________________ Pamela L. Perrewé Committee Member Approved: _____________________________ Caryn Beck-Dudley Dean, College of Business The Office of Graduate Studies has verified and approved the above named committee members. ii This dissertation is dedicated to my husband, my teacher, my inspiration, and my best friend, Marc D. Street. iii ACKNOWLEDGEMENTS I would like to thank my dissertation chair, Bruce Lamont, for taking me under his wing and believing in me. Many thanks go to my other committee members as well. Thanks to Micki Kacmar for all the knowledge and advice you imparted to me both in and out of class, thanks for your constant support, and thanks for staying with me across the miles. Thanks to Pam Perrewé for your insights and for always helping me to keep things in perspective. Thanks to Jack Fiorito who pushed me to dig deeper in class and on the dissertation. And thanks to my outside member, Susan Fiorito who was there to lend helpful comments and encouraging remarks. I would also like to thank all of the other management faculty from FSU who helped train me to be a scholar and helped with generation of ideas for research. Thanks to Bill Anthony, Jim Combs, and Dave Ketchen. I have many people to thank for their sharing their time and expertise with me for this project. For serving as industry experts, I thank Scot Ransbottom, Brad Schonhoft, Delta Schonhoft, and Jeff Swift. For assistance with data collection and editing, I thank Marc Street, Emily Ford, and Colin Rader. For helping me to learn analyses, I thank Hugh Marble, Wendy Habegger, and Ron Piccolo. Special thanks go to all of my peers at FSU for all of your helpfulness, and for stress relief, too! And finally, I’d like to thank my family for all of their support throughout the years. Thanks Mom, Dad, Valerie, Alex, Scot, Synnove, Godfather, Vera, Irene, Eddie, Sandy, Lionel, Dave, and Grandma Irene. And thanks Marc, who always gives me the reason and the courage to persevere. iv TABLE OF CONTENTS List of Tables ............................................................................................................................vii List of Figures..........................................................................................................................viii Abstract .....................................................................................................................................ix 1. INTRODUCTION..................................................................................................................1 2. A MODEL OF FIRST-MOVER ADVANTAGES..................................................................5 Literature on First Moves.................................................................................................5 Theoretical Model .........................................................................................................13 Hypotheses....................................................................................................................31 3. RESEARCH METHOD .......................................................................................................41 Sample and Data............................................................................................................41 Event Study Methodology to Test Hypothesis 1.............................................................48 Regression Analysis to Test Hypotheses 2-5..................................................................52 4. RESULTS............................................................................................................................64 Event Study Analysis.....................................................................................................64 Regression Results.........................................................................................................66 5. DISCUSSION AND CONCLUSION...................................................................................74 Discussion of Research Findings ...................................................................................75 Contributions to Research and Practice..........................................................................82 Limitations and Directions for Future Research .............................................................87 Conclusions...................................................................................................................90 APPENDIX A...........................................................................................................................91 APPENDIX B...........................................................................................................................97 APPENDIX C.........................................................................................................................106 v APPENDIX D.........................................................................................................................108 REFERENCES .......................................................................................................................109 BIOGRAPHICAL SKETCH...................................................................................................129 vi LIST OF TABLES 1. Similarity of Dimensions in Various Capacity Constructs.....................................................25 2. Slack Asset Types and the Criteria for Impact on the First Move-Performance Relationship.34 3. Comparison of Sample to Other First Moving Firms and Non-First Moving Firms...............46 4. Contaminating Events by Industry........................................................................................50 5. Loadings, Eigenvalues, and Variance Explained for Factor of Combinative Capabilities and Reputation .....................................................................................................................56 6. Abnormal Stock Returns Using a Market Model with a Value Weighted Index ....................65 7. Descriptive Statistics and Correlations..................................................................................67 8. Review of Hypotheses & Summary Findings........................................................................69 9. Results of Regression Analysis of Performance Effects of First Moves on Organizational Capacity, Environmental Dynamism and Interactions ....................................................70 vii LIST OF FIGURES 1. The Relationships among First Moves, Organizational Capacity, and Environmental Dynamism and their Effect on Performance.....................................................................3 2. Theoretical Model of the First Move—Performance Relationship ........................................15 3. The Two Mechanisms of the Environment as Relating to the Interaction between First Moves and Organizational Capacity..........................................................................................29 4. Research Model of the Performance Effects of First Moves..................................................32 5. Interactive Effects of Environmental Dynamism and Leadership Capacity on the Performance Effects of First Moves ...................................................................................................71 6. Interactive Effect of Environmental Dynamism and Financial Slack on the Performance Effects of First Moves ...................................................................................................72 7. Positive and Negative Factors Affecting First Mover Performance .......................................85 viii ABSTRACT Even though firms that are first to market often maintain a performance advantage over later entrants, this is not always the case. There are important contingencies upon which a first move may or may not be successful. One such contingency, described herein, is organizational capacity, a multidimensional construct that aids the firm in creating sources of advantage from a first move. Additionally, the role of environmental dynamism as an influence on organizational capacity’s moderating effect on the relationship between first-moves and performance is discussed. Hypotheses concerning these effects, including some differential effects of the components of organizational capacity, are developed. Event study and multiple regression analyses are used to test these hypotheses. The findings of