Doctoral Thesis Nurturing Entrepreneurial Venturing Capabilities A study of family firms Imran Nazir JÖNKÖPING UNIVERSITY JÖNKÖPING INTERNATIONAL BUSINESS SCHOOL JIBS DISSERTATION SERIES NO. 114, 2017 Doctoral Thesis in Business Administration Nurturing Entrepreneurial Venturing Capabilities: A study of family Firms JIBS Dissertation Series No.114 © 2017 Imran Nazir and Jönköping International Business School Publisher: Jönköping International Business School P.O. Box 1026 SE-551 11 Jönköping Tel.: +46 36 10 10 00 www.ju.se Printed by Ineko AB 2017 ISSN 1403-0470 ISBN 978-91-86345-74-7 To my family We can only learn and advance with contradictions. The faithful inside should meet the doubtful. The doubtful should meet the faithful. Human slowly advances and becomes mature when he accepts his contradictions. Shams of Tabriz Beyond stars are even more worlds There are still even more tests of passion. You are falcon, flight is your task Before you there are other skies as well. Iqbal 3 Acknowledgements In the hours of night and dawn when this book was written, there was silence, moments of contemplation, of solitude and vulnerability. I needed this. Albert Einstein once said: ‘The monotony and solitude of a quiet life stimulates the creative mind’. As my academic years went on, the list of women and men who made it possible to complete this project grew longer. I am almost sure that some of these precious names are going to escape me, though this is in no way lessens the importance of their presence and contribution. My heart thanks them beyond these pages with affection and gratitude. I would first like to thank my supervisors Leif Melin and Mattias Nordqvist. I am deeply grateful to my main supervisor, Leif, who initiated my PhD studies, most of my accomplishment in this research have only been possible with his trust, patience unrelenting guidance and inner wisdom. I thank Mattias, for encouraging me throughout the process, providing me constructive feedback and for being generous in sharing his time, experience and knowledge. I am indebted to Michael Hitt for the deep and insightful conversation on resources and capabilities during my visit to Mays Business School in 2014, which have immensely enriched my research and intellectual background. In addition to my supervisors, I am also grateful to Salvatore Sciascia, discussant of the manuscript presented at the final seminar, his insightful questions and thought-provoking comments have immensely improved the final version of my thesis. I owe a special thanks to my colleagues and friends at Jönköping International Business School for providing a stimulating and collaborative research environment. I am particularly grateful to Ethel Brundin for her constant accompaniment, permanent enthusiasm and faithfulness. Thank you, Ethel, for being there when I needed help. Kasja Haag, Leona Achtenhagen, Olof Burning, Francesco Chirico, Per Davidssons, Naveed Akhter, Massimo Bau, Daniel Pittino, Sara Ekberg, Lars Petterson, Emma Lappi who have been constantly available and provided me with unobtrusive support, I would here like to express my deepest gratitude. Thank you Susanne Hansson, Tanja Andersson and Katarina Blåman for your work over the years. Thank you Anders Melander for your valuable feedback on my research proposal. I am grateful to the two-family firms who generously shared their stories with me and provided not only rich insights about their entrepreneurial journey, but also with a thorough understanding of the family and business. I gratefully acknowledge financial support from Carl-Olof and Jenz Harmin foundation which made my PhD studies at CeFEO possible. Also, a special thanks to Henry and Sylvia TOFT foundation for their generous scholarship which made my visit to Mays Business School possible. 5 I owe a bigger debt of gratitude than I can never express to my wife Zartash, who has believed in me from day one and has accompanied me in this journey through smiles, through tears and infinite warmth of presence. I thank you for being with me on this journey and making it possible for us to advance together. This book owes you more than I can tell. My final thanks and last prayer go to the One, the Most Near, the Most Gracious. Indeed, without His Blessings and Strength this effort would not have been possible. Jönköping August 2017 Imran Nazir 6 Abstract The purpose of this dissertation is to improve our understanding of how family firms adapt to their dynamic environments through creating new businesses and to explore the role of dynamic capabilities driving firm’s strategic entrepreneurial activities. I address the above aims by conducting qualitative case studies of Hum Network and AVT channels, which are both family firms at the time of their entry into the deregulated TV industry of Pakistan in 2005. A deregulated environment is often characterized as highly dynamic owing to the rapid and frequent changes that occur in customer groups and product offerings and the mix of competitors. Reduced barriers to entry through government legislation often produce a massive shift in the structure of competition, as it attracts new entrants to the industry, intensifying the hostility of the business environment. The success and long-term survival in this increasingly dynamic environment often rests on building dynamic capabilities that transform firm resources and competences and revitalize existing firm businesses. However, we still lack detailed insights into how family firms build dynamic capabilities to facilitate the implementation of entrepreneurial initiatives, which focus on the creation of new corporate businesses. In the literature of family entrepreneurship, the dominant view holds that family objectives concerned with ensuring longevity made family firms low risk- takers and conservative in their strategies and they are thus less likely to engage in venturing initiatives. Some scholars point to potential insufficiencies when family firms use their resources: they argue that family owner-managers often draw from a family pool rather than a wider market for talent which can stifle the development of capabilities needed to engage in entrepreneurial initiatives. Contrary to this view, one of the key insights that emerge from this study is that to cope with changes in the competitive environment, family firms adopt new business venturing as a strategic approach to establish and protect their position in a competitive industry. By a strategic approach, I mean the intent of family founding executives to seek strategic adaptation, particularly through continuously identifying unmet customer needs in the industry and exploiting these needs through producing new media products and services well in advance of their competitors. To enact or implement their strategic imperative, both firms develope a set of capabilities, which I call entrepreneurial venturing capabilities (EVC). First, opportunity refinement capability refers to the ability to envision new possibilities in the market combined with the ability to evaluate and modify the opportunity according to new insights to shape the venture opportunity in ways that more effectively address the unmet customer or market needs. It reflects management’s abilities in imaging new venture opportunities based on the industry experience and to further refine these opportunities by deliberately 7 composing teams at the top management level with additional industry experience to collectively form judgements on the attractiveness of new opportunities. Second, resource mobilization capability consists of an ability to develop and integrate the internal and external resources needed to develop new media offering for the new ventures. It reflects management’s ability in building enduring and trust-based relationships with actors inside the organization to accumulate and integrate resources as well as ability to form external collaborative relationships necessary to ensure the continuous development of new innovative products. Third, customer orientation capability is the ability to develop and maintain close relationships with customers to ensure long-term success of the new venture in the competitive environment. Customer orientation reflects management’s ability in accumulating relational resources such as reputation, image, trust and credibility through promoting behaviors, this puts an emphasize on understanding and aligning with the customer’s cultural values proactively to collect and use customer information to adopt to their current and future needs as well as collaborating with the customers regularly. Overall, the capabilities that I identify enable family firms to sense and calibrate the opportunities in the fast-changing deregulated environment, to rapidly mobilize resources for new product development to seize the opportunities, and to quickly transform their product and services by disseminating customer knowledge throughout the organization to meet the shifting demands of customers and gain market dominance. 8 Content 1. Introduction ................................................................................................ 13 1.1 Background of research ......................................................................... 13 1.2 Open issues in the dynamic capabilities view ........................................ 15 1.3 Family firms: An empirical context ....................................................... 18 1.4 Purpose and research questions ............................................................. 21