British Journal of Management, Vol. 00, 1–19 (2015) DOI: 10.1111/1467-8551.12097 A Strategy Tripod Perspective on Knowledge Creation Capability Zhongfeng Su, Mike W. Peng1 andEnXie2 Nanjing University Business School, Nanjing 210093, China, 1Jindal School of Management, University of Texas at Dallas, Box 830688, SM 43, Richardson, TX 75083, USA, and 2School of Management, Xi’an Jiaotong University, Xi’an, 710049 Shaanxi, China Corresponding author email: [email protected] Drawing on the strategy tripod perspective, in this study we examine how the performance effect of knowledge creation capability is contingent on key industrial and institutional variables. We find that technological turbulence, competitive intensity and government support all positively moderate the relationship between knowledge creation capability and firm performance, while dysfunctional competition has a negative moderating im- pact. This study provides a more fine-grained analysis on the performance implications of knowledge creation capability. Moreover, it represents one of the first attempts to empiri- cally test the interactive effects of the three legs of the strategy tripod (the industry-based, resource-based and institution-based views) in one study and supports the importance of integrating the three legs to better understand the complex phenomenon. Introduction investigation drawn from a more insightful theo- retical lens. Does knowledge creation capability contribute to The strategy tripod perspective suggests that, firm performance? The resource-based view states although the resource-based view is powerful, it an ambiguous yes. This is because knowledge cre- alone is not sufficient to explain the complex ation capability, which reflects a firm’s ability to phenomenon; instead, it is the combination of create new knowledge, has been admitted as an three legs of the strategy tripod (the industry- important resource with the characters of valu- based, resource-based and institution-based views) able, rare, inimitable and non-substitutable (Smith, that provides a better understanding of the phe- Collins and Clark, 2005). Yet this statement is not nomenon (Gao et al., 2010; Peng et al., 2009; Ya- well supported by existing empirical studies in that makawa, Peng and Deeds, 2008). Accordingly, the they report that neither knowledge creation capa- strategy tripod perspective may be insightful to bility nor new created knowledge positively im- probe more deeply into the performance effect of pacts firm performance all the time (e.g. Collins, knowledge creation capability. In particular, the Smith and Stevens, 2001; Droge,¨ Claycomb and perspective advocates examining the interactions Germain, 2003; Schulze and Hoegl, 2006). As a of the three legs in terms of how the value of a result, the question of what the boundaries are certain resource varies with industrial and institu- within which knowledge creation capability con- tional settings (Lu, Liu and Wang, 2010; Meyer tributes to firm performance necessitates further et al., 2009). Extending this argument, we suggest that the relationship between knowledge creation capability and firm performance may be contin- This study was supported by the National Natural Sci- gent on industrial and institutional contexts. ence Foundation of China (71202107; 71472087) and the Therefore, in order to provide a more fine- International Cooperative Research Fund of the School grained analysis of the performance implications of Management, Nanjing University. © 2015 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA. 2 Z. Su, M. W. Peng and E. Xie of knowledge creation capability, this study exam- least in part is a reflection of the constraints of the ines the moderating effects of key industrial and particular institutional framework that the firm institutional variables on the relationship between confronts (Peng, 2006). knowledge creation capability and firm perfor- Although these three views are insightful, they mance. Specifically, we outline technological tur- focus on different levels. Specifically, the industry- bulence and competitive intensity as key indus- based view is good at identifying external forces at trial variables and dysfunctional competition and the industry level, the resource-based view excels government support as key institutional variables. in identifying internal strengths and weaknesses at Then, we hypothesize their moderating effects and the firm level, and the institution- based view em- empirically test the hypotheses based on a survey phasizes the societal-level influences (Peng, Wang of 212 firms. and Jiang, 2008). None of them alone is enough to This study makes two contributions. First, provide a comprehensive picture; rather, ‘it is the through investigating how the relationship be- combination of their insights that lead to a bet- tween knowledge creation capability and firm ter and more insightful understanding of the com- performance is moderated by key industrial and plex phenomenon’ (Yamakawa, Peng and Deeds, institutional variables, the study enriches the dis- 2008, p. 64). For example, the resource-based view cipline’s knowledge on the performance effect of has been criticized for its ‘little effort to establish knowledge creation capability. Second, although appropriate contexts’ (Priem and Butler, 2001, p. the strategy tripod perspective highlights integrat- 32). Barney (2001, p. 52) himself acknowledged ing the three legs of the strategy tripod, extant this criticism, noting that ‘the value of a firm’s re- studies often list them individually whereas lit- sources must be understood in the specific mar- tle research has empirically tested their interac- ket context within which a firm is operating ... tive effects within one study (Lu, Liu and Wang, [T]oo many authors have simply assumed away 2010; Peng et al., 2009; Yamakawa, Peng and this question, and, thus, have failed to help de- Deeds, 2008). By viewing knowledge creation ca- velop a more complete theory of firm advan- pability from the resource-based view, industrial tages.’ Therefore, the strategy tripod perspective, variables from the industry-based view and insti- which takes the industry-based, resource-based tutional variables from the institution-based view, and institution-based views as three legs and com- this study represents one of the first attempts to bines them together, emerges to overcome some of empirically examine the interactions between the the limitations of previous work that is typically three legs of the strategy tripod. based on a single perspective (Peng et al., 2009; Yamakawa, Peng and Deeds, 2008). Several scholars have utilized the strategy tri- Literature review and hypotheses pod perspective to investigate various complex development phenomena. For example, building on the strat- egy tripod perspective Yamakawa, Peng and The strategy tripod perspective Deeds (2008) developed a comprehensive frame- The industry-based, resource-based and work on what drives new ventures from emerg- institution-based views are all leading perspectives ing economies to enter developed economies. Gao in the strategy literature. The industry-based view et al. (2010) took the strategy tripod perspective states that the industrial conditions in which a to illustrate export behaviour and found that in- firm competes to a large extent determines firm stitutional environment has a stronger impact on performance, and the firm can build and sustain export behaviour than firm competences and in- its competitive advantage through altering its dustry factors. Cui, Jiang and Stening (2011) em- position in the industry (Boter and Holmquist, ployed the strategy tripod perspective to address 1996; Porter, 1980). Based on the assumption that the question of how Chinese firms make entry- resources are heterogeneous and idiosyncratic, the mode decisions for outward investments. Xie et al. resource-based view suggests a firm’s sustainable (2011) adopted the strategy tripod perspective to competitive advantage is largely attributed to its investigate foreign firms’ strategic positioning in valuable, rare, inimitable and non-substitutable the US host market. And Ju, Zhao and Wang resources (Barney, 1991). And the institution- (2014) utilized the strategy tripod perspective to based view highlights that firm performance at examine the boundaries of the positive relationship © 2015 British Academy of Management. Strategy Tripod Perspective on Knowledge Creation Capability 3 between relational governance and export perfor- Drawing on the resource-based view, scholars mance. often take for granted that knowledge creation ca- These studies reveal the explanatory and pre- pability universally leads to superior performance. dictive power of the strategy tripod perspec- In particular, the resource-based view states that tive, yet they simply list the three legs of a firm’s competitive advantage stems from its the strategy tripod in terms of the individ- valuable, rare, inimitable and non-substitutable ual role played by key industry-, resource- and resources (Barney, 1991). Through creating new institution-related variables. Besides the indepen- knowledge, knowledge creation capability aids in dent impact, the industry-based, resource-based coping with environmental changes (Wang, Su and institution-based views have interactive effects and Yang, 2011). Thus, it is valuable. And knowl- (Oliver, 1991; Peng, 2006). For instance, Oliver edge creation capability