Paving Evolutionary Path with Experience Transition in Dynamic
Capabilities
Abstract
The dynamic capabilities approach underscores the role of experience
accumulation as a firm- specific resource in sustaining a competitive
advantage through evolutionary paths. However, little is known about
experience transition and its effect on firm performance. This topic is
important because it touches upon a long-standing debate about strategy
commitment and flexibility. To explain and predict experience
transition, this study draws insights from sequence analysis to examine
the effects of sequence stability. Drawing from the acquisition
sequences of 234 publicly traded firms within the biotechnology industry
from 2012 to 2019, this study corroborates with the dynamic capabilities
approach and finds that the significantly negative effect of sequence
stability is contingent upon complementary assets. While a negative
relationship exists between sequence stability and advertising
investment, the causal direction reverses when the interaction term
shifts to physical capital investment. This study contributes to the
resource-based view by highlighting that successful experience
transition depends on resource alignment with corporate strategy.11 Jan 2024Submitted to Advance 03 Apr 2024Published in Advance