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Paving Evolutionary Path with Experience Transition in Dynamic Capabilities
  • Yu-Ching Cheng
Yu-Ching Cheng

Corresponding Author:[email protected]

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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