Capabilities, Strategic Intent and Firm Performance: An Empirical Investigation

Abstract

This dissertation consists of three papers that are linked through the topic of organizational capabilities. The first paper, entitled "Organizational Core Capabilities, Strategic Intent and Performance: A Study of the Pharmaceutical Industry," looks at the association between capabilities, strategic intent and performance. Employing capabilities theory and the strategic intent literature, I model (i) the association of firm-level capabilities and rigidities on performance, (ii) the association of strategic intent and performance and (iii) the interaction effects of capabilities and strategic intent upon performance. Our sample consists of pharmaceutical firms during the years 1993 to 2003 and I find that both capabilities and strategic intent are negatively associated with firm performance. The interaction of the two main effects is positively related to performance conditional on firms having high strategic intent. The findings point to potential evidence of core rigidities theory as well as strategic intent theory, which has yet to be empirically tested by scholars. The second paper is entitled "The Impact of Political Capabilities on Firm Performance: An Empirical Investigation." In this paper, I integrate capabilities theory with the literature on corporate political activity (CPA). The CPA literature has been robust in addressing the determinants of a firm's choice to engage in political activities but has been less robust in modeling the CPA-performance link. I address this by first integrating capabilities theory and political action and then by testing a number of constructs on a sample of Fortune 500 firms from varying industries. Specifically, I find that political action committee (PAC) intensity and lobbying intensity is associated with higher firm performance. I then interact PAC intensity with lobbying intensity and also find positive association between this interaction and performance, denoting that these two activities are complements and not substitutes. Finally, I moderate these relationships with industry concentration and find that performance increases for politically active firms as industries become more concentrated. The third paper is titled "Political Capabilities and Rigidities: The Case of AT&T's Acquisition Attempt of T-Mobile USA." This paper studies, in an in-depth case study, the political capabilities of American Telephone and Telegraph (AT&T), focusing on the years 1984-2011. Using capabilities and rigidities theory from management, I provide detailed evidence of (i) AT&T's intent to compete on political capabilities, (ii) the success derived from these political capabilities and (iii) situational failure resulting from an over-reliance on these political capabilities. In the empirical section, I show how the firm failed to assess external information that it needed to adjust its competitive strategy and, as a result, failed to acquire a key competitor. This paper makes contributions to capabilities research, rigidities research and corporate political activity.