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Where firms change: internal development versus external capability sourcing in the global telecommunications industry
Author(s) -
Capron Laurence,
Mitchell Will
Publication year - 2004
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1057/palgrave.emr.1500017
Subject(s) - control reconfiguration , transaction cost , business , industrial organization , legitimacy , database transaction , telecommunications , computer science , finance , politics , political science , law , embedded system , programming language
This paper studies firms' choices of internal vs external sources of new capabilities. We first compare transaction cost, knowledge‐based, and institutional arguments, which all emphasize the attributes of capabilities, including contractual hazards, capability gaps, and legitimacy. We next contrast these arguments with propositions that emphasize constraints on external availability as drivers of internal development. We then propose that a firm's internal reconfiguration and external reconfiguration routines affect its capability sourcing decisions as interactions with the capability attributes and external constraints. The empirical analysis draws on a survey of 162 telecommunications firms operating in Europe, North America, Latin America, or Asia.