Protection and internal transfer of technological competencies. The role of causal ambiguity
| DOI | https://doi.org/10.1108/02635570510616076 |
| Pages | 841-856 |
| Published date | 01 September 2005 |
| Date | 01 September 2005 |
| Author | Nuria González‐Alvarez,Mariano Nieto‐Antolín |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Protection and internal transfer
of technological competencies
The role of causal ambiguity
Nuria Gonza
´lez-Alvarez and Mariano Nieto-Antolı
´n
Departamento de Direccio
´n y Economı
´a de la Empresa, Universidad de Leo
´n,
Leo
´n, Spain
Abstract
Purpose – The purpose of this paper is to study how causal ambiguity around technological
competencies can help firms to achieve superior performance.
Design/methodology/approach – Traditionally, it has been recognised that causal ambiguity of
technology represents an effective protection against imitation. Recently, however, researchers have
unearthed evidence that the effects of causal ambiguity also could be extending to the interior of the
firm itself, hampering the diffusion of its own technological capabilities among its managers. In this
case, the existence of causal ambiguity of technology will have a negative impact on firm performance.
In this paper both effects are studied in a sample of 258 Spanish manufacturing firms using several
statistical techniques.
Findings – The results indicate that causal ambiguity exerts a double-edged influence on firm
performance. On the positive side, by protecting technological competencies from imitation and, on the
negative, hampering the diffusion of these capabilities within the firm, with this second effect being stronger.
Research limitations/implications – The main limitation of this work is that there are clearly
many other factors that can explain firm performance apart from causal ambiguity of technology.
However, as the main objective of the present work is to study the relations between causal ambiguity
around technological capabilities and firm performance, it did not seem wise, for operational reasons,
to complicate the analysis by including other variables.
Practical implications – In order to achieve better results, firms must use causal ambiguity around
technological competencies to protect these competencies against imitation and should make great
efforts to diffuse them within the firm.
Originality/value – The results obtained allow one to make a contribution to the debate existing on
the literature about the influence that causal ambiguity around technological competencies has on firm
performance.
Keywords Organizationalperformance, Core competences, Communication technologies,Spain
Paper type Research paper
Technological innovation is crucial to a variety of important outcomes, including
economic growth, firm performance and industrial change. Hence, the ability to
effectively innovate is a central challenge for firms. Firms with superior technological
competencies (i.e. the ability to apply scientific and technical knowledge to develop and
improve products and process) tend to be more innovative and thus perform at high
levels (McEvily et al., 2004). Technological competencies consist of knowledge and
skills embedded in people and knowledge embedded in technical systems
(Leonard-Barton, 1995). Technical systems are the manifestations of years of
accumulating, codifying and structuring the tacit knowledge embodied in people.
These competencies can be come institutionalized . That is, they are part of
organizational assumptions that guide strategic decision making. Technology
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The role of
causal ambiguity
841
Industrial Management & Data
Systems
Vol. 105 No. 7, 2005
pp. 841-856
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570510616076
embedded in technical systems and people skills typically can be traced back to the
firm’s first products or services (De Carolis, 2003, p. 34).
The creation of technological competencies is theoretically linked to competitive
advantage (Barney, 200 1; Prahalad and Hamel, 1990 ; Leonard-Barton, 199 5).
According to resource-based view, firms with resources that are valuable, rare,
non-substitutable and difficult to imitate can achieve and maintain over time a position
of advantage with respect to their competitors (Barney, 1991). Of these four
characteristics, inimitability is the most important (Hoopes et al., 2003, p. 890), and it is
the most significant contribution of the RBV (Barney, 2001, p. 45). In that sense,
technological competencies will lead to a competitive advantage, when they are
inimitable-costly or difficult for competitors to imitate. In general, the duration of a
particular technological advantage will depend on the degree to which the firm can
protect the competencies on which its advantage is based from imitation. In other
words, technological competencies of a firm will lead to a competitive advantage when
they are difficult to imitate. Thus, protecting competencies against imitation becomes a
crucial aspect to take into account for achieving a sustainable competitive adva ntage
(Dierickx and Cool, 1989; Spender and Grant, 1996).
Technological competencies tend to be protected by various isolating mechanisms.
There is empirical evidence about the degree of use and the effectiveness of some of
these mechanisms. Thus, scholars have verified that firms tend to protect their
technological competencies with legal protection measures (such as patents), using
secrecy, adopting leadership strategies (lead time), by moving quickly down the
learning curve, or controlling certain complementary resources (complementary
sales/service, complementary manufacturing) (Cohen et al., 2000; Geroski, 1995; Levin
et al., 1987; Teece, 1987).
Another barrier preventing valuable technology resources from imitation is the
causal ambiguity of technology, which refers to “a similar lack of understanding of the
logical linkages between actions and outcomes, inputs and outputs, causes and effects
that are related to technological or process know-how” (Simonin, 1999, p. 597).
It might in principle be thought that causal ambiguity, like the other isolating
mechanisms, in protecting a firm’s technological competencies from imitation by
competitors will produce a positive effect on performance. However, some authors
point out that causal ambiguity can also hamper managers’ attempts to identify the
technological capabilities on which their firm bases its competitive advantage (Reed
and DeFillipi, 1990; King and Zeithaml, 2001). This ignorance will hinder the diffusion
of routines inside the organisation (Szulanski, 1996) and in this case, causal ambiguity
will have a negative effect on firm performance.
Which of these two effects will exert a bigger influence on firm performance? It has
been noted that a technological capability, in order for it to be a source of competiti ve
advantage, “must not be so simple that it can be easily imitated, or so complex that it is
difficult to use and control internally” (Shoemaker and Amit, 1994, p. 9). Causal
ambiguity which hinders the comprehension of technological competencies affects
both competitors and the managers of the firm itself. While the first effect will
positively impact firm performance, the second will have a negative impact.
The objective of this paper is to analyse how causal ambiguity around technological
competencies influences firm performance. With this in mind, the rest of the paper is
structured as follows: in the next section, we establish the theoretical framework of the
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