Organizational capabilities and competitive advantage: Senior managers' perceptions of past use, past payoff, and future use

Date of Completion

January 1999


Business Administration, Management




Evidence of the seriousness of America's competitive weaknesses in the manufacturing sector is abundant. Senior managers play a central role in developing a strategy which guides individual learning and ensures the achievement of competitive advantage. This research investigated senior managers' perceptions of four propositions related to how a company develops competitive advantage. ^ Organizational learning theory (DiBella & Nevis, 1997) and the resource-based theory of competitive advantage (Barney, 1995) provided the theoretical framework for the study, and were used to explain variations in the dependent variables: (a) past use, (b) past payoff, and (c) planned future use of four organizational capabilities (i.e., strategic management, systems and technologies, innovation, and collaborative alliances). ^ Data were collected from senior managers (n = 57) in New England manufacturing companies. Analysis of variance (ANOVA) and post hoc tests were used to determine the extent of differences among senior managers' past use, past payoff, and planned future use scores. Paired samples t-tests were used to determine if there were differences between senior managers' past use and planned future use scores. ^ Systems and technologies were most favored, collaborative alliances least favored, with significant differences between senior managers' past use and planned future use for all four organizational capabilities. There was a wide range of opinion among the senior managers, and they did not perceive individual knowledge related to the four organizational capabilities to be a major component of their strategy in terms of competitive advantage. These findings are not consistent with the views espoused in the literature, and failed to support the study's four propositions regarding organizational capabilities required for competitive advantage. ^ Three new propositions, regarding (1) industry context (i.e., the allure of systems and technologies and the aversion to collaborative alliances), (2) senior managers' limited commitment to developing individual knowledge, and (3) management culture's influence on senior managers' perceptions regarding individual knowledge and competitive advantage, are presented for future research. The results have implications for the focus of management education programs. ^