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"Firm Capability, Corporate Governance, and Firm Competitive Behavior: A Multi-Theoretic Framework"

Jinyu He and Joseph T. Mahoney

 

First Author :

Jinyu He
Department of Management of Organizations
The Hong Kong University of Science and Technology
School of Business and Management
Clear Water Bay, Kowloon
Hong Kong
China

852-2358-7738
852-2335-5325 (Fax)

mnjhe@ust.hk


Second Author :

Joseph T. Mahoney
Department of Business Administration
University of Illinois at Urbana-Champaign
140C Wohlers Hall, MC 706
1206 South Sixth Street
Champaign, IL 61820
USA

217-244-8257
217-244-7969 (Fax)

josephm@uiuc.edu

http://www.business.uiuc.edu/faculty/mahoney.html

 
 
Abstract :
 
This paper identifies firm-level competitive activity, one of the key units of analysis in competitive dynamics research, as the fundamental mediation between corporate governance and firm-level financial performance. By employing the “Motivation-Capability” logic embodied in the competitive dynamics research literature, we reclassify various practices of corporate governance into motivational mechanisms (“motivation”) and resource acquisition and securing mechanisms (“capability”). Based on this reclassification, the current paper develops a multi-theoretic framework for studying the relationships among firm-level capability, corporate governance, and firm-level competitive behavior (which are characterized both by the level and variety of firm-level competitive activity). We maintainargue that the firm’s capability determinesinfluences the potential scale and scope of its competitive activity. And, the “motivation” components of corporate governance system moderate such a relationship. In addition, the “capability” components of corporate governance supplement firm capability, thus having direct effects on firm-level competitive behavior as well.
 
 
Footnotes & Acknowledgements :
 
We acknowledge with thanks the helpful comments and suggestions from Rajshree Agarwal, Ruth Aguilera, Ming-Jer Chen, Glenn Hoetker, Huseyin Leblebici, Steven Lui, Anju Seth, Heli Wang, and Tieying Yu on earlier versions of the paper. The usual disclaimer applies.
 
 
Manuscript Received : 2006
Manuscript Published : 2006
 
 
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