Firm aspirations, resource orchestration and performance: a study of Indian firms

Abstract

Resource orchestration is characterized by a series of firm-level strategic actions – from search and selection of assets (resource investment) to the bundling and leveraging of these assets (resource deployment) – and represents a mature stage of the resource-based theory. In this thesis, we investigate these firm-level actions by utilizing insights from the behavioural theory of the firm. We begin by a comprehensive review of extant research that utilizes concepts from the behavioural theory of the firm in resource-based investigations, using a bibliometric survey. We present a nuanced picture of the integration of two seminal theories and identify two major research gaps that we then proceed to investigate. First, we draw upon organizational aspirations (from the behavioural theory of the firm) to understand adaptations in resource deployment (via organizational capabilities). Using a sample of Indian firms, we find opposite and distinct curvilinear responses by firms in their use of ordinary and dynamic capabilities depending on their performance relative to aspiration levels. Additionally, we shed new light on the use of organizational capabilities under the unique condition of firms below aspirations but possessing slack resources. Second, we adopt a behavioural lens in investigating the performance effects of resource investment. Analysing investments in R&D and Marketing by Indian firms, we find that this relationship is contingent on similar actions by peers/rivals within an industry. In addition, we find evidence for the moderating effects of industry-level (external) factors of foreign competition and market leadership that mitigate the base relationship. Overall, our research demonstrates the complementary effects in “cross-fertilization” of two seminal theories. Second, we aid in further opening the black box of actions under resource orchestration. Third, we illustrate the peculiarities and trade-offs that contribute towards heterogeneity in a firm’s resource base. Finally, we contribute new insights in firm behaviour under the effects of opposing search mechanisms and draw attention to the limitations of reference points.