UNIVERSITY OF GRONINGEN
Resource orchestration process and
entrepreneurial orientation of the manager in a
developing country
Master thesis, Msc BA specialization Small Business & Entrepreneurship
University of Groningen, Faculty of Economics and Business
6/22/2015
Name: Andrei Alexandru Ungurasu Student Number: S2769867
Address: Nieuwe Ebbingestraat 54C
9712NM Groningen (Netherlands) Phone: +40755363524
Email: andrei.ungurasu@gmail.com Supervisor: Dr.ir. Jeroen Kraaijenbrink Co-assessor: Dr. ir. H. Haibo Zhou
Keywords: Resource Orchestration, Entrepreneurial orientation, developing country, high velocity industry.
ABSTRACT
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Contents
Introduction ... 4 Literature review ... 7 2.1 Introduction ... 7 2.2 Approach ... 7 2.3 Resources ... 7 2.3 Capabilities ... 8 2. 4 Environmental factors ... 82.4.1 High velocity market context ... 9
2.4.2 The munificence of the market ... 10
2.4.3 Dynamism and Uncertainty of the Market ... 10
2.4.4 Competition levels ... 11 2.4.5 Emerging economy ... 11 2.5 Resource orchestration ... 12 2.5.1 Structuring ... 13 2.5.2 Bundling resources ... 16 2.5.3 Leveraging capabilities ... 18 2.5.4 Asset orchestration ... 20 2.6 Entrepreneurial orientation ... 21 Entrepreneurship ... 21 Entrepreneurial orientation ... 22 Theoretical framework ... 24 Methodology ... 25 3.1 General approach... 25 3.2 Constructs ... 26 3.3 Data collection ... 27 3.3.1 Sample ... 29 3.4 Quality control ... 29
3.5 Analysis and Research ... 30
Analysis & Results ... 31
4.1 Within case study analysis ... 31
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4.3 Cross case analysis ... 57
4.3.1 Environmental factors ... 58
4.3.2 Within groups’ similarities ... 60
4.3.3 Approach of analysis ... 61
4.3.4 Subtle differences within groups ... 71
Discussion and conclusion ... 76
5.1 Discussion ... 76
5.1.1 Findings ... 76
5.2 Conclusion ... 79
5.2.1 Theoretical implications ... 80
5.2.2 Managerial implications ... 81
7. Limitations and Further Research ... 82
8. References ... 83
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Acknowledgements Acknowledgements
I would like to express my gratitude to my supervisor Dr.ir. Jeroen Kraaijenbrink for all the guidance that I received during writing process of this master thesis.
I also like to express my gratitude and to thank the companies that accepted to be part of this analysis. Furthermore I would like to thank the managers who shared their precious time during the process of interviewing
In the whole writing process, my family supported me. Subsequently I would like to thank my father who always encourages me, my mother who always motivates me, my little brother who was always curious about my progress and my grandmother who supported me with all her love. I will be grateful forever for your love.
I expressly want to thank my new friends from Groningen who have become part of my family. Without you, I wouldn‟t have lived the experience of my life.
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Introduction
The recent literature on strategic management aims to understand the differences among the performance of firms. It studies the efforts of the firms to develop a sustainable competitive advantage as a major determinant of the wealth creation process (Rouse & Dallenback, 1999; Hit et al, 2011). To create a competitive advantage, Barney (1991) argues that a firm must possess a bundle of resources which are more valuable, rare, inimitable and non-substitutable than those held by any other or potential competitor, thus from exploitation process of resources and capabilities as bundles, the manager is able to generate value for customers and wealth for owners (Ireland, et al. 2003). Lately, the rapidly changing market environment showed that novel bundles of resources and capabilities may arise from the uncertainty created by the market‟s velocity (Hitt, Ireland, Camp, et al, 2001). Therefore companies are able to generate wealth by identifying novel ways to orchestrate the resources and capabilities in line with the external environment of the company. The orchestration process can be enhanced by the manager‟s entrepreneurial orientation, which is characterized by pro-activeness, risk taking and opportunity exploration and exploitation (Shane&Venkataraman, 2000; Storey&Greene, 2010). Sirmon et al. (2007) defined resource orchestration as the comprehensive process of structuring, bundling and leveraging the firm‟s resources with the purpose of creating value for customers and competitive advantage for the firm.
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Therefore the question of maintaining the competitive advantage of the firm is arisen. The current literature states that the manger within a small business needs to orchestrate resources and capabilities to maintain the firm competitive (Amit& Schoemaker, 1993). Previous research suggested that the resource orchestration process can be enhanced by the entrepreneurial orientation of the firm (Hitt et al, 2011). As we discussed earlier, the market context is an important factor in the resource orchestration process, thereby we decided to analyze and to observe how managers are able to orchestrate their resources in high velocity market from a developing country. Within a developing country, the levels of uncertainty and market dynamism are increased and the rules of the game can be changed instantly, thus the managers must act proactive and must be innovative in decision making. Creativity also plays an important role in the managerial capabilities that the top managers must perform in such a context.
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Bensanko(2013) argues in his book that strategy means applying consistent principles to constantly changing business conditions. In concordance with Bensanko (2013) and following the research direction provided by Michael Hitt in his 2011 article, the following master thesis aims to investigate how top managers, within a small business, use their entrepreneurial behavior to orchestrate the resources of small businesses in a high velocity market from a developing country, in order to maintain the company competitive (Rumelt, 1991). More specifically, this paper proposes the following research questions:
Is entrepreneurial orientation of the manager an enabler of the resource orchestration process in a developing market from an emerging country?
Do small businesses within a high velocity market and a developing country orchestrate their resources differently than the theory?
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Literature review
2.1 Introduction
The current research is grounded on strategic management field, thus it is necessary to review the constructs which stand as the basis of the research question. A clear definition and operationalization of the core constructs is the key towards an efficient research. The core concepts of this study are: Resource orchestration; Entrepreneurial Orientation; High velocity market context. The literature review chapter will end with a theoretical framework based on the previous concepts, which will stand as the main data-analysis mean.
2.2 Approach
A review of prior, relevant literature is an essential feature of any academic project. An effective review can stand as a basement for advanced knowledge. It facilitates theory development, closes areas where an abundance of research exists, and exposes areas where research is needed. (Webster et al., 2002). Therefore, the current research proposes an interdisciplinary approach which concerns resource orchestration and entrepreneurial behavior within a high velocity market context. Webster and Watson (2002) recommend a structured approach to determine the source material for the review. They consider that the major contributions are likely to be in leading journals. To be more efficient, journal databases accelerate identification of relevant articles. Furthermore, “go backward” by reviewing the citations of the major contributions is used in this research. A “go forward” analysis strengthens the pool of articles available for the review, thus Google Scholar and Web of Science were the most used databases in this research.
2.3 Resources
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resources by distinguishing three main categories of resources: human capital resources, organizational capital resources and physical resources.
Resources are the key to develop and implement strategies and to develop new technologies (Daft, 1983). In the traditional strategy literature, resources are the firm‟s strengths which are used to attain goals and to develop strategies. In the current research, resources are central to the research because we intend to study the resource orchestration process in a SME within a high velocity industry.
The current research suggests that possessing resources alone do not guarantee the development of competitive advantage (Barney, 1991; Newbert 2008; Sirmon et al., 2011). Resources must be accumulated, bundled, and leveraged, thus the maximum value for creating competitive advantage is reached only when resources are managed effectively( Sirmon & Hitt, 2003; Sirmon, Hitt & Ireland, 2007; Sirmon et al., 2011). According to Penrose (1959) resources are only effective when are deployed in combination with other resources or capabilities.
2.3 Capabilities
Capabilities are associated with the ability of a firm to deploy resources, normally, or in combinations (Penrose, 1959; Newbert, 2008), using organizational systems and processes. Amit and Schoemaker (1993) state that capabilities are knowledge-based processes; tangible or intangible processes and routines that are firm specific and are developed over time through complex interaction among the firm‟s resources. Basically a capability enhances the productivity of the deployed resource, and offers strategic flexibility. Resources and capabilities are “inextricably bound together in the attainment of the firm‟s competitive advantage” (Newbert (2008). Both Rubin (1973) and Penrose concur as they are convinced that in order to effectively process resources, a firm must use them in some effective combination. Newbert concludes by saying “it seems that while a resource (or capability) may have tremendous potential value, its value can only be realized when it is combined with a corresponding capability”.
2. 4 Environmental factors
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competitive advantage is diminished. Keats and Hitt (1988) concluded that the relationship between the firm and the external environment affects the performance and the long-term survival of the firm. In this paper, an entrepreneurial perspective of the firm and external environment relationship will be used. This implies that the organization and those within it influence the environment (Smith and Cao, 2007).
Hitt and his colleagues (2011), identified three important environmental factors for the entrepreneurial orientation within an established company: Munificence, dynamism and
uncertainty, and the levels of competitions. These factors have a higher impact in a high velocity market context. Therefore, we are going to briefly review these concepts.
2.4.1 High velocity market context
In high velocity environments or dynamic environments, incumbents can gain access to needed resources through networking (Zaheer et al., 2010). Basically, the managers are able to enrich or to pioneer new bundles of resources with the help of the network ties. Consequently, firms may use cooperative strategies such as alliances to create a competitive advantage (Hitt et al., 2011). Ketchen et al. (2007) argued that collaboration in which large and small firms share ideas, knowledge and opportunities supports the entrepreneurial orientation of the manager.
The playground of innovative companies is defined as a high velocity market (Slater, 1993; Eisenhardt & Martin, 2000). It presents a rapid and unanticipated change of the economic structure. These markets are ones in which market boundaries are blurred, successful business models are unclear, and market players are ambiguous and shifting. The structure of the industry is not clear. Uncertainty cannot be designed as a probability, because it is not possible to specify possible future market states (Eisenhardt & Martin, 2000). The market equilibrium is not constant, Barney (1991) talks about this phenomenon as a “Schumpeterian shock”.
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In a high velocity environment, an important characteristic of managers is that they have to be emotionally secure and not be too subjective. The entrepreneurial orientation of the manager enhances the decision making process and also the resource orchestration process (Hitt et al., 2011). A high velocity market is characterized by an increased level of market munificence, an increased level of uncertainty, an increased level of dynamism and an aggressive competition.
2.4.2 The munificence of the market
The munificence of an environment is context specific. Furthermore, the individuals with a high entrepreneurial orientation get resources in the environment to generate competitive advantage and create value by engaging in entrepreneurial bricolage (Hitt, Ireland, Sirmin, & Trahms, 2011). In the current literature have been identified three characteristics that influence how the perceptions of resources affect the interaction between a certain firm and its environment (Baker & Nelson, 2005): The first characteristic is the idiosyncratic feature of the firms in what they perceive to be a value-generating resource. The second feature is the tendency of firms to gain differential benefits, thus the entrepreneurs‟ creative thinking plays a significant role. The third characteristic is a result of the previous two, thus a firm can “capitalize on resources that other organizations deem to have less value-creating potential (Hitt et al, 2011). In conclusion, even resource constrained environments can be characterized by munificence for some firms within the market. Agarwal (2007) presents a good example of environmental munificence through the intangible assets that leak into environment when the firms do not succeed to commercialize the knowledge they hold. This phenomenon can be associated with the knowledge spillover (Hitt et al., 2011) which can be used by the firms and individuals from the market to create new capabilities within the organizations. The obtained capabilities represent a tool for the managers to create the competitive advantage of the firm. The end result should be the economic growth of an area or of an industry (Agarwal et al., 2007; DeCarolis & Deeds, 1999)
2.4.3 Dynamism and Uncertainty of the Market
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Moreover, the incapacity to access robust information about conditions in the external environment creates ambiguity during the strategic-making process (Sirmon et al., 2007). Aldrich (2000) proved that environmental dynamism is positively related with the new venture creation and with the entrepreneurial behavior, thus individuals that act entrepreneurially are more likely to seek opportunities in dynamic markets, using their knowledge resource and ability to recognize and to deal with uncertainty (Gaglio& Katz, 2001).
2.4.4 Competition levels
The structure of the industry affects the degree of competitive rivalry and uncertainty, thus the degree of competition and the amount of rivalry it spawns create change that enhances the potential uncertainty. However, the extent to which the amount of rivalry and the degree of competition produce uncertainty can moderate organizational routines. Industry recipes provide heuristics or decision rules that guide the managerial decision process and actions (Aldrich, 2000).
2.4.5 Emerging economy
The emerging markets, unlike developed markets, are characterized by frequent regime switches, higher levels of uncertainty, increased volatility of the regulations, a premise motivated by the dramatic reversals in fiscal, monetary, and trade policies observed in these economies. Consequently, shocks, rapid changes in the market structure and increased uncertainty are primary source of fluctuations in these markets as opposed to transitory fluctuations around the trend. ( Aguiar et al., 2007)
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In order to provide a better explanation of the role of managers within resource-based logic, Sirmon (2007) proposes a resource management framework which is focused on the actions of managers. This is in concordance with the main research question. The resource management is defined “the comprehensive process of structuring, bundling and leveraging the firm‟s resources”. The purpose is to create value for customers and competitive advantage for the firm. This process is called by Kraaijenbrink et al. (2010) the “managerial capabilities”, and is the process in which firms engage to accomplish their objectives. Furthermore, Morrow et al., (2007) show that rare and valuable resources management actions are important to firms‟ recovery, after a performance crisis. Previous research demonstrated that resource management is complementary with the asset orchestration process (Helfat et al. 2007). It mainly consists of two processes, the search process and the configuration process.
The resource management framework, is grounded on the RBV, and has been explicitly linked with RBV‟s primary logic, while asset orchestration is grounded on the dynamic capabilities concept. Therefore, we can argue that Dynamic capabilities have been linked to the RBV (Teece et al., 1997, Helfat & Peteraf, 2003; Sirmon et al., 2011) therefore; we can see an indirect connection between the two frameworks. The complementarities of these frameworks are observed by Sirmon et al. (2011). The latter proposes the integration of the previous mentioned frameworks to facilitate research of managers‟ actions within capability and resource-based logics (Sirmon et al., 2011). The term resource orchestration is adopted in this paper and it is based on both resource management and asset orchestration frameworks.
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The resource portfolio is the sum of all firm-controlled resources (Sirmon et al., 2007). Makadok (2003) argues that the resource portfolio establishes the upper bounds of a firm‟s potential value creation at a point in time.
Structuring the resource portfolio is the process by which firms acquire, accumulate and divest resources (Barney, 1986; Dierickx & Cool, 1989). The acquiring, accumulating and divesting sub processes are directly affected by the environmental context (Sirmon et al., 2007), which in turn determines their contribution to the firm‟s potential of creating value (Miller & Sharmsie, 1996). The environmental uncertainty strongly influences the factor‟s efficiency (Denrell et al., 2003), the potential shift in customers‟ demands, and the centralized decision making (Keats & Hitt, 1988), thus the structuring process must be adjusted by the managers to the degree of environmental uncertainty and munificence (Sirmon et al., 2007). Hitt et al. (2011) suggested that the entrepreneurial orientation of the managers may enhance the efficiency of the resource structuring process. The structuring process is presented as following:
Acquiring. Acquiring refers to the process of resource purchasing from strategic factor markets (Barney, 1986). Commodity-like resources (equipment), intangible resources (intellectual capital) and complex sets of tangible and intangible resources are acquired from the factor market or via mergers and acquisitions of companies (Sirmon et al., 2007; Denrell et al., 2003). The prospects of acquiring resources to simultaneously contribute to competitive advantage and owner wealth are low (Barney, 1986) because of the factor market‟s efficiency. However, strategic factor markets often have incomplete information about how to reconfigure new or old resources to be used in unexpected ways (Sirmon et al., 2007; Denrell et al., 2003). The uncertainty may provide opportunities for entrepreneurs to buy resources below their market price and to create novel bundles of resources that may enforce a core competence of the company.
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new ones in response to environmental changes (either opportunities or threats)” (Sirmon et al., 2007).
Within a high velocity market context, where the uncertainty is present, acquiring resources as real options increases the possibility of the firm to respond to the environmental changes in form of opportunities and threats (MCgarth &Nerker, 2004). Thus, the acquisition of a real option resource increases the firm‟s ability to create value under conditions of high environmental uncertainty; we suppose that the entrepreneurial orientation of the manager will enhance the acquisition process under uncertainty, because the entrepreneur may be able to recognize opportunities for resource acquisitions. Therefore, “under conditions of high environmental uncertainty, acquiring resources that allow preferential access to a greater variety of opportunities increases a firm‟s potential value creation. Resources as real options can be especially valuable in high velocity market contexts” (Sirmon et al., 2007).
Accumulating. Accumulating means the developing process of resources within the firm. Accumulating is especially needed when environmental munificence is low, because the firm‟s required resources are not all to be found on strategic factor markets. Therefore the internal development of resources strengthens their isolating mechanism, for instance causal ambiguity ( Sirmon et al., 2007; Thomke & Kyemmerle,2002). Under uncertainty, firms are less likely to react when there are unpredicted opportunities or threats or significant competitors‟ actions without appropriate resources. If a firm lacks of an adequate number of skilled managers, it may not be capable of responding to a market shift, threat or opportunity, thus it can miss an opportunity to launch a new product or service when there is a new demand in the market. When the need arises, building the managerial knowledge and skills can create adequate professional employees who can assume managerial positions. Developing resources internally is considered to be more crucial in less munificent environments, because in these environments firms are able to acquire resources easily externally. In conclusion, a firm can create a real option through the internal development of the current resources in prediction of the needs ahead (Sirmon et al., 2007).
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and/or relatively less experienced managers to work on projects along with experts can help these employees develop managerial tacit knowledge. If the company doesn‟t possess the needed tacit knowledge, then the firm might form a strategic alliance with other companies that possess the required knowledge (Lane & Lubatkin, 1998). These strategic alliances can be seen as real options (Kogut, 1991). Within such an alliance, the partners invest in the relationship in order to accumulate tacit knowledge. Managers are likely to make these additional investments only when they expect a future gain. Thus, the firms need to improve their resources in order to act in market‟s shifts.Under circumstances of high environmental uncertainty, accumulating resources that offer prior access to a greater variety of opportunities escalates a firm‟s potential value creation (Sirmon et al., 2007). The entrepreneurial orientation of the manager may enhance the learning process; in the same time, the entrepreneurial orientation may help the effective use of the strong ties that the manager (Castrogiovanni, 1991)
Divesting. Divesting is defined as the shedding of firm-controlled resources (Sirmon et al., 2007; Sirmon et al., 2011). Firms have limited resources, it is essential to actively evaluate current resources and to divest less-valued resources to generate the flexibility for the need of acquiring or accumulating resources with higher values (Sirmon, Hitt & Ireland, 2007; Sirmon & Hitt, 2003; Uhlenbruck, Meyer, & Hitt, 2003). Therefore resources that are less likely contributed to the competitive advantage or extra resources that can‟t be bundled and leveraged profitably are viable to be divested strategically. Sirmon et al. (2007) gives the examples of the layoffs of human capital, disposal of noncore businesses, sell-offs of specific assets, derivation of business and outsourcing. But divesting only brings value when it helps to reduce the firm‟s tangible or intangible costs without risking a current or a future competitive advantage. In order to divest efficiently, a manager must understand the current ability of a resource and the future potential to create value. However, under uncertainty, future potentials of the resource of creating values are hard to measure (Sirmon et al., 2007).
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2007). Under situations of high environmental uncertainty, divesting resources can be risky for a firm‟s potential value creation. Extreme attention should be paid to process of divesting resources, especially in uncertain environments with low munificence.
2.5.2 Bundling resources
According to Sirmon et al (2007), bundling means the process of forming capabilities. Sirmon et al. (2007) states that “resources within the firm‟s resource portfolio are integrated (bundled) to create capabilities, with each capability being a unique combination of resources allowing the firm to take specific actions (e.g. marketing, R&D) that are intended to create value for customers”. Customers seek value from a firm‟s product or service in form of problem solution or the satisfaction of a need (Sirmon et al., 2007).
Resource bundles range from small agglutination of resources to higher-order concept of patching (Sirmon et al., 2007). Patching changes are usually small in scale. Managers think of evolution, not revolution (Brown & Eidenhardt, 1999). There can be obtained different capabilities from different types of bundling. Therefore for an incremental change within a firm, different bundling processes are required when the goal is a change in the firm‟s capabilities (Hamel & Prahald, 1994). The process of bundling is influenced by the firm‟s external environment, thus the higher uncertainty the greater need for creating new capabilities to function in different environmental context. Sirmon et al (2007), presents three different bundling processes within the Resource Management framework. These are Stabilizing, enriching and pioneering.
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Enriching. A current capability is extended and elaborated through the enriching bundling process. The degree of enrichment varies from keeping skills up to date to innovating. The learning process plays a key role within this capability, thus capabilities can be enriched by acquiring new skills that enlarge the portfolio of current resourced bundles, and furthermore the addition of a complementary resource from the resource portfolio to the current bundles can enforce this process (Sirmon et al., 2007). The enriching process that bundles newly purchased resources with the firm‟s current capabilities is similar to grafting (Puraman et al., 2003). Within a high velocity market context, greater enrichment is required to add new values or to maintain the current values created due to the incapability to forecast the changes in customers‟ needs or competitors „actions (Sirmon et al., 2007).
Pioneering. Pioneering capabilities are capabilities that have no antecedents (Ahuja et al., 2001), thus experimentation with pioneering technologies can be a mechanism for incumbents to circumvent the danger of the propinquity trap and preempt such attackers (Brown, 1991). The pioneering process basically ignores the available solutions, thus it focuses on completely new solutions. The pioneering process is basically based on Schumpeterian logic, its purpose is to create a new competitive advantage. Creativity plays an important role within the opportunity recognition of novel resources bundles (Baron, 2006). A manager with a higher entrepreneurial orientation will present a higher level of creativity, thus the process of pioneering will be more efficient. Knowledge and creativity play a crucial role in the process, therefore they enhance the likelihood that the manager will discover novel, unique and value generating ways to integrate the possible functionalities of the bundles and capabilities possessed by the firm. Sirmon et al. (2007) states that “pioneering bundling process may include the rearrangement of current resources, but it often includes the integration of existing resources to create new capabilities”; In consequence, to obtain an efficient pioneering process a firm may require a heterogeneous team of experienced managers (Sirmon et al., 2007)
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dynamic and uncertain the market context is. The more focus is needed for the firms to engage in continuous enriching and pioneering bundling processes. Under uncertainty the anticipation of the actions of the competitors or developments outside the industry is difficult. That might create technological discontinuities. The opportunity‟s identification process is likely to be serendipitous (Denrell et al., 2003). In conclusion, firms must exploit the unforeseen opportunities when they occur.
In high velocity market contexts, firms are able to maintain their competitive advantage only with capabilities that creates more value for the customers compared to the competitors‟ value generation. Environments of high munificence make the pioneering process difficult to respond to changes by bundling competences and capabilities, because all the market players have access to the same pool of resources (Sirmon et al., 2007). Under conditions of high environmental uncertainty, the enriching process is required to create optimum value for customers. The pioneering process has to create new capabilities that create new streams of value for customers. Contradictory, the stabilizing process is less likely to create significant value for customers under high uncertainty conditions (Sirmon, Hitt, Ireland, 2007)
2.5.3 Leveraging capabilities
Leveraging consists of processes used to apply the capabilities of the firm to generate value for customers and owners. The leveraging process consists of mobilizing, coordinating and deploying (Sirmon et al., 2007). The previous processes can take place simultaneously; therefore, while deploying a capability, firms might learn how to integrate a new capability. Proactive coordination requires combinative, experience-based routines to leverage the value creation for customer‟s capability (Alvarez & Barney, 2002).
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Mobilizing is defined as: “The intent of mobilizing is to identify the capabilities needed and to design the capability configurations necessary to exploit opportunities, in the market and gain a competitive advantage” in Sirmon‟s et al. (2007) paper. Therefore, mobilizing is a necessary step in the process of value generation for customers. Sirmon et al.(2007) states that : “mobilizing capability configurations is a necessary but insufficient leveraging process to create competitive advantage and value for the customers.”
Coordinating refers to the integration of the mobilizing capabilities by an effective and efficient way so that the capability can be highly configured. This is the first phase in leveraging strategy implementation process. Sirmon et al(2007) states that the key to success in this process is to “possess knowledge about the value of individual capabilities, as well as using effective communication network to diffuse that knowledge, facilitates efforts to integrate capabilities into comprehensive sets of value-creating organizational skills” (Sirmon, Hitt, & Ireland, 2005; Hamel & Prahalad, 1994).
Effective coordination of capabilities results in the sharing of explicit and tacit knowledge to integrate the capabilities into effective configurations (Sirmon et al., 2007). The exchange of knowledge is mostly done within the internal network the firm has (Hitt & Ireland, 2002). Technology enhances the communication flow within a company, thus it build social capital (Sirmon et al, 2007)
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Figure 1- Resource management process based on Sirmon et al (2007)
In order to generate value for customers, wealth for owner and competitive advantage for the company, all the previous processes must be synchronized (Sirmon et al., 2011) . Kraaijenbrink et al.(2010) associates the resource management framework with the “managerial capabilities” of a company. Thus, managers should engage in structuring, bundling and leveraging processes to increase the efficiency of the firm‟s resources in order to reach the established strategic objectives (Sirmon et al, 2011)
2.5.4 Asset orchestration
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Figure 2 - Resource Orchestration process based onSirmon et al. (2011)
2.6 Entrepreneurial orientation Entrepreneurship
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orientation results in a more efficient resources orchestration process, that ultimately creates more value for customers and owners (Sirmon et al., 2011).
Entrepreneurial orientation
Researchers have agreed that the entrepreneurial orientation is the result of three dimensions: innovativeness, proactiveness and risk-taking (Wiklund et al, 2003). Innovativeness is reflected within the tendency to support new ideas, novelty experimentation, and creative processes, thus engaging in new and practices and technologies (Lumpkin and Dess, 1996). Proactiveness represents the anticipating capability of an individual, thus the creation of a first-mover advantage against competitors is the result of the proactiveness. Such a forward-perspective looking, allows managers to act entrepreneurially and to take action before a certain problem occurs. On the other hand, risk taking is associated with the ability to commit a considerable amount of resources to risky business projects where the failure cost is high (Miller and Friesen, 1978). Moreover, it implies the resources‟ deployment towards projects with unknown outcomes (Wiklund and Shepherd, 2003). Product innovation, risk taking and proactiveness are the essence of entrepreneurial orientation, thus Lumpkin and Dess (1996) argue that entrepreneurial orientation can include “taking initiatives by anticipating and pursuing for new opportunities.” In conclusion, the entrepreneurial orientation provides a system of practices and managerial styles that offers direction for the use of resources (Chirico et al., 2011). Thereby in this paper, we assume that the manager‟s entrepreneurial orientation can enhance the resource orchestration process, and later the performance. Wiklund (1999) found out that there is a direct connection between the manager‟s entrepreneurial orientation and the performance of the firm, so we assume to find a positive effect between the entrepreneurial orientation of the manager and the performance of the firm.
Brown and his colleagues (2001) define the entrepreneurship using Stevenson‟s (1990) definition: Entrepreneurship is defined as “the process by which individuals – either on their own or inside organizations- pursue opportunities without regard to the resources they currently control” . By having the focus on this definition, we can treat the entrepreneurial orientation as a managerial capability that can enhance the resource orchestration process.
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controlled (Stevenson, 1983). The entrepreneurial behavior is contrasted with the administrative behavior. For our study, we will use Brown‟s et al. (2001), promoter managers are placed at the entrepreneurial end and trustees at the administrative end. Brown and his colleagues (2001) provide the following directions: “The promoter‟s sole intent is pursuing and exploiting opportunities regardless of resources controlled, while the trustee strives to make the most efficient use of its resources pool (as “required” by fiduciary responsibility)”. There are some environmental factors that pull the managers and their companies towards entrepreneurial behavior or towards administrative behavior (Brown et al., 2001).
In this paper we are going to use Brown‟s et al (2001) quantitative tool to measure the entrepreneurial orientation of the manager, Stevenson categorized the management behavior of the promoter and trustee types along six dimensions: Strategic Orientation, Commitment to Opportunity, Commitment of Resources, Control of Resources, Management Structure and Reward Philosophy (Stevenson, 1983; Stevenson & Gumpert, 1985).
Table 1- Entrepreneurial orientation & dimensions (Brown et al., 2001)
In summary, Stevenson‟s view of entrepreneurial management puts opportunity-based behavior at the center, thus we assume that the entrepreneurs will be able to see opportunities in the resource orchestration process, thus they will create novel bundles of resources which will
Entrepreneurial end| Promoter Administrative end | Trustee Strategic orientation
and commitment to opportunity
Focus : Environmetal opportunities not the
resources needed to exploit them Focus: utilize the resources of the firm efficiently
Commitment and control of resources
Focus: Maximizing the value creation by exploiting opportunities while reducing resources required ; Resources are rented
A thorough analysis in advance with large, but less reversible, investments ;
resources are possessed
Management structure & reward philosophy
Characteristics: Flexibility, coordination of key non-controlled resources, opportunity orientation; incentives are based on the value created
Characteristics: a formalized hierarchy, defined lines of authority, highly routinized work, systems designed to measure productivity; incentives are based on fulfillment of the tasks
Growth orientation & entrepreneurial culture
rapid growth and that entrepreneurial management ; a work environemnt based on experimentation and creativity and
opportunity seeking
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consequently bring value for customers and wealth for owners. The entrepreneurial behavior may be “critical to the long term vitality of our economy” (Stevenson. 1983, p. 3),
Theoretical framework
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Methodology
Like mentioned in the literature review, this paper provides a contribution to the literature by providing a more comprehensive understanding of the way managers orchestrate the available resources in order to reach to competitive advantage. To enter more into depth, the paper aims to investigate how the entrepreneurial behavior of the manager influences the orchestration process. Within the current literature has been identified a positive correlation between entrepreneurial behavior and firm‟s performance. Thus the relationship between entrepreneurial behavior and resource orchestration process becomes plausible and an interesting topic to study. The resource orchestration within small businesses from a high velocity industry can also offer new insights concerning the three steps of resource orchestration process. The concept is popular and the study is plausible, because the literature doesn‟t offer a complete overview of the concept. The following thesis aims at developing theory on the previously mentioned matters by means of case studies and literature research. In the end of this study, we expect to obtain logical patterns which will be supported by the evidence gained from the case studies and the literature research. As this paper tries to provide a more comprehensive understanding of the previous concept, the knowledge generating process “theory development”, fits best with this objective.
3.1 General approach
The investigated phenomenon will be analyzed from a qualitative perspective, because it offers a comprehensive understanding of the relation between Resources, Orchestration Process and Entrepreneurial behavior within a Small Business.
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field even more attractive. Primary data will consist of semi-structured interviews with the top managers of 14 companies that activate in a high velocity market, and structured interviews with the companies‟ customers (see Appendix 3).
3.2 Constructs
Environmental dynamism
Table 2 Environmental dynamism constructs
Resource orchestration process
After the main resources that create the competitive advantage are tracked, a set of questions was asked about the resource orchestration process. The focus was on the sub-processes: Structuring, Bundling and Leveraging. The current literature doesn‟t provide a set of questions. Thereby, the interview consisted of a semi-structured interview. The results will be carefully analyzed and codified. The respondents will be the CEOs of the companies from the sample. The questions were developed together based on the current literature regarding resource orchestration.
Entrepreneurial orientation
To measure the entrepreneurial orientation of the manager, was used Brown‟s et al. (2001) qualitative tool (see appendix 1). We need to explain how we obtained the entrepreneurial orientation value
Environmental
dynamism Construct type Collected Questions Uncertainty Qualitative semi-structured
interview
How often do customers shift in preferences ? How often does the market structure change? Dynamics Qualitative semi-structured
interview How often does the market structure change? Competiton Qualitative semi-structured
interview
How aggressive is your competition? Are you aware of your direct competitors?
Munificence Qualitative
semi-structured
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The items were of the forced choice type, with pairs of statements representing the opposite ends of the promoter/trustee continuum. A ten-point scale divided the two statements. The respondents were asked to mark the number which best represented the view of their firm. In order to avoid response set contamination, i.e., the tendency to respond to statements for reasons other than their content, the questions were arranged so that the promoter statements and the trustee statements appeared on both the right and left sides (Robinson et al., 1991). All the gathered data was stored in an excel file. Because the questions for Growth orientation and Entrepreneurial culture were reversed in order to limit the respondents‟ bias, we re-reversed them in order to arrange all the trustee related questions on the left side and the promoter related questions on the right side. For each dimension, we computed the average score. In the end, we computed the average of the average scores of each dimension, thus, we obtained the entrepreneurial orientation of the manager. The computations were made on column, thus, the scores were easily allocated to the managers. Eisenhardt (1989) argues that combining qualitative data with the quantitative data in a case study analysis ensures a synergistic view of evidence.
Construct Collection type Use Remarks
Vision& Mission Qualitative Resource orchestration analysis
The researcher will check if the resource orchestration process is in line with the mission and vision Firm characteristics Qualitative Resource orchestration
analysis; available in appendix
Firm size; Turnover Eurm; Set up year; Firm maturity; Organizational structure; Industry;
Country; Ownership Structure
Table 3 Other relevant constructs
3.3 Data collection
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owners from the sample. To strengthen the validity of the analysis and to obtain different perspectives that may add valuable information, data concerning the firm‟s specification will be gathered from the company‟s database provided by the university (Aken, 2012). This will compensate for the bounded rationality of a single individual.
All interviews were conducted by following Emans guidelines (2003). At the start a short introduction will be given in which the topic of the interview was explained, together with the purpose, procedure and the timing of the conversation. Furthermore, the business owner‟s permission was asked for a recording and a promise was made that gathered information was kept confidential prior to starting the interview. Broad general questions were asked first to avoid scoping out resources that may be of importance.
A special emphasis was placed on the primary data collection: the interview. Therefore it was very important for proper creation, testing and implementation of the interviews. In this matter, before starting the collection of primary data, the interview was critically evaluated through a pre-testing which was done in one Romanian company (the official distributor of Samsung electronics products) this company possesses an ecommerce platform, and it is included in the sample of firms). The purpose was to identify problems related to layout, length, wording, content, coding. A pilot study is essential for the creation of the final interview. (Thomas, 2003). After the final questionnaire for the interview was developed, it was used to answer to the main research and sub-questions. This was done in three ways (depending on the possibilities offered; the order presents also the preference): direct interview (even though it is an expensive tool, it generates high quality information (Thomas, 2003); telephone interview (when it is too expensive for direct interview and the interviewee agree for a phone call); internet (Skype). The purpose of using these tools to gather primary data was mainly because we wanted to maximize the quality of response (Thomas, 2003). It is of great importance that the quality of the responses is high ("Why so?" - Factors considered for judging. Whetten, (1989))
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The target population is represented by SMEs located in Romania. Moreover, we were interested to find companies within a high velocity market. In order to be able to generalize this phenomenon, we decided to interview top managers from various industries.
Table 4 - Respondents
3.4 Quality control
Potential biases must be under control; therefore the characteristics of the study will be independent of the results (Yin, 2003). Because of the constant possibility for a biased research, the development of the theory will be controlled through coding the interviews.
Also, through the use of triangulation (using multiple research instruments), the potential bias of instruments will also be held in control by collecting both secondary data (literature review), but also primary data (semi-structured interviews). Another biased identified is the respondent one.
COMPANY NAME Firm size Turnover EurmSet up year Firm maturity /life cycle Legal form Industry Country Owners
Intracom SRL 7 0.35 2012 maturity SRL/ LTD Samsung Professional displays Romania 2
Activ Invest SRL 25 8.225 2001 Maturity SRL/ LTD Samsung Wholesale distributor, logistics, ecommerce
Romania 2
Foto Service SRL 17 0.321439 1991 Decline SRL/ LTD Photography, Kodak Romania 1
Sc Papillon Laboratoires
145 7.377381 1994 Maturity SRL/ LTD Hair coloring manufacturer Romania 2
Ro Star SA 246 9.25 1992 Maturity/Dec
line
SA/ PLC Buscuits Manufacture Romania 3
Tapako Industry SRL 15 0.75 2007 Maturity SRL/ LTD Topography & wholesale Romania 1 FALCON
ELECTRONICS SRL
67 4.95 1994 Maturity/Dec
line
SRL/ LTD Car accessories & Wholesale Romania 1
Infotec SRL 7 0.137485 1994 Maturity/
Decline
SRL/ LTD IT, Delear Xerox for eastern part of Romania,
Romania 2
Pentagon COM SRL 8 0.35 1996 Maturity /
Decline
SRL/ LTD Telecommunications, Alcatel Lucent Authorized distributor
Romania 3
Hotel Capitol SA 99 0.38 1995 Maturity SRL/ LTD Hospitality Romania 3
Abstralt Impex SRL 4 0.15 1993 Maturity SRL/ LTD Frame wholesaler Romania 1
RiskSoft SRL 10 0.562993 2001 Maturity SRL/ LTD IT, Microsoft Cloud Reseller Romania 3 AS Global Business
SRL
6 0.673045 2004 Maturity SRL/ LTD Telecomunications Romania 1
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To avoid this kind of problems, in the research paper the interviews will be assisted by a Romanian master student from the Bucharest Academy of Economic Sciences.
3.5 Analysis and Research
After every interview an analysis of data will follow. By using recordings (both notes and voice recording) and a proper administration, it was clear where the focal point for competitive advantage come from. Then analysis process of the data collection consisted of within-case analysis to gain familiarity with the data (Eisenhardt, 1989). This within-case analysis was done by reading the interviews, code them and interpret them (Brown et al., 1997). Thereafter, there was a cross-pattern analysis conducted to look at the data from different views. The findings of the interviews will be compared in a table to see the differences and similarities. One tactic is to select categories or dimensions, and then to look for within-group similarities coupled with intergroup differences. Dimensions can be suggested by the research problem or by existing literature.
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Analysis & Results
4.1 Within case study analysis
Case study 1 –Intracom - Samsung B2B professional displays Rental & sell
Regarding structuring, the company has a resource portfolio. The manager said that “we are able to manage all the available resources, because we are a spin off that has as its core activity rental services”. The strategic goal of the company is to create as much as possible value for the customers, as the manager said “we want to offer our best service to our customers…” Thus, all the resources are structured in this sense. When the company needs to acquire a strategic resource to implement its strategy more efficient, it has to access the strategic factor market. Because the company sells and rents only Samsung professional displays, it has a special relationship with the main vendor, thus it has price advantages. If the company has to acquire human resource, then it is very difficult to find on the labor market specialized personnel, because the business is based on a niche. In the company, almost all the employees have managerial tasks, thereby, “the employees must be efficient and ready to take rational decisions based on figures and facts”. In this sense, to accumulate the team's managerial skills and communication ability, the employees are trained. Moreover, all the personnel receive technical training from Samsung. “The installation team must be very efficient and must deliver value to the customers … We develop the abilities of our employees within the company and together with Samsung‟s support.” The manager frequently checks the efficiency of the resources. If a resource stops being cost efficient, then the company divests the resource, the efficiency of the company is the main concern of the manager. Usually the divested physical resources are replaced with more efficient resources. The manager doesn't wait for the resource to lose its value. “We sell the unproductive resources before they become a burden to our company. We want to generate profit from both the rental and selling activities”
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resources as much as possible. To enrich the competences of the company they create strategic partnerships. For example “If we win an important project, we outsource the competences that we don‟t have. Thus we make both our partners and customers happy”. The manager uses his creativity all the time to pioneer new bundles of resources. A new resource is bundled with an existing one to increase efficiency and effectiveness by both sides. For example, ”a new sales manager brought all his customers to our company”.
Because the resources are stabilized and structured, the manager is easily able to mobilize those that can create value for customers and wealth for owner. The company uses the available bundles for various tasks. For example “we rent our equipment for a good price also to expose our products to future possible customers”. When the company seizes an opportunity it mobilizes its available resources, it bundles them and then it exploits the opportunity. The manager is directly interested to create the most cost efficient and the most effective bundle, to exploit the opportunity. “We never say no to opportunities, we try to reconfigure and rearrange all the available resources to exploit an opportunity.” The competitors are able to replicate the service, but not the relationship that we have with Samsung”. The manager knows how efficient each strategic resource is. In the coordination process, an important role is played by the communication flow. “I know the value that the rental service can bring to our customers … I also value the irreproachable communication skills that my team has, this is how we win customers “ By having an efficient and effective mobilizing and coordinating strategy, the manager is able to deploy the new bundle of resources and capabilities. Whenever a new efficient practice is discovered, the company tries to codify it and to create a black box effect for the competition.
Case study 2 Activ Invest– Samsung Electronics wholesale
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therefore, we have to be creative”. Most frequently, the strategic resource is already owned by the firm and the bundles are allocated to the activities that can create extra value “we reallocate our resources to fulfill the expectations of our customers”. Within the company the human resource is trained as much as possible. The employees with managerial positions are constantly evaluated. The managerial skills represent an important feature of the personnel due to the decentralized flat structure of the company “each member of our team has the freedom to take his or her decisions, but at the end of the day we must work as a single unit, which understands the needs of the customers and fulfills them”, thus in case of need the personnel is trained to improve this capability. If a customer is interested in a service or product the company doesn't have, then he is transferred to a strategic partner “a customer will always appreciate your help”. In case the company needs to accumulate a resource and it engages in alliances “when we have the same interest, it is better to fight together rather than against.” The efficiency of the strategic resources is constantly checked by the business owner. The manager is aware of the value that the key resources bring to the company. When a strategic resource is not efficient, the manager tries to revitalize it. Most of the times, the manager is able to revitalize the efficiency of the resource “we want to exploit our resources as much as possible. When the efficiency of the resource drops, we use our creativity to revitalize it”. If this not possible, the resource is divested.
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important bundling factor. These novel combinations of resources can bring an important advantage for the company “we pioneer and invent solutions for us and for our customers. If you are not creative, you can‟t be different, then you will lack of competitive advantages”. Usually, the manager pioneers a strategic resource with a new one, or with a resource that is not very efficient. Each time these bundles are created, a very important factor in this process is the market “We try to find the necessities of our customers. We adapt our resources and we solve the problem”.
The new bundles are punctually used to efficiently and effectively implement the company's strategy. Only if the added value is considerable, the manager uses a bundle for multiple taks. For example the company constantly mobilizes the sales department with the technical and marketing departments to better coordinate the sales and to implement a comprehensive strategy. When a market opportunity is seized, the manager uses his ability to exploit it “…we use our creativity to be efficient and to exploit all the market opportunities that we can spot” the manager bundles the current resources to appropriate the opportunity. The company discovered and exploited opportunities for which there was no market. “We leased TVs before 2007; it was nowhere to be seen. We were successful and creative. This what Samsung always appreciates about us”. The competitors are able to observe how the company coordinates most of the processes. Beside the relationships that were created with the main stakeholders, the rest of the processes and resources can be imitated. Within the company, communication is an internal strength. The company has a flat decentralized organizational structure, “the employees must be able to communicate in order to coordinate their resources efficiently”. There are few routines in the company. But when a certain bundle is deployed and proves to bring value, the manager codifies it in the organizational culture “we don‟t want to reinvent the wheel; we want to make it as efficient as possible by reorganizing our resources when needed.”
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lack of resources or capabilities the company tries to produce or to acquire the missing capabilities through new bundles. The human resource is considered to be the most valuable resource that the company has. The marketing and the R&D department are considered to be vital in the value creation process. The CEO stated “it is very difficult to acquire a strategic resource. I need to have a business plan to see how the new resource will work within my company”. The CEO said “The reputation helps us to acquire the resources. Money is the only problem in the end.” Each time a resource is acquired, the future benefits are considered. The CEO also stated that all the company's processes must be seen independently, thus the resource allocation process is more efficient. The personnel skills are essential for the CEO. He considers that the managerial capabilities are those that provide a competitive advantage to the company, because the personnel can take decisions easier. Therefore, the company invests in trainings for its personnel. The sales and marketing department are targeted. Within the company it is valued the alignment of the sales personnel to the strategic goal. “The sales personnel have to provide guidance and assistance for customer. The technical team also receives constant training. All the departments are interconnected and aware of the market's velocity and change.” If the company doesn't have a competence, it tries to acquire it “you have two chances in this environment, either you buy others and grow, either you wait and die”. The CEO acknowledges that the resources are best accumulated during the crisis periods when the company needThe company analyzes the efficiency and the effectiveness of the strategic resources. The main concern of the manager is to reduce the cost and to find the solution that increases the firm's competitiveness as much as possible. The CEO considers that the company must maintain the core activities and outsource the complementary ones. “We divested the distribution department, because outsourcing proved to be more efficient.”
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new brand division by moving some employees to the new division. It works with the same core resources, the same capabilties, but with a new business model.” Thus the firm can target new customers, therefore extra value is generated. If a resource is very efficient and effective, the manager tries to replicate it internally. Afterwards he allocates it to activities that are not efficient. The company pioneers new bundles of resources with the intent of creating a new competitive advantage. Knowledge is crucial in this process. The CEO bundles the creation department with the marketing department in order to obtain a better result. The CEO philosophy is to allocate resources and to pioneer bundles for certain core capabilities the company has. “It is a cycle, you create a new bundle, that creates a resource. After the resource is created, you create the second bundle with that resource to enhance its productivity. In this way your competitors will be confused and the advantage that you have, will not be replicable”
The company is able to mobilize the needed resources in order to develop its strategy and exploit opportunities. The CEO has an important role in this process, thus when a new opportunity is spotted, he analyzes the external environment, evaluates all the possibilities, chooses the right resources or bundles. Usually he uses the resources on hand to exploit an opportunity “before we test the opportunity, we learn how it works and then, if it is the case, we invest in it to be more efficient”. All these new bundles are coordinated by the CEO. The competitors are not able to observe how the CEO coordinates the activities, but “they can speculate our costs”. Within the company, communication is essential. One of the main goals of the training sessions that the employees have is to align the internal and the external communication skills, such that the personnel is able to understand the customers and in the end, to transform the customers' needs into internal targets. The deployed bundles are analyzed to see if they provide a competitive advantage to the company. If this happens, then the CEO codifies it as routine and integrates it in the organizational culture of the company.
Case study 4 Foto service – Photography
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have time and money to afford this”. Because of the industry's decline, the company hasn't acquired a strategic resource since 2008. But before the decline, each time a new resource was acquired, the manager was considering all the possible allocations of the certain resource. “We used to be very flexible before, because there were many customers. Now, the market is almost inexistent, and we try to attract all possible customers with the resources we have on hand” The personnel receive technical training. For example the photographers receive a basic training of how to use more efficiently the camera. The printing department is trained how to use the printing machine and the editing tools. There are no trainings for managerial capabilities and skills. Thus, the resources are accumulated by trainings.
When a resource stops to be efficient, the manager tries to upgrade it. For example one of the key resources is the printing machine. Because this resource loses its financial value during the time, when it stops to be efficient, the company divests it. In this case the competitive advantage is hard to be maintained. “If the printing machine breaks, I will probably close this activity”
The manager doesn't make constant improvements to stabilize the capabilities and competencies possessed by the company.
The manager doesn't invest in trainings, doesn't updates the resources on hand. There is a bundle created between the photo shooting and the printing process, thus the resources are not enriched on a frequent base. New products for the printing capability are developed if there is a market. For example, the company enriched the printing capability by developing printing on magnetic paper, thus it was able to create in short period of time personalized magnets. If the company doesn't have a competence or a capability, it creates an alliance with a partner to outsource the service provided by the certain capability. For example, the company outsources the service of transferring the video from VSH to DVD.
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If a there is an opportunity that needs a new capability or resource, the manager mobilizes the resources on hand to exploits that certain opportunity. The competitors can easily observe the way the company coordinates its resources and capabilities. The manager stated that the company survives because of the regular customers, who constantly bring value for the company. Within the company, the communication process is very important. The internal and external communication processes is directly managed by the business owner,
Because the company performs a limited number of activities, a new capability or competence resulted from a deployment of a bundle of resources is difficult to obtain. But, when a new capability or competence is obtained, the manager introduces it in the organizational culture of the company.
Case study 5- RoStar - Biscuits Manufacturing
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Because the industry is not very dynamic from the technological point of view, the company maintains the efficiency of the resources through incremental upgrades. The manager is able to stabilize and isolate the bundles of resources that generates competitive advantage and then to reconfigure the bundle in a novel way. Recently, the company hired a specialized consultancy firm to improve the quality of the biscuits. The receipt was enriched and some of the ingredients changed with the better options from the market. Thus, the customer's perceived benefits increased. But more often, the company develops competences in-house rather than partnerships. The company bundles new resources with old resources to create a competitive advantage. “Our business philosophy doesn‟t let us pioneer too much. We stick to the main principles that we have, bake biscuits” Each time a certain bundle is created, the market is considered as an important decision factor, but not necessarily essential .
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Case study 6 – Tapako Industry – Topography and Topcon authorized wholesaler
The tangible resources are well mapped, fact which allows the management of the firm to make use of the resources efficiently and to deploy them wherever they can create value for the company. Because the manager has 25 years of experience on the market allows him to reconfigure and to exploit the resources on hand. The company always aims to acquire the newest technology. The specialized factor market is not accessible for all the companies due to the information asymmetry. If the company needs to acquire specialized human resource, the HR department head hunts the best available option. Because the industry requires very specific resources, the newly acquired resources are not used for multiple tasks, “we buy or resources mainly from the western market, because our competitors don‟t have access there. If we the resource can fulfill several tasks, then we reallocate it.” The employees are trained for managerial skills. The main concern of the business owner is to have employees ready to reconfigure the resources they use, and to understand the market's dynamics and the customers' changing expectations “I want to have well prepared employees in my company”. In this sense, the employees with managerial tasks are sent to specialized trainings to develop and to accumulate managerial competences. The company is seen on the market as an innovator, thus many other companies require partnerships for knowledge sharing. “The other companies want to know how we are successful. We teach them, and then we accumulate our skills in Western Europe”. The business owner constantly verifies the efficiency of the resources on hand. His main concern is to provide to the customer the most reliable and professional solution, thus he needs to be sure that the resources the company has are reliable. Being proactive helps the manager to anticipate when a resource becomes less efficient “I do not wait for my resources to become inefficient, I take action before. This is how I won my reputation”. In this case, he is able to take action beforehand and to be sure that the competitive advantage is maintained. When a resource is divested, the company is able to maintain its competitive advantage because of the action taken by the manager beforehand.
