Measuring dynamic capabilities in new ventures: exploring strategic change in US green goods manufacturing using website
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Measuring dynamic capabilities in new ventures: exploring strategic change in US green goods manufacturing using website data Sanjay K. Arora1 · Yin Li2 · Jan Youtie3 · Philip Shapira4,5
© The Author(s) 2019
Abstract Entrepreneurial scholarship suggests that a small firm’s ability to grow is a function of its capacity to sense and respond to changes in the market as well as the broader environment for the firm’s goods and services. Developing detailed measures of internal capabilities at a large scale, however, is often hampered by limitations in the availability of data from conventional sources, low survey response rates and panel attrition. The emergence of new information sources, including big data sets derived from the online activities of firms, coupled with advanced computational approaches, raises fresh analytical possibilities. In this exploratory study, we turn to freely accessible website data to gauge internal capabilities, specifically for market sensing and responding. To operationalize the construct of seizing, the paper uses an application of topic modeling, a text mining approach commonly used in computer science, on archived website data from the Wayback Machine for two time periods, 2008–2009 and 2010–2011, to explain sales growth for green goods enterprises in two later time periods, from 2010 to 2012. We find an endogenous inverse U-shaped relationship exists between market seizing and sales growth. Increasing levels of focus on a firm’s local geographic area also predict sales growth. We consider these findings in light of the practitioner literature on firm agility and pivoting and discuss opportunities for future work using website data to study entrepreneurship and the strategic management of innovation. Keywords Dynamic capabilities · Entrepreneurship · SMEs · Big data · Website analytics · Text mining JEL Classification C18 · C81 · D22 · L21 · L26 · O32
* Philip Shapira [email protected] 1
Ernst & Young, LLP, Washington, DC 20005, USA
2
School of International Relations and Public Affairs, Fudan University, Shanghai 200433, China
3
Enterprise Innovation Institute, Georgia Institute of Technology, Atlanta, GA 30308, USA
4
Manchester Institute of Innovation Research, Alliance Manchester Business School, University of Manchester, Manchester M15 6PB, UK
5
School of Public Policy, Georgia Institute of Technology, Atlanta, GA 30332, USA
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1 Introduction Organizational agility is increasingly seen by researchers as a source of competitive advantage as firms alter their capabilities and business models to better respond to market opportunities and threats (Roberts and Grover 2012; Teece et al. 2016). Agility is essentially an outcome of enacting effective strategic change at the right time to achieve beneficial performance outcomes. According to the dynamic capability literature, agility involves the continuing ability to sense new market conditions, adapt or seize upon opportunities, and alter strategy (Teece 2007; Te
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