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3.2 Synergy between Intra-Industry Capabilities and Environmental Scanning
Capabilities
Environmental scanning capabilities
reflect the ability of managers to scan for
opportunities and threats to firms’ current operations and are highly influenced by managers’
social capital, particularly their ties to other organizations (Ocasio, 1997; Pennings et al.,
1998; Gulati, Dialdin, and Wang, 2002; Williams and Mitchell, 2004). Studies on the nature
of managerial work suggest that an essential part of managerial work is making and
maintaining contacts and interaction outside the formal organizational chain of command,
both at interorganizational and interpersonal levels (Mintzberg, 1973, 1975; Carroll and Teo,
1996). Thus, managers’ ties to other organizations determine their environmental scanning
capabilities.
However, managers require a high level of industry-specific knowledge and skills to
recognize and realize the benefits of external opportunities in a specific industry. For external
information and knowledge to be transferred to the recipient effectively, the recipient must
have sufficient absorptive capacity, which depends on whether the recipient has related
experience (Cohen and Levinthal, 1990). In addition, generating innovation from external
information, knowledge, and resources facilitated by external ties requires intra-industry
experience (Dakhli and De Clercq, 2004). Accordingly, the second proposition of this paper
is as follows:
Proposition 2: The environmental scanning capability of managers moderates the
relationship between their intra-industry capability and an entrant’s
intra-industry performance.
4. Hypothesis Development
4.1 Synergy between Intra-Industry Experience and Managers’ External Ties
The external ties that managers make and maintain reportedly enable firms to manage
ambiguity and uncertainty in an emerging industry (Pfeffer and Salancik, 1978; Aldrich,
1999; Aldrich and Baker, 2001; Lant, 2003) and reduce environmental dependency (Carroll
and Teo, 1996). Moreover, the external ties of mangers can enable firms to access
information, resources, markets, and technologies in a timely and reliable manner (Gulati,
Nohria, and Zaheer, 2000), transfer knowledge directly, and combine complementary
knowledge bases (Van Den Bosch, Van Wijk, and Volberda, 2006). Recent empirical findings
have revealed that the business ties of managers can exert a direct impact on knowledge
exchange and knowledge combination, indirectly influencing firm innovation in product and