Responses to Senior Editor’s and Reviewers’ Comments
Organization Science (OS00-1044.1)
May 16, 2001
Title: “A Process Model of Resource and Capability Development: Lessons from the EC Strategy at Bolsa de Valores de Guayaquil”
Responses to Senior Editor’s Comments
Comment / Response or Action TakenThank you for resubmitting your manuscript formerly entitled “Internet strategy at Bolsa de Valores de Guayaquil: A model of resources and competencies ordering to develop dynamic capabilities in a less-developed country” and now entitled “A process model of resource and capability development: Lessons from the e-commerce strategy at Bolsa de Valores de Guayaquil” to Organization Science for possible publication (OS00-1044.1). Two of your colleagues and I have now had a chance to read your paper (Reviewer 3 has been slow to respond so I decided to move forward without his or her comments this time). One colleague is ready to “sign off” on the paper, while another has some remaining concerns and feedback and craft the best paper possible. The good news is that you received some very good food for thought here. Know that I will only sending this back to Reviewer 1 for comments next time. / I am delighted to know that the Senior Editor and the reviewers found “very good food for thought” in my manuscript, and that reviewer 2 is even ready to “sign off” on the paper. I also found the extensive comments that you and reviewers 1 and 2 provided very helpful in further strengthening the manuscript. Thank you for your continued encouragement. I believe I have addressed all of the remaining issues that were raised.
The biggest issue for you to address is the question of just what is, or is not, a resource and a capability. Strive to be even clearer in your definitions. Readers should not be left to wonder how to classify training, benchmarking, trustworthiness and integration, for example. And as you do this, stay very alert to the issue of process. There should be no ambiguity that you are looking at the development of the e-commerce strategy here as a way to shed light on these generalizable theoretical processes. You don’t want people walking away from your paper thinking that you have simply developed a three stage model of a website development process in Ecuador. / Thanks for this advice. Some of the issues that you raised here are precisely in alignment with criticisms that have been made of the RBV perspective. I addressed these concerns in my manuscript following your advice and that of reviewer 1. Three specific actions were taken:
1. I provide a clear definition of resources and capabilities in the “Theoretical Background” section (see page 3):
“The RBV sees a firm as a bundle of resources and capabilities. Resources are firm-specific assets and competencies controlled and used by firms to develop and implement their strategies. They can be either tangible (e.g., financial assets, technology) or intangible (e.g., managerial skills, reputation) (Barney 1991, 1997). Resources are heterogeneous across firms, and some resources are valuable yet rare, difficult to imitate, or non-substitutable, giving the firms that have them distinctive core capabilities. Resources that provide sustainable advantage tend to be (1) causally ambiguous (e.g., transformational leadership), (2) socially complex (e.g., culture), (3) rare (firm-specific), or (4) imperfectly imitable (e.g., distinctive location) (Barney 1997). Capabilities are a firm’s abilities to integrate, build, and reconfigure internal and external assets and competencies so that they enable it to perform distinctive activities (Teece et al. 1997). The resource-based approach focuses on the characteristics of resources and the strategic factor markets from which they are obtained.”
2. I acknowledge the weaknesses of the RBV perspective in conceptualizing and parameterizing the terms “resources” and “capabilities,” and provide a clear description of how these terms were conceived in my study. The following paragraph was added in the “Research Approach” section (see page 7):
“Despite its significance, the RBV perspective has not gone unchallenged. In particular, although resources and capabilities are at the heart of the RBV, they have not been fully parameterized and often are described in vague terms that have been criticized as being tautological, endlessly recursive, and non-operational (e.g., Mosakowski and McKelvey 1999, Priem and Butler 2000, Williamson 1999). Precisely, the purpose of this paper is to extend our understanding of resources and capabilities and how they develop in organizations. This understanding will, in turn, enhance the RBV perspective. Thus, it is important to first note that in this paper resources are input factors (assets and competencies) controlled and used by BVG in the formation and implement of its EC strategy. Capabilities consist of identifiable and specific organizational processes that were observed to create value for BVG by manipulating resources in the formation and implementation of the new value-creating EC strategy. Second, some of these resources and capabilities used have often been the subject of extensive empirical research in their own right.”
3. The “Discussion” section was carefully reviewed to make sure that resources and capabilities were properly characterized.
We would also like to see you provide a little more description of what an exchange does…and in particular, some more detail about this particular exchange. Note that I asked you to do this last time. I also asked you to address the question of whether or not we can think of this exchange as a firm. You never really addressed these issues in any detail. You told me that the section on pages 8-10 was “enriched by including some of these issues” (my emphasis). Can you please tackle these issues next time? / Yes, BVG is a not-for-profit corporation (an autonomous business entity), and therefore, we can think of it as a firm. In this revision I have been more explicit in the description of the stock exchange in the section “Antecedent Conditions.” I present the general functions of a stock exchange and the history of BVG as well as its main competitors and customers. In addition, following reviewer 1’s comments, I have assumed that “there are several OS readers who will not know how an exchange makes its money.” Therefore, Figure 1 presents the economic model of BVG, and clearly highlights how BVG makes its money.
In addition, I asked you to provide some sense of what has happened to this exchange since you stopped following it carefully. Given that your analysis really concludes at the end of 1997 (although you mention a recognition ceremony on 12/18/98), I think it is fair to add a postscript that tells the reader what has happened since then. Can you do that? / To clarify what has happened since the time frame described in this study, I have included a new section at the end of the paper entitled “What Has Happened at BVG since this Study was Conducted” (see page 30).
As before, could you please provide a point-by-point response to the issues raised in the reviews? Please know that I have every intention of making a final publication decision once we see the next version of the paper. I am really looking forward to reading it! / I want to take this opportunity to thank you and the reviewers for your insightful feedback on my manuscript! In this revision, I have tried to address the weaknesses that were noted.
In addition, following your advice, detailed responses can be found below next to the reviewers’ comments.
Responses to Reviewer 2’s Comments
This paper uses a longitudinal case study of the electronic commerce strategy formation and implementation at an Ecuadorian stock exchange to explore how firms develop, manage, and deploy resources. You have clearly done a tremendous amount of work both in the initial data collection, in organizing and evaluating the data you collected, and in writing and rewriting this paper. I also agree that studying this case, in particular, is useful for a number of reasons. Least among these is the opportunity, as you point out in your introduction, to trace the development of a firm strategy from its beginning. I like the paper very much, and I appreciate the energy you have clearly invested in responding to the prior set of reviews.
Your introduction is excellent now. I like the way you motivate the question, situate the problem theoretically and practically, and justify (page 2) the reasons for studying the BVG case. The paper is more focused, and you have a nice “hook” now. Dropping the propositions and revising the theoretical approach worked well. Likewise, your discussion of the methods reads well and is greatly improved over the prior version of the paper. You also do a good job (page 16) assessing the nature of the success, and I like how you develop the results and how you deduce the three phase process of resource and capability development. / Thank you for your kind words. I appreciate the positive feedback on my paper. I am delighted to know that Reviewer 2 is ready to “sign off” on this paper.
I think the paper is in great shape and have just a couple minor suggestions for additional improvement:
- Do you need the phrase “one theoretical lens for examining sources of competitive strategy” in the first sentence of your abstract? This is very minor, but I thought it might be extraneous. It seems to make that sentence a little less clear than it might otherwise be.
- On page 13, you have a paragraph that begins “Visitors…” I am not sure what the function of this note is. Again, this is really minor – maybe another short sentence explaining how this fits would be in order.
- Your description of “Key Resources and Capabilities Developed in Phase 2” needs a bit of rewriting. The sentence beginning “At BVG, with an increased understanding of the internet potential, but also….” is difficult to read. Similarly, the sentence (page 23) beginning “He advises…” is missing a word. You might give this section another rewrite for clarity. / Thank you for this advice. I have removed the phrase that you pointed out, making that sentence clearer.
Given that this paragraph, as you pointed out, was not adding to the paper, I have removed it in this revision.
Following this advice, I have rewritten the description of “Key Resources Capabilities in Phase 2.” Specifically, the sentences that you pointed out now read:
“Managers at BVG began to search for alternatives to put in place an EC strategy, as their understanding of the Internet potential increased and their awareness of the existing resource constraints became clearer.”
I have also modified the sentence that you mentioned (see page 23) as follows:
“He advises that a more flexible approach requires constant experimentation.”
Responses to Reviewer 1’s Comments
This paper has been significantly revised, and it is much improved as a result. In particular, the paper is much more focused and much clearer. I am sorry to report that I think the paper still needs significant revisions, but I do think the revisions are do-able.
For the most part, the paper works well through the motivation/introduction section and the review of RBV theory. I agree that there is relatively little extant research that shows how or theorizes about how resources/capabilities/competencies are developed and renewed, compared to the amount of research on how R/C/C are exploited. I also agree that the case study approach is a good one to take at this time, given the state of the literature. For the most part, I found the presentation of the BVG case to be fine (a few suggestions for improvement are listed below). / Thank you for the positive feedback on this paper. I appreciate your comments. In this revision, I have reworked the paper in the manner that you and the Senior Editor have suggested.
But at the Discussion section, I started having a lot of problems. In a nutshell, the analysis of the case does not resonate with the RBV perspective, in my opinion. I was looking for an analysis that identified capabilities (or resources or competencies – to save space I’m just going to say “capability” for all of these) and then showed how they were developed or renewed – e.g., where they came from, or how they might have been built. To me a capability is a more or less a STOCK, although sometimes it’s a stock of knowledge in the form of a process (as in an ability to do something). So I was looking for the identification of new rare (valuable, inimitable, etc) stocks, along with a story of where those stocks came from. I think this is a fair expectation for the paper, based on the current framing.
However, what I find in the analysis was a discussion that strikes me as a variance model showing a variety of factors having impacts on one another, with a website popping out at the end. The analysis seems to answer the question, what managerial moves or practices were important for getting MV up and running at BVG? This is not at all the question at hand in this paper, as I understand its mission. While some of the managerial moves or practices might be seen as the exploitation of a resource, others just seemed to be events or characteristics of something. Certainly it wasn’t clear to me what capabilities whose development was being focused on, or what the development “engine” was. The overall picture is one of a factor model that bears little resemblance to an RBV analysis, at least for this reader. / Please notice that some of the issues that you raised here are precisely in alignment with criticisms that have been made of the RBV perspective. I addressed these concerns in my manuscript following your advice and that of the Senior Editor. Three specific actions were taken: