Strategy Making E-Book

Wladimir Kovacic

• Herausgeber: Books on Demand
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 248

Veröffentlichungsjahr: 2017

Beschreibung

Strategic initiative implementation has evolved in recent years as a new and progressive form of strategy making. In this regard, strategic initiative implementation constitutes one of the central topics of strategic management regarding how firms can renew their most valuable sources of competitive advantage: the firm's idiosyncratic resources and knowledge base. Strategic management concepts and practical guidelines are still lacking on how strategic initiative implementation affects a company's idiosyncratic resources and knowledge base and what kinds of challenging effects may evolve during the strategic initiative implementation. Therefore, the aim of this book is to enhance our understanding of how strategic initiative implementation affects a firm's most valuable sources of competitive advantage and how thinking in strategic initiatives changes the thinking of traditional strategic Management disciplines. The book proposes a new way of strategy making concepts through proposing a new theory that depicts the dysfunctional effects of strategic initiative implementation. New thoughts are proposed to enhance a firm's existing core capabilities in the context of strategic initiative implementation and the interactions between ongoing initiatives. Furthermore, the book highlights the role and value of strategic initiative related dynamic capabilities. New insights into the challenges and limitations of extending and recombining the emerging knowledge bases from ongoing initiatives depict the evolution of dysfunctional knowledge. This book is a valuable source for both, practitioner and scholars to enhance their daily work and thoughts.

Leseprobe

“Strategic initiatives are an effective

instrument now how organisations

understand and develop new competitive

advantage. Mastering strategic initiatives

becomes the crucial success factor for

every competing organisation.”

Table of Content

INTRODUCTION OF STRATEGIC INITIATIVES

1.1 L

ACKS OF

S

TRATEGIC

I

NITIATIVE UNDERSTANDING

1.2 S

TRATEGIC

I

NITIATIVES AS A MODERN

M

ANAGEMENT

D

ISCIPLINE

1.3.1 Strategic Initiative related Strategy Making

1.3.2 Resource Based Theory

1.3.3 Strategic Initiative related Dynamic Capabilities

1.3.4 Knowledge Based Theory

1.4 P

RACTICAL RELEVANCE AND CONTRIBUTION

STRATEGIC MANAGEMENT THEORIES OF STRATEGIC INITIATIVES

2.1 S

TRATEGIC

I

NITIATIVES

2.1.1 Ambiguity of Strategic Initiatives

2.1.2 Competitive Advantage through Strategic Initiatives

2.1.3 Strategic change initiative implementation problems

2.1.4 Managerial Context of Strategic Initiatives

2.1.5 Discussion of the Strategic Initiatives Concept

2.2 R

ESOURCE

B

ASED

V

IEW OF THE

F

IRM

2.2.1 Historical context of the RBV – Penrose Influence

2.2.2 Concepts of Firm Resources

2.2.3 Resource Transformations through Strategic Initiatives

2.2.4 Discussion of the RBV

2.3 D

YNAMIC

C

APABILITY

T

HEORY

2.3.1 Classification of Dynamic Capabilities

2.3.2 Characteristics of Dynamic Capabilities

2.3.2.1 Market Dynamics in the Context of Dynamic Capabilities

2.3.2.2 Value of Dynamic Capabilities

2.3.2.3 Enabling Functionalities of Dynamic Capabilities in the Context of Strategic Initiatives

2.3.3 Discussion of the Dynamic Capabilities Theory

2.4 K

NOWLEDGE

B

ASED

V

IEW OF THE

F

IRM

2.4.1 Theory of Knowledge and Organisational Knowledge

2.4.1.1 Knowledge Creation Theories

2.4.1.2 Knowledge Creation in the Context of Strategic Initiatives

2.4.1.3 The Knowledge Base Concept of the Firm

2.4.1.4 Heterogeneity of Idiosyncratic Knowledge Bases

2.4.2 Discussion of the KBV

2.5 S

TRATEGIC

I

NITIATIVE RELATED GAPS WITHIN CURRENT

M

ANAGEMENT

T

HEORIES

ANALYSIS OF STRATEGIC INITIATIVES

3.1 C

OMPARISON OF THE

S

TRATEGIC

I

NITIATIVE

C

HARACTERISTICS

3.2 F

IELDWORK ANALYSIS OF

S

TRATEGIC

I

NITIATIVE RELATED

I

NTERACTIONS

3.2.1 Strategic Initiative Implementation Challenges

3.2.1.1 Formation of Challenges

3.2.1.2 Characteristics of the Main Challenges identified

3.2.2 Consequences from the emerged Challenges – Dysfunctional Effects

3.2.3 Emerging Concept of Strategic Initiative related Dysfunctions

3.3 T

HEORETICAL

R

EFLECTION OF THE

S

TRATEGIC

I

NITIATIVE FIELDWORK FINDINGS

3.3.1 Strategic Initiative Interactions in the context of the RBV

3.3.2 The Role and Value of Strategic Initiative related Dynamic Capabilities

3.3.3 Strategic Initiative Interactions in the Context of the KBV

3.3.3.1 Affecting Firm and Strategic Initiative specific Knowledge Bases

3.3.3.2 Stimulating Knowledge Creation through Initiative related Interactions

3.3.4 Closing Reflection of the observed Challenges and Dysfunctional Effects

STRATEGIC INITIATIVE CONCLUSIONS

4.1 M

ANAGING

S

TRATEGIC

I

NITIATIVES

4.1.1 Theoretical Contributions and Implications

4.1.1.1 Contribution to the Strategic Management Literature: An Integrated Perspective

4.1.1.2 Contributions to the Resource Based Theory

4.1.1.3 Contributions to the Dynamic Capability Literature

4.1.1.4 Contributions to the Knowledge Based Theory

4.1.1.4.1 Insights into Strategic Initiative related Knowledge Base Creation

4.1.1.4.2 Insights and Consequences of Dysfunctional Knowledge Creation

4.1.1.5 Cross-Theory Integration in the Context of Strategy Making

4.1.2 Managerial Contributions and Implications

4.1.2.1 Managing the Range of Strategic Initiatives related Interactions

4.1.2.2 Managing the Synergies of emerging Knowledge Bases

4.1.2.3 Prioritising the Strategic Relevance of Emerging Knowledge

4.1.2.4 Early Detection of Critical Situations during Initiative Implementations

4.1.2.5 Enforcing the Value Creation of Strategic Initiatives

4.3 S

TRATEGIC

M

ANAGEMENT

O

UTLOOK

REFERENCE LIST

1 Introduction of Strategic Initiatives

Strategic initiative implementation as a new form of strategy making has evolved in recent years, especially within companies operating in highly competitive sectors. Companies from those industries have increasingly shifted from a yearly strategic planning process to a continuous strategy development one, based on strategic initiatives. Strategic initiatives represent a new and progressive form of strategy making and implementation, whereby the idiosyncratic key sources of a firm’s competitive advantage are mobilised and renewed. In this regard, strategic initiative implementation constitutes one of the central topics of the strategic management disciplines regarding how firms can expand their resources and knowledge bases in order to improve their existing capabilities, or develop new ones, and thereby renew their key sources of competitive advantage. Furthermore, strategic initiative implementations are result-oriented and flexible, and they extend the static strategic planning process into a more dynamic one by combining strategic thoughts and implementation at the same time as involving a wide range of different stakeholders within a company, from top management to almost all members of the organisation.

However, there is still a lack of strategic initiative implementation concepts within the strategic management theories, especially on how strategic initiative implementation affects a company’s idiosyncratic resources and knowledge base and what kinds of challenging effects may emerge during the implementation. Moreover, guidelines are still required on how strategic initiative implementation can be managed professionally to assure the quality and results of the firm’s strategy making process.

Therefore, the aim of this book is twofold:

To improve the understanding of how strategic initiative implementation affects a firm’s most valuable sources of competitive advantage, namely, the firm’s idiosyncratic resources and knowledge base.To determine what kinds of challenges (dysfunctions) arise during the initiative implementation process.

Specifically, the author defines a strategic initiative as a vehicle for the implementation of strategic objectives that were predominantly originated by the top management and/or key decision makers of the firm. Based on this notion, the author positions the top management and key decision makers as the change agents within the organisation. Therefore, to view a strategic initiative as being functional or dysfunctional will largely depend on the outcome of the initiative and how much the results vary compared to the outcome anticipated by the top managers.

1.1 Lacks of Strategic Initiative understanding

The challenges which emerge during the strategic initiative related renewal process are still insufficiently observed and conceptualised. By examining the challenges related to strategic initiative implementation, this book combines and extends the resource based theory, the concept of dynamic capabilities, and the knowledge based theory from the perspective of the strategic initiatives.

From the perspective of the resource based theory, idiosyncratic resources are the most valuable source of a firm’s competitive advantage. The mobilisation and re-combination of the existing firm resources with new ones are critical aspects of successfully renewing the firm’s sources of competitive advantage. However, the traditional resource based view gives an inadequate account of the dynamic aspect of renewing a firm’s resource base. In particular, the dynamic context of strategic initiative implementations is not fully discovered and linked to the resource based theory. Missing links between the resource based theory and the strategic initiative concept show a theoretical gap in how strategic initiative implementations may give rise to competitive bundles of resources or challenges by utilising initiative specific dynamic capabilities. These arguments extend the debate on the resource based theory and integrate the dynamic capability concept and the knowledge based theory of the firm into the research focus.

Dynamic capabilities enable a strategic initiative to transform and deploy a firm’s individual resources to create and renew the firm’s sources of sustainable competitive advantage. In this context, dynamic capabilities are fragile and unstable processes which reconfigure a firm’s or another initiative’s existing resource base through specific functionalities described in the literature as resource creation, resource integration, resource re-combination, and resource release. Therefore, strategic initiative related dynamic capabilities are not themselves sources of competitive advantage because their value resides in their ability to reconfigure a firm’s existing resource base by relying strongly on situation-specific knowledge. In this regard, strategic initiative related dynamic capabilities have not been conceptualised comprehensively according to their role and value in contributing to the success of strategic initiative implementation. In particular, it is unclear how dynamic capabilities are relevant to strategic initiative implementations which successfully achieve their objectives and goals. The perspective that strategic initiatives develop and leverage individual dynamic capabilities to renew existing resources and extend existing knowledge bases incorporates the knowledge based theory of the firm into the research focus.

The increasing importance of knowledge as a strategic enabler for firms has superseded the static nature of the resource based view of the firm, and it has created a growing body of research studies on knowledge in organisations. In this context, the perspective of strategic initiatives as knowledge creating entities focuses this book discussion on how emerging knowledge bases are affected by strategic initiative implementations. Idiosyncratic knowledge bases are the sources from which initiative related dynamic capabilities draw specific knowledge to drive renewal of the firm’s sources of competitive advantage. During this renewal process, strategic initiative implementation activities create new knowledge which, in its turn, is stored and combined with other strategic initiative specific knowledge bases. From this emerges a theoretical gap regarding which kind of challenging effect may arise during this knowledge creation process, and the role and value of the strategic initiative related dynamic capabilities during this renewal process. Clarification of this unresolved area strengthens the assumption that knowledge is the most important resource within a firm: some scholars still deem it crucial to consider the strategic value of knowledge because not all knowledge is equally valuable.

By observing how strategic initiative implementations affect the firm’s most valuable resources of competitive advantage, the book focuses its thoughts on the interactions between the ongoing initiatives and interactions between the strategic initiative and the firm’s organisational context. Secondly, by observing the interactions of the strategic initiatives this book analyses the emerging challenges that arise from different interactions and discusses the drivers of such challenges. In particular, concerning how a firm’s idiosyncratic resources and knowledge base are influenced by strategic initiative interactions, this books aims to show how a strategic initiative affects the resources and emerging knowledge of a firm and other ongoing strategic initiatives. Furthermore, discussing how idiosyncratic resources and a firm’s knowledge base are affected by strategic initiative interactions, the book seeks to discover what kinds of challenges emerge, how potential challenges arise during initiative implementations, and what drivers facilitate challenges against strategic initiative implementation. Finally, the intention of the book is to furnish an integrated perspective on strategic initiative implementation and additional theoretical insights into the relative dysfunctions, thereby enriching the current concepts of strategic initiative related strategy implementations and their potential challenges.

1.2 Strategic Initiatives as a modern Management Discipline

This book establishes a link between the resource based view and the knowledge based view in the context of strategic initiative implementation to renew a firm’s most valuable sources of competitive advantage. Furthermore, the book highlights the role and value of strategic initiative related dynamic capabilities with regard to renewing the firm’s most valuable sources of competitive advantage: its existing resources, and especially knowledge bases from other ongoing strategic initiatives.

“Strategic initiatives are an effective

instrument now how organisations

understand and develop new competitive

advantage. Mastering strategic initiatives

becomes the crucial success factor for

every competing organisation.”

1.3.1 Strategic Initiative related Strategy Making

One of the main contributions of this book is its integrative and novel perspective on strategic initiative related dysfunctions in the context of successful strategy implementations. The book goes beyond the discussion of how strategic initiatives can facilitate the renewal of a firm’s unique sources of competitive advantage. It describes the challenges and consequences that emerge during the process of renewing a firm’s sources of competitive advantage through strategic initiatives. These consequences are termed ‘dysfunctional effects’, which constitute strategic obstacles against a firm’s implementation of its strategies through strategic initiatives. Furthermore, it extends the work of strategic initiative related studies by highlighting the complexities of strategic initiative interactions with the firm’s organisational context and other ongoing initiatives. Finally, the book furnish an integrated perspective on initiative related strategy making.

1.3.2 Resource Based Theory

Strategic initiatives improves our understanding of how the existing resources are combined with new resources in the context of strategic initiative implementation. According to Black’s (1994) concept of “cogency relationships”, a firm’s resources are surrounded by various kinds of relationship which are established and extended through strategic initiative related interactions between the strategic initiative and the organisational context or interactions between ongoing initiatives (Teece, 1982; Barney, 1991). These interactions combine old and existing firm resources to shape new bundles of resources, but it is uncertain whether the expected results can be achieved because every strategic initiative enters uncharted territory to some extent. Furthermore, emerging strategic initiative interactions explain how new bundles of resources arise from strategic initiatives and why it is uncertain that the expected results will be obtained. Every strategic initiative interaction carries the risk of creating challenges which lead to dysfunctional effects and the failure to achieve the desired results. Another aspect of strategic initiatives is that it connects the resource based theory and the strategic initiative concept together. The interconnection with the strategic initiative concepts helps to overcome the highly static nature of the resource based theory and provides answers about why successful firms that are able to allocate sufficient resources to renew their sources of competitive advantage can potentially fail.

1.3.3 Strategic Initiative related Dynamic Capabilities

The findings of this book contribute in different ways to the dynamic capability literature. Firstly, dynamic capabilities may be crucial for successful initiative implementation. According to this book, five different strategic initiatives related dynamic capabilities are the key factors in successful initiative implementations. This finding enriches the current understanding on the key sources of successful initiative implementations. Secondly, the value of the initiative related dynamic capabilities outlined in this book resides mainly in their ability to improve the firm’s existing bundles of resources and knowledge bases. In this regard, the strategic initiative related dynamic capabilities observed relate to a firm’s idiosyncratic knowledge base: they provide for all the recognised core functionalities of integrating, reconfiguring, gaining and releasing resources and the extending current knowledge base to facilitate the renewal process of the firm’s competitive advantage (Teece et al., 1997; Mitchell et al., 1999; Karim and Mitchell, 2000; Eisenhardt and Martin, 2000). Thirdly, the initiative related dynamic capabilities perform a twofold role in the successful implementation of a firm’s strategic objectives and goals through strategic initiatives. On the one hand, the strategic initiative related dynamic capabilities perform a key role in supporting the implementation of new strategies and business directions. However, on the other hand, dynamic capabilities create additional challenges for the firm and ongoing initiatives which produce destructive outcomes for the business, termed by this book “dysfunctional effects”. These dysfunctional effects are generated mainly by the five initiative related dynamic capabilities, and they result from the production of supportive and dysfunctional knowledge stored within initiative specific knowledge base.

1.3.4 Knowledge Based Theory

The thoughts of this book contributes in different ways to the knowledge based theory. In particular, it furnishes new insights into how strategic initiatives affect the new knowledge emerging from other ongoing initiatives. Highlighted in how strategic initiative interactions establish connections among the distinct knowledge bases of different ongoing strategic initiatives to create new and strategic initiative driven knowledge. Furthermore, these interactions generate limitations and incompatibilities among the emerging knowledge base combinations in the context of strategic initiatives. These limitations relate to incompatibilities among the idiosyncratic knowledge bases of strategic initiatives (e.g. initiative individual sense making routines etc.) which serve specialised strategic initiative purposes in implementing a specific strategic objective of the firm. The consequence of these specialisations is that strategic initiative related knowledge bases are limited in their capacity to be combined with other knowledge bases to create new knowledge. In this regard, the book comes to the conclusion that not all the knowledge created or triggered by strategic initiative interactions is equally valuable for the firm, and that it may even become business destructive (dysfunctional).

Dysfunctional knowledge may emerge from strategic initiative implementation; it may be stored in different initiative specific knowledge bases; and it may be generated by different strategic initiative interactions between the strategic initiative and the firm’s organisational context or by interactions among all of the ongoing initiatives.

Another thought in this book concerns the connection discovered between strategic initiatives related to dynamic capabilities and idiosyncratic knowledge bases. Dysfunctional knowledge within the initiative related knowledge base can turn the dynamic capabilities involved into destructive processes which iteratively generate challenges which give rise to dysfunctional effects that hamper the firm’s value creation process and its ability to renew its sources of competitive advantage. Finally, the book discusses the challenges emerging from the initiative implementation and draws up a classification of dysfunctional effects which increases the understanding of strategic initiative directed strategy making and strengthens the concept of strategic initiatives as entities able to create both business supportive and business destructive (dysfunctional) knowledge.

1.4 Practical relevance and contribution

Given the growing importance of successful strategic initiative implementation in management practice, this book provides guidelines for decision makers and project teams on how the strategic initiative implementations can be managed professionally. Furthermore, it provide insights and specific suggestions for practitioners. More specifically, it intends to highlight the following aspects.

Firstly, it shows that strategy making in the context of strategic initiatives requires reinforcing the management of strategic initiative related interactions with the firm’s organisational context and other ongoing initiatives. Reducing the complexities of strategic initiative related interactions – especially with other ongoing initiatives – can help managers to avoid producing unexpected and negative outcomes and limiting the firm’s ability to renew its sources of competitive advantage based on the interactions among ongoing initiatives. A strategic initiative may have a strategic rationale for the firm in isolation. However, the integrated perspective of different ongoing strategic initiatives may comprise inefficient interactions which give rise to business destructive outcomes in ongoing initiatives. Hence, managers need to monitor and judge ongoing and emerging interactions among strategic initiatives according to their potential range and impact.

Secondly, during their implementation, strategic initiatives develop their own knowledge bases which connect with other strategic initiative specific knowledge bases. Managers should manage these connections and knowledge base combinations by focusing their attention on potential synergies and limitations in the firm’s emerging knowledge base. Strategic initiative related knowledge bases comprise strategic and valuable knowledge which is idiosyncratic and resists being combined with the firm’s other specialised knowledge, especially during strategic initiative implementation. In this context, initiative specific knowledge bases may not always be amenable to connection with other specialised knowledge bases. Synergies can turn into inefficient overlaps which may restrict the effectiveness of initiative-specific knowledge bases because every initiative-specific knowledge base is specialised in addressing a strategic rationale of the firm. Thirdly, the managers should understand and prioritise the strategic importance of emerging knowledge across their organisation. According to the findings of this dissertation, not all the knowledge emerging from strategic initiatives is of equal strategic importance and value for the same period of time. Moreover, the knowledge emerging from the strategic initiatives may be supportive, less supportive or even dysfunctional. In this regard, this book outlines dysfunctional knowledge which can help managers to increase their understanding of irrelevant knowledge and create profiles on their dysfunctional knowledge in order to eliminate it through the prioritisation of strategic initiative implementation activities. Furthermore, the continuous prioritisation of initiative related resources may help to protect scarce firm resources and minimize the creation of ineffective knowledge. Fourthly, the book discuss the fact that challenges may arise during strategic initiative implementation. These challenges must be detected at an early stage in order to prevent problematic situations from arising during initiative implementations. Two challenging situations of growing resistance, boundaries and barriers against or between ongoing strategic initiatives, and conflicting perspectives and dependencies among ongoing strategic initiatives, provide indicators for managers on initiative implementation challenges which can iteratively generate new ones. Managers must be aware of these problematic situations because they represent critical and unexpected environments for the strategic initiative implementation activities. Furthermore, if managers understand these challenges, they are able to identify problematic initiatives and decide on activities to prevent challenging outcomes for the firm and secure the strategy implementation process.

Finally, the management team needs constantly to enhance the value creation of a strategic initiative by preventing the escalation of potential challenges from producing various dysfunctional effects for the entire company. Through challenges, strategic initiatives may give rise to dysfunctional effects (Drifting Targets, Emerging Resource Lacks, Neglect of Available Resources, Operational Complexities and Problem Multiplier) which can produce business destructive outcomes during the strategy implementation process. Furthermore, this outcome restricts the value creation of individual strategic initiatives and is a new strategic threat for the company as it implements its strategies through strategic initiatives. Therefore, constantly enhancing and energizing the value creation of ongoing strategic initiatives requires managers to perform the roles of initiative-driven explorers and innovators.

2 Strategic Management Theories of Strategic Initiatives

This chapter reviews the literature relevant to this research work, and identifies and discusses the theoretical gaps and limitations. Strategic initiatives are becoming a vital source for renewing a firm’s sources of competitive advantage. In this regard, to increase our understanding about the strategic initiative implementation process and their potential challenges, different main bodies of literature were selected to be reviewed: in particular, the strategic initiative concepts, the resource based theory, the dynamic capabilities literature and the knowledge based theory of the firm. Figure 1 outlines the selected main bodies of literature by outlining the interrelations among them according to the thoughts outlined in this book.

Figure 1: Selected main bodies of literature.

The literature review starts with a discussion of the strategic initiative concept. The concept of strategic initiatives has been recognised as a common way to implement a firm’s strategy by renewing its most valuable sources of competitive advantage, which leads to the sustainability of the firm’s economic rents and above-average returns ( Peteraf, 1993; McGrath et al., 1995; Lovas and Ghoshal, 2000). In dynamic and competitive environments, like the IT industry, firms have shifted more and more from a yearly planning process to a continuous strategy development process based on strategic initiative implementations (Daft and Weick, 1984; Teece, 1984; Black and Boal, 1994; Hamel, 2000; Wielemaker et al., 2001; Wielemaker, 2003). In this regard, strategic initiative implementations are faced with the challenge of remaining in the market by mobilising and renewing the firm’s sources of competitive advantage; idiosyncratic resources and knowledge base (Bower, 1970; Burgelman, 1983a; Burgelman, 1991; Dunbar and Ahlstrom, 1995; McGrath et al., 1995; McGrath, 2001; Marx, 2004). Therefore, affecting the firm’s existing resource base to establish new and competitive bundles of resources is critical for a successful strategic initiative implementation. This leads to the debate and review of the resource based theory (Daft and Weick, 1984; Wernerfelt, 1984; Block and MacMilan, 1985; Barney, 1991; Peteraf, 1993).

Inspired by Edith Penrose’s (1959) theory of the growth of the firm, scholars have developed the resource based theory of the firm to determine how a firm’s competitive advantage can be understood (Chamberlin, 1933; Wernerfelt, 1984; Barney, 1986; Barney, 1991; Peteraf, 1993). The theory defines a firm’s resources as the key source of competitive advantage (Bower and Christensen, 1996; Barney, 1991). However, the resource based view has the shortcoming of providing an overly static account of a firm’s competitive advantage. Scholars have argued that the traditional resource based view misinterprets the notion of renewing competitive advantage (Collis, 1991; Teece and Pisano, 1994; Eisenhardt and Martin, 2000). The dynamic context of strategic initiative implementations, in particular, is not fully linked into the resource based theory on how strategic initiative implementation activities can lead to competitive bundles of resources. Furthermore, the assumption emerges that strategic initiatives require idiosyncratic dynamic capabilities successfully to implement their objectives and goals by leveraging and enhancing the existing knowledge base of a firm to establish competitive bundles of idiosyncratic firm resources. These arguments led to the decision to integrate the theories of dynamic capabilities and the knowledge based theory of the firm into the scope of the literature review.

Dynamic capabilities provide the opportunity to overcome and enhance the static nature of the RBV by providing the theoretical background to define the sources which enable a strategic initiative to transform and deploy a firm’s individual resources to create and renew its sources of sustainable competitive advantage. ( Amit and Schoemaker, 1993; Teece and Pisano, 1994; Teece et al., 1997; Eisenhardt and Martin, 2000; Winter, 2003). Therefore, the strategic initiative related strategy implementation approach requires initiative specific dynamic capabilities as a prerequisite for successful strategy implementations (Teece and Pisano, 1994). In this regard, the theory of dynamic capabilities also provides answers to the challenges that firms face during the process of renewing their sources of competitive advantage. Firms are highly path–dependent, and the current core capabilities relevant to a firm’s current success may become traps or rigidities for its future success (Levitt and March, 1988; Leonard-Barton, 1992). Therefore, dynamic capabilities provide promising insights into renewing and sustaining the sources of competitive advantage for companies through strategic initiatives, and into why previously successful firms may fail to maintain their competitive advantages. Nevertheless, the theory lacks an explanation of how firms fail within their strategy implementations. In particular which kind of dynamic capabilities are relevant for strategic initiatives successfully to implement their objectives and goals? Moreover, strategic initiative related research has focused on the process of initiative development, rather than integrating the concept of dynamic capabilities in the context of critical resource effects that emerge during strategic initiative implementations (Bryson and Bromily, 1993; McGrath et al., 1995; McGrath, 1996; McGrath, 2001; Wielemaker, 2003). The lack of theoretical background and insufficient explanations of how firms fail by using strategic initiatives are therefore apparent, and, in particular, the conceptualisation of the challenges that arise when a firm tries to renew its resources and knowledge base. In this regard, theoretical gaps emerge regarding what kind of consequences – especially resource-effects and influencing factors – occur and surround the renewal of an existing firm resource and knowledge base during the transformation into new sources of competitive advantage. Hence, the perspective that strategic initiatives develop and leverage individual dynamic capabilities to renew existing resources and extend the existing knowledge bases by combining, utilising and extending the existing knowledge of the firm and other ongoing initiatives, leads to the fourth main body of literature: the knowledge based theory of the firm.

The knowledge based theory of the firm enriches the theoretical discussion and conceptualisation of renewing a firm’s sources of competitive advantage through strategic initiatives in two main ways. Firstly, strategic initiative related dynamic capabilities facilitate the combination of new and old resources by accelerating the creation of new knowledge in the context of shaping competitive bundles of firm resources. Secondly, new and emerging knowledge from initiative implementations extends the relevant idiosyncratic knowledge base of the firm from where initiative specific dynamic capabilities iteratively utilise their knowledge. Those aspects concern the important debate on the strategic importance of knowledge as an enabler for firms, which has created a growing body of literature on knowledge in organisations (Grant and Baden-Fuller, 1995; Nonaka and Takeuchi, 1995; Grant, 1996; Spender, 1996; Eisenhardt and Santos, 2001; Patriotta, 2003). In this regard, the increasing understanding of how strategic initiatives affect a firm’s individual resources and knowledge base can be enhanced through new aspects of supportive and destructive knowledge creation. New and emerging knowledge may not always be helpful in reshaping a firm’s sources of competitive advantages through strategic initiatives. Therefore, the knowledge based view of the firm is necessary to explain the impacts and consequences of the emerging challenges and the effects of the resource transformation process in the context of initiative related dynamic capabilities utilising the knowledge base of the firm. Moreover, an increased understanding of the side-effects that arise during the initiative implementation process in the context of knowledge creation heightens the understanding and value of the emerging knowledge bases of the firm (including knowledge bases from other ongoing initiatives). Finally, based on the main bodies of literature reviewed and the identified theoretical gaps, the last section of this literature review describes the research questions derived from the literature review.

2.1 Strategic Initiatives

The concept of ‘strategic initiative’ concerns a progressive form of strategy making (Bower, 1970; Burgelman, 1983b; Burgelman, 1988; Burgelman, 1991; Lovas and Ghoshal, 2000; Floyd and Wooldridge, 2000; Wielemaker, 2003). Strategic initiatives can play a key role for companies in the strategic renewal process. Strategic initiatives enable firms to deploy and employ their resources, and they facilitate individual dynamic capabilities to renew a firm’s sources of competitive advantage (McGrath et al., 1995). They reflect the means by which a firm’s management team expects to achieve its strategic goals and visions as reflected in value creation and sustainable growth (Dunbar and Ahlstrom, 1995; Lovas and Ghoshal, 2000). In this regard, successful strategic initiatives create and accumulate the new knowledge necessary to fulfil targets (Winter, 2000; McGrath, 2001; Wielemaker, 2003). The concept of strategic initiative has been given various and complementary definitions within the academic literature. A general and common definition in relation to the wide range of complementary studies in the literature is provided by McGrath et. al (1995, p. 13):

“Strategic initiatives are a principle mechanism through which organisations develop new competitive advantage”