Integrated dynamic perspective on firm competencies and organizationalperformance: a study of China's largeconstruction SOEs

The question why some firms outperform their counterparts in an industry has important implications for both researchers and managers. It is particularly true for many China’s large construction SOEs, which are tormented with lacklustre organizational performance and shortage of long-term competitiveness particularly under the situation of the increasing competition from domestic and international competitors. This research aims to investigate the dynamic relationships among external environment, firm resources and competencies, and organizational performance in the context of China’s large construction SOEs, so as to answer two basic questions: 1) how are the external environment and firms’ resources and competencies related to organizational performance? 2) how does the portfolio of competencies vary and evolve as the external environment changes? In order to address the above issues, two mainstream models under strategic management theories, known as the Industrial/Organizational (I/O) model and the Resource-Based View (RBV), are evaluated. The I/O model argues that superior performance is achieved when firms implement the strategy imposed by the characteristics of the external environment, while the RBV proposes that the critical factors for success lie within the firm itself in terms of its resources and capabilities. However, neither of them can solely provide satisfactory explanation for the source of superior organizational performance. More and more researchers agree to consider these explanations as complementary, and co-evolutionary and dynamic perspective should also be introduced to understand this complex issue. Based on the exhaustive literature review, an integrated dynamic competence-based model (IDCM) is established by combining the three constructs, i.e., external environment (EE), firm resources and competencies (FR&FC), and organizational performance (OP) into the same framework. The IDCM model produces two main sets of hypotheses, which are tested by ways of two interactive empirical studies combining different research methods, i.e., quantitative vs. qualitative, cross-sectional vs. longitudinal, questionnaire survey vs. case studies approaches. In the cross-sectional study, based on 150 viable questionnaires, exploratory and confirmatory factor analysis is carried out to test measurement models of the three constructs, and then structural equation modelling is used to estimate the path coefficients among the variables. The results indicate that both external environment and internal resources and competencies are important determinants of the organizational performance. Comparing to external environment, however, internal resources and competencies play more important roles in determining a construction SOE’s organizational performance. The longitudinal study is carried out through conducting three in-depth case studies. The results demonstrate the co-evolutionary relationships among EE, FR&FC, and OP: EE determines what performance required of the organization, then the enterprise, according to the performance required, decides what sorts of FR&FC are needed. Ultimately, such a portfolio of FR&FC leads to organization’s actual performance, which is compared to the expected performance to determine whether the current portfolio is appropriate, followed by necessary readjustment of the portfolio. The effective operation of this whole system leads to the organization’s ultimate survival and success. More importantly, the whole system is dynamic and evolves following a rising spiral. The implications of the findings for both research and practice are discussed, and the limitations of the study are presented. Directions for future research are also suggested.