Operationalizing and Measuring Capabilities : An Application to High-Technology Markets

OPERATIONALIZING AND MEASURING CAPABILITIES: AN APPLICATION TO HIGH-TECHNOLOGY MARKETS ABSTRACT This paper attempts to operationalize and measure firm-specific capabilities using an extant conceptualization in the resource-based view (RBV) literature. Capabilities are conceived as the efficiency with a firm employs a given set of resources (inputs) at its disposal to achieve certain objectives (outputs). This view is operationalized using an input-output approach. We then proceed to suggest an estimation methodology, namely the Stochastic Frontier Estimation (SFE) technique that allows us to infer firm capabilities from archival data. This operationalization and estimation technique is illustrated with an empirical application in the semiconductor industry. Our findings underscore the heterogeneity in capabilities across firms in this industry, as well as the significant complementarity effects that exist between a firm's R&D and marketing resources