Research note: The creation of capabilities in new ventures - A longitudinal study

The role of the organization's resources and capabilities in its competitiv e advantage, and, by extension, its performance, has become a topic of rene wed interest. Although the importance of capabilities is the basis of much of this research, there is little work which investigates how capabilities are actually created. This paper empirically assesses the role of managemen t in the creation of capability within organizations over time. Of five hyp otheses, two were fully supported, and partial support was found for a thir d. We find that managerial advocacy in the form of specialized directors of sub-units, and the number of executives on the top management team, influe nce capability creation as does the existence of formalized rules related t o resource allocation. CEO background was found to have no effect. The resu lts present the initial outlines of how competencies might be created and s uggest avenues for further inquiry.