Strategic Management of a Family-Owned Airline–
Analyzing the Absorptive Capacity ofCimber Sterling A/S
Britta Boyd
University of Southern Denmark
Department for Border Region Studies
Alsion 2, 6400 Sønderborg, DK
Tel: +45 (0)6550 1756
Svend Hollensen
University of Southern Denmark
Department for Border Region Studies
Alsion 2, 6400 Sønderborg, DK
Tel: +45 (0)6550 1218
Abstract: The concept of absorptivecapacity (ACAP) observing a firm’s ability to value, assimilate and utilize new external knowledgeis applied in this paper.This comparative study focuses on strategic management processes and competitivenessof different airlines. The aim is to discover differences in resources and capabilities leading to competitive advantages within the aviation industry. From acompetence and ACAPperspective family and non-family airlines are analysed by interviewing the owners, managers and selected employees of the businesses.The analysis shows how Cimber Sterling Group A/Sas a Danish family business copes with increasing competition and critical situations, such asthe volcanic ash cloud and financial crisis.
Key words: Absorptive capacity, competitive advantages, strategic management.
Introduction:
The international behaviour of family businesses differs from non-family businesses because of different competences and values (Casillas, Acedo & Moreno, 2007). Despite this it has not yet been identified how family businesses use these competences in their strategic management. In the selected aviation industry there exist only a small number of family businesses. The strategic management of Cimber Sterling Group A/S a Danish family-owned airline and its implications on competitiveness are in the focus of this comparative study.
Literature review:
Prior research on organizational learning and strategic management focussing on the role of ACAP defined the concept as “ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends” (Cohen & Levinthal, 1990). Research onfamily business succession and the effectiveness of knowledge transfer revealed the importance of the ACAP perspective(Szulanski, 2000; Zahra & George, 2002; Sharma, 2004). Looking atknowledge as a family business strategic resource a lack of ACAP can hamper the effective knowledge transfer inside a company (Cabrera-Suárez, De Saá-Pérez & García-Almeida, 2001). The findings of Szulanski (2000) support that causal ambiguity and the lack of ACAP of the recipient are the mostimportant predictors of stickiness within the process of knowledge transfer.Despite the acknowledged importance of ACAP for family business and management research there are no studies that integrate the concept. Therefore this case study will compare the competitive advantage realization of family and non-family businesses from an ACAP perspective.
Method and research model:
In a reconceptualization Zahra & George (2002) define ACAP as a “set of knowledge based capabilities embedded within the firm’s routines and strategic processes” that enhances the ability to gain and sustain competitive advantages. They differentiate two subsets of potential and realized ACAP. Dynamic capabilities build the basis for long-term competitive advantages, realized by resource configurations (Eisenhardt & Martin, 2000). In that sense, dynamic capabilities can be seen as potential ACAP and resource configuration as a realized ACAP, shown in following Figure:
Research Model (Adapted from Zahra & George, 2002 and Eisenhardt & Martin, 2000):
In accordance with the outlined prior research this case study will explore the historical knowledge source and experience being absorbed from three different stakeholder perspectives when responding to activation triggers. The ash cloud and recent oil price increase are regarded as situational triggers. Structural triggers reflect the financial crisis and the overall conditions in a saturated market. How these triggers are absorbed as potential ACAP and transformed to realized ACAP will be investigated in the study.
Conclusions:
Identifying the potential and realized capacity in the strategic management of low- cost airlines wasrevealed as a source of strategic competitiveness. The ACAP improved especially through the stakeholders’ experience, strategic flexibility and customer orientation, leading to competitive advantage realization in the domestic market.
Key references:
Cohen, W. M. & Levinthal, D. A. (1990) Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35: 128-152.
Eisenhardt, K. M. & Martin, J. A. (2000) Dynamic capabilities: What are they?, Strategic Management Journal, 21: 1105-1121.
Lane, P. J. & Lubakin, M. (1998) Relative Absorptive Capacity and Interorganizational Learning. Strategic Management Journal, 19: 461–477.
Zahra, S. A. & George, G. (2002) Absorptive capacity: A review reconceptualization, and extension. Academy of Management Review, 27(2): 185-203.
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