Research Note: The Creation of Capabilities in New Ventures—A Longitudinal Study

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Abstract
The role of the organization's resources and capabilities in its competitive advantage, and, by extension, its performance, has become a topic of renewed 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 management in the creation of capability within organizations over time. Of five hypotheses, two were fully supported, and partial support was found for a third. We find that managerial advocacy in the form of specialized directors of sub-units, and the number of executives on the top management team, influence capability creation as does the existence of formalized rules related to resource allocation. CEO background was found to have no effect. The results present the initial outlines of how competencies might be created and suggest avenues for further inquiry.