The Internet as a Complementary Resource for SMEs: The Interaction Effect of Strategic Assets and the Internet

The Internet as a Complementary Resource for SMEs: The Interaction Effect of Strategic Assets and the Internet

Frank Schlemmer (Queen’s University of Belfast, Northern Ireland) and Brian Webb (Queen’s University of Belfast, Northern Ireland)
DOI: 10.4018/978-1-60960-132-4.ch001
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Abstract

It has been suggested that the Internet can be used to leverage a firm’s strategic assets. However, empirical research on complementarity is still rare and frequently inconclusive, especially in the context of small and medium-sized enterprises. We propose a theoretical framework with the independent variables business resources, dynamic capabilities and IT assets. Survey data of 146 small firms suggest that the Internet is complementary with business resources and dynamic capabilities but not with IT assets. Therefore, the framework may enable small firm managers to create competitive advantage by identifying strategic assets that are complementary with the Internet. Furthermore, our research our research highlights the threat of an over-investment in IT assets.
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Complementarity In Resource-Based Research

According to the resource-based view of the firm (RBV), firms perform differently because they differ in terms of the strategic assets they control (Barney 1991; Penrose 1959; Wernerfelt 1984). The founding idea of viewing a firm as a bundle of strategic assets was pioneered in 1959 by Penrose in her theory of the growth of the firm. This paper focuses especially on the complementarity of strategic assets. Under the resource-based view, a complementary interaction typically enhances the value for both (or all) strategic assets, although the causality may be ambiguous (Barney, 1991). Yet, researchers have only started to analyze complementarity of strategic assets. Empirical work in that area can be divided in the following two research streams.

One stream of research focuses on complementarity at strategic alliances or at mergers and acquisitions. For example, Rothaermel (2001) found that firms focusing on complementarity outperform those firms that limit their focus on the exploration of new technologies. Stuart (2000) suggested that the reputation of a larger firm is a complementary resource for a smaller firm. In particular, an alliance with a larger firm can help a smaller firm build confidence and attract customers, which then drives financial performance for both partners. Chung, Singh, and Lee (2000) found out that banks tend to ally with other banks that can complement their weaknesses. Krishnan, Miller, and Judge (1997) suggest that complementary top management teams (defined as differences in functional backgrounds between acquiring and acquired firm managers) drive post-acquisition firm performance. Similarly, Capron and Pistre (2002) suggested that acquirers only earn abnormal returns when their strategic assets are complementary with the target and not if they only receive strategic assets from the target.

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