The Institutional Structuring of Organizational Capabilities: The Role of Authority Sharing and Organizational Careers

Abstract

The development of competitive competences in firms involves the generation of core employee commitment to collective problem solving and the development of firm-specific capabilities. Such commitment is often gained through authority sharing and providing organizational careers that reward contributions to organizational problem-solving routines and goals. However, firms vary considerably in how authoritative coordination of economic activities (both within and between companies) is achieved, and in the extent and scope of organizational careers. These differences affect their development of coordinating, learning and reconfigurational organizational capabilities. Owners and managers are encouraged to adopt varying degrees of authority sharing with groups of employees and business partners, and to invest in organizational careers to varying extents, by different institutional frameworks. In particular, variations in states' coordinating roles, the strength of business associations, the market for corporate control and the organization of training systems affect firms' delegation of discretion and career types. As a result, firms in different institutional frameworks develop distinctive kinds of capabilities that influence how they compete in different sectors and technologies.

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