1. Constance E. Helfat Strategic Management Journal, 18(5): 339-360
Know-how and Asset Complementarity and Dynamic Capability Accumulation: The Case of R&D
Constance E. Helfat
Strategic Management Journal, 18(5):
Prepared by Grace C. Su

2. Research Question
When firms seek to alter their stock of knowledge in response to change in the external environment, do such efforts depend on the firms’ existing stocks of complementary know-how and other assets, and if so, how?
Dynamic capabilities: Teece and Pisano (1994)
Complementary asset stock: Dierickx and Cool ( 1989 )
Complementary knowledge produces economy of scope on R&D
Settings: R&D by U.S. oil companies from
When oil companies sought to augment their stock of capabilities via coal conversion R&D in response to rising oil prices, did complementary know-how and assets influence the degree of the augment?

3. Conventional existed tech
Petroleum Industry
Major oil price increases: , , expected supply shortage
Oil companies increased expenditures on alternative fuels technologies in pursuit of cost competitiveness
Conventional existed tech
Oil and gas recovery
Refining
Other coal
Nuclear
Less developed tech
Coal conversion
Oil shale
Tar sands
Geothermal
Sola

4. Dynamic Capabilities Accumulated via Coal Conversion R&D
Complementary knowledge
Prior refining tech (+)
Econ of scope on established knowledge + high TC of know-how
Accumulated refinery assets (+)
Broader technical competences
Other synthetic tech (+)
But expected to be smaller than prior refining tech due to the smaller econ of scope of less developed knowledge
Complementary assets
Accumulated coal assets (+)
Others: Financial resources (+), competitor’s R&D spillovers (-)
Control: Oil price, firm dummy

5. Evidences Descriptive: Hypothesis tests: Total R&D expenditure 
Refining R&D 
Coal conversion R&D 
Hypothesis tests:
Prior refining tech (+)
Accumulated refinery assets (+)
Other synthetic tech (+)
Accumulated coal assets (+)
Financial resources (+)
Competitor’s R&D spillovers (-)
Oil price
Firm dummy

6. Discussion & Conclusion
When firms sought to augment knowledge stocks, the accumulated knowledge and resources provide complementarity and econ of scope
Established > less developed
When real oil prices fell in the 1980s, coal conversion R&D spending slumped
The econ of scope from complementarity < price drop
Comment: Very good empirical paper
Captures environment “change”
Tests “accumulation”