1. 1 Know-How and Asset Complementarity and Dynamic Capability Accumulation: The Case of R&D Constance E. Helfat (1997): SMJ, 18(5), 339-360 Prepared by: Enrique, Lihong, John, Jongkuk

2. 2 Some Concepts Asset Stock: the cumulative result of adhering to a set of consistent policies of choosing appropriate time paths of asset flows over a period of time (Dierickx & Cool, 1989) Dynamic Capability: a subset of the competences/capabilities which allows the firm to create new products and processes and respond to changing market circumstances (Teece and Pisano, 1994: 541)

3. 3 Conceptual Integration Look at the complementarity between asset stock and dynamic capabilities accumulation Use R&D as an example of new knowledge accumulation Embed this complementary relationship into a changing market

4. 4 Research Setting 26 largest U.S. energy firms (primarily petroleum companies) R&D expenditures from 1976 to 1981 Historical context: increasing oil price and decreasing supply called for alternative cost- effective fuels technologies Coal conversion technology as an example of R&D

5. 5 Complementarity and Coal Conversion Complementarity and Coal Conversion Technological complementarity leads to larger amount of coal conversion R&D: H1a: Firms that had larger stocks of knowledge from past refining R&D were likely to have undertaken larger amount of coal gasification/liquefaction R&D. H1b: Firms that had larger accumulated refinery assets were likely to have undertaken larger amount of coal gasification/liquefaction R&D. H1c: Firms that had larger stocks of knowledge from past R&D on other synthetic fuels were likely to have undertaken larger amount of coal gasification/liquefaction R&D.

6. 6 Complementarity and Coal Conversion Complementarity and Coal Conversion Asset complementarity facilitates commercialization of R&D outcome H2: Firms that had larger accumulated coal assets were likely to have undertaken larger amount of coal gasification/liquefaction R&D

7. 7 Empirical Model DV: IVs:

8. 8 Tobit Regression and Results R&D = f (complementary knowledge, complementary physical assets, other knowledge and resources, control variables) H1a is supported statistically, and substantially, refining R&D capital stock intensity is positively related to coal conversion R&D H2 is supported statistically, and substantially, coal asset is positively related to coal conversion R&D H1b and H1c are not supported statistically

9. 9 Discussion and Conclusions Significance of know-how with complementarity, and insignificance of assets with few complementarities lend support to the general proposition that “know-how and asset complementarities facilitate dynamic capabilities accumulation.” Firms with complementary technology and asset stock are more able to adapt to the dynamic environment by accumulating R&D capabilities.