Nurturing entrepreneurial venturing capabilities : A study of family firms

The purpose of this dissertation is to improve our understanding of how family firms adapt to their dynamic environments through creating new businesses and to explore the role of dynamic capabilities driving firm’s strategic entrepreneurial activities. I address the above aims by conducting qualitative case studies of Hum Network and AVT channels, which are both family firms at the time of their entry into the deregulated TV industry of Pakistan in 2005. A deregulated environment is often characterized as highly dynamic owing to the rapid and frequent changes that occur in customer groups and product offerings and the mix of competitors. Reduced barriers to entry through government legislation often produce a massive shift in the structure of competition, as it attracts new entrants to the industry, intensifying the hostility of the business environment. The success and long-term survival in this increasingly dynamic environment often rests on building dynamic capabilities that transform firm resources and competences and revitalize existing firm businesses. However, we still lack detailed insights into how family firms build dynamic capabilities to facilitate the implementation of entrepreneurial initiatives, which focus on the creation of new corporate businesses. In the literature of family entrepreneurship, the dominant view holds that family objectives concerned with ensuring longevity made family firms low risktakers and conservative in their strategies and they are thus less likely to engage in venturing initiatives. Some scholars point to potential insufficiencies when family firms use their resources: they argue that family owner-managers often draw from a family pool rather than a wider market for talent which can stifle the development of capabilities needed to engage in entrepreneurial initiatives. Contrary to this view, one of the key insights that emerge from this study is that to cope with changes in the competitive environment, family firms adopt new business venturing as a strategic approach to establish and protect their position in a competitive industry. By a strategic approach, I mean the intent of family founding executives to seek strategic adaptation, particularly through continuously identifying unmet customer needs in the industry and exploiting these needs through producing new media products and services well in advance of their competitors. To enact or implement their strategic imperative, both firms develope a set of capabilities, which I call entrepreneurial venturing capabilities (EVC). First, opportunity refinement capability refers to the ability to envision new possibilities in the market combined with the ability to evaluate and modify the opportunity according to new insights to shape the venture opportunity in ways that more effectively address the unmet customer or market needs. It reflects management’s abilities in imaging new venture opportunities based on the industry experience and to further refine these opportunities by deliberately composing teams at the top management level with additional industry experience to collectively form judgements on the attractiveness of new opportunities. Second, resource mobilization capability consists of an ability to develop and integrate the internal and external resources needed to develop new media offering for the new ventures. It reflects management’s ability in building enduring and trust-based relationships with actors inside the organization to accumulate and integrate resources as well as ability to form external collaborative relationships necessary to ensure the continuous development of new innovative products. Third, customer orientation capability is the ability to develop and maintain close relationships with customers to ensure long-term success of the new venture in the competitive environment. Customer orientation reflects management’s ability in accumulating relational resources such as reputation, image, trust and credibility through promoting behaviors, this puts an emphasize on understanding and aligning with the customer’s cultural values proactively to collect and use customer information to adopt to their current and future needs as well as collaborating with the customers regularly. Overall, the capabilities that I identify enable family firms to sense and calibrate the opportunities in the fast-changing deregulated environment, to rapidly mobilize resources for new product development to seize the opportunities, and to quickly transform their product and services by disseminating customer knowledge throughout the organization to meet the shifting demands of customers and gain market dominance