Technological capabilities and firm performance: The case of small manufacturing firms in Japan

Takehiko Isobe, Shige Makino, David B. Montgomery

Research output: Contribution to journalArticlepeer-review

49 Citations (Scopus)


The purpose of this study is to investigate the relationship between technological capabilities and firm performance. We divide technological capabilities into two types-refinement capability, which involves the improvement of the existing asset portfolio, and reconfiguration capability, which involves the restructuring of the asset portfolio through the integration of new assets. The results of an analysis of a sample of 302 small and medium-sized manufacturing firms in Japan suggest that refinement capability relates more positively to operational efficiency than does reconfiguration capability, and that reconfiguration capability relates more positively to strategic performance than does refinement capability. The results also suggest that firms with superior refinement capability tend to possess superior reconfiguration capability. Our findings show that both external and internal factors, such as technological volatility, inter-firm collaboration, and firm age and size, are significantly associated with the level of refinement and reconfiguration capabilities possessed by a firm.

Original languageEnglish
Pages (from-to)413-428
Number of pages16
JournalAsia Pacific Journal of Management
Issue number3
Publication statusPublished - 2008 Sept 1


  • Competitive advantage
  • Dynamic capability
  • Resource-based view
  • Technological capabilities

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management


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