The Route To Long-Term Success Of Technology Companies

Long-term success requires the challenging task of persistently creating and capturing value. Institutional theory addresses persistence in organisations and inter-organisational fields, but uncovers a paradox: while institutionalisation increases survival chances, it generates inertia, rigidity, and resistance to change, and therefore reduces long-term competitive advantage. The historical analysis of two long-lived electrical manufacturing companies (General Electric and Westinghouse) suggests that both developed a distinctive technological competence, and, for many decades, persistently created value. However, General Electric's distinctive competences also included dynamic and value-capture capabilities. These findings suggest that long-term success may occur in the presence of institutionalisation, if institutionalisation encompasses dynamic capabilities. In addition, this paper suggests that a resource-preservation dimension be included in the dynamic capabilities construct and in institutional theory, and that depending on how institutionalisation is conducted, the organisation may create habits that prevent or foster the side effects of institutionalisation processes.