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

  • Takehiko IsobeEmail author
  • Shige Makino
  • David B. Montgomery


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.


Technological capabilities Competitive advantage Resource-based view Dynamic capability 


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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  • Takehiko Isobe
    • 1
    Email author
  • Shige Makino
    • 2
  • David B. Montgomery
    • 3
    • 4
  1. 1.Graduate School of Business AdministrationKeio UniversityYokohamaJapan
  2. 2.Department of ManagementThe Chinese University of Hong KongShatinHong Kong
  3. 3.Graduate School of BusinessStanford UniversityStanfordUSA
  4. 4.Lee Kong Chan School of BusinessSingapore Management UniversitySingaporeSingapore

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