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Introduction
The continuing transformation of the Vietnamese economy from a planned economy to a market-oriented economy together with the entry to the World Trade Organization has offered several opportunities for Vietnamese firms such as new markets for exports and imports. However, together with opportunities, Vietnamese firms have been confronted with more severe competition because they have to compete against multinational enterprises in their home market (Nguyen and Nguyen, 2011). For that reason, Vietnamese firms should equip themselves with appropriate business capabilities in order to achieve competitive advantage. Consequently, identifying not only what types of capabilities that are able to create competitive advantage but also their required levels of necessity is a crucial task for firms in general and Vietnamese firms in particular.
Capabilities of a firm are a complex bundle of knowledge and skills that enables the firm to transform its available resources to achieve superior performance (Day, 1994; Feng et al., 2017). During the past several years, researchers have tried to identify firm capabilities and their effect on performance (e.g. Camisón and Villar-Lopez, 2014; Feng et al., 2017; Nguyen and Nguyen, 2011; Orlandi, 2016; Sirmon et al., 2007; Song et al., 2005; Wang and Lo, 2003). Those studies, however, focus on the net effect of firm capabilities rather than their causal complexity although the resource-based view (RBT) theory of the firm suggests that “capabilities are necessary, but not sufficient, conditions for competitive advantage” (Eisenhardt and Martin, 2000, p. 1106). For example, Camisón and Villar-Lopez (2014) examine the role of innovation (net effect) in firm performance using partial least squares (variance-based structural equation modeling). Feng et al. (2017) examine the impact of marketing, R&D, and operations capabilities on firm performance employing multiple regression analysis (MRA). Nguyen and Nguyen (2011) test the net effect of marketing and innovativeness capabilities on firm performance using structural equation modeling. To the best of the author’s knowledge, however, the question of what level of each capability serving as a necessary condition for a wanted level of performance has been largely ignored in the literature (Dul, 2016a).
Conventional statistical tools, such as correlations, MRA or structural equation modeling, assist researchers in investigating the net effect of a number of independent variables on one or more dependent variables....