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Capabilities in Motion: New Organizational Forms and the Reshaping of the
Hollywood Movie Industry
Main points of the article
(lecture)
This paper investigates how capabilities in the Hollywood movie industry have developed in
response to the transition from a studio era dominated by integrated hierarchies to post-studio
era dominated by flexible hub organizations. This article adopts the resource-based view of the
firm. Research is done about the Hollywood movie industry between Studio era and post-
studio era.
Two industry capabilities – mobilizing and transforming capabilities – play a crucial role in
assembling and transforming resource bundles into feature films.
They examined the impact of these new organizational forms on two key capabilities – which
some describe as transition to new organizational forms shifts the co- evolutionary process, with
practices and routines that make up mobilizing capabilities changing faster and becoming more
important to box office success than practices and routines that make up transforming
capabilities.
The strategy of integrated hierarchical organizations depends on ownership of resources that
reduces incentives to develop mobilizing capabilities, and increases incentives to develop
transforming capabilities.
The advent of new organizational forms, by contrast, increases returns to new practices and
routines that mobilize resources at the expense of returns on exploring practices and routines
that make up transforming capabilities.evolution of industry capabilities is linked to the evolution
of the relationship between firm and industry structure
Key terminologies
Resources
Inputs for achieving superior performance
● Can be tangible and intangible
● Can be Sustainable and competitive advantage
● Firms may fail to acquire the best resources (e.g. not hire the best job candidates), may
lose resources (e.g. reputation loss) or use them suboptimally (e.g. inefficient
production)
● Not only the manner of finding the right, superior resources, but the organizations have
to renew and update.
○ This is when the capabilities enter into play.
Capabilities
processes that ‘integrate, reconfigure, gain and release resources’ in response to market
conditions
● Routines and practices used to effectively manage resourcess
,industry capabilities
collections of practices and routines exist at the level of industries as well
● Are systemic properties that result from the behaviour of firms acting to improve their
position within this ecology by searching for new practices and routines.
● firms not only search for new routines and practices to manage their own inter- nally held
resources, they also develop routines and practices to identify and adapt their
competitors’ routines and practices
‘mobilizing capabilities’ : social capital
routines needed to identify and commit most of the resources, particularly in the form of various
forms of creative talent such as producer, director, writer, and stars. Evaluation and negotiation
of the talent of the human resources are essential.
● Preproduction phase
● Useful for allocating the best resources to a specific project.
○ This capabilities characterize the preproduction phase of movies. It is important
to mobilize the right resources to get the success of the movie
○ Problem: search and selection
○ Solutions : selection routine that simplifies decision making, e.g. the pitch.
‘transforming capabilities’ : human capital
routines that drive and regulate the process of using this bundle of resources to obtain a
finished product of a desirable quality. Tied to craftmanship
● Production phase
● Useful for optimizing the process of transforming resources into output
○ Problem: inconsistency in the quality of output
○ Solutions: craft-based routines that improve production, e.g. cinematicc and
production techniques
Summaries
Technological innovation, global interdependence, and new managerial mindsets are combining
to create organizations that are more efficient, more flexible, and quicker to adapt to change
characteristics of contemporary new organizations:
● flat rather than hierarchical
● knowledge intensive rather than capital intensive
● rely heavily on networks to mobilize crucial resources
to understand the impact of new organizational forms on industry evolution it is necessary to
closely examine the corresponding evolution of industry capabilities.
● competitive interdependence may result in some capabilities evolving more rapidly at the
expense of other capabilities.
two key capabilities
indispensable for the planning, making and marketing of movies
ROLE OF INDUSTRY CAPABILITES
Sustaining competitive advantage is not simply a matter of finding the right bundle of resources
● it depends crucially on a continuous upgrading and renewing of these resources
Sustained competitive advantage can be achieved when they are vulnerable, rare, imperfectly
imitable, and not substitutable.
● Controlling these resources are extremely important.
○ One way might be to internalize them, instead of having them externally to the
organization.
The main engine of industry capabilities is a cycle of innovation and imitation. Firm
performance is driven and reinforced by both these processes.
Logically, in order to ensure that their resources are unique and idiosyncratic,
● exploration and experimentation with practices and routines in a race to find and adopt
industry best practices
membership in an industry goes hand in hand with shared capabilities that are nevertheless
crucial for sustaining advantage
● reflection of the fact that firms in the same business invariably develop similar solutions
to a common set of problems.
Resources are the crucial intermediaries in the process.
● The search for better capabilities is tied to the search for acquiring or producing unique
and idiosyncratic resources, for it is resources that confer sustainable advantage
Sustained competitive advantage can be achieved when they are vulnerable, rare, imperfectly
imitable, and not substitutable.
● Controlling these resources are extremely important.
○ One way might be to internalize them, instead of having them externally to the
organization.
Their search for improved capabilities is therefore driven by external and internal searching for
new practices and routines.
EVOLUTION OF CAPABILITIES IN THE US MOTION PICTURE INDUSTRY
The key problem in pre-production is ensuring that key resources are in place and ready for
use.
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