Complementarity between generic organizational configuration and functional capabilities in the explanation of performance : a fuzzy set analysis of the Thai non-life insurance industry

In this thesis, I propose that consistency between a business unit’s generic organizational configuration (GOC) and a firm’s functional capability (FC) provides a better explanation of corresponding performance dimension across business units than either factor on its own. I investigate five types of GOC based on a combination of Miles and Snow’s (1978) and Porter’s (1980) typologies, which I map onto four different FCs (DeSarbo et al., 2005) and four different intermediate outcomes. Traditionally, quantitative analysis better matches GOC and qualitative analysis is more suitable for FC (Hoskisson et al., 1999). Instead, I employ fuzzy set qualitative comparative analysis (fsQCA) (Ragin, 1987, 2000), a formal analysis of qualitative evidence and small to medium-N situations using Boolean algebra to study causal complexity focusing on necessary and/or sufficient conditions for a desired outcome. This allows me 1) to explore exactly which combinations of GOC and FC provide sufficient conditions to achieve high levels of related performance dimensions; and 2) to examine equifinality (Fiss, 2007; Ragin, 2008). Based on causal asymmetry, this set theoretic approach is more appropriate to describe social science relationships than correlational tests that assume causal symmetry, the only causal assumption of methodologies available for previous researches (Ragin, 1987, 2000; Fiss, 2011). Therefore, the adoption of this new technique could also solve the methodological gap in this literature that partly leads to equivocal results in prior researches, which in turn mistakenly support falisification attempts for both GOC and FC theories, because these perceived inconsistency in former researches could actually be a normal situation of asymmetrical relationship (equifinality), a true nature of social science relationships. Moreover, fsQCA fits well with small to medium-sized sample that limits the use of traditional quantitative analysis. The context for this study is the Thai non-life insurance industry in 2011, focusing on a single industry in order to avoid the performance variation caused by differing industry conditions in multi-industry research (Conant, Mokwa and Varadarajan, 1990) which might affect the impact of GOC and FC, and to accord with the timing of the hypothesized cause-effect relationship, as well as to represent a novel setting – a service industry in an emerging market. The findings suggest that scholars should consider organizational configuration and capabilities in a more nuanced manner and should assume compatibility between GOC and FC. This shifts the focus from negating and replacing the former with the latter to searching for an appropriate combination of the two, because finding a compatible combination may be more important for generating high performance than either factor individually. This research contributes to academic and practical knowledge of the configuration-performance relationship, enhances explanations of performance and mitigates the equivocal results of previous research studies, as well as supporting the equifinality notion. The results also suggest that these two well-established and parallel research streams are compatible, thereby bridging the gap between them. Furthermore, it suggests that future research should take a more holistic view regarding the creation of competitive advantage through both external (market power of GOC) and internal (efficiency of FC) causal factors. Finally, it will help managers to select a GOC compatible with their FC and to match this combination with an appropriate performance goal.