A Strategic Choice Model of Dynamic Capabilities Development

Abstract

The positive link between dynamic capabilities and firm performance is well understood. Given this link, recent research has highlighted the practical and theoretical importance of understanding how dynamic capabilities are developed. However, the evolutionary learning assumptions that underlie much dynamic capabilities research leave little room to explore the antecedents of dynamic capabilities development in terms of the reasoned and intentional actions of managers, i.e., their strategic choices. Consequently, it is unclear how a strategic choice view should approach the development of routines that constitute dynamic capabilities given a prior focus on selection pressure over behavioral variation. To address these concerns, I propose a strategic choice model to explain how managers can contribute to the development of dynamic capabilities. By drawing on the resource-based view, the knowledge-based view, and institutional theory, I surface the creation of “learning spaces” as a key moderator that explains how managers may take steps to develop dynamic capabilities for a firm facing conditions of increasing environmental dynamism. This article contributes to the dynamic capabilities literature by answering recent calls to explain how dynamic capabilities are developed, to further elaborate assumptions about managerial agency, and to integrate new and relevant insights from institutional theory.