Building Capability Systems in New Businesses: The Role of Capability Architecture

Abstract

Research into how organizational capabilities develop has focused upon specific types of capability and particular processes for capability development. Yet, to develop and survive, an enterprise must put in place an integrated system of organizational capabilities deploying multiple development processes. Our study enquires into the content, structure and development processes of such capability systems. Building upon the existing literature, we use in-depth studies of four new e-commerce businesses to explore the emergence of capabilities in new business ventures. We use the term capability architectures to characterize these systems of organizational capabilities. Our case studies reveal a management-led process in which capability architecture arises from the strategic intent of the founding team and is realized through organizational systems of structure, process development, and external knowledge sourcing. Although the empirical basis of our study is narrow, our findings complement and are consistent with those of other case studies of capability development.