Complementarity versus substitutability of dynamic and operational capabilities in B2B firms: A configurational approach

Gábor Nagy,Matti Jaakkola,Nikolina Koporcic

doi:10.1016/j.indmarman.2018.11.006

Abstract

Despite extensive research into dynamic and operational capabilities, understanding of their interplay is still scant. Both complementary and substitutive roles have been proposed in prior conceptual studies, but only limited systematic empirical investigations into the mutual interdependence of these capabilities have been conducted. Drawing on a sample of 219 Hungarian B2B firms, this study incorporates prior literature on dynamic and operational capabilities and employs a set-theoretical approach to examine whether the capabilities complement or substitute each other in producing high levels of business performance. While evidence for both types of interdependency is provided, the findings generally support the view that dynamic and operational capabilities are complementary rather than substitutive. The two types of capabilities also explain business performance better jointly than in isolation. Several effective capability configurations, associated with high business performance, are identified. The findings paint a detailed picture of the complex interplay between dynamic and operational capabilities, thereby contributing to academic and managerial audiences alike.

Highlights

The capability-based theory asserts that distinctive organizational capabilities are an important source of performance differentials between firms (Karna, Richter & Riesenkampff, 2016; Theoharakis et al, 2009; Weerawardena & Mavondo, 2011; Felin et al, 2012; Peteraf, 1993)
Drawing on a sample of 219 Hungarian B2B firms, this study incorporates prior literature on dynamic and operational capabilities and employs a set-theoretical approach to examine whether the capabilities complement or substitute each other in producing high levels of business performance
The present study addresses this research gap by studying firms that operate in business-to-business markets where nurturing customer relationships is deemed important (La Rocca & Snehota, 2014) and effective product/service development can complement it by serving as a guarantee in mutual understanding and benefits in customer relationships and as a source of market knowledge and effective process configuration (Hitt & Borza, 2000; Jacob, 2006; Ma et al, 2009; Smirnova et al, 2011; Tzokas et al 2015; Wilden, Akaka, Karpen & Hohberger, 2017; Heirati, O'Cass, Schoefer, & Siahtiri, 2016)

Summary

Introduction

The capability-based theory asserts that distinctive organizational capabilities are an important source of performance differentials between firms (Karna, Richter & Riesenkampff, 2016; Theoharakis et al, 2009; Weerawardena & Mavondo, 2011; Felin et al, 2012; Peteraf, 1993). The more moderate view rejects the superiority of dynamic capabilities as it conceives operational and dynamic capabilities as mutually reinforcing (i.e., the latter enhancing the former), so that together they explain performance better than either of them in isolation (Ambrosini et al, 2009; Cassiman & Veugelers 2006; Freeman, 1991; Rigby & Zook, 2002; Rothwell et al, 1974) The latter view is in line with the ambidexterity literature, which argues that firms need to both ‘exploit’ the existing lines of activities and ‘explore’ new ones (Tushman & O'Reilly, 1996) and stresses the importance of keeping both of these abilities within the same organization (Gibson & Birkinshaw, 2004). Between the main viewpoints, a consensus is yet to be reached

Methods

Findings

Discussion

Conclusion