Flying with Clipped Wings: Dynamic Capabilities of Publicly Owned Health Care Providers

Abstract

To implement change effectively and efficiently, private firms require strong dynamic capabilities, consisting of sensing, seizing, and reconfiguration capacities. In the public sector, however, the concept of dynamic capability might be of less use because opportunity recognition (sensing) and strategic decision making (seizing) are taken over by the government. In this work, we discuss the only part of the dynamic capability left to highly regulated non-profit organizations: the reconfiguration of the resource base in order to meet the expectations of the regulator. Using a sample of general practitioners from public hospitals in Ukraine (n = 237; 81 per cent of the entire population of general practitioners from two Ukrainian cities), we apply structural equation modelling to legitimize the construct of reconfiguration-centred dynamic capability (reconfiguration capability) and test its impact on hospitals’ performance. First, we show that reconfiguration capability explains the effects of the lack of resources even at the local level. Second, we show that reconfiguration capability is a strong predictor of performance.