Noncognitive Microfoundations: Understanding Dynamic Capabilities as Idiosyncractically Refined Sensitivities and Predispositions

Abstract

The dynamic capabilities framework has been used to explain how firms successfully adapt to changing environments. However, tensions exist in the literature surrounding the idiosyncratic, tacit, and, hence, inimitable nature of dynamic capabilities. Scholars struggle to explain in cognitivist terms how such firm capabilities are acquired in the first instance. In this article we argue that a firm’s dynamic capabilities rest on a tacitly shared substrate of sensitivities and predispositions that precede cognitive representation. These sensitivities and predispositions are typically transmitted and shared unconsciously through social practices rather than through formal instruction. They provide the microfoundational substrate of capabilities that enable a firm to effectively respond by orienting its members toward external environmental challenges in a manner unique to the firm’s history. Such sensitivities and predispositions provide an organizational modus operandi for members to reconfigure capabilities and resources and to capitalize on new opportunities.