Abstract
Theories of business relationships and networks suggest that a firm's relationships with other organizations matter for its performance and survival (Håkansson & Snehota, 1995). Inspired by business relationship and network perspectives, we expand Teece's (2007) dynamic capabilities model and develop an interactive dynamic capabilities framework with three pairs of capabilities: sensing and being sensed, seizing and being seized, and reconfiguring and being reconfigured. Conducting process data analysis of two cases, we shed light on how firms can change and enhance their business performance through the three pairs of interactive dynamic capabilities. The framework adds to the theory of dynamic capabilities by conceptualizing how they can operate across firm boundaries, in inter-organizational relationships, networks or ecosystems populated by many organizations involved actively, and interactively, in sensing, seizing and reconfiguring themselves and each other.
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