The relationship between dynamic and operating capabilities as a stage-gate process: Insights from radical innovation

Abstract

AbstractDynamic capabilities ‘create, extend or modify’ the firm's current operating capabilities in order to enable strategic renewal. Although widely recognized, this conceptualization of the relationship between dynamic and operating capabilities lacks empirical grounding. Using process research into the difficult radical new product development path of a new influenza drug, our data reveal that dynamic and operating capabilities have a stage-gate type relationship. We demonstrate that dynamic capabilities need to achieve certain critical outputs if successful transfer to the operating capability stage is to be reached. Furthermore progress from one stage to the next is dependent on how well dynamic capabilities co-specialize with downstream operating capabilities. This co-specialization is enabled via three processes within a dynamic capability: value network knowledge generation, value schema development and value proposition development.