Unveiling the Betwixt-and-between of Dynamic Capabilities

THE AIMS OF THE PAPER The existence of dynamic capabilities is key for newly created organizations. However, the development of these capabilities is less researched, especially in the case of start-ups. The primary aim of the study is to explore the characteristics of the development of dynamic capabilities through the case study of a domestic start-up, to illustrate the relationship between organizational and individual capabilities, while providing insights into the interaction between individual capabilities that can lead to the development of dynamic organizational capabilities. METHODOLOGY The primary data collection took place at a domestic start-up. The chosen methodology is the case study, in which three data sources were used. The in-depth interview served as the primary data source, personal or online interviews for at least 45 minutes were conducted with all members of the organization. The in-depth interviews were supplemented by document analysis to gather information from other sources. At the end of the study, the results were validated in a management workshop. MOST IMPORTANT RESULTS During the development of dynamic capabilities four types of interactions between individual capabilities could be identified: complementation, merging and extending similarities, searching and selecting alternatives and acceptance. Each type of interaction provides a solution in different situations, but all of them ultimately contribute to the development of dynamic capabilities. RECOMMENDATIONS Development of dynamic organizational capabilities (hence flexibility) is at least partly rooted in individuals and the interactions between them. It is therefore worthwhile for organizations to emphasize the acquisition of employees with good dynamic managerial capabilities and their involvement in interactions.

Creating dynamic capabilities through business partnerships: the role of resources and capabilities and implications for performance

In recent years, the dynamic capabilities view has attracted attention in the management literature, and theoretical papers note many research challenges. Currently, one of the most significant issues is the role of the marketing function in the development of dynamic capabilities, and some recent discussions have even introduced the new term ‘dynamic marketing capabilities’. The main area of interest is how to achieve a well‐integrated framework to serve as the starting point for empirical papers. Although the most recent research proposes a wide range of processes as possible dynamic marketing capabilities, it is difficult to find consensus among these proposals. To resolve this difficulty, this paper seeks to define the dynamic marketing capabilities construct based on accepted components in the generic dynamic capabilities view. More specifically, it defines the role of dynamic marketing capabilities through absorptive capacity and knowledge management. By identifying these components and relating them in an integrative model, the authors propose to explain how dynamic marketing capabilities work and precisely which marketing processes promote both components.

A crucial requirement for firms to remain competitive is to consistently and simultaneously engage in exploratory and exploitative activities. The academic literature has broadly accepted that the development of dynamic capabilities (ie firms' abilities to create, reconfigure and improve resources and capabilities to fit their changing environments) are vital to meeting this competitive requirement. Research has predominately addressed these dynamic capabilities from a management perspective. Little attention has been paid to the influence of the board of directors on these firm capabilities even though boards hold the fiduciary responsibility for the corporation and its long-term viability. Even less has been written on how boards ought to organise themselves and develop their dynamic board capabilities to support and govern corporate renewal and performance effectively. This paper aims to start addressing this gap by using two related aims. First, a process framework for board behaviours is proposed that ensures, and supports, a systematic way of building and developing corporate-level dynamic capabilities. Then, evidence is presented and reviewed from a survey of two board member communities which supports the idea that board capabilities are essential for a firm's successful renewal and economic performance, and need to be improved in practice. This framework is closely aligned with well-established components identified by the management literature but differs in having the board as the unit of analysis. A crucial question and action agenda is proposed for boards eager to acquire and develop their dynamic capabilities.

Recent work in the field of management has focused on 'dynamic capability', the ability of a firm to develop new capabilities in response to shifts in its external environment, as a significant source of competitive advantage. This paper enhances our understanding of dynamic technical capability. While most established firms have difficulty adapting when confronted with radical, competence-destroying technological change, Mergentbaler Linotype, a firm founded in 1886, has survived three such revolutions and ltd the market in 1990. An examination of the history of this firm in contrast to other incumbents from the same era highlights two key contributors to dynamic technical capability: external integrative capability and geographically distributed research sites. External integrative capability comprises two elements: internal investments that develop absorptive capacity and an external communication infrastructure to facilitate the transmission of external knowledge. In combination, these elements enable the firm K successfully to identify and integrate knowledge outside its boundaries. Geographically distributed research sites facilitate the development of new technical capability in three j : ways. First, competition among research sites spurs innovation. Second, multiple I locations help to overcome organizational inertia by allowing for the development of ^ different generations of technology in different locations. Finally, multiple locations | provide a source of variation, enabling the firm to leverage differences in local & environments.

While researchers have conceptualized both dynamic and substantive capabilities in a variety of ways, there are still no established measures for either dynamic or substantive capabilities. Although learning has been referred to as a specific type of process underlying the evolution and development of dynamic capabilities, the deep connection between dynamic capabilities and organizational process research has not yet been adequately explored. There is a need for conceptualization and operationalization of these different aspects of the learning process. In this paper, we address these gaps in the literature by drawing upon concepts from the organizational learning, marketing and strategic management fields to understand better and define dynamic and substantive capabilities concepts. First, we define dynamic and substantive capabilities and form a theoretical foundation for their conceptualization. We then develop and test specific item measures for each construct. Our findings support our conceptualization and measurement of both these important aspects of organizational performance.

Purpose– The purpose of this paper is to examine the development process of dynamic capabilities.Design/methodology/approach– The paper adopts a qualitative, longitudinal participant-observation research design. A single case study firm was observed over a ten-year period of active researcher engagement allowing for the collection of rich data on the development and deployment of dynamic capabilities as they evolved.Findings– Dynamic capabilities can be identified as sensing, seizing and transforming. They are capable of intentional development by managers through strategic decision making and deliberative learning, within a path-dependent evolution.Research limitations/implications– A longitudinal single case study allowed for a close look at the development of dynamic capabilities, exploring the context and conditions that facilitated change and tracing the evolution of the organization’s processes. However, this study remains subject to the limits of a single case approach. Future cross-sectional research would be able to test the conceptual model and allow for generalization of the findings to other populations of firms.Practical implications– The dynamic capability concept has been criticized for being of little practical use to managers. This research shows the process of intentional dynamic capability development, offering insights to practicing managers.Originality/value– This research adds to the relatively scant base of empirical work on dynamic capabilities and offers a conceptual model of dynamic capability development. The paper contributes to the neglected area of dynamic capabilities in SME’s, showing that the dynamic capability concept is relevant to this sector. The paper provides insight for practitioners by showing that intentional dynamic capability development is achievable.

Dynamic capability is a fundamental concept for firms to achieve competitive advantage. In the past two decades, researcher have studied the impact of dynamic capability on the business, financial, and innovative performance of organizations; however, it is clear that the results achieved by some companies are superior in terms of the development and application of dynamic capability. This difference in terms of the results achieved can be explained by factors related to the organizational structure and, therefore, this research analyses the impacts of the organizational structure on knowledge-based dynamic capability. Partial Least Squares (PLS) was applied to a sample of 192 Brazilian manufacturing companies to analyze our theoretical premises. Our research contributes to the literature by showing how the components of the organizational structure (formalization, centralization, and integration) affect the two elements of knowledge-based dynamic capability (knowledge absorptive and transformative capacity). Previous studies indicate that less mechanical structures, that is, structures with lower levels of centralization and formalization, are favorable for the development of dynamic capability. In a different way, our results indicate that formalization and centralization act differently in relation to the absorptive capacity transformative capacity.

Leaders play a vital role in the development of dynamic capabilities. However, the effects of leadership styles on firms’ dynamic capabilities have not been fully explored, with relatively few studies examining the relationship between leadership and dynamic capabilities. This research examined the influence of transformational and transactional leadership styles on dynamic capabilities. Using data from 279 Kenyan firms. Data analysis was done using hierarchical linear regression model. The finding shows that transformational and transactional leadership styles influence the development of organizational dynamic capabilities. While the transformational leadership style leads to the development of sensing, seizing, and configuration capabilities, transactional leaders do not affect the development of sensing dynamic capabilities. However, they have significant effects on seizing and configuration capabilities development. This study develops knowledge that enables leaders, scholars and practitioners to understand how to use different leadership styles to pursue or develop different dynamic capabilities.

We surprisingly know little about the process through which dynamic capabilities are generated and developed within organizations. When organizations cope with changes, they need to challenge the very essence and reflect upon the core attributes that make their employees respond to the question of ‘who are we as an organization?’, i.e. organizational identity. In this study we investigate the interplay between organizational identity and the development of dynamic capabilities. Our two qualitative case studies of Italian companies show that the search for coherence between the new routines introduced from outside (i.e. consultants) and organizational identity engenders the development of dynamic capabilities. In the first case, the introduction of new routines triggered the definition of a new organizational identity coherent with the underlying practices, and turned into the development of replication dynamic capabilities. In the second case, an enduring identity inspired the redefinition of the routines and contributed to the development of adaptation dynamic capabilities. The paper discusses contributions to the literatures about dynamic capabilities and organizational identity, as well as practical implications.

Entrepreneurial orientation (EO) and dynamic managerial capabilities (DMCs) are beneficial to the development of organisational dynamic capabilities (DCs) in SMEs. Nevertheless, there is still a lack of detailed understanding of the development of DCs. No study has approached how DMCs with EO transfer to become organisation-wide DCs, much less with a configurational approach. This article considers the dimensions of DMCs: human capital, social capital and managerial cognition, and those of EO’s: innovativeness, risk-taking and proactiveness in conjunction. This is in contrast with the underlying assumption of independent effects. The authors survey Portuguese SMEs in a wide range of industries and treat the data through fsQCA, performing a necessity and sufficiency analysis for the presence and absence of DCs. The findings indicate that the dimensions of EO and DMCs are sufficient for consistently determining the presence of DCs in SMEs. Managerial cognition has a symmetric core role in their presence and absence. For the presence of DCs, innovativeness or proactiveness is additionally required.

This paper studies the influence of network market orientation on adaptive, absorptive and innovative dynamic capabilities development in Spanish international new ventures. This research also explores the interrelationship among those dynamic capabilities. Results from the contrast of the proposed structural equation model confirm that network market orientation facilitates the development of dynamic adaptive and absorptive capabilities in international new ventures and that, in turn, these capabilities influence their capacity to develop innovative dynamic capabilities. As a consequence our research extends past research by adopting a relational approach to explain how international new ventures develop dynamic capabilities in foreign markets.

Purpose– Prior studies have argued that small firms with dynamic capabilities can revise and reconfigure their internal resources to meet the uncertainties of their business environment. However, there is a lack of understanding of how they can develop such critical capabilities. The purpose of this paper is to propose that small firms can employ information and communication technology (ICT) capabilities as a facilitator for developing dynamic capabilities. Thus, the study builds on resource-based view (RBV) literature and information systems (IS) literature by examining the influence of ICT capabilities on the dynamic capabilities of small firms.Design/methodology/approach– Several hypotheses were tested by analysing the survey data from 291 small high-technology firms in Sweden.Findings– The results reveal that ICT capabilities influence dynamic capabilities of small firms. More specifically, the ICT use for internal efficiency positively influences adoptive capabilities, collaborative use of ICT positively influences networking capabilities, and ICT use for communications positively influences both adaptive and innovation capabilities. Consequently, the results suggest that the different components of ICT capabilities facilitate the development of the different organizational capabilities that together represent dynamic capabilities and thus, can contribute to a small firm’s competitive advantage.Practical implications– This study has few implications for the managers and CEO’s of small high-technology firms. First, by prioritizing ICT capabilities, small firms can benefit from the development of dynamic capabilities that will support them to meet the challenges of turbulent business environment. Second, because small firms usually lack internal resources (i.e. financial resources and competence), the study provides more specific direction on how they can strategically invest and build different components of ICT that will positively influence their adaptive, absorptive, innovative, and network capabilities.Originality/value– The study provides an alternative view of how ICT capabilities influence the performance of small firms, and outlines how such capabilities influence the development of dynamic capabilities. Therefore, the study in hand contributes to the RBV and IS literature by specifically linking the components of ICT capabilities to dynamic capabilities and its related sub-capabilities.

Although previous studies have explored the formation and effects of dynamic capabilities, much remains to be learned on this topic. There has been little research on the formation and effects of exploitative dynamic capabilities and explorative dynamic capabilities. This paper provides an explanation of how entrepreneurial leadership style and slack resources affect the formation of exploitive dynamic capabilities and explorative dynamic capabilities and evaluates the effects of exploitive dynamic capabilities and explorative dynamic capabilities on competitive advantage. Based on a sample of 382 Chinese firms, the empirical results show that a transactional leadership style and absorbed slack resources can encourage the formation of exploitative dynamic capabilities, and that a transformational leadership style and unabsorbed slack resources are conducive to the development of explorative dynamic capabilities. Furthermore, exploitative dynamic capabilities and explorative dynamic capabilities can reinforce and complement each other. Exploitative dynamic capabilities positively impact explorative dynamic capabilities, and explorative dynamic capabilities enhance exploitative dynamic capabilities. In particular, exploitative dynamic capabilities have an important effect on short-term financial performance, and explorative dynamic capabilities lead to a significant long-term competitive advantage. The results show that explorative dynamic capabilities surpass exploitative dynamic capabilities in terms of competitive advantage, even if both have a positive influence on competitive advantage. This study validates and develops the theory of dynamic capabilities.

By investigating drivers of dynamic learning in service alliance firms, this empirical study demonstrates the locus of dynamic knowledge articulation (DKA) and dynamic capabilities (DCs) development. This study uses a sample of 363 service alliance firms to test the distinctive role of drivers of dynamic learning in DKA and DC development. The results show that manager integration powers, external linkages, codification of experience, and ambiguity have positive effects on DKA. Moreover, DKA has a strong positive influence on DC development. This study contributes to the literature by focusing on DKA and DC development from the perspective of processes, structure, and DCs of service alliance firms.