Dynamic Capabilities Framework Research Articles

Dynamic capabilities and competitiveness: Relationship among industrial policy, structural transformation, and economic growth in Indonesian regional industries

The complex interactions of industrial Policy, structural transformation, economic growth, and competitive strategy within regional industries are examined in this research. Using a dynamic capabilities framework, the study examines the mediating roles of organizational innovation and adaptability in the link between competitiveness and macroeconomic variables. A two-way fixed effects model is used in this study to examine the influence of structural transformation (ST) on Industrial Policy (IP). Using regional data covering the years 2010 to 2022, the research undertaken in this paper explores the dynamics of the Indonesian economy by empirically assessing the consequences of structural change on industrial Policy. In order to establish a comprehensive model that clarifies the mechanisms through which industrial policies and structural shifts impact the development of dynamic capabilities, ultimately influencing competitiveness strategies, this research draws on a large amount of empirical data and integrates insights from seminal works. Our research adds to our knowledge of strategic management in regional industries by providing detailed information on how economic development and policy interventions influence businesses’ ability to adapt and gain a competitive edge. In addition to advancing scholarly discourse, this study offers business executives and politicians valuable insights for managing the intricacies of global economic processes.

Enhancing SMEs resilience through digital innovation: a stage-based analysis

PurposeThe COVID-19 pandemic has profoundly impacted small and medium-sized enterprises (SMEs), inherently vulnerable entities, prompting a pivotal question of how to enhance SMEs’ organizational resilience (OR) to withstand discontinuous crises. Although digital innovation (DI) is widely acknowledged as a critical antecedent to OR, limited studies have analyzed the configurational effects of DI on OR, particularly stage-based analysis.Design/methodology/approachUnderpinned by the dynamic capabilities view, this study introduces a multi-stage dynamic capabilities framework for OR. Employing Latent Dirichlet Allocation (LDA), digital product innovation (DPI), digital services innovation (DSI) and digital process innovation (DCI) are further deconstructed into six dimensions. Furthermore, we utilized fuzzy-set qualitative comparative analysis (fsQCA) to explore the configuration effects of six DI on OR at different stages, using data from 94 Chinese SMEs.FindingsFirst, OR improvement hinges not on a singular DI but on the interactions among various DIs. Second, multiple equivalent configurations emerge at different stages. Before the crisis, absorptive capability primarily advanced through iterative DPI and predictive DSI. During the crisis, response capability is principally augmented by the iterative DPI, distributed DCI, and integrated DCI. After the crisis, recovery capability is predominantly fortified by the iterative DPI, expanded DPI and experiential DSI. Third, iterative DPI consistently assumes a supportive role in fortifying OR.Originality/valueThis study contributes to the extant literature on DI and OR, offering practical guidance for SMEs to systematically enhance OR by configuring DI across distinct stages.

THEORETICAL FRAMEWORKS SUPPORTING IT AND BUSINESS STRATEGY ALIGNMENT FOR SUSTAINED COMPETITIVE ADVANTAGE

In today's dynamic business environment, the alignment between information technology (IT) and business strategy is critical for organizations seeking sustained competitive advantage. This paper presents a comprehensive examination of theoretical frameworks supporting this alignment, aiming to provide insights into how organizations can effectively integrate IT capabilities with strategic objectives. The theoretical foundations explored include the Resource-Based View (RBV), which emphasizes leveraging unique resources and capabilities to achieve competitive advantage. Additionally, the Dynamic Capabilities Framework underscores the importance of an organization's ability to adapt and innovate in response to changing market conditions, highlighting the role of IT in facilitating agility and flexibility. The Strategic Alignment Model offers a structured approach to ensuring coherence between business strategy, IT strategy, and organizational infrastructure, enabling seamless integration and alignment. Value Chain Analysis provides a framework for understanding how IT can add value across different stages of the value chain, informing strategic decision-making and resource allocation. Moreover, IT Governance Frameworks, such as COBIT and ITIL, offer guidelines for effective management and governance of IT resources to support strategic objectives. Business Process Reengineering (BPR) is also examined as a methodology for redesigning business processes to align with strategic goals and leverage IT capabilities. Through an exploration of these theoretical frameworks, this paper aims to equip organizations with the knowledge and tools necessary to achieve sustained competitive advantage through the strategic alignment of IT and business strategies. Keywords: Theoretical Frameworks, IT, Business Strategy Alignment, Sustained Competitive Advantage.

Dynamic Capability Framework for Indonesian School Adaptation in Unstable Public Policy Times

ABSTRACT This research endeavors to disclose the key organizational components of three selected schools and their responses to considerable public policy flux. It aims at integrating key aspects of learning from change situations into systemic approaches to the organizational design of schools in Indonesia. Using dynamic capability framework, this research delves into an overarching question of how Indonesian schools adjust its internal and external context to unstable public policy times. Using a qualitative multiple case study approach, this research gathered data through interviews and focus group discussions. The analysis is structured in three stages namely in case analysis, cross case analysis, and finding formulation. The findings suggested that the area of adaptation could be formulated within the following phases: a) questioning and understanding the situation; b) identifying and defining school identity to guide adjustment efforts; c) maximizing communication, network, and school resources; and d) insights into the school structure. The important actions implemented by the schools correspond with dimensions of dynamic capability namely sensing, seizing, and transforming. This study also highlights the significance of a particular approach to organizational design that features dynamic capabilities and substantive capability to help schools manage their resources to successfully adapt within unstable environmental periods.

Building brand equity as a dynamic capability during Gautrain public–private partnership patronage guarantee controversy

Learning outcomes After completion of the case study, the students will be able to gain knowledge on public–private partnerships (PPPs) in emerging markets; understand how to apply the sensing element of the dynamic capabilities framework in analysing context, especially in emerging market context; and understand how to apply the dynamic capabilities framework to the process of developing brand equity. Case overview/synopsis On 20 March 2020, in Johannesburg South Africa, Dr Barbara Jensen Vorster, the head of corporate communications and marketing at the Gautrain Management Agency, was considering her dilemma of how to manage stakeholders at a time when the patronage guarantee was under question. The nature of the Gautrain PPP transport contract entailed a revenue guarantee that was called a patronage guarantee. How did they build their Gautrain brand equity during the Gautrain PPP patronage guarantee controversy? This case study highlights the perspectives of multiple stakeholders which places the Gautrain brand equity under strain. The Gautrain brand identity was created to project an integrated, overarching brand position for the construction project and later the operating company. The logo illustrated Africanisation, and the slogan “For People on the Move” represented a modern collaborative approach. Upholding the status of the brand is an important quest for the corporate communications and marketing team, and therefore the issue around the patronage guarantee must be addressed. This case study illustrates contrasting views about the Gautrain being elitist versus the rapid rail train enabling economic prosperity. The pro-prosperity versus pro-economic development values were at the heart of the different opinions around the patronage guarantee. Students are therefore confronted with their own values while the case study aims to drive an awareness or consciousness around these issues in an emerging market. Complexity academic level This case study is appropriate for advanced undergraduate and Master of Business Administration courses focused on marketing, communications and/or stakeholder management, such as in business and society courses. At both levels, the case study will be valuable in generating discussion on communications models and how to manage stakeholders ranging from government to community representatives. In courses where dynamic capabilities theory is taught, this case study will offer a specific application of this model in the context of brand communications and building brand equity in times of controversy. Supplementary materials Teaching notes are available for educators only. Subject code CSS 3: Entrepreneurship.

Linking the top management team transactive memory system, strategic flexibility and digital business model innovation: a dynamic capabilities perspective

ABSTRACT This study applies the dynamic capabilities perspective to explore how the top management team transactive memory system affects digital business model innovation through strategic flexibility. It proposes hypotheses regarding the relationships between the top management team transactive memory system, strategic flexibility, and digital business model innovation. Furthermore, it tests these hypotheses using the Structural Equation Model and the Bootstrapping method for the data collected from 205 Chinese firms. The results show that the top management team transactive memory system has a significant positive impact on strategic flexibility and digital business model innovation; the top management team transactive memory system can influence digital business model innovation through strategic flexibility. These findings provide a new dynamic capabilities framework for digital business model innovation from the perspective of top management team cognition and contribute to the literature on digital business model innovation from a dynamic capabilities perspective. They also provide insight into how firms can build dynamic capabilities to promote digital business model innovation.

The relationship between learning orientation, firm performance and market dynamism in MSMEs operating in technology parks in Poland: an empirical analysis

PurposeThe authors analyzed the relationship between learning orientation (LO) and performance in micro, small and medium-sized enterprises (MSMEs) by investigating the moderating role of environmental dynamism to answer the need for systematic research of models between LO and firm performance (FP).Design/methodology/approachThe authors investigated the (in)direct relationship between LO and FP. The authors collected data from 182 MSMEs operating in technology parks (TPs) in Poland. The authors used two methods in the quantitative empirical research. The authors used linear regression models to test the hypotheses, which allowed for a global assessment of relationships among all analyzed variables. Dynamic capabilities (DCs) framework guided the study.FindingsThe study results show that FP benefits from LO-related behaviors. LO is an important stimulant of FP. Meanwhile, the authors did not classify market dynamism (MD) as a moderator of the LO-FP relationship.Research limitations/implicationsBy design, the authors surveyed only MSMEs open to participate in the survey, which potentially limits generalizability. Furthermore, future researchers may consider other types of strategic orientations (SOs) to further explain the impact of multiple SOs on FP in specific industries.Originality/valueThis article presents arguments that allow for recognizing LO as a strategic organizational factor shaping FP.

Artificial intelligence and adaptive response to market changes: A strategy to enhance firm performance and innovation

This research examines how AI-powered capabilities can bring value to organizations by enhancing their Adaptive Response to Market Changes (ARMC). Utilizing insights from organizational agility and the dynamic capability framework, we define ARMC as an organization’s ability to promptly identify and adjust to market changes, with customer responsiveness and operational adjustment as foundational competencies. We outline three AI-powered capabilities (AI-enabled automation, AI-enabled analytics, and AI-enabled relational capabilities) as ARMC’s predictors. We posit that the strengths of these relationships depend on environmental hostility and dynamism. Additionally, we propose positive associations between ARMC and three organizational outcomes: firm performance, process innovation, and product innovation. Our research employs a two-stage design, surveying IT and business executives from firms that have adopted AI. The results demonstrate significant interaction effects of environmental hostility and dynamism on the relationships between AI-powered capabilities and ARMC. Furthermore, we find that ARMC positively influences firm performance and innovation.

Dynamic Capabilities and Firm Performance: Moderating Effect of Environmental Dynamism

This paper, therefore, conducts much detail with regard to the moderating role of environmental dynamism between dynamic capabilities and firm performance, with special reference to Small and Medium Enterprises (SMEs) of Pakistan. The conceptual framework leans on the proposition by Teece, Pisano, and Shuen (1997) that dynamic capabilities allow reconfiguration of resources for the changing market demand and hence the source of competitive advantage to the firm. It is theoretically possible that empirical studies on the moderating effect of environmental dynamism are possible, and still scarce within this domain—an even more rare context in the case of Pakistani SMEs. Thereby, this research intends to fill that gap by empirically examining how the influence of environmental dynamism plays out at the dynamic capabilities-performance nexus in Pakistani SMEs—a sector pivotal for the economic growth of the nation but also challenged by a unique blend of local business conditions. Understanding how firms can benefit from their dynamic capabilities in relation to their performance in volatile markets has become important within this fast-changing business environment. This paper, therefore, through an intensive review of the literature, traces the development of the dynamic capability theory in highlighting its relevance for firm performance and the critical roles environmental dynamism has played as one of the most emphasized contextual factors in firm performance. Quantitative research design will be used for data collection from a broad base of industries under the SME sector of Pakistan, and it will be collected through cross-sectional surveys to explore the proposed relationships. Findings have revealed an environmental dynamism-relevant moderating effect on the relationship between dynamic capabilities and performance. That is to say, in the most volatile environments, SME performance will be more dependent on dynamic capabilities, and that dependence will imply that the strategic value of the capabilities would become contingent on the level of environmental dynamism. This is congruent with the resource-based view (RBV) theory of strategy: the strategic value of resources and capabilities depends on the fit that such resources will have with the external environment. Implications for managers and policymakers, therefore, could be said to be very pragmatic, since SMEs operating within such dynamic markets would have a crying need to develop and deploy dynamic capabilities in a strategic way to effectively steer through the environment. First, these findings contribute to theoretical development in that they draw and support from the dynamic capability view (DCV) and RBV literature in verifying the contingent value of the dynamic capability with respect to environmental dynamism. It not only adds some fertile insights into the dynamic capabilities framework within an emerging market context like Pakistan but also substantiates some interesting facets for SMEs to gain an edge on their competitive advantage within the fast-changing global business environment.

Dynamic Capabilities and Strategic Control Systems: A Study at Itaipu Binacional

Several studies have thus far linked diverse organizational outcomes as antecedents to dynamic capabilities, with an emphasis on entrepreneurship, environmental dynamism, resources, knowledge management, organizational learning, and strategic planning. This study aims to fully assess how the model of strategic levers of control and dynamic capabilities framework are related, considering all conceptual dimensions and the profile of ITAIPU Binacional employees. The data was collected through a survey, and the hypotheses evaluated with the assistance of structural equation modelling, using the partial least squares estimation method. The findings validated the central hypothesis, that the levers of control do positively influence the presence of the dynamic capabilities, in addition to one other complementary hypothesis— that the interactive system also positively influences the ability to sense opportunities. The strategic levers of control can now be treated by organizations as possible sources of dynamic capabilities.

Microfoundations of Dynamic Capabilities for Social Innovations in Small Non-Profit Organizations

The promotion of social innovations by non-profit and business organizations has gained increasing interest. Yet, there has been limited research on routines that organizations use to facilitate social innovations. This paper uses a dynamic capabilities framework to understand the microfoundations of dynamic capabilities for social innovation in small non-profit organizations. Through analysis of routines of 20 small organizations in five European metropolitan areas, the paper demonstrates that many microfoundation aspects resemble generic abilities of opportunity identification, alliancing, user engagement, networking, and organizational learning. However, their orientation toward public values requires incorporating commitments to social value and principles of ethics, responsibility, and sustainability, into different organizational processes. We suggest that social impact does not always require substantial investment and can be achievable through modest changes such as repurposing surplus resources. Building flexible routines that enable such incremental changes is a key element of organizational capability to adapt to changing contexts.

A Dynamic Capabilities View of Lean in a Service Context

In this article, we present the progression of lean deployment in a multilateral organization and subsequently characterize a dynamic capabilities framework of lean for organizational learning. It systematically explores the identification, execution, sustenance, and evaluation of lean in a service setting. A roadmap to lean deployment in pure-service environments and leveraging lean to create a win-win strategy for both employees and top management are a few key highlights of this article. Drawing parallels from dynamic capabilities literature, we propose a “dynamic capabilities” view of lean deployment (as a strategic resource), thereby evaluating lean's fitness to be recognized as a dynamic capability and not merely a process improvement practice.

Blockchain technology as a driver of economic development in small economies: a dynamic capabilities framework

ABSTRACT Blockchain can enable small countries to overcome systemic constraints and strengthen their economies. Based on dynamic capabilities theory, we develop a conceptual framework that explores the applicability of blockchain for fostering economic development. Specifically, we postulate that the agent’s role in dynamic capabilities theory can be extended from the organisation level to the country level. Our proposed framework integrates blockchain as an economic driver and dynamic capabilities on higher-order and lower-order levels (i.e., business and investment development, human capital development, financial system enhancement, regulatory framework improvement, and systems and infrastructure improvement) to show their impacts on different aspects of economic development. International regulatory and political factors serve as moderators that determine whether a national blockchain-based strategy will ultimately be successful. In summary, we illustrate how blockchain as an enabler of dynamic capabilities can contribute to a small country’s economic development.

Toward a Multilevel Framework of Dynamic Capabilities Through the Lens of Project Management, Project Portfolio Management, and Project-Based Organizations

Project management, project portfolio management (PPM), and project-based organizations (PBOs) literature lacks in approaching the development of dynamic capabilities (DCs). However, creating a competitive advantage through DCs has been considered a valued mechanism. Hence, this study critically reviews the literature, looking for cross-fertilization that bridges the literature on DCs with project management, PPM, and PBOs, using a multilevel perspective to organize the coding book and explore the microfoundations of DCs. Merging content analysis and bibliometrics, we identify 99 DCs clustered into three levels: project management, PPM, and PBOs. It proposes a multilevel framework that classifies the core DCs per level of analysis.

A critical review of status quo and future directions of owner dynamic capabilities: Dimensions and key factors

Abstract Existing studies agree that owner dynamic capabilities are crucial in dynamic environments. Based on a systematic literature review of 44 research with CiteSpace and the content analysis method, this study aims to elucidate the dimensions and key factors of owner dynamic capabilities. Owner dynamic capabilities are studied in the context of a construction project due to their resource-constrained, goal-urgent, and uncertainty characteristics. Cognition capabilities, resilient change management capabilities, integrated organization capabilities, and strategic innovation capabilities are identified as the dimensions. Critical factors have also been analyzed at different levels. This study proposes a discriminatory framework of owner dynamic capabilities that combined organizational ambidexterity and resilience. Moreover, this study contributes to the clarification of the concept of owner dynamic capabilities and the enrichment of their knowledge hierarchy. Practitioners can track the main contradictions that owners are currently facing against the actual situation and seek strategies.

The Role of Business Model Innovation in the IT Services Sector: a Comprehensive Mapping Review

Purpose: The study analyzes the evolution of Business Model Innovation (BMI) in the IT sector, which is mentioned in many available scientific publications. The major output of this paper is concrete customer requirements that invite business model innovations to managed IT services and challenges to establish corresponding business model innovations.
 Design/Method/Approach: The study identified more than 200 journal articles and conference articles with BMI and IT service providers, and it conducted a mapping review of current research to identify relevant academic theories, implementation strategies, and BMI in the managed IT service sector while highlighting gaps in empirical research.
 Findings: Most applied are BMI and the framework of dynamic capabilities in business models of IT services. Early movers, who develop a comprehensive platform strategy, can achieve an invulnerable moat and establish a leading market position.
 Practical Implications: The insights of this study could be applied by large companies, small- and medium-sized companies and start-ups, researchers, etc. They can use the insights to innovate their current business models and improve tailored client solutions. 
 Originality/Value: The study concludes that business model innovations and IT service providers develop areas for future success.
 Research Limitations/Future Research: The design of the study is based on a systematic literature review and limited to the areas of BMI research in the IT service sector. For further research projects, individual articles can be chosen to perform in-depth analysis. Our trend analysis shows the focus on main technologies. However, this can be compared with the technologies mentioned in the Gartner Hype Cycle. Further research could be conducted to overcome limitations and cover the uncertain content of this research.
 Paper Type: Conceptual
 JEL Classification: M21, O14, O33

Building start-up acceleration capability: A dynamic capability framework for collaboration with start-ups

In today's dynamic business landscape, large corporations are increasingly recognizing the value of collaboration with start-ups as a means to drive innovation, explore new market opportunities, and gain a competitive edge. To fully leverage the potential of such collaborations, these corporations need to develop specific capabilities that enable them to effectively identify, seize, and capitalize on promising collaboration opportunities. The primary goal of this research work is to propose the concept of Start-up Acceleration Capability (SAC) as a higher-order dynamic capability that enables large corporations to fully leverage collaboration with start-ups. The paper begins by reviewing the relevant literature on corporate-start-up collaboration and provides an overview of the dynamic capability framework and its micro-foundations. Subsequently, SAC is defined as a dynamic capability that combines three key components: sensing, seizing, and (re)configuring. Each component is examined in detail, highlighting the key micro-foundations that underpin its effectiveness and success. The findings provide valuable guidance for practitioners seeking to develop and strengthen SAC within their organizations and contribute to the existing literature on collaboration with start-ups, innovation management, and entrepreneurship. This research aims to advance knowledge and understanding in the field and provide guidance to practitioners and scholars seeking to maximize the value of start-up collaborations.

The Nature and Layers of Dynamic Capabilities of Firms Engaging in Business Model Innovations: A Qualitative Study on Information Technology Firms in Istanbul’s Science-Parks

This study aims to explore the dynamic capabilities (DCs) framework (with sensing, seizing, and reconfiguration dimensions) by exploring the fulfilment layer and underlying processes and structures employed in business model innovation (BMI) process within both new and established entrepreneurial firms. We employed exploratory and descriptive qualitative research method and gathered data through semi-structured interviews with entrepreneurs of nine firms operating in the science-park settings in Istanbul, Türkiye. This study uncovered rich insights about the DCs, as categorized in this study under 10 sub-dimensions. In addition, three different fulfilment layers of DCs emerged at the entrepreneurial firms: (i) the entrepreneurial capabilities at the individual layer, (ii) the entrepreneurial team’s complementary capabilities at the top managerial layer, and (iii) the mechanisms and routines at the organizational layer. DC sub-dimensions suggested in our study are clues for entrepreneurs to develop BMIs. Practitioners are recommended to consider their primary responsibility for BMIs processes independent of the size of the firms, to build entrepreneurial teams with partners having the complementary skill set and concentrate on the employees’ selection, as well as their adaptation to the firm routines. Additionally, the study complements Teece’s theoretical DC framework on BMI extending it into fulfilment layer and opens a fruitful research area for scholars.

Organizational Resilience of Filipino Music Performers during the COVID-19 Pandemic: A Dynamic Capabilities View

This study looks into the dynamic capabilities theory and its relationship with organizational resilience by drawing on a sample of select Filipino live music performers, specifically rock bands. A qualitative thematic analysis approach was used to answer the research questions with the help of transcribed interviews and online data. The pandemic gave rise to several obstacles. To overcome these challenges, the bands exhibited dynamic capabilities. Key themes in each of the capacities of the dynamic capabilities framework were seen, for example, Digital Transformation and Vicarious Learning under Sense, and Changing the Songwriting Process and Evolving Future Outlook under Transform. This study can help business organizations, artists, and workers in the live music industry cope with fast-changing environments and crises. This research can also serve to understand dynamic capabilities in more detail.

Scaling organizational agility: key insights from an incumbent firm's agile transformation

PurposeThis paper aims to examine the key challenges experienced and lessons learned when organizations undergo large-scale agile transformations and seeks to answer the question of how incumbent firms achieve agility at scale.Design/methodology/approachBuilding on a case study of a multinational corporation seeking to scale up agility, the authors combined 36 semistructured interviews with secondary data from the organization to analyze its transformation since the early planning period.FindingsThe results show how incumbent firms develop and successfully integrate agility-enhancing capabilities to sense, seize and transform in times of digital transformation and rapid change. The findings highlight how agility can be established initially at the divisional level, namely with a key accelerator in the form of a center of competence, and later prepared to be scaled up across the organization. Moreover, the authors abstract and organize the findings according to the dynamic capabilities framework and offer propositions of how companies can achieve organizational agility by scaling up agility from a divisional to an organizational level.Practical implicationsAlong with in-depth insights into agile transformations, this article provides practitioners with guidance for developing agility-enhancing capabilities within incumbent organizations and creating, scaling and managing agility across them.Originality/valueExamining the case of a multinational corporation's exceptional, pioneering effort to scale agility, this article addresses the strategic importance of agility and explains how organizational agility can serve incumbent firms in industries characterized by uncertainty and intense competition.