Dynamic Capabilities Literature Research Articles

Organizational change capacity: the systematic development of a scale

PurposeThe purpose of this paper is to systematically develop a reliable and valid construct that can facilitate and enhance the organizational change process by following Hinkin's suggestions for construct development. The “Organizational Capacity for Change” (OCC) construct provides a multi‐dimensional assessment tool to diagnose and guide organizational change.Design/methodology/approachIn the first empirical study, the paper provides details on the creation and refinement of the OCC instrument by reviewing the results of nearly 3,600 respondents in 161 organizational units in a wide variety of industries from 1999 to 2005. In the second empirical study, it tests the OCC instrument in a single industry to determine the validity of the measures.FindingsThe result is a reliable and valid multi‐dimensional, 32‐item instrument which describes a new construct in the organizational sciences that can be used by executives to prepare for and enhance their organizational change process, or for scholars to study the organizational change process.Practical implicationsTheoretically, this measure refines and extends the dynamic capabilities literature. Pragmatically, this measure provides a tool for assisting executives to lead organization change initiatives.Originality/valueThis measure provides a reliable and valid tool for assessing organizational change capacity, as well as provides a means for gauging improvement in organizational change capacity over time.

Target Costing in the Automotive Industry: A Case Study of Dynamic Capabilities

Management accounting provides a range of non-directive techniques that can be adopted, implemented and discarded at the organization’s will. Management accounting is embedded in routines that satisfy the definition of dynamic capabilities because those routines aid organizations to achieve new resource configurations. The application of specific management accounting techniques has not previously been studied in their function as dynamic capabilities. The literature of dynamic capabilities provides a lens through which management accounting techniques can be seen to leverage organizational resources. The paper describes the case study of the introduction of ‘target costing’ for purchased components within the supply chain of a division of a multinational, non-Japanese automotive assembler faced with considerable cost pressures. The paper makes three specific contributions to the literature. First, the dynamic capabilities literature is applied within management accounting to show how the adoption of particular techniques in particular organizational settings can provide decision useful information for the improvement of substantive capabilities and improvements in the resource base. Second, a revised model of dynamic capabilities is presented which takes into account the hierarchical and inter-related nature of resources and capabilities. The managerial role is emphasised through the role of managers in accessing external knowledge resources, transferring that new knowledge into new or modified organizational routines and using that knowledge to develop substantive capabilities, thereby leveraging the use of internal organizational resources. Dynamic capabilities must be learned and embedded within organizational routines. These routines include management accounting routines. Third, the literature of capability lifecycles has been expanded to reflect some additional causes of failure of dynamic managerial capabilities. Path dependency, structural inertia, and psychological commitment have previously been identified as impediments to adopting new dynamic capabilities. To this list the present case study adds external pressures, and organizational politics. A failure to understand epistemic issues and differences in cultural, organizational and strategic issues may also have contributed to the failed implementation.

Selection Capability: How Capability Gaps and Internal Social Frictions Affect Internal and External Strategic Renewal

The dynamic capabilities literature suggests that firms need to use both internal development and external sourcing to thrive over time, but we have a limited understanding of the conditions that best suit different sourcing choices. This study examines how constraints that arise from firms' existing stocks of capabilities and from their internal social contexts shape their choices of capability-sourcing modes and, in turn, their ability to obtain new capabilities. Thus, the research focuses on an underemphasized form of dynamic capability: the ability to select appropriate modes of capability sourcing. We test the arguments with a survey and longitudinal survival study of the international telecommunications industry. We find intriguing variations in the way that firms' selection capability influences their ability to renew their capabilities and, ultimately, to survive.

Capability Reconfiguration: An Analysis Of Incumbent Responses To Technological Change

I present a model of capability reconfiguration, integrating the Schumpeterian perspective on technological discontinuities with the dynamic capabilities literature to explain the responses of incumbents to technological change. I identify substitution, evolution, and transformation as three mechanisms of capability reconfiguration and then link the choice of reconfiguration mechanism to the nature of technological change and to the attributes of capabilities. I conclude that the extent to which the chosen mechanism enables incumbents to overcome cognitive and operational impediments influences their capacity to bridge capability gaps.

The human side of radical innovation

Radical innovation requires organizations to move into unknown territory and experiment with new processes that largely elude systemization. In this paper we report on a 6-year longitudinal study of 12 radical innovation (RI) projects in 10 large established US based firms. In actuality, there are a number of organizational factors that leverage the human side of making radical innovation happen that, if viewed systematically, could be utilized more broadly for greater radical innovation success. We report on gaps and mismatches that emerged in the sample as well regarding the expectation for radical innovation to happen and the mechanisms by which people are incented to do so. We link our observations to the evolving dynamic capabilities literature as it is currently being extended into high velocity domains.

DEVELOPING INNOVATION CAPABILITY IN ORGANISATIONS: A DYNAMIC CAPABILITIES APPROACH

This paper draws together knowledge from a variety of fields to propose that innovation management can be viewed as a form of organisational capability. Excellent companies invest and nurture this capability, from which they execute effective innovation processes, leading to innovations in new product, services and processes, and superior business performance results. An extensive review of the literature on innovation management, along with a case study of Cisco Systems, develops a conceptual model of the firm as an innovation engine. This new operating model sees substantial investment in innovation capability as the primary engine for wealth creation, rather than the possession of physical assets. Building on the dynamic capabilities literature, an "innovation capability" construct is proposed with seven elements. These are vision and strategy, harnessing the competence base, organisational intelligence, creativity and idea management, organisational structures and systems, culture and climate, and management of technology.