Higher-order Dynamic Capabilities Research Articles

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 effect of ambidexterity on market performance: a new perspective and measurement from the dynamic capability framework

ABSTRACT Previous research defined ambidexterity as a dynamic capability that allows companies to generate and orchestrate a balance between exploitation and exploration. Following this line of thought, this study delves deeper into the relationships between exploitation, exploration and ambidexterity, as well as into their different natures, functions and utilities. To explore this perspective, we empirically analyse data from 605 organic agro-food processing companies regarding their level of exploitation, exploration, and synergy practices, and investigate their effect on their market performance. This research contributes to the organisational literature by understanding ambidexterity as a higher-order dynamic capability that encompasses both balance and synergies between exploitation and exploration practices. It also provides some advice to managers to develop different ambidexterity configurations to improve their firm market performance.

Multinational orchestration: a meta-theoretical approach toward competitive advantage

PurposeThe purpose of this study is to critically evaluate the canonical contribution of the classical theories of multinational enterprises (MNE) and complement them with congruous multi-theoretical lenses to a propose a meta-theoretical view for competitive advantage. The proposed framework is applied to fundamental questions of MNE, and exploratory insights are revealed.Design/methodology/approachThis study sought to review the literature on various paradigms such as resource-based view, knowledge-based view, attention-based view, relational view, dynamic capability view and institution-based view to propose a meta-theoretical approach explicating the phenomenon of competitiveness.FindingsThis study proffers that the key to global competitiveness lies in building micro-foundational, multidimensional and multilevel multinational orchestration capabilities. The requisite orchestration capabilities are capabilities par excellence that explain: how organizational capabilities originate through the cognition of individual employees at the micro level; how individual-level abilities are amplified when they are harnessed through relational capabilities to form knowledge capabilities at the meso-level; and how the confluence of knowledge capabilities and higher order dynamic capabilities gives rise to heterogeneous firm-level knowledge-based dynamic capabilities that can be combined with institution capabilities to aggrandize the prediction of competitive advantage for MNEs.Originality/valueThe successful development of MNE competitiveness as a field of academic inquiry, brought about by an increasing amount of theoretical specialization, has come at the price of significant fragmentation of the overall scientific quest. The abovementioned paradigms and their underlying constructs have primarily been conceptualized in silos. The classical theories of MNE have been used a starting point to which complementary multidisciplinary views have been scaffolded to gain a more nuanced understanding of global competitiveness.

The Epistemology of Entrepreneurial Responsible Orientation (ERO): Theory, Conceptualization, and Future Research

Organizations are constantly searching for new pathways to ensure survival and sustainability in a highly dynamic and competitive environment. Against this background, the present study aims to propose a strategic framework considering the crucial role of small businesses and entrepreneurship for sustainable economic, social, and environmental development. This paper employed a selective-intensive literature review technique to review and evaluate extant sustainability orientation (SO) literature from multiple strategic orientation paradigm. In addition, drawing from the theoretical underpinnings of resource complementarity and configuration perspective, this study proposes a configuration of sustainability orientation (SO), entrepreneurial orientation (EO), and market orientation (MO) in the era of sustainable development. The key finding of this paper is the development of a higher-order dynamic capability, that is, Entrepreneurial Responsible Orientation (ERO). ERO is proposed as an entrepreneurial strategic framework that integrates three distinct but complementary elements (i.e., sustainability, entrepreneurial, and marketing) under the umbrella of strategic orientation that drives superior sustainable firm performance. Moreover, we put forward the future research agenda by developing several potential research questions, thus, the findings of this study will serve as a springboard to extend the knowledge base in this field of research. This paper provides an integrated framework in the contexts of small businesses and entrepreneurship by utilizing the combination of the theoretical and conceptual development approaches. The proposed framework, if implemented successfully, has the potential to drive sustainable performance of the small firms particularly, and sustainable development of the country, generally.

A recipe for USO success? Unravelling the micro-foundations of dynamic capability building to overcome critical junctures

• USOs face dynamic and iterative junctures each posing challenges which need to be overcome. • Micro-foundational dynamic capabilities can help explain USO survival and success. • Absorptive, adaptive and innovative capabilities can help USO sustainability. • USOs need to develop, deploy and integrate combinations of micro-foundational capabilities. University Spin-Offs (USOs) are important contributors to regional innovation, productivity and job creation; however, their failure rates remain very high. While studies have explored the factors affecting USO formation and success, scholars have highlighted the need for further research into the processes through which USOs can effectively reach sustainable returns by navigating several critical junctures. We posit that a micro-foundational perspective can contribute new knowledge on how USOs develop higher-order dynamic capabilities, which are essential to overcoming key challenges and leveraging opportunities. This paper explores how USOs develop the micro-foundational dynamic capabilities of adaptive, absorptive and innovative capabilities to successfully overcome formation's critical junctures and reach long-term sustainability. The findings identify how USOs develop, deploy and integrate various combinations of micro-foundational capabilities to navigate each critical juncture and reach thresholds of sustainability. In particular, as firm development progressed and critical junctures increased in complexity, USOs needed to deploy all three capabilities simultaneously and in an integrated manner. We identify the limitations of existing linear models of USO development and contribute to theory development through the development of a new, dynamic model that illustrates how USOs build micro-foundational dynamic capabilities cumulatively and iteratively to overcome critical junctures.

Linking SME international marketing agility to new technology adoption

This article proposes an alternative conceptualisation and operationalisation of international marketing agility as a higher-order dynamic capability constituting overseas market-sensing decision-making flexibility and international marketing adaptability. The international marketing agility – new technology adoption relationship was examined under the moderating effects of new technology relative advantage and complexity among a sample of 162 small and medium sized enterprises (SME) exporters in Thailand, where new internet-enabled inventory management systems were being promoted. The self-administered survey data were analysed using multiple-group structural equation modelling. Results reveal that new technology adoption is driven by higher-level competencies such as international marketing agility, which develops, integrates and reconfigures resources through the three first-order capabilities to enable SME exporters to cope with volatile environments. Such adoption is enhanced by SME exporter perceptions of internet-enabled inventory management system’s relative advantage, but is otherwise diminished by perceptions of its complexity. These findings provide important implications for policymakers and technology vendors responsible for securing adoption by SMEs in emerging markets.

Business Model Construction from Dynamic Capabilities Perspective

The construction of the business model is to shape the structure of various activities in the plate according to the task attributes and task objectives of each section in the business model. The Dynamic Capabilities of the enterprise determine the result of the construction of the business model, and its strength also affects the adaptation and operation of the business model institutions to the new business model. Enterprises with strong Dynamic Capabilities have a good execution ability in the business model architecture, and can also quickly adapt to the structural framework of changing their business model, and improve the feasibility of the actual operation of the business model. This paper will be in the framework of the Dynamic Capabilities theory, the construction of business model, through the case from model construction, design innovation to the coordinated operation of the new model, concluded that the two have a strong interaction, including the enterprise higher-order Dynamic Capabilities has a strong positive influence on the choice of business model, construction and application.

Business Model Construction from Dynamic Capabilities Perspective

The construction of the business model is to shape the structure of various activities in the plate according to the task attributes and task objectives of each section in the business model. The Dynamic Capabilities of the enterprise determine the result of the construction of the business model, and its strength also affects the adaptation and operation of the business model institutions to the new business model. Enterprises with strong Dynamic Capabilities have a good execution ability in the business model architecture, and can also quickly adapt to the structural framework of changing their business model, and improve the feasibility of the actual operation of the business model. This paper will be in the framework of the Dynamic Capabilities theory, the construction of business model, through the case from model construction, design innovation to the coordinated operation of the new model, concluded that the two have a strong interaction, including the enterprise higher-order Dynamic Capabilities has a strong positive influence on the choice of business model, construction and application.

The interplay between digital manufacturing and dynamic capabilities: an empirical examination of direct and indirect effects on firm performance

PurposeThe purpose of this paper is to identify and empirically examine the dynamic capabilities (DC) that drive the development of digital manufacturing capabilities (DMC) and the role of DMC in mediating their influence on firm performance.Design/methodology/approachBased on the dynamic capabilities view (DCV) of the firm, the authors develop a set of hypotheses that are tested through a survey of 110 managers in the manufacturing sector. The hypothesized model is tested through structural equation modeling.FindingsThe results indicate that although higher-order DC (HODC) have a strong influence on firm performance, their effects are partially mediated by the DMC that they generate, by positively affecting the extended production process.Practical implicationsThe analysis contributes to a better understanding of the interplay between levels of the DC hierarchy by finding that DMC play an important role in translating HODC into enhanced firm performance.Originality/valueBy complementing the DCV with the disruptive innovation theory in a specific fast changing context, this study introduces a new construct (DMC) providing an original and considerable contribution to the literature. To the best of the authors’ knowledge, it is the first empirical study that includes and assesses all these elements together in the context of the manufacturing industry.

How to empower analytics capability to tackle emergency situations?

PurposeAnalytics thrives in navigating emergency situations. Emergency operations management needs to develop analytics empowerment capability (ANEC) to prepare for uncertainty, support continuity and tackle any disruptions. However, there is limited knowledge on ANEC and its effects on strategic emergency service agility (SESA) and emergency service adaptation (ESAD) in such contexts. Drawing on the dynamic capability (DC) theory, we address this research gap by developing an ANEC model. We also model the effects of ANEC on SESA and ESAD using SESA as a mediator. We also assess the moderating and quadratic effects of ANEC on two higher-order DCs (i.e. SESA and ESAD).Design/methodology/approachDrawing on the literature on big data, empowerment and DC, we develop and validate an ANEC model using data from 245 service systems managers in Australia. The study uses the partial least squares-based structural equation modelling (PLS-SEM) to prove the research model. The predictive power of the research model is validated through PLSpredict (k = 10) using a training sample (n = 220) and a holdout sample (n = 25).FindingsThe findings show that analytics climate, technological enablement, information access, knowledge and skills, training and development and decision-making ability are the significant components of ANEC. The findings confirm strategic emergency service agility as a significant partial mediator between ANEC and emergency service adaptation. The findings also discuss the moderating and quadratic effects of ANEC on outcome constructs. We discuss the implications of our findings for emergency situations with limitations and future research directions.Originality/valueThe findings show that building ANEC plays a fundamental role in developing strategic agility and service adaptation in emergency situations to prepare for disruptions, mitigate risks and continue operations.

Exploring the impact of big data analytics capabilities on business model innovation: The mediating role of entrepreneurial orientation

Big Data Analytics Capabilities (BDAC) represent critical tools for business competitiveness in highly dynamic markets. In this connection, by leveraging on the Dynamic Capabilities View (DCV) this study analyses the relationship between BDAC and Business Model Innovation (BMI). It argues that the impact of BDAC (a lower-order dynamic capability) on BMI is mediated by Entrepreneurial Orientation (EO; a higher-order dynamic capability). The proposed model is assessed by PLS-SEM (symmetric) and fuzzy-set Qualitative Comparative Analysis (asymmetric) methods using survey data from 253 UK firms. Our findings demonstrate that BDAC have both direct and indirect positive effects on BMI, with the latter being mediated by EO. These results enrich the innovation management literature on Big Data (BD) by showing that BDAC influence company strategic logics and objectives, rather than depending on them, thus playing a significant role in creating value for companies and their stakeholders.

Understanding industrialised house building as a company’s dynamic capabilities

PurposeTo further the understanding of industrialised house building (IHB) from a temporal, emergent corporate-ability perspective, this study aims to trace the build-up of corporate assets in an IHB company over time. The research draws on dynamic capabilities, acknowledging not only what assets the company have developed and currently are exploiting, but also how these assets were develop and managed (i.e. enhanced, combined, protected and potentially reconfigured) to sustain long-term competitiveness.Design/methodology/approachA case study design was used to form a narrative that covers the evolution of an IHB company over a 25-year period. Corporate archival material, analysis of original data from a large number of research studies during 1993-2013 and retrospective reflections of owners and managers, including crosschecking interpretations of archival material, developed and triangulated the narrative.FindingsThe study presents rich empirical findings on the build-up of corporate assets. Starting from a successive process of exploration and exploitation formation of dynamic capabilities eventually played out into an exponential dynamic capability build-up. The IHB case company displays the ability to not only continuously exploit and renew resources and competences, but also to sense, seize and reconfigure cumulative assets over time. The exponential development of dynamic capabilities resonates to literature on higher-order dynamic capabilities implying that: the accumulated and higher-order dynamic capabilities are difficult to imitate and a (any) company must possess higher-order dynamic capabilities to be able to exploit and/or take up IHB.Originality/valueThe study is complementing and potentially challenging frequent framings of the IHB concept. Previous research has addressed and characterised IHB mainly by encapsulating a moment in time and, thus, characteristics are momentary and represent static views on IHB. However, IHB has seen a strong development over the past 25 years, and the study reflects on this development from the perspective of one of the IHB-forerunner companies in Sweden. By exploring from a company perspective the developments, reconfiguration and capacity to develop/reconfigure over time in a changing environment, the study introduces an alternative understanding of IHB as dynamic capabilities.

Investigating the role of demand planning as a higher-order construct in mitigating disruptions in the European supply chains

PurposeThe goal of the paper is twofold. First, it aims to empirically conceptualize whether a wide array of fragmented demand planning activities, performed in supply chains, can be logically categorized into actionable sets of practices, which then form a broader conceptualization of the demand planning process. Second, regarding certain contextual factors, our research seeks to investigate the contribution of demand planning, as a higher-order construct, to mitigating disruptions induced by operational risks in supply chains.Design/methodology/approachIn this study, PLS-SEM was used to estimate the reflective-formative nature of the model. The results of PLS-SEM were additionally complemented by the assessment of the predictive power of our model. Finally, to reveal possible contingency effects, the multigroup analysis (MGA) was conducted.FindingsThe study suggests that demand planning process (DPP) is a second-order construct that is composed of four sets of practices, including goal setting, data gathering, demand forecasting, communicating the demand predictions and synchronizing supply with demand. The study also reveals that the demand planning practices, only when considered together, as a higher-order factor, significantly contribute to mitigating disruptions driven by operational risks. Finally, the research shows that the strength of the impact of demand planning on disruptions is contextually dependent.Research limitations/implicationsWhile the study makes some important contributions, the obtained findings ought to be considered within the context of limitations. First, the study only investigates disruptions driven by operational risks, ignoring the negative consequences of environmental risks (terrorist attacks, natural disasters, etc.), which may have a far more negative impact on supply chains. Second, the sample is mostly composed of medium and large companies, not necessarily representative of demand planning performed by the entire spectrum of companies operating in the market.Practical implicationsThe study shows that to effectively mitigate disruptions induced by operational risks, the demand planning practices should be integrated into a higher-order construct. Likewise, our research demonstrates that the intensity of demand planning process is contingent upon a number of contextual factors, including firm size, demand variability and demand volume.Social implicationsThe study indicates that to mitigate disruptions of operational risk, demand planning as a higher-order dynamic capability can be referred to the concept of organizational learning, which contributes to forming a critical common ground, ensuring the balance between formal and informal dynamic routines.Originality/valueThe paper depicts that to fully deal with disruptions, the demand planning practices need to be integrated and categorized into the dedicated higher-order. This may lead to forming demand planning as a higher-order dynamic capability that provides a more rapid and efficient rebuttal to any disruptions triggered by operational risks.

Do I Really Need You? The Impact of External Advisors on M&A Dynamic Capabilities

External M&A advisors significantly impact a firm’s M&A decisions. While research so far has mainly focused on analyzing the impact of external advisors on individual M&A projects, findings about their long-term influence are limited. Do advisors impact just the performance of M&A projects as one-time events or do they have a lasting impact on a firm’s M&A management capability in a dynamic M&A environment? Our research attempts to better understand the interplay of an internal M&A function and external M&A advisors with respect to their role as antecedents of M&A dynamic capability. Using survey data from 205 acquirers in the German- speaking countries, we provide evidence for the impact of both external and internal organizational mechanisms on M&A dynamic capability, but also empirically highlight the limitations of external resources. Our analysis hereby recognizes the moderating effect of an M&A function’s organizational positioning. Considering the hierarchical ordering of dynamic capabilities, we theorize and empirically demonstrate that M&A lower-order dynamic capability partially mediates the impact of M&A higher-order dynamic capability on M&A performance. This enables a more nuanced understanding of the relationship between M&A dynamic capabilities and M&A performance and its organizational antecedents.

Increasing firm agility through the use of data analytics: The role of fit

Agility, which refers to a dynamic capability within firms to identify and effectively respond to threats and opportunities with speed, is considered as a main business imperative in modern business environments. While there is some evidence that information technology (IT) capabilities can help organizations to be more agile, studies have reported mixed findings regarding such effects. In this study, we identify the conditions under which IT capabilities translate into agility gains. We focus on a specific and critical IT capability, the use of data analytics, which is often leveraged by firms to improve decision making and achieve agility gains. We leverage dynamic capability theory to understand the influence of data analytics use as a lower-order dynamic capability on firm agility as a higher-order dynamic capability. We also draw on the fit perspective to suggest that this impact will only accrue if there is a high degree of fit between several elements that are closely related to the use of data analytics tools within firms including the tools themselves, the users, the firm tasks, and the data. The proposed research model is empirically validated using survey data from 215 senior IT professionals confirming the importance of high levels of fit between data analytics tools and key related elements. The findings provide the understanding of the impacts of data analytics use on firm agility, while also providing guidance to managers on how they could better leverage the use of such technologies. These findings could be more broadly used to inform the effective use of other forms of IT in organizations.

Building a scale for dynamic learning capabilities: The role of resources, learning, competitive intent and routine patterning

Those researching organizational capabilities have largely accepted that the most fundamental operational capabilities form a hierarchy ranging from the lower-order dynamic functional to higher-order dynamic learning capabilities. Measurability has advantaged the first two types, resulting in numerous operationalized measurement scales. Yet at the strategic level, higher-order capabilities remain unmeasured, thus perpetuating issues of causal ambiguity. This paper responds by developing and presenting a measurement scale of dynamic learning capabilities (DLCs). Using multiple sources of data, we follow a five-step process to propose to measure and then validate a reliable scale consisting of three subscales. These subscales complement and thus extend the existing exploration and exploitation learning subscales. This predictive validity is further supported by relating all our subscales to perceived performance. Employing this dedicated new scale will enhance both the validity of studies on higher-order dynamic capabilities and the understanding of how firms create and use capabilities to drive performance.

Leveraging Knowledge Processes for Building Higher-Order Dynamic CapabilitiesAn Empirical Evidence from It Sector in India

The study aims to integrate the two prominent Views of Strategic Management namely Dynamic Capability View and Knowledge-Based View and posit a Knowledge-Based View to the capabilities of an organization by establishing a relationship between Knowledge Management Processes and Higher-Order Dynamic Capabilities. The paper makes an attempt to supplement the strategically oriented concept of dynamic capabilities with Knowledge Processes of a firm by suggesting that Knowledge Processes can be leveraged to build advanced capabilities like Adaptability, Absorptiveness and Innovativeness. It was concluded that the three Knowledge Processes namely Knowledge Acquisition, Knowledge Conversion and Knowledge Application are critical for the development of Higher-Order Dynamic Capabilities of a firm. The research also focuses on evaluating organizations in the IT sector operating in India in light of the knowledgebased view of capabilities of dynamism and suggests strategies for enhancing the knowledge orientation and thus improving the capabilities of organizations.

Managing open incremental process innovation: Absorptive Capacity and distributed learning

In this conceptual article, we extend earlier work on Open Innovation and Absorptive Capacity. We suggest that the literature on Absorptive Capacity does not place sufficient emphasis on distributed knowledge and learning or on the application of innovative knowledge. To accomplish physical transformations, organisations need specific Innovative Capacities that extend beyond knowledge management. Accessive Capacity is the ability to collect, sort and analyse knowledge from both internal and external sources. Adaptive Capacity is needed to ensure that new pieces of equipment are suitable for the organisation's own purposes even though they may have been originally developed for other uses. Integrative Capacity makes it possible for a new or modified piece of equipment to be fitted into an existing production process with a minimum of inessential and expensive adjustment elsewhere in the process. These Innovative Capacities are controlled and coordinated by Innovative Management Capacity, a higher-order dynamic capability.

Supplying large firms: The role of entrepreneurial and dynamic capabilities in small businesses

Drawing on the concepts of ‘entrepreneurial’ and ‘dynamic’ capabilities, this study examines the capabilities that allow small firms to operate as suppliers to large organizations in the public and private sectors. Interest in this topic is fuelled by academic speculation about the extent to which such supply chain relationships can facilitate the growth of small firms and by current policy initiatives to promote small firm-friendly procurement practices. Based on the evidence from 18 small firms, the study shows how entrepreneurial and a variety of dynamic capabilities are intertwined in subtle and complex ways, and how the development of one shapes and is shaped by the development and use of the other. In doing so, the article contributes to identifying small firm capabilities that together underpin a higher-order dynamic capability required to supply large firms and to the debate on the nature and types of such capabilities.

Dynamic capabilities for strategic team performance management: the case of Nissan

PurposeThe purpose of this paper is to explain how hoshin kanri (policy management) is used as a higher order dynamic capability at Nissan. The paper also seeks to examine the role of top executive audits as part of the FAIR strategy execution process to develop core competences as part of team management.Design/methodology/approachThe research used semi‐retrospective ethnographic case summaries recorded by an active manager involved in the implementation process of the researched organizational phenomenon. These documented observations were triangulated against internally published company reports and those made public, and any externally published documentation about Nissan.FindingsThe paper finds that the use of a top executive audit (TEA) as a part of hoshin kanri, works as a high‐order dynamic capability according to Teece et al. . Hoshin kanri is premised on a strong reliance on teamwork, and the effectiveness of teams is a major contributory factor to organizational performance. It works well because TEAs are a special form of organizational audit of lower‐level operations against top‐level strategy (i.e. it is a strategic review framework).Originality/valueHow Nissan's business philosophies and methodologies are managed as core capabilities is explored. TEAs, as a key component of hoshin kanri, are examined as a strategic team performance management system.