Microfoundations Of Dynamic Capabilities Research Articles

How do firms build dynamic capabilities to develop sustainable products? A multiple case study in the manufacturing industry

In response to mounting pressure for organizations to meet sustainability requirements and improve their environmental footprint, companies are increasingly tasked with adapting their product portfolios to include environmentally sustainable solutions. However, little research has explored how firms develop the capabilities necessary to achieve this goal. In particular, there is a gap in understanding the microfoundations of dynamic capabilities–the specific skills, processes, and organizational activities–that enable firms to simultaneously pursue business objectives and environmental requirements during product development cycles. To address this gap, we conducted a multiple case study of 19 established manufacturing firms to examine the dynamic capabilities involved in developing environmentally sustainable products. Our findings reveal a dynamic process of profiting from environmentally sustainable product development and identify several microfoundations that enable these dynamic capabilities. For scholars, this study provides a detailed analysis of why and how microfoundations of dynamic capabilities support environmentally sustainable product development. We show that implementing these becomes a continuous process of strategic renewal for an organization. For manufacturing practitioners, our study provides a blueprint for initiating and enabling strategic activities for environmentally sustainable product development.

How does innovative dynamic capability favour sustainability? A study for Brazilian industry

ABSTRACT Achieving sustainability performance seems to increasingly occupy the strategic agendas of organisations. Are organisations investing in their strategic agendas in Environmental, Social and Economic Sustainability? The research aims to analyze the innovative, dynamic capabilities effect on Sustainability performance (Environmental, Social and Economic). The hypothesis adopted is that sensing, seising and transforming favour Sustainability performance over time. We have used a longitudinal multiple linear regression analysis of Brazilian Innovation Research (BIR) data, for 16 years, a sample of 41 manufacturing sectors. The findings suggest that transforming favours environmental sustainability, sensing and seising favour economic sustainability and seising favours social sustainability. This study answers how and to what extent the micro foundations of dynamic capabilities affect sustainability performance in the three dimensions.

Microfoundations of dynamic capabilities: a systematic review and a multilevel framework

PurposeMicrofoundations have become an effective approach for capability scholars to explore the heterogeneity of organizational results. Since the early pioneering work of scholars such as Felin and Foss, the microfoundations of strategic organization had not been extensively studied until 2010. The theoretical and empirical literature associated with the microfoundations of dynamic capabilities has developed rapidly. However, the diversity and fragmentation of micro-elements lead to a lack of a relatively consistent understanding of microfoundations, the study purpose is to aggregate the associated scattered terminology into a cohesive discussion.Design/methodology/approachA systematic literature review was conducted on research papers published between 2000 and 2022 using a hybrid methodology that included bibliometric and content analysis.FindingsThe authors suggest that this line of research can be divided into three stages. The study further develop a framework delineating the main components and mechanism involved in the microfoundations of dynamic capabilities, which in turn help us distill research gaps and opportunities for future work.Originality/valueThe authors construct a framework that can serve as a coherent research platform for further knowledge development. In the framework, the authors highlight that the research of group constructs, culture and leadership, data-driven topics are valuable for our understanding of the microfoundations of dynamics capabilities.

Micro-foundations of dynamic capabilities to facilitate university technology transfer.

Within the university-industry ecosystem, improvement and innovation of technology transfer involve implementing appropriate dynamic capabilities. To answer the question-What are the micro-foundations of dynamic capabilities in university technology transfer?-this study investigates in-depth organizational-level dynamic capabilities in transferring university-based knowledge to business and society. Two qualitative case studies were deployed at organizational entities at Vrije Universiteit Amsterdam: the Industry Alliance Office, and the Demonstrator Lab. These two organizations stimulate science- and business-oriented university technology transfer. In this context, the micro-foundations of the dynamic capabilities "sensing", "seizing" and "reconfiguring" are identified and discussed. For "sensing", which is the university's ability to explore the opportunities in the ecosystem, the micro-foundations are "selecting internal competency" and "sensing external partners". For "seizing", which supports universities in managing complementarity with industry and society, micro-foundations include "resource co-allocation" and "collaborative business model". The micro-foundations of "reconfiguring", through which universities maintain evolutionary fitness in the innovation ecosystem, are "strategic renewal", "establishing a university technology transfer-friendly environment", and "asset orchestration". This study provides researchers with a better understanding of how dynamic capabilities facilitate university technology transfer. Industrial practitioners and policymakers can consider the suggestions of the present study when pursuing collaboration with universities.

Microfoundations of dynamic coopetition capabilities in firms from a microbrewery cluster

PurposeThe objective of this research is to analyze the microfoundations of dynamic capabilities used by microbreweries in Porto Alegre (Brazil) in their coopetition strategies.Design/methodology/approachA case study with a qualitative approach was developed. Data were collected during interviews with owners of 11 microbreweries, via analysis of documents and nonparticipatory observation. The authors used the content analysis technique to infer knowledge.FindingsThe authors identified the microfoundations of dynamic coopetition capabilities including collective purchases, shared distribution expenses, shared production, education of consumers and other beer producers, group interaction and a business roundtable with entrepreneurs from the food and drink sector in the hospitality industry.Research limitations/implicationsThe authors developed a framework that considers the relationship between the microfoundations of dynamic capabilities and coopetition regarding the paradox between competition and cooperation. It is relevant to identify different actors’ movements and the potential outcomes of coopetitive strategies, which yield a competitive advantage for the cluster.Practical implicationsTogether, the microfoundations of dynamic capabilities contribute to the competitive advantage of the cluster.Originality/valueThe study highlights how small companies can jointly develop competitive advantage in a market dominated by a large company.

Accelerated internationalization of SMEs and microfoundations of dynamic capabilities: towards an integrated conceptual framework

PurposeStriving for growth since their early stages, many small and medium enterprises (SMEs) are increasingly adopting an entrepreneurial behavior based on a rapid and early international expansion. Although some extant research have been done on the dynamic capabilities of SMEs’ accelerated internationalization–born global (BG) SMEs, no study was, to the best of the authors’ knowledge, carried on the microfoundations underlying this phenomenon. This paper aims to fill this gap in the literature and contribute to the growing theory development of SME’s microfoundations.Design/methodology/approachThis paper proposes an integrated conceptual framework to better identify the microfoundations that influence born global SMEs internationalization by integrating individual, structural and processual – the microfoundations approach within the dynamic capabilities of sensing, seizing and reconfiguring.FindingsOur propositions argue that born global SMEs are characterized by dynamic capabilities based on a combination of some individual (manager’s human and social capital, such as its personal orientation, experiences, cognition and intuition), process (market learning, technology development) and structural (agility, communication/coordination) factors that helps a lot in the acceleration of the internationalization process.Research limitations/implicationsEmpirical study should be done to enrich the conceptual material.Practical implicationsTo identify some international opportunities, companies should rely on the entrepreneurial orientation of its managers, its experience and network as well as the market-related learning and technological processes. The managerial cognition is important to seize opportunities while the manager’s human capital is needed to reconfigure resources while internationalizing rapidly.Social implicationsThis research shows that individual attributes are important but insufficient to accelerate the internationalization process. Some individual characteristics are more useful in sensing international opportunities rapidly, such as manager’s international entrepreneurial, past experience and network, However, the managerial cognition is important to seize opportunities, whereas the manager’s human capital is needed to reconfigure resources while internationalizing rapidly.Originality/valueBorn global firms must develop several dynamic capabilities to foster their accelerated early international development. This paper gives insights about the individual, structural and processual of sensing international opportunities, seizing and reconfiguring resources and competencies for born globals.

Orchestration of the complex environmental context: how does strategic management affect and dynamic capabilities mediate performance?

PurposeThis paper aims to understand better how strategic management (SM) affects organizational and operational performance by examining the mediating role of dynamic capabilities (DCs) in complex environments.Design/methodology/approachThis study uses a survey of a sample of managers (n = 480) from each logistics firm and applies structural equation modeling to determine the relationships among variables.FindingsThe analyses identify SM directly and DCs as a mediator significant antecedent for the operational performance; further, environmental complexity shows an impact as a significant factor on both variables.Research limitations/implicationsOne of the managerial implications is that acquiring-sensing the environment should be orchestrated to be effective.Originality/valuePrevious DC literature studied underdeveloped DCs in complex environments and ignored the manager’s role as a connection between the environment and the firm. This paper contributes to the topic in three important ways: first, it clarifies the operational performance from the combination of the design of the DCs and the SM characteristics within the complex environment; second, the paper specifies that microfoundations of DCs are essential in the drive’s differences in the performance of the firms; and third, it clarifies regarding the role of the complex external environment rather than dynamic ones.

Does Strategic Agility Matter for Product Development Performance? The Role of Employee Resilience

As firms conduct their product development in increasingly dynamic and continuously changing environments, strategic agility can be an important source of product development performance (PDP). However, little attention has been paid to the micro individual capabilities that translate strategic agility into greater PDP. This study examines the mediating roles of employee resilience and self-efficacy as key dynamic micro-level (individual) capabilities that connect firms’ strategic agility to their PDP. Adopting a microfoundations approach and multilevel analysis and using data of 758 managers from 185 firms in Turkey, the findings suggest that strategic agility’s impact on PDP is conveyed through individual-level capabilities of employee resilience and self-efficacy. We draw on the microfoundations of dynamic capabilities and provide important insights on how firms developing individual capabilities attain higher PDP.

The micro-foundations of a dynamic technological capability in the automotive industry

This article seeks insights into how individuals, processes, and structures interact to create the micro-foundations of an operational capability related to production line innovation. Drawing on the literature on the micro-foundations of dynamic capabilities, we develop a model that explains how structures and processes encourage individuals to interact and how organizational routines and production line innovation capabilities emerge through these interactions. We based this study on a single case study design and used the Gioia methodology to analyze the data. The model was developed using 20 interviews with automotive industry suppliers, data collected from participant observations, and data from secondary sources. First, the findings at the individual level show that the mentality and experiences of managers affect macro-level capabilities. Second, social capital and networks, learning and integration capabilities, participatory decision-making and communication, coordination capabilities, and human resources management capabilities influence the development of production line innovation capability by promoting interpersonal interaction. Finally, structural factors such as organizational barriers and processes improve production line innovation capability. This study contributes to the literature on the micro-foundations of dynamic capabilities.

Microfoundations of dynamic capabilities: experiences of apparel product developers

ABSTRACT The purpose of this paper was to explore apparel product developers’ experiences with microfoundations of dynamic capabilities while at work. A phenomenological qualitative approach was pursued to complete in-depth interviews and analyze the data. Apparel product developers were interviewed because literature supports that product development constitutes a dynamic capability. The findings of this study propose a conceptual framework that explains the experiences of apparel product developers with the microfoundations dynamic capabilities. The conceptual framework illustrates inhibitors, facilitators, and occurrences of the microfoundations for apparel product developers and can facilitate strategic and innovative decisions for firms and inform academic programmes. This study offers new insight into the microfoundations of dynamic capabilities from the perspectives and experiences of apparel product developers. It also proposes that non-managerial personnel can initiate and complete the microfoundations of dynamic capabilities: Sensing, seizing, and reconfiguring.

Understanding the transformation toward omnichannel logistics in grocery retail: a dynamic capabilities perspective

PurposeOmnichannel (OC) logistics is undergoing a significant transformation in grocery retail. To shed light on this important but underresearched phenomenon, this study aims to investigate how grocery retailers transform and why some are more successful in transforming OC logistics.Design/methodology/approachApplying dynamic capabilities as a theoretical lens, a multiple case study was conducted with three grocery retailers at different stages of their transformation.FindingsSix microfoundations of dynamic capabilities were identified as critical for enabling OC transformation. The study highlights important differences in dynamic capabilities, which can be attributed to investment decision-making, governance and creating co-specialization. Finally, the authors propose seven propositions for contextualization of dynamic capabilities for OC transformation in grocery retail.Originality/valueThis study is original by contextualizing microfoundations in grocery OC retailing. The study contributes to theory and practice by showing the value of dynamic capabilities, stressing the important interrelation among a retailer's governance structure, leadership and capability to make investment decisions, increase logistics coordination and co-specialize.

Human-behavioral micro-foundations of dynamic capabilities: A systematic review of the last two decades of research

Human-behavioral micro-foundations of dynamic capabilities: A systematic review of the last two decades of research

Structural process model of organizational innovativeness types for sustainability: a dynamic capability perspective

PurposeThis paper aims to present an empirical test to analyze a structural process model based on constructs of organizational innovativeness types considering sustainability aspects. It explores interdependency among constructs of organizational innovativeness identified as product, process, behavioral, market, strategic and risk innovativeness. It integrates a dynamic capability perspective to strengthen the existing literature.Design/methodology/approachSample for data analysis covers 389 managers of firms demonstrating some traits of sustainability orientation and operating in a developing economy like India. Structural equation modeling is applied to test the causal model.FindingsStudy reveals that risk innovativeness along with strategic innovativeness leads to behavioral innovativeness which further causes product innovativeness and business process innovativeness. Business process innovativeness supports product innovativeness leading to market innovativeness of a firm. Characteristics of organizational innovativeness linked with the risk-taking ability of top management can be a critical differentiating factor between conventional and sustainability-oriented firms.Research limitations/implicationsThe factor of risk innovativeness was applied as per the existing measurement scale and has a scope for further exploration. It also offers an opportunity to reassess organizational innovativeness processes considering sustainability aspects.Practical implicationsThe study may help organizations to develop a systemic approach to evolve and develop business processes linked to organizational innovativeness considering sustainability challenges and uncertain market conditions.Social implicationsDevelopment of organizational innovativeness considering sustainability aspects may lead to innovative and disruptive products/services leading to mitigate climate change issues, thus helping global societies in long run.Originality/valueThe study offers common ground linked to the bodies of research related to dynamic capabilities, micro-foundations of dynamic capabilities, innovative capability and sustainability.

Bifurcating the dynamic dominant logic: technical and evolutionary patterns of action

PurposeThis study proposed the integrative model of dynamic dominant logic (DL) with exploitation (EP) and exploration (ER) as a pattern of actions in endeavoring firm performance (FP). This study also intended to explain the multiple patterns of DL in creating technical and evolutionary fitness simultaneously.Design/methodology/approachThis study used a cross-sectional quantitative analysis of the Indonesian commercial banking population facing digital transformation and was analyzed using covariance-based structural equation modeling through parceling.FindingsThe model confirmed that DL positively affects EP and ER. It also revealed that DL indirectly impacts FP through EP, indicating changes in the traditional banking business through the strong acceptance of “new realities” in adapting to the rapid growth of technology. Hence, this study discovered that during the recent banking digital transformation, the beneficial inertia of the technical pattern of action might lose effectiveness in creating superior performance.Practical implicationsDL is vital in locking short-term performance while maintaining long-term performance opportunities through EP and ER to promote digital transformation. Accordingly, it induced banks to adopt new technology for value creation and fortifying competitive advantage.Originality/valueThis study provided a theory about how DL links the firm's decision-making process by promoting multiple patterns of action in achieving technical and evolutionary fitness. It highlighted the DL as a resource conceptualization that promotes resource development through EP and ER as microfoundation of dynamic capabilities during the tension of institutionalization and digital transformation.

Exploring microfoundations of dynamic capabilities – challenges, barriers and enablers of organizational change

PurposeThe purpose of this study is to identify factors affecting an organization’s dynamic capability and, consequently, its ability to manage organizational change.Design/methodology/approachA single case study was conducted to provide a deeper understanding of the situation that the case company experienced during a specific phase of reconfiguration. Data were collected through nine in-depth, semi-structured interviews and analyzed using the Gioia methodology.FindingsChallenges, barriers and enablers affecting the organization's dynamic capability in the reconfiguration phase were identified.Originality/valueThis study contributes to the theory of dynamic capabilities and to the current investigatory stream regarding microfoundations by presenting practical examples of challenges, barriers and enablers that affect an organization’s ability to succeed during an organizational reconfiguration. These examples are intended to aid in discussions on microfoundations of dynamic capabilities and their impact in practice.

Dynamic Capabilities and New Product Development Performance

The paper aims to propose a structured multi-dimensional framework linking higher organisational capabilities such as dynamic capabilities (DC) and new product development (NPD) performance as a means by which the sustainable competitive advantage can be realised. The study lends support to supply chains that enable the firms to generate an economic surplus into the future. For this purpose, this study examines the complex inter-relationships between DC and performance in NPD using a multiple-criteria decision analysis (MCDA) approach using automotive industry data. The components of the DC model including the three capacities of sensing, seizing, and reconfiguration have been operationalised in cases featuring extensive supplier involvement in NPD projects. The findings of the study highlight that superior NPD performance including effectiveness, efficiency, and product content can be explained well by identifying and evaluating the effects of the organizational and managerial processes underlying the micro-foundations of DC.

Microfoundations of dynamic capabilities: Insights from circular economy business cases

AbstractCircular economy is a key strategy to achieve corporate sustainability. However, so far, most firms are unable to translate the concept of circular economy into their corporate strategies, business models, and operations. Some scholars have argued that firms need to develop new (and dynamic) capabilities for circular economy implementation. Yet there is a little discussion on how firms can develop such capabilities. Notably, there is a paucity of research on specific skills, processes, and organizational activities (microfoundations of dynamic capabilities) that may facilitate circular economy implementation. To address this knowledge gap, using a multiple‐case studies approach, we explore microfoundations of dynamic capabilities in successful circular economy business cases. Our findings indicate that dynamic capabilities positively contribute to circular economy implementation. Our case studies show that case firms identified circular economy opportunities by using four microfoundations of sensing capability. Further, case firms acted on the identified opportunities by using simultaneously three microfoundations of seizing capability and four microfoundations of reconfiguring capability. This paper contributes to the literature on the relations between dynamic capabilities and corporate sustainability by providing insights on how sensing, seizing, and reconfiguring dynamic capabilities act in successful operationalization of circular economy strategies.

Corporate foresight as a microfoundation of dynamic capabilities

AbstractThe dynamic capabilities perspective is aimed at explaining how firms achieve and sustain competitive advantages, especially in environments that become volatile, uncertain, complex, and ambiguous (VUCA). In this paper, we combine factors that explain dynamic capabilities on the firm level with factors of dynamic managerial capabilities on the individual level. In addition to the dynamic capabilities theory, we draw on corporate foresight (CF) literature to test the impact of CF training. We find that both the organizational‐level practices and the individual‐level training of leaders are positively associated with firm‐level outcomes. We further observe that this relationship is mediated by dynamic managerial capabilities (i.e., the ability of leaders to challenge current business models, make decisions under uncertainty, and reconfigure organizational resources). Our findings emphasize the importance of training leaders and building organizational CF practices to build the dynamic capabilities needed in VUCA environments.

Dynamic capabilities for hire – How former host-country entrepreneurs as MNC subsidiary managers affect performance

MNC subsidiaries benefit from managers with entrepreneurial skills for finding superior combinations of MNC and host-country resources. However, such management skills are scarce. We reason that subsidiaries can improve their performance by hiring host-country entrepreneurs as managers since they develop similar skills in start-ups. Our theoretical model integrates mechanisms from entrepreneurial experience into theory on the microfoundations of dynamic capabilities. We test and support our prediction using longitudinal employer–employee data for 5587 foreign MNC subsidiaries in Portugal. Further, we show that performance effects are weaker when a subsidiary’s management is internationally diverse and stronger in dynamic host-country environments.

A problem-solving process for developing capabilities: the case of an established firm

Purpose Current research has theorized that developing dynamic capability can be viewed as a problem-finding and problem-solving process in terms of a firm’s resource reconfiguration. However, there continues to be a scarcity of empirical research on how firms and managers solve innovation problems to develop capabilities. Building on the theoretical lens of problem-solving perspective (PSP) and dynamic capability literature, the purpose of this paper is to address this gap by examining how a large automobile company developed different types of capabilities (combining capability, replacing capability and evolving capability) and their underlying problem-solving processes. Design/methodology/approach An inductive multi-case design was used to investigate the problem-solving process in different types of capability development in the context of NPD. This methodology has a number of benefits, including accommodation of the rich data used to compare the inferences among cases, thus enabling researchers to extend the emergent theory. Findings The findings of a multi-case study show that managers tend to direct their attentions to searching for solutions among external resources when the problem is framed as a combination of existing capabilities. Conversely, managers direct their attention to facilitating organizational learning when the problem is framed as an extension of an existing capability. However, managers need to direct more attention to gaining legitimacy when the problem is framed as a replacement of existing capabilities. The findings thus respond to increasing calls for more investigations into the microfoundations underlying firms’ capabilities, by revealing different instances of PSP, and their connections with different actions that take to capability development. Originality/value By comparatively examining the unique problem-solving process underlying an established firm’s innovative challenges in developing capabilities, the findings identify different instances of PSP, and their connections with different actions that take to capability development. Thus, the findings respond to increasing calls for more investigation into the microfoundations of dynamic capabilities for organizational outcomes. The findings also add to the new product development literature by examining how a product innovation can be framed differently depending on the attributes of an innovation problem. As PSP is particularly useful in offering guidance to firms’ innovative search, it is important for managers to pay attention to the attribute of each product and its domain of solution in considering the effectiveness of value creation.