Showing papers on "Dynamic capabilities published in 2006"
TL;DR: In this paper, a definition of dynamic capabilities, separating them from substantive capabilities as well as from their antecedents and consequences, is proposed, and a set of propositions that outline how substantive capabilities and dynamic capabilities are related to one another, how this relationship is moderated by organizational knowledge and skills, and how organizational age affects the speed of utilization of dynamic capability and the learning mode used in organizational change.
Abstract: The emergent literature on dynamic capabilities and their role in value creation is riddled with inconsistencies, overlapping definitions, and outright contradictions. Yet, the theoretical and practical importance of developing and applying dynamic capabilities to sustain a firm's competitive advantage in complex and volatile external environments has catapulted this issue to the forefront of the research agendas of many scholars. In this paper, we offer a definition of dynamic capabilities, separating them from substantive capabilities as well as from their antecedents and consequences. We also present a set of propositions that outline (1) how substantive capabilities and dynamic capabilities are related to one another, (2) how this relationship is moderated by organizational knowledge and skills, (3) how organizational age affects the speed of utilization of dynamic capabilities and the learning mode used in organizational change, and (4) how organizational knowledge and market dynamism affect the likely value of dynamic capabilities. Our discussion and model help to delineate key differences in the dynamic capabilities that new ventures and established companies have, revealing a key source of strategic heterogeneity between these firms.
2,546 citations
TL;DR: It is suggested that IS researchers should look beyond the direct effects of firm-level IT infrastructures and focus their attention on how business units can leverage IT functionalities to better reconfigure and execute business processes in turbulent environments.
Abstract: A burning question for information systems (IS) researchers and practitioners is whether and how IT can build a competitive advantage in turbulent environments. To address this question, this study focuses on the business process level of analysis and introduces the construct of IT leveraging competence---the ability to effectively use IT functionalities. This construct is conceptualized in the context of new product development (NPD). IT leveraging competence is shown to indirectly influence competitive advantage in NPD through two key mediating links: functional competencies (the ability to effectively execute operational NPD processes) and dynamic capabilities (the ability to reconfigure functional competencies to address turbulent environments). Environmental turbulence is also shown to moderate the process by which IT leveraging competence influences competitive advantage in NPD. Empirical data were collected from 180 NPD managers.
Through the construct of IT leveraging competence, the study shows that the effective use of IT functionalities, even generic functionalities, by business units can help build a competitive advantage. The study also shows that the strategic effect of IT leveraging competence is more pronounced in higher levels of environmental turbulence. This effect is not direct: It is fully mediated by both dynamic capabilities and functional competencies. Taken together, these findings suggest that IS researchers should look beyond the direct effects of firm-level IT infrastructures and focus their attention on how business units can leverage IT functionalities to better reconfigure and execute business processes. In turbulent environments, focusing on these aspects is even more vital.
1,301 citations
TL;DR: In this article, the authors consider how innovators benefit from value appropriation and creation, and they provide an integrative guide that explains how firms should manage their position along the value chain to capture returns from innovation.
615 citations
TL;DR: In this article, a Schumpeterian theory of the firm is outlined, along with a framework to assist management in designing technology commercialization strategies, and links are also made to the strategic management literature on resources and dynamic capabilities.
587 citations
TL;DR: It is concluded that the extent to which the chosen mechanism enables incumbents to overcome cognitive and operational impediments influences their capacity to bridge capability gaps.
Abstract: 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.
521 citations
TL;DR: The concept of innovation orientation as a system is conceptualized and defined in this paper, and a multidimensional knowledge structure and a framework for understanding innovation orientation and its consequences in an organizational context are developed.
509 citations
TL;DR: In this article, the authors explore the evolution of management systems for enabling radical innovation to occur repeatedly in large firms and report on one aspect of this management system: organizational structures for enabling and nurturing RI.
367 citations
TL;DR: A conceptual model based on the theory of dynamic capabilities to study how manufacturing plants realize improvements in plant performance by leveraging plant information systems to enable implementation of advanced manufacturing capabilities suggests that manufacturing capabilities mediate the impact of information systems on plant performance.
Abstract: Firms have been investing over $5 billion a year in recent years on new information technology and software in their manufacturing plants. In this study, we develop a conceptual model based on the theory of dynamic capabilities to study how manufacturing plants realize improvements in plant performance by leveraging plant information systems to enable implementation of advanced manufacturing capabilities. We develop hypotheses about relationships between information systems, their impact on manufacturing practices, and the overall impact on plant performance. Analysis of survey data from 1,077 U.S. manufacturing plants provides empirical support for the dynamic capabilities model and suggests that manufacturing capabilities mediate the impact of information systems on plant performance. Our results underscore the importance of manufacturing and organizational capabilities in studying the impact of IT on manufacturing plant productivity, and provide a sharper theoretical lens to evaluate their impact.
359 citations
TL;DR: It is proposed that simplified links between design and performance outcomes in modular environments facilitate imitation, and the same reduction in complexity drives development of dynamic capabilities.
Abstract: Modular design practices provide a lens on the link among product architecture, imitation, and the dynamic capabilities that sustain long-term performance. Looking at closed product systems, we propose that simplified links between design and performance outcomes in modular environments facilitate imitation. The same reduction in complexity drives development of dynamic capabilities. These take the form of more rapid and reliable search processes for incremental and radical innovations. The scope and timing of a firm's modular strategy influence the development of these capabilities, which are critical to sustainable modular performance advantages.
303 citations
TL;DR: In this paper, a two-dimensional typology of dynamic capabilities, grouping them by the life-cycle stage and the timing of expected returns, is presented, and validated and mapped four distinct innovation strategies onto specific sets of product innovation capabilities.
294 citations
TL;DR: The findings are that acquired and internally developed units serve different roles in the process of change, and that firms perceive reconfiguration to be beneficial.
Abstract: This paper explores changes in organizational structure and distinguishes between units' origins. Unit reconfiguration is the addition of units to, deletion of units from, and recombination of units within the firm. This study compares the reconfiguration of internally developed vs. acquired units, explores what forms of unit recombination are common, and observes whether firms pursue recombination before divestiture. Theoretical support is drawn from the dynamic capabilities perspective, research on modular organizational systems, and strategy–structure literature. The findings are that acquired and internally developed units serve different roles in the process of change, and that firms perceive reconfiguration to be beneficial. Copyright © 2006 John Wiley & Sons, Ltd.
TL;DR: Hypotheses were developed to capture the dynamic capabilities that result from interfirm partnerships during the joint new product development (NPD) process — the ability to build, integrate, and reconfigure existing resources to adapt to rapidly changing environments and shed light on the nature of technology-based interfirm NPD partnerships.
Abstract: Hypotheses were developed to capture the dynamic capabilities that result from interfirm partnerships during the joint new product development (NPD) process—the ability to build, integrate, and reconfigure existing resources to adapt to rapidly changing environments. These capabilities, in turn, were proposed to have a positive impact on NPD performance outcomes: (a) proportion of new product success and (b) superior new product commercialization. In contexts where the locus of innovation is rapidly changing, the impact of interfirm NPD dynamic capabilities was hypothesized to be diminished in high-technology contexts, especially for buyers (original equipment manufacturers) and to a lesser extent for suppliers. Still, technology-based interfirm NPD partnerships were predicted to ultimately outperform low-technology ones in both NPD performance outcomes. Finally, information technology (IT) support for NPD was hypothesized to influence the interfirm NPD partnership's dynamic capabilities. Using survey data from 72 auto company managers and their suppliers, the proposed model in which IT support for NPD influences the success of interfirm NPD partnerships through the mediating role of interfirm NPD partnership dynamic capabilities in high- and low-technology contexts was generally supported. The results shed light on the nature of technology-based interfirm NPD partnerships and have implications for their success. Theoretical and managerial implications are discussed.
TL;DR: This article examined and delineated dynamic capabilities from entrepreneurial capabilities in entrepreneurship and developed theory to explain how venture capitalists (VCs) endue their ventures with greater dynamic capabilities in order to address weaknesses and threats.
01 Jun 2006
TL;DR: In this paper, a definition of dynamic capabilities, separating them from substantive capabilities as well as from their antecedents and consequences, is presented, along with a set of propositions that outline how substantive capabilities and dynamic capabilities are related to one another, how this relationship is moderated by organizational knowledge and skills, and how organ-izational age affects the speed of utilization and the learning mode used in organizational change.
Abstract: The emergent literature on dynamic capabilities and their role in value creation is riddled with inconsistencies, overlapping definitions, and outright contradictions. Yet, the theoretical and practical importance of developing and applying dynamic capabilities to sus-tain a firm’s competitive advantage in complex and volatile external environments has cata-pulted this issue to the forefront of the research agendas of many scholars. In this paper, we offer a definition of dynamic capabilities, separating them from substantive capabilities as well as from their antecedents and consequences. We also present a set of propositions that outline (1) how substantive capabilities and dynamic capabilities are related to one another, (2) how this relationship is moderated by organizational knowledge and skills, (3) how organ-izational age affects the speed of utilization of dynamic capabilities and the learning mode used in organizational change, and (4) how organizational knowledge and market dynamism affect the likely value of dynamic capabilities. Our discussion and model help to delineate key differences in the dynamic capabilities that new ventures and established companies have, revealing a key source of strategic heterogeneity between these firms.
TL;DR: In this paper, a case study of two Spanish companies that have successfully learned from stakeholder dialogue and have generated innovations that are beneficial both to the company and to sustainable development in general is presented.
Abstract: This paper attempts to gain a deeper understanding of the firm's ability to integrate stakeholder insights into the process of organisational innovation within the context of sustainable development. Given the early stage of empirical research on the topic, we used an exploratory case study of two Spanish companies that have successfully learned from stakeholder dialogue and have generated innovations that are beneficial both to the company and to sustainable development in general. The evidence from the two case studies suggests that there are two simple capabilities - stakeholder dialogue and stakeholder knowledge integration for generating innovations in accordance with stakeholder needs. Whereas stakeholder dialogue leverages organisational resources that promote two-way communication, transparency and appropriate feedback to stakeholders, stakeholder knowledge integration relies on non-hierarchical structures, flexibility and openness to change. The paper sheds some light on the under-researched issue of linking stakeholder dialogue and sustainable innovation, and contributes to opening the black box of dynamic capabilities and advancing in the understanding of this fundamental organisational concept.
TL;DR: In this article, the authors identify this dynamic capability associated with acquiring and utilizing external technological know-how with the notion of absorptive capacity (AC), and build a conceptual framework suggesting that marketing, R&D, and operations capabilities have a significant positive impact on a firm's AC.
Abstract: The rapid rate of knowledge obsolescence in many high-technology markets makes it imperative for firms to renew their technological bases constantly. Given its critical importance, excellence in renewal of technological base would serve as a dynamic capability. Drawing on past literature, we identify this dynamic capability associated with acquiring and utilizing external technological know-how with the notion of absorptive capacity (AC).
We ask the following questions: (a) What would cause some firms to have a higher AC than others? and, (b) What is the impact of AC on a firm's profitability?
We build a conceptual framework suggesting that marketing, R&D, and operations capabilities have a significant positive impact on a firm's AC. We test our framework on a data set of firms in high-technology markets. Using an econometric technique called stochastic frontier estimation, we infer the AC of firms from an observation of the know-how they actually absorb. We find that firm-specific capabilities significantly impact AC. Also, we find that AC has a significant impact on profitability and that this impact is moderated by the pace of technological change: the greater the pace of change, the greater the impact.
TL;DR: In this paper, the role of knowledge in intentionally created business networks called nets is discussed and the types of knowledge and learning required in the management of different types of business net are dependent on the value creation characteristics of the net types.
Abstract: This paper focuses on the role of knowledge in intentionally created business networks called nets. Nets are seen to offer firms collective benefits beyond those of a single firm or market transaction. We propose that the types of knowledge and learning required in the management of different types of business net are dependent on the value creation characteristics of the net types. Based on this we suggest a classification of three generic net types –‘current business nets’, ‘business renewal nets’, and ‘emerging new business nets’– and argue that they pose different conditions for management in nets. Using this framework and integrating notions from the industrial network approach, strategic management and dynamic capabilities view, and organizational learning we make a number of observations and propositions about the role of knowledge and learning in the three types of business net. The paper contributes to the emerging theory of network management.
TL;DR: In this paper, the authors show that the management orientation of entrepreneurial proclivity increases the accumulation of knowledge resources, in addition to enhancing the conversion of one knowledge resource (knowledge of suppliers) in the capability of market responsiveness.
TL;DR: The study illustrates how forms of knowledge, particularly when transmitted via social interactions, can act as a source of dynamic capabilities, and concludes with suggestions about further research on the social and political interactions between the two.
Abstract: Two concepts, dynamic capabilities and knowledge management, are widely assumed to be linked to sustained competitive advantage, although researchers have found it hard to substantiate these assumptions. It has also been suggested that the interplay between the two is important, and that it needs to be better understood. In this paper, we therefore look at the nature of, and interaction between, organizational knowledge and dynamic capabilities in some detail. We do this first through a literature review, and second, through a case study of the evolution of a new international business. The study illustrates how forms of knowledge, particularly when transmitted via social interactions, can act as a source of dynamic capabilities, and we conclude with suggestions about further research on the social and political interactions between the two.
TL;DR: The author used data from 244 Taiwanese information technology firms and found that, in an unstable environment, resources, whether from the firm itself or from associated support firms, did not directly influence performance.
Posted Content•
TL;DR: In this article, the authors focus on the business process level of analysis and introduce the construct of IT leveraging competence, which is conceptualized in the context of new product development (NPD) to indirectly influence competitive advantage in NPD through two key mediating links: functional competencies and dynamic capabilities.
Abstract: A burning question for information systems (IS) researchers and practitioners is whether and how IT can build a competitive advantage in turbulent environments. To address this question, this study focuses on the business process level of analysis and introduces the construct of IT leveraging competence — the ability to effectively use IT functionalities. This construct is conceptualized in the context of new product development (NPD). IT leveraging competence is shown to indirectly influence competitive advantage in NPD through two key mediating links: functional competencies (the ability to effectively execute operational NPD processes) and dynamic capabilities (the ability to reconfigure functional competencies to address turbulent environments). Environmental turbulence is also shown to moderate the process by which IT leveraging competence influences competitive advantage in NPD. Empirical data were collected from 180 NPD managers. Through the construct of IT leveraging competence, the study shows that the effective use of IT functionalities, even generic functionalities, by business units can help build a competitive advantage. The study also shows that the strategic effect of IT leveraging competence is more pronounced in higher levels of environmental turbulence. This effect is not direct: It is fully mediated by both dynamic capabilities and functional competencies. Taken together, these findings suggest that IS researchers should look beyond the direct effects of firm-level IT infrastructures and focus their attention on how business units can leverage IT functionalities to better reconfigure.
TL;DR: How Schumpeterian environments influence organizations in the direction of simpler, minimally‐structured designs is discussed and why Schumpetersian environments create the need for strategic improvisation and minimally-structured design is considered.
Abstract: Purpose – The purpose of this paper is to contribute to the creation of a complexity theory of strategy by integrating a number of ideas that have previously been explored independently in the strategy literature, namely improvisation, minimal structures, simple rules, dynamic capabilities, bricolage, and organizational resilience.Design/methodology/approach – Organizations are taken as complex adaptive systems that align with their environments through interaction and response rather than analysis and planning. The paper discusses how Schumpeterian environments influence organizations in the direction of simpler, minimally‐structured designs and considers why Schumpeterian environments create the need for strategic improvisation and minimally‐structured designs.Research limitations/implications – The paper articulates recent concepts in the management literature. The integration of these new concepts may be relevant to explore the way they relate with each other in the emerging organizational configurati...
TL;DR: This paper provides a study about how competency traps are formed in the process of knowledge exploration and exploitation as well as their effects on business performance and a discussion of implications for the organizational learning literature.
Abstract: It is no surprise that knowledge exploitation and knowledge exploration have become the consistent theme in organizational learning literature. Strategy and organization theorists have similarly observed the dynamic capabilities anchored in a firm's ability to simultaneously exploit current technologies and resources to secure efficiency benefits, and creating variation through exploratory innovation. While some studies argue that excessive exploration or excessive exploitation can lead to a competency trap, the ‘competency trap’ component actually has received less empirical scrutiny. This paper provides a study about how competency traps are formed in the process of knowledge exploration and exploitation as well as their effects on business performance.
The paper includes three main sections: First, the theoretical interpretation of the ‘competency trap’ construct is broadened by investigating the formation of competency traps based on organizational learning theory; second, factors leading to the formation of different competency traps are identified; and third, the relationship between an organization's competency trap and business performance is investigated. The article ends with a discussion of implications for the organizational learning literature. Copyright © 2006 John Wiley & Sons, Ltd.
TL;DR: The model that is synthesised from the literature review draws on the work of Dorothy Leonard on technological capability, the I‐space model of knowledge assets developed by Max Boisot, and other work based in the organisational learning and innovation management literature.
Abstract: Purpose – The purpose of this paper is to present a review of literature that establishes the factors affecting the ability of an organisation to absorb and apply knowledge. The review aims to draw from literature on the resource‐based view of the firm, dynamic capabilities, organisational learning, knowledge management and technological innovation. The paper then seeks to present a model of knowledge translation capability synthesised from the literature review.Design/methodology/approach – The model that is synthesised from the literature review draws on three streams of work. First, the work of Dorothy Leonard on technological capability; second, the I‐space model of knowledge assets developed by Max Boisot; and third, other work based in the organisational learning and innovation management literature. The model is illustrated using a case study of an innovation project.Findings – The effective development of a knowledge translation capability requires attention to a network of both formal and informa...
TL;DR: In this article, an empirical study of 59 start-ups in the Swedish mobile Internet industry was performed, and it was shown that start-up which change market focus have a significantly higher probability to survive their first years.
Abstract: The dynamic capabilities perspective has received increasing attention in the field of strategic management research. By focusing not only on the competitive advantage that is provided by a certain resource constellation, but also on the change of firms' resources over time to fit changing business environments, this perspective underlines the strategic importance of innovation. Despite the apparent interest in the dynamics of firm resources, there is still limited empirical evidence for how the strategic matching of resources and market needs is actually done, particularly in more rapidly changing environments. In order to investigate this process, an empirical study of 59 start-ups in the Swedish mobile Internet industry was performed. A first finding from the study is that start-ups which change market focus have a significantly higher probability to survive their first years. Furthermore, it is seen that in most cases, the change in market focus takes place without any related change in the technological resources that are used by the firm, indicating that an important factor at this stage is the flexible use of resources in searching for a suitable match between resources and market opportunities. This mode of learning and adaptation is very different from earlier proposed models focusing on the acquisition and transformation of resources. Instead, the early-stage dynamic capabilities reveal themselves as bricolage, that is, the capacity to re-interpret and re-combine already existing resources and thereby improve their fit with the demands of the market environment. The results suggest that earlier proposed dynamic capabilities frameworks need to be modified, by taking into account the single entrepreneur as a source of dynamic capabilities, and by introducing the concept of resource flexibility. In terms of managerial implications, the findings underline the importance for entrepreneurs to balance the striving for distinctive capabilities that provide competitive advantage and the experimentation and improvisation needed to adapt to changes in the market. Copyright © 2006 John Wiley & Sons, Ltd.
TL;DR: In this paper, an overview of existing literature at the firm level, a propositional model is proposed to describe the process of adaptation and the factors enabling adaptation in new technology-based ventures.
Abstract: Recent research shows that, owing to the presence of uncertainty and ambiguity, new ventures have great difficulties in defining a viable business model from the outset and that minor or major adaptations to this initial business model are needed as the venture evolves. Technology-based companies are confronted with particularly high degrees of uncertainty and ambiguity. This paper therefore focuses on new technology-based ventures as a special case worth investigating. Most of the entrepreneurship literature studies adaptation at the individual level. However, many new technology-based firms are founded by a team of entrepreneurs. This paper therefore looks at how existing literature at the company level can inform us about adaptation in new technology-based companies. It starts by relating the concept of adaptation in new technology-based ventures to the existing literature on organizational adaptation at the firm level. Based on an overview of existing literature at the firm level, a propositional model is then put forward, describing (1) the process of adaptation and (2) the factors enabling adaptation in new technology-based ventures.
Book•
01 Jan 2006TL;DR: In this paper, the authors present a unified theory of management based on a consistent disequilibrium framework for the unification of the functional disciplines of management, and propose an Activities-based view of strategizing.
Abstract: Contents Preface Acknowledgments List of abbreviations List of Charts 1. Introduction Strategizing vs. economizing Outline of chapters 2. Capitalism is not and never can be a stationary system The Schumpeterian schema and dynamic competition vs. a comparative static framework: Structure, Conduct, Performance Applications in a test case: the Flat Panel Display industry 3. Entrepreneurial profits can only be earned in disequilibrium The Knightian theory of profits Strategic opportunities and earning profits in disequilibrium Why Knightian profits vanish at perfectly competitive equilibrium 4. Rents vs. profits as strategizing goals Ricardian and monopoly rents - and their inadequacies as goals for strategizing Organizational, managerial and entrepreneurial rents as illusory goals for firms 5. Strategizing is carried out by resource-based firms The Penrosean firm as vehicle for strategizing Fundamental strategic categories of the firm: Resources, activities and routines Strategic goals associated with resources: complementarities with activities: increasing returns and with routines: learning by doing 6. No firm is an island: Strategizing in networks The firm with its multiple connections Resources, activities and routines at the network level, and strategic goals associated with them 7. The economy as a whole: Entrepreneurial, industrial and evolutionary dynamics The Schumpeterian notion of the economy as a whole, linking strategizing via entrepreneurial dynamics to industrial dynamics and evolutionary dynamics 8. Strategizing in disequilibrium: Comparative static vs. dynamic frameworks The workings of the framework as a totality Generation of an Activities-based view of strategizing, a Resources-based view, and a Routines-based view (or Dynamic capabilities perspective), in both comparative static and dynamic settings 9. Towards a unified theory of management The advantages for management of adopting a consistent disequilibrium framework - not least in developing a platform for the unification of the functional disciplines of management Appendix. Entrepreneurship and economics: A case of shocking neglect References Index
Journal Article•
TL;DR: In this article, the authors examine the importance of institutional embeddedness and dynamic capabilities in the internationalization strategies of small and medium-sized enterprises (SMEs) in emerging economies.
Abstract: We examine the importance of institutional embeddedness and dynamic capabilities in the internationalization strategies of small and medium-sized enterprises (SMEs) in emerging economies. We focus on two types of SMEs - incumbent SMEs and entrepreneurial start-ups. We argue that incumbent SMEs can increase their internationalization capabilities by using their embedded networks with local governments and business groups. Entrepreneurial start-ups in emerging economies may develop new capabilities by learning from foreign firms and business groups. Therefore, entrepreneurial start-ups identify, create, and exploit new opportunities continuously in foreign markets. This work contributes to our knowledge of how incumbent SMEs and entrepreneurial ventures in emerging markets build knowledge and capabilities to enter and compete successfully in international markets.
TL;DR: In this paper, the authors focus on the dynamics of implementation processes of accrual output-based budgeting in local governments in Germany and compare the performance of six case studies in German municipalities.
Abstract: In order to improve financial decision making in local governments in Germany, accrual output-based budgeting is being introduced. As the dynamics of implementation processes are often neglected, we research the shift from established rules and procedures to the application of accrual accounting, especially how public managers deal with new financial management systems and how their expectations are fulfilled. Based on a dynamic capability approach, six case studies in German municipalities are conducted. In a comparative analysis we focus on the dynamics of implementation processes. The findings emphasize that the application of accrual accounting is dependent on strategic orientations of top managers, involvement of middle managers and the capability to develop new structural routines in managing change.
TL;DR: In this paper, the authors draw upon the strategy literature to provide a number of insights into what constitute the critical external drivers influencing strategy and the nature of the internal resources firms require to sustain their competitive advantage.