Dynamic capabilities and knowledge management: an integrative role for learning?

Modern strategic management theories try to explain why firms differ, because new sources of competitive advantage are keenly sought in the dynamic and complex environment of global competition. Two areas in particular have attracted the attention of researchers: the role of dynamic capabilities, and the firm's abilities for knowledge management. In this paper, we argue that there is a link between these two concepts, which has not been fully articulated in the literature. The aim of the paper is therefore to ascertain the conceptual connection between them as a basis for future research. Our proposed framework acknowledges and critiques the distinct roots of each field, identifies boundaries, and proposes relationships between the constructs and firm performance

Dynamic Capabilities and their Indirect Impact on Firm Performance

This paper investigates the relationship between dynamic capabilities and firm performance. In particular it addresses the question of whether dynamic capabilities impact directly or indirectly on performance. Using data from manufacturing firms, the paper articulates and measures dynamic capabilities as a multi-dimensional construct with three underlying factors: coordination, learning and strategic competitive response. Then, structural equation modelling is employed to explore the relationships among dynamic capabilities, functional competences and firm performance. Empirical findings suggest that dynamic capabilities are antecedents to functional competences which in turn have a significant effect on performance. Direct effects on performance are found to be insignificant. Furthermore, similar effects seem to hold for both higher and lower levels of environmental dynamism. Theoretical and practical implications are discussed.Dynamic capabilities; functional competences; firm performance; indirect impact

Strategic Orientations, Dynamic Capabilities, and Firm Performance: an Analysis for Knowledge Intensive Business Services

The strategic orientations of a firm are considered crucial for enhancing firm performance and their impact can be even greater when associated with dynamic capabilities, particularly in complex and dynamic environments. This study empirically analyzes the relationship between market, entrepreneurial and learning orientations, dynamic capabilities, and performance using an integrative approach hitherto little explored. Using a sample of 209 knowledge intensive business service firms, this paper applies structural equation modeling to explore both direct effects of strategic orientations and the mediating role of dynamic capabilities on performance. The study demonstrates that learning orientation and one of the dimensions of entrepreneurial orientation have a direct positive effect on performance. On the other hand, dynamic capabilities mediate the relationships between some of the strategic orientations and firm performance. Overall, when dynamic capabilities are combined with the appropriate strategic orientations, they enhance firm performance. This paper contributes to a better understanding of the knowledge economy, given the important role knowledge intensive business services play in such a dynamic and pivotal sector

Beyond Penrose: A Cognitive Theory of the Firm

This paper uses a cognitive theory of firms and organizations, with a focus on learning and innovation.Here, cognition is a wide notion, including value judgments and corresponding feelings and emotions.This paper focuses on the relation between that cognitive theory and Penrose's theory of the growth of the firm.As in Penrose's work, the focus is on learning, rather than on efficient utilization of resources or appropriation of returns from them.Also as in Penrose, the underlying view of cognition is a constructivist one, according to which people with different experience view the world differently.So far, the paper is consistent with Penrose.However, it also adopts and further develops some of the criticism of her views, concerning the role of other human resources than managers in organizational learning, problems of conflicts of interest and governance within the firm, dynamic capabilities for developing new capabilities, and, above all, the alternative of collaboration between firms, for learning and innovation, in the combination of capabilities between rather than within the firm.In particular, it argues that, in contrast with Penrose, there are limits to firm size.theory of the firm;Penrose;knowledge;learning;innovation;dynamic capabilities;firm size;growth of the firm

Learning investments and organizational capabilities: case studies on the development of project portfolio management capabilities

Purpose The purpose of this paper is to improve understanding and provide guidance for investments in organizational learning mechanisms for the establishment and evolution of organizational capabilities such as project portfolio management (PPM) and project management capabilities. Design/methodology/approach A multiple-case study research project investigates the development of PPM capabilities in six successful organizations across diverse industries. Findings The research indicates that PPM and organizational learning are dynamic capabilities that enhance an organization's ability to achieve and maintain competitive advantage in dynamic environments. PPM capabilities are shown to co-evolve through a combination of tacit experience accumulation, explicit knowledge articulation and explicit knowledge codification learning mechanisms. Although all three learning mechanisms are important throughout the establishment and evolution of PPM capability development, the research indicates that the development of an effective PPM capability will require particularly strong investments in enhancing tacit experience accumulation mechanisms and explicit knowledge codification mechanisms during the initial establishment or during periods of radical change to the PPM process

Professional Learning – Reflexive Managerial Learning in the Context of Dynamic Capabilities

The notion of dynamic capabilities (DC) is suggestive that organisations adapt to changing environmental demands proactively or reactively by exercising capability. Based on the assumptions of incremental change DC is constrained by the imprints of evolutionary economics evident in the writings of the early pioneers. The historical trajectory is central alongside routinized practices setting the scene for predictable learning patterns and behaviour. In as much as capability is understood in terms of an evolutionary learning framework knowledge is always tied to the past, but DC by name should be an outlook to the future. DC still elicit strong sentiments not least associated with what some scholars have described as paradoxical in its conceptualisation steeped in routines and experiential learning. How then can capability be dynamic given that the very essence of capability is based on inertia, embeddeness etc. the very source of its causal ambiguity and competitive usefulness? Indeed the notion of capability is highly suggestive as being particularly constraining on cognitive independence. Managers are the linchpins of DC, it is not surprising therefore that in contemporary writing terms such as managerial dynamic capabilities and managerial cognition are commonplace. Notwithstanding the conceptualisation of DC seems to impose severe limitations on what managers can think, learn and do, in other words a heavily curtailed agency. The reality cannot be any further from the truth, embedded in institutional structures managers actively display agentic behaviours, such as innovativeness and entrepreneurship. Perhaps the evolutionary economics functionalist view of the world left more than just an “incremental change” imprint on the field! Managers are therefore not social dopes in spite of what existing theories that variously restricts learning to socialisation suggest. How then can managerial learning be explained without conflating the powers of the individual with that of structure? A critical realist approach potentially offers a way forward. From a critical realist approach capability can be conceptualised as a social structure. Social structures predate social actors but are only reproduced in action. Social structures are also relational in nature. Managers are viewed as roles played by actors occupying certain organisational positions. It is through the role play that capabilities are reproduced, thus managerial action are central in the exercise of capability. Pre-existing managerial roles are imbued with objective cultural artefacts (rules, norms, etc.) shaping the cognition of potential incumbents. However these are subjectively accessed meaning that action outcomes may not necessarily reflect intention. Viewed this way capabilities are susceptible to reproduction as well as elaboration or change; intentionally or otherwise. Drawing on Archer’s morphogenesis approach we argue that subjectivity functions as dominant reflexive modes. In this paper we employ the concept of internal conversation to distinguish between managers that are predominantly communicative reflexives and autonomous reflexives. ‘Autonomous’ managers are independent learners, future oriented, innovative, entrepreneurial, and act strategically to improve organisational practice. On the other hand ‘communicative’ managers favour the status quo, their learning is constrained by the structure they are embedded in and act to preserve existing practices. As such we seek, through critical realism, to theorise learning in terms of internal conversation emphasising impact of learning outcomes to organisations

Dynamic Capability Building through partnering: An Australian Mobile handset case Study

Dynamic capabilities are increasingly seen as an organisational characteristic for innovation and are regarded as a source of competitive advantage. In a quest for sustainability, service organisations are partnering with their stakeholders, and subsequently are aptly bringing innovation in services to market. Most of existing empirical research regarding dynamic capabilities seeks to define and identify specific dynamic capabilities, as well as their organizational antecedents or effects. Yet, the extent to which the antecedents of success in particular dynamic capabilities, contribute to innovation in service organisations remains less researched. This study advances the understanding of such dynamic capability building process through effective collaboration, and highlights the detailed mechanisms and processes of capability building within a service value network framework to deliver innovation in services. Deploying a case study methodology, transcribing interviews with managers and staff from an Australian telco and its partnering organisations, results show that collaboration, collaborative organisational learning, collaborative innovative capacity, entrepreneurial alertness and collaborative agility are all core to fostering innovation in services. Practical implications of this research are significant, and that the impacts of collaboration and the dynamic capabilities mentioned above are discussed in the context of a mobile handset case study

Learning from Semantic Inconsistencies as the Origin of Dynamic Capabilities in MNCs: Evidence from Pharmaceutical MNCs

This paper focuses on origins of dynamic capabilities in multinational corporations (MNCs). Building on literature in the area of organizational memory and organizational learning, we investigate factors that contribute to subsidiaries of MNCs ability to detach themselves from obsolete knowledge and practices. To construct the theoretical framework, 11 extensive interviews with marketing and sales executives from three pharmaceutical MNCs operated in Iran were conducted. We test our hypotheses using statistical quantitative analysis of data related to 459 observations from subsidiaries of 51 pharmaceutical MNCs during years 2005-2009. We examine the quality of corrective actions taken by subsidiaries of pharmaceutical MNCs subsequent to subsidiaries failing to meet expected performance objectives. Our findings confirm a moderating role for internationalization, span, and the composition of human resources on the quality of corrective actions pursued