Discontinuity in the Environment, Firm Response and Dynamic Capabilities

Abstract

This paper identifies and focuses on a specific type of environmental development called discontinuity. Discontinuities in the forms of rapid technological innovations, regulatory reforms, institutional overhauls, and socio-cultural developments are the source of opportunities and threats to the firm. Firm responds to these discontinuities in specific ways in sustaining its existence at different points of time. This paper conceptualizes discontinuity and identifies its natures; explores the possible types of responses by the firm, and their enablers. The capability of sensing, seizing and re-shaping are captured to establish the linkages in the framework of interrelations. It posits a set of propositions based on conceptual development and illustration of two cases.