Academic journal article Journal of East European Management Studies

Renewing the Resource Base in Line with the Dynamic Capabilities View: A Key to Sustained Competitive Advantage in the IT Industry

Academic journal article Journal of East European Management Studies

Renewing the Resource Base in Line with the Dynamic Capabilities View: A Key to Sustained Competitive Advantage in the IT Industry

Article excerpt

1. Introduction

Managing firms has never been so difficult, especially for information technology (IT) firms operating in a high velocity environment. In such an environment, firms experience great uncertainty and intensive competition. Consequently, to be able to survive in such conditions firms need to renew their resource base as their environment changes. The dynamic capabilities view (DCV) has emerged as an attempt to untangle the complex problem of sustainable competitive advantage in today's dynamic environment (Teece et al. 1997; Eisenhardt/Martin 2000). The underlying assumption is that firms which are able to sense and then seize new opportunities and, further, reconfigure their resources and capabilities in line with recognised opportunities and environmental change can create and sustain a competitive advantage (Teece 2009). The DCV has received a lot of attention in recent years, although the outcome is a complex, sometimes confusing body of research with limited empirical studies. The main reason for the modest empirical evidence might be the apparent dominance of quantitative studies, which may infer the presence of dynamic capabilities by examining a firm's performance outcomes (Ambrosini/Bowman 2009). Arend and Bromley (2009:87) argue that, if we do not develop a theoretical foundation, the field of strategic management may move away from the DCV. Ambrosini and Bowman (2009) propose that fine-grained case studies of firms able to sustain a competitive advantage over time in dynamic environments can offer insights into the dynamic capabilities field.

There are two motivations for conducting this research. First, the central focus and challenge in business economics is how to attain and sustain a competitive advantage. To sustain their competitive advantage firms need to renew their resource base as their environment changes. The relatively static nature of earlier well-known perspectives in the strategic management field largely explains why new perspectives have emerged. The latest approach seeking to extend previous views is the DCV that apparently can be useful for strategic management as a field of study as well as for practitioners, and therefore calls for a deeper understanding. Second, we so far have little evidence on which to base suggestions for how to build dynamic capabilities. The literature on dynamic capabilities is currently imbued with conceptual and theoretical debates instead of focusing on empirical testing. Therefore, with our research we are taking a step towards accumulating enough case-based data to create the possibility to better understand the DCV's importance as a source of competitive advantage.

The paper's main purpose is to recognise dynamic capabilities as a source of competitive advantage in the IT industry. It focuses on the following key research question: Are firms that renew their resource base in line with the DCV able to sustain a competitive advantage and thus the related firm performance? In line with this vital research question, the objectives of this paper are: (1) to identify relevant capabilities in IT firms in general and, from a dynamic capa- bilities viewpoint, their sensing, seizing and reconfiguring capabilities; and (2) to investigate the level at which each individual dynamic capability is deployed, and to link this to firm performance. In order to examine the relationships involved, in-depth interviews were conducted in six representative firms in the IT industry. Due to that industry's specific nature, IT firms represent a suitable context to create and validate our research model. In addition, the DCV is particularly relevant to markets exposed to rapid technological change and strong international competition (Teece 2009:156). This paper highlights the promising avenues and potential offered by the DCV that encourages further development. Moreover, it empirically contributes to the emerging work on dynamic capabilities through its detailed cross-case study investigation. …

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