Academic journal article Management : Journal of Contemporary Management Issues

Dynamic Capabilities and Competitive Advantage: Findings from Case Studies *

Academic journal article Management : Journal of Contemporary Management Issues

Dynamic Capabilities and Competitive Advantage: Findings from Case Studies *

Article excerpt

1. INTRODUCTION

The dynamic capabilities view (DCV) has emerged as an attempt to untangle the complex problem of sustainable competitive advantage in today's dynamic environment (Eisenhardt & Martin, 2000; Teece, Pisano & Shuen, 1997). 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 recognized opportunities and environmental change can create and sustain a competitive advantage (Teece, 2012, 2009). Since the average period in which firms are able to sustain a competitive advantage has been decreasing over time (Wiggins & Ruefli, 2005), the issue of a sustained competitive advantage has become a critical concern of both academics and practitioners. Li and Liu's (2014) study of 217 firms shows that dynamic capabilities significantly positively affect competitive advantage, and that environmental dynamism is an important driver. Ambrosini and Bowman (2009) propose that fine-grained case studies of firms which have been able to sustain a competitive advantage over time in dynamic environments can offer some important guidelines on how to remain competitive in a world of intense competition.

The paper's main purpose is to recognize dynamic capabilities as a source of competitive advantage in IT firms. Our focus was: (1) to study relevant firm capabilities from a dynamic capabilities viewpoint, their sensing, seizing and reconfiguring capabilities; and (2) to investigate the level of deployment of each individual dynamic capability, 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 the IT industry's specific nature, IT firms represent a suitable context to create and validate our research model. IT industry is also considered as one of the most changing and demanding sectors in today's environment. This paper draws attention to the promising avenues and potential offered by the dynamic capabilities view that encourages further development. In addition, it provides an empirical contribution to the emerging work on dynamic capabilities through its detailed cross-case study investigation. Finally, it offers some important practical implications.

2. LITERATURE REVIEW

The publication written by Teece, Pisano and Shuen (1997) is recognized as the first seminal paper on the notion of dynamic capabilities. Evidently, the paper triggered a growing body of papers, namely more than 1,721 from 1997 to 2008 (Peteraf, DiStefano & Verona, 2013) in top management journals, and over 1,900 citations by December 2009 (DiStefano, Peteraf & Verona, 2010). However, the field still remains mostly conceptual and largely focuses on foundation-level issues (Helfat & Peteraf, 2009). Extensive literature reviews in recent years (e.g. Zahra et al., 2006; Wang & Ahmed, 2007; Ambrosini & Bowman, 2009; Baretto, 2010; Peteraf, DiStefano and Verona, 2013) have not shown much progress as the field is still overflowing with a disconnected body of research. In addition, the DCV has received a lot of criticism (like other previous approaches such as the RBV) for being fuzzy and tautological (e.g. Winter, 2003) with little empirical support (Newbert, 2007; Ambrosini & Bowman, 2009). We propose that, if the DCV is useful as a field of study and, of course, for practitioners, then it needs to be fully researched, and should be expanded to other areas, such as the IS literature.

Based on the literature review, six (6) capabilities were recognized as relevant firm capabilities (see Figure 1), and were further analyzed from the dynamic capabilities perspective. (1) Managers' dominant role in developing dynamic capabilities has been widely recognized (Helfat & Martin, 2014; Augier & Teece, 2009; Rindova & Kotha, 2001; Teece, 2007), especially in reconfiguring the resource base (Ambrosini & Bowman, 2009; Harreld, O'Reilly & Tushman, 2007; Moliterno & Wiersema, 2007). …

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