The Rate and Potential of Capability Development Trajectories

Rockart, Scott F., and Nilanjana Dutt. "The rate and potential of capability development trajectories." Strategic Management Journal (2013)

Posted: 22 Mar 2014

See all articles by Scott Rockart

Scott Rockart

Duke University

Nilanjana Dutt

Bocconi University -- Department of Management and Technology; Bocconi University - Department of Management and Technology; Bocconi University -- Department of Management and Technology

Date Written: March 20, 2014

Abstract

This paper examines differences in the rate and potential of firms' capability development trajectories. Capability development trajectories are the paths over which firms' capabilities change with experience and other activities. While prior research focused on factors affecting capability development rate (the fraction of the gap between a firm's current and potential capability eliminated with each unit of activity), we argue that capability development trajectories also differ in potential (the maximum capability level a firm could achieve through repeating a given set of activities over time). We develop and estimate a formal model of capability development, showing that larger underwriting projects lead to a lower rate of improvement toward higher potential capabilities, and derive implications for research on industry dynamics and the nature of competitive advantage.

Keywords: capabilities, experience, investment banking, professional services, organizational learning

Suggested Citation

Rockart, Scott and Dutt, Nilanjana and Dutt, Nilanjana, The Rate and Potential of Capability Development Trajectories (March 20, 2014). Rockart, Scott F., and Nilanjana Dutt. "The rate and potential of capability development trajectories." Strategic Management Journal (2013), Available at SSRN: https://ssrn.com/abstract=2406443

Scott Rockart

Duke University ( email )

Box 90120
Durham, NC 27708-0120
United States

HOME PAGE: http://www.duke.edu/~srockart

Nilanjana Dutt (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Bocconi University -- Department of Management and Technology ( email )

Via Roentgen 1-2
Milan, MI 20136
Italy

Bocconi University -- Department of Management and Technology ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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