Searching for a Simple Model of Dynamic Capabilities

Abstract

A fundamental issue for academics and practitioners is to better understand the nature and role of dynamic capabilities. Since dynamic capabilities have been viewed mostly as a “black box,” we first seek to identify, articulate, and propose a simple and measurable model of dynamic capabilities. Drawing upon the dynamic capabilities literature, we identify a set of capabilities - sensing the environment, learning, coordinating, and integrating - that are proposed to reconfigure existing operational capabilities into new ones that better match the environment. Second, to overcome concerns that dynamic capabilities are tautologically linked to performance and are only valuable in turbulent environments, we propose a structural model where dynamic capabilities indirectly affect performance in New Product Development (NPD) groups through the mediating role of operational NPD capabilities. The proposed indirect effect of dynamic capabilities on performance is also proposed to be moderated by environmental turbulence. Data from 180 NPD business units empirically support both the proposed simple model of the nature of dynamic capabilities and the structural model by which dynamic capabilities influence NPD performance through operational NPD capabilities in different levels of environmental turbulence. We discuss the study’s implications for better understanding the nature and role of dynamic capabilities.

Keywords: Dynamic Capabilities, Operational Capabilities, New Product Development, Environmental Turbulence