Dynamic Capabilities During the Global Crisis: Evidence from Italian New Technology Based Firms

Abstract

The recent financial crisis and the subsequent economic downturn are undoubtedly the most important global events affecting modern economic systems since the Great Depression of 1930s. Up to now ideas from strategic management theories on why and how some firms have handled the global crisis better than others have almost been absent from conversations. The global crisis represents a dramatic change in the environmental circumstances that can make a firm aware of the inadequacy of its current resources and capabilities configuration. The dynamic capabilities (DCs) notion deals fundamentally with firms’ abilities to renew, modify, and adapt their current bundle of resources and competencies to face new external contingencies so as to achieve congruence with changing business environment and may be a valuable conceptual tool for understanding how firms cope with the current global crisis.

The present paper heeds the call for framing the inquiring on the current global crisis within the strategic management discourse and advances knowledge on the handling of the global crisis by ventures in high tech sectors (i.e. New Technology Based Firms, NTBFs from hereafter). We synthesize our arguments in a set of hypotheses that are tested on a sample of 115 Italian NTBFs extracted from the RITA database developed by the Politecnico di Milano. Results show that DCs have a positive impact on firms’ growth performances, and that the extent of the DCs is positively related with the founders human capital of the firm, the internationalization, the presence of technological alliances and the resource slack. In so doing, we contribute to the debate on why and how some firms have coped with the crisis better than other firms.

Keywords: dynamic capabilities, global crisis, strategic shift, firm performance