Organization Architecture and Dynamic Capabilities: Network Microfoundations of Competitive Advantages in Dynamic Markets

55 Pages Posted: 1 Jun 2013

Date Written: May 30, 2013

Abstract

This paper contributes to dynamic capabilities research by investigating how features of organization architecture provide a basis for superior firm performance and sustainable competitive advantage in dynamic markets. Using a simple model of organization architecture composed of networked employees with distinctive knowledge and dynamic markets composed of a flow of heterogeneous opportunities, I explore how knowledge mobilization mechanisms leveraging network ties – transfer, collaboration, and recombination – underlie dynamic capabilities. Prior theory predicts that the performance of these substitute network mechanisms increases with market dynamism, but produces unsustainable advantages under imitative conditions. By contrast, I find different performance effects of unpredictability and complexity, and a complementary impact of using transfer and recombination mechanisms together that can generate sustainable advantages, suggesting design conditions for dynamic capabilities.

Keywords: Dynamic Capabilities, Organization Architecture, Opportunities, Dynamic Markets

JEL Classification: D21, D23, D2, D8

Suggested Citation

Davis, Jason P., Organization Architecture and Dynamic Capabilities: Network Microfoundations of Competitive Advantages in Dynamic Markets (May 30, 2013). Available at SSRN: https://ssrn.com/abstract=2272774 or http://dx.doi.org/10.2139/ssrn.2272774

Jason P. Davis (Contact Author)

INSEAD ( email )

1 Ayer Rajah Avenue
Singapore
Singapore

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