Understanding the Elusive Black Box of Dynamic Capabilities

Decision Sciences (2011), 42 (1), 239-273.

35 Pages Posted: 20 Dec 2013 Last revised: 31 Dec 2016

See all articles by Paul A. Pavlou

Paul A. Pavlou

Temple University - Department of Management Information Systems; Temple University - Department of Strategic Management

Omar A. El Sawy

University of Southern California - Marshall School of Business

Date Written: February 18, 2011

Abstract

A major challenge for managers in turbulent environments is to make sound decisions quickly. Dynamic capabilities have been proposed as a means for addressing turbulent environments by helping managers extend, modify, and reconfigure existing operational capabilities into new ones that better match the environment. However, because dynamic capabilities have been viewed as an elusive black box, it is difficult for managers to make sound decisions in turbulent environments if they cannot effectively measure dynamic capabilities. Therefore, we first seek to propose a measurable model of dynamic capabilities by conceptualizing, operationalizing, and measuring dynamic capabilities. Specifically, drawing upon the dynamic capabilities literature, we identify a set of capabilities — sensing the environment, learning, coordinating, and integrating — that help reconfigure existing operational capabilities into new ones that better match the environment. Second, we propose a structural model where dynamic capabilities influence performance by reconfiguring existing operational capabilities in the context of new product development (NPD). Data from 180 NPD units support both the measurable model of dynamic capabilities and also the structural model by which dynamic capabilities influence performance in NPD by reconfiguring operational capabilities, particularly in higher levels of environmental turbulence. The study’s implications for managerial decision making in turbulent environments by capturing the elusive black box of dynamic capabilities are discussed.

Keywords: Decision Making, Turbulent Environments, Dynamic Capabilities, New Product Development, Operational Capabilities

Suggested Citation

Pavlou, Paul A. and El Sawy, Omar A., Understanding the Elusive Black Box of Dynamic Capabilities (February 18, 2011). Decision Sciences (2011), 42 (1), 239-273. . Available at SSRN: https://ssrn.com/abstract=2369339

Paul A. Pavlou (Contact Author)

Temple University - Department of Management Information Systems ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States

Omar A. El Sawy

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

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