Assessing dynamic capabilities of incumbents in the face of unprecedented industry transformation: the case of the automotive industry

Abstract

PurposeThe purpose of this paper is to develop a holistic approach to the assessment of dynamic capabilities (DCs). Holistic refers to incorporating all DCs of an organisation relevant for determining and executing the firm's strategy.Design/methodology/approachA two-phase study was conducted. First, secondary sources, such as media, industry and annual reports, are being used to initially assess CASE (connected, autonomous, shared and electric) and implications for incumbent car manufacturers in a structured way. Second, semi-structured interviews with automotive managers and further automotive stakeholders offer in-depth insights into CASE, as well as incumbents' strategies and the underlying rationale.FindingsThe proposed framework for assessing DCs offers a holistic approach and provides new angles of analysis. First, the time dimension is considered using scenarios since timing is vital in strategy and implementation. Second, capabilities are broken down into technological and non-technological, sharpening strategic decision-making of automakers. Third, the analysis considers external VUCA (volatility, uncertainty, complexity and ambiguity) as they interplay with internal DCs.Research limitations/implicationsFurther testing of the proposed DC assessment approach offers a promising opportunity for future research. This paper focuses on the automotive industry, but it is worth investigating the extent to which the approach can be used in other dynamic industries, such as finance or retail.Originality/valueThe approach proposed highlights the importance and nuances of considering external perspectives in the DC assessment and the relevance of non-technological capabilities in the automotive industry. Thereby, it contributes to the literature on capability assessments and the operationalisability of the DC lens.

VUCA Factors Influencing Stakeholder Relationship Management Development: A Systematic Literature Review

“…Studies conducted in modern industries, such as automotive and telecommunications, have shown that a possible starting point for increasing adaptability and resilience of organisations is by assessing the dynamic capabilities, both from a high-level approach (strategy and implementation directions), as well as by domain (non-technological and technological) within VUCA contexts starting from existing frameworks (Dasi et al, 2019;Hoeft, 2021). Another study looked at leadership VUCA challenges from a generational change.…”

“…Manufacturing industries are faced with an increasing demand for systemic approaches to tackle the complexities and uncertainties they face (Hoeft, 2021;Nowacka and Rzemieniak, 2022;Datta et Joshi, 2023). By embracing systemic thinking, these industries are able to gain a comprehensive understanding of their supply chains (Lechler et al, 2019;Grzybowska and Tubis, 2022), operational processes (Sharif and Irani, 2017;Laurin, 2018), and interdependencies across the organization.…”

A Capabilities Framework for Dynamic Competition: Assessing the Relative Chances of Incumbents, Start-Ups, and Diversifying Entrants

“…Sharing is based on the concept of multiple people sharing vehicles, with the aim of increasing vehicle utilization. Electrification is the transition to electrified powertrains that ultimately replace internal combustion engines (ICEs) and promise zero emissions at the point of use (Hoeft, 2021). Auto companies are presently focusing a great deal of their efforts on E, electrification to achieve the emissions targets set by governments.…”

Lessons For Enhancing Competitive Advantage: Dynamic Capabilities Framework

“…One way of survival of manufacturing companies for managing new product development (NPD) projects operating in the volatile business environment would be reliance on developing DC. In automotive industry, key suppliers have collaborated for many years in their NPD projects to build and develop DC as a holistic approach to assist automakers to facilitate strategy implementation for sustaining NPD performance or competitive advantage in long term (Tuli and Shankar, 2014;Kumar et al,2018;Hoeft, 2021).…”