Dynamic Capabilities-Based and Environment Serving Organization-Based Concepts in Strategic Management: Are They Complementary? A Theoretical Overview

Abstract

In the last few decades resource-based concepts have been discussed and seemingly accepted by many scholars in strategic management. Some have argued and challenged them since many companies struggle to obtain and apply the strategic tools to enhance their performance and competitiveness. Competitive advantage is moving toward a different paradigm, following dynamic competition and market turbulence. In the current era of the digital economy a company’s top and general managements can be blamed for not smartly leveraging their resources and responding to their customers on time with the right offerings. Therefore, it is difficult to sustain competitive advantage. This research, using theories and a practical approach, discuss the relevance of strategic management concepts, especially Dynamic Capabilities-based, Resource-based and Environment Serving Organization-based (ESO-based) perspective in the current industrial context, as the real root of strategic management theories. This paper concludes that both Dynamic Capabilities-Based as well as Resource-Based concepts complement the ESO-based concept and therefore deserved to be explored further as a strategic formula for companies.
 Keywords: resource-based; dynamic-capabilities; ESO-based; competitive advantage

Does Diversification Strategy Play An Eminent Role In The Current Turbulence Of Digital Economy: A Strategic Approach

“…Environmental turbulence in the Environment Serving Organization ESO-based concept focuses on the changes in the business environment that need to be carefully monitored and followed by adjusting the company's strategic aggressiveness and general management capability responsiveness to ensure its continued success and securing from any surprises. The turbulence level in the environment can be divided into five groups (Ansoff & Sullivan, 1993) and then extended into six levels (Oroh, 2020). Focusing on turbulence with different levels from high certainty to high uncertainty and changes, it explicitly starts from stable-no change or slow change (Level One and Two) to incremental and predictable-fast change (Level Three and Four), into a surprising and deteriorating situation (Level Five and Six).…”

“…However, inimitability, nonsubstitutability, and nontransferability are essential but still cannot sustain and guarantee the sustainability of competitive advantage. Thus, it is helpful to explore the link between the Resource-Product concept (Wernerfelt matrix) and Product-Market concept (Ansoff Growth Matrix) to develop and enrich our fundamental thinking to establishing and maintaining the company's market(s) potentials to maintain above-average profit performance (Oroh, 2020).…”

“…Based on the research, the indicators of Environmental Turbulence Level three (3) and four (4) includes company activities should regularly develop innovative new products to make customers reconsider their preferences, develop products that activate the unstated needs of customers, regularly adopt ideas from other industries to delight customers, set new product standards in the market, and as the organisation is the product leader, should be aware of competitors who will copy and follow their activities (Kachouie et al, 2018;Ansoff and Sullivan, 1993;Oroh, 2016Oroh, , 2018Oroh, , 2019Oroh, , 2020.…”

“…During the growth stage, theoretically, companies' cash flows are in surplus; therefore, a strategic investment with calculated-risk and potential return trade-off is very much needed for a company's further growth. Thus, diversification strategy, following the Ansoff Growth Matrix (1958Matrix ( , 1965, is suitable for companies who are launching new products or targeting new markets to grasp opportunities following its familiarity, comprehensive marketing research, and when the Environmental Turbulence (ETurbulence) is at the level above three (Ansoff and Sullivan, 1993;Oroh, 2020).Diversification is one of the most discussed topics in management literature, and both related and unrelated diversification studies show contradictory results toward firms' performance (Lee and Lee, 2007; Park and Jang, 2013). However, despite its definitions, arguments, pros and cons, prominent scholars showed that diversification is one of the key strategies to gain and sustain competitive advantage at the high turbulence and rapid technological change conditions (Ansoff, 1958;Teece et al, 1997;Teece, 2018).…”

“…During the growth stage, theoretically, companies' cash flows are in surplus; therefore, a strategic investment with calculated-risk and potential return trade-off is very much needed for a company's further growth. Thus, diversification strategy, following the Ansoff Growth Matrix (1958Matrix ( , 1965, is suitable for companies who are launching new products or targeting new markets to grasp opportunities following its familiarity, comprehensive marketing research, and when the Environmental Turbulence (ETurbulence) is at the level above three (Ansoff and Sullivan, 1993;Oroh, 2020).…”