The functioning of dynamic capabilities: explaining the role of organizational innovativeness and culture

Abstract

PurposeUsing the knowledge-based view of the firm, dynamic capability literature and known dimensions of organizational innovativeness (OI), this article develops two testable models that attempt to explain: (1) how innovativeness functions as a source of capability dynamization and (2) how organizational culture (OC) critically determines this function of innovativeness.Design/methodology/approachThe study uses a cross-sectional design and maximum variation sampling to identify organizations from the population of formal Indian business firms with the aim of controlling the effects of moderating variables such as their size, age, nature of business and ownership. Measurement instruments are borrowed from the literature. The cleaned dataset (n = 453 cases from 13 organizations) is randomly split into two-halves, which are used separately for extracting and confirming underlying factors. Rigorous procedure for assessing scale psychometric properties has been followed. The hypotheses are tested using structural equation modelling (SEM).FindingsExcept for a couple of paths that turned out insignificant, the data by and large support the study hypotheses. While market innovativeness failed to emerge as a factor, the capability dynamizing dimensions of innovativeness significantly predict its outcome dimensions of product and process innovativeness. Barring the effect of “trust”, they also fully mediate the effect of the rest of the culture factors on these outcome dimensions. Importantly, they are substantively determined by the culture factors, suggesting that the capability dynamizing dimensions are embedded in culture.Originality/valueThe primary contribution of this study is that besides accounting for how firm innovativeness can possibly explain the dynamism in dynamic capabilities, the results indicate a critical influence of culture in determining the potency of the dynamizing mechanisms. This has important implications for theory and practice.

Demystifying the role of internal dynamics in the path of innovative competitiveness: a serial mediation model of international joint ventures

“…Innovative capability empowers an organization to grapple with market dynamism by achieving and sustaining competitive advantage (Aggarwal and Kapoor, 2018). It is proved to be one of the key performance measures that can ensure SCA of a global firm (Ghosh and Srivastava, 2021; Park and Ungson, 2019; Teece, 2020). Innovation is the process of exploiting the existing knowledge base or the newly obtained organization's knowledge for commercial value creation in terms of new products or processes, services or technologies (Ibrahim et al , 2009).…”

The formation of a firm's core competence and its development: an analysis with a special reference to North East England firms

“…, 2017; Ghosh and Srivsatava, 2021). Recent literature (see Walker, 2016; Ghosh and Srivsatava, 2021) categorises knowledge as a) a “thing” (cited in Walker, 2016, p. 116; Leonard and Sviokla, 1998; Abel, 2008; Asheim et al. , 2017) or data (big data) that can be stored and transferred (explicit knowledge) and b) “tacit knowledge” or “sticky knowledge” embodied in human beings (Polanyi, 1969; Nonaka and Takeuchi, 1995; Davenport and Prusak, 1998; Tam and Gray, 2016) which is automatic, stuck to the contexts and only exposed and shared in firm-specific social platforms (see the concept Ba, Nonaka et al.…”

“…, 2014). Also, this attribute of the firm seeks to explain the inimitability component of a firm's core competence, which is mainly embedded in human beings and exposed via social interactions and is entailed and enhanced by the process of reconfiguration of capabilities (Ghosh and Srivasthava, 2021; Salvato and Vassolo, 2018; Zollo and Winter, 2002). Through a careful examination of these propositions, one can identify the heart of the dynamic capability concept as being the flexibility of a firm to either reconfigure or improve existing competencies to form new ones that cannot be easily imitated (Szulanski, 1996; Liebeskind, 1996) or to create new competencies by accessing new exterior knowledge (Haarhaus and Liening, 2020; Eisenhardt and Martin, 2000).…”

“…, 2001a, b; Esienhardt and Martin, 2000; Asheim et al. , 2017; Ghosh and Srivsatava, 2021). Recent literature (see Walker, 2016; Ghosh and Srivsatava, 2021) categorises knowledge as a) a “thing” (cited in Walker, 2016, p. 116; Leonard and Sviokla, 1998; Abel, 2008; Asheim et al.…”

“…, 2021; Ghosh and Srivasthava, 2021) establishes the nexus between a firm's dynamic capability and inimitability. Taken all together, the above literature (Ghosh and Srivstava, 2021; Ali et al. , 2021; Salvato and Vassolo, 2018) explains how the reconfiguration and modification of resources and capabilities spur the nebulous and complex attributes required for a firm's inimitability.…”