Managing in a Global Context

DYNAMIC CAPABILITIES

Montonen MariaNguyen HuyenNguyen Thi Hong YenNuttens Robin

1. Nature of Dynamic Capabilities2. Market Dynamism3. Evolution of Dynamic Capabilities4. The Role of the Manager

Presentation Outline

1. Nature of Dynamic Capabilities

What comes to your mind when you think

about:Dynamic Capabilities?

Nature of Dynamic CapabilitiesDynamic Capabilities VS RBV

"It consists of strategic and organizational specific processes that create values in

companies operating in dynamic markets by manipulating resources into new strategies

for value creation“

Eisenhardt; Martin (2000)

RESOURCES

CAPABILITIES

COMPETITIV

E ADVANTAG

E

STRATEGY

Nature of Dynamic CapabilitiesDynamic Capabilities VS RBV

Nature of Dynamic CapabilitiesDynamic Capabilities VS RBV

Nature of Dynamic Capabilities

Internal analysis of the firm Reconfigure Organizational capabilities:

routines and standard operating procedures

Source of competitive advantage

Internal analysis of the firm

Possess Tangible and Intangible

resources

Source of sustained competitive advantage

Dynamic Capabilities VS RBV

RBVDC

2. Market Dynamism

Market DynamismHow does market dynamism affect dynamic capabilities?

Dynamic capabilities differ in their dependence on existing

knowledge

Patterns of effective dynamic

capabilities depend on market dynamism

A firm can be in a market of moderate dynamism or high velocity dynamism

Market DynamismModerately dynamic vs. high velocity markets

Moderately dynamic market High velocity market Change occurs frequently and on

predictable and linear paths Industry structures are relatively

stable Various stakeholders are well known Effective dynamic capabilities are

heavily dependent on existing knowledge

“Learning before doing” approach

Change is more nonlinear and harder to predict

Industry structure is unclear Successful business models are

unclear Various stakeholders are vague Less reliance on existing knowledge Dynamic capabilities are simple

Causal ambiguity of dynamic capabilities differs with market

dynamism

Sustainability of the capabilities

differs with market dynamism

Market DynamismWhat are the implications?

3. Evolution of Dynamic Capabilities

EvolutionWhich factors influence the evolution of dynamic capabilities?

•Repeated practice•Codification of experience into technology and formal procedure•Pacing of experience: either too much or too little at a time•Mistake: small losses, not success or big failure

Learning mechanism

•Moderately dynamic market: variation •High velocity market: selection

Market dynamism

•Consequential Order of implementation

EvolutionQuestions

• How to create competitive advantages in high velocity market?

• Are those advantages sustained?

By using dynamic capabilities to create resource configurations that have those characteristics of competitive advantages

Duration of competitive advantages in high velocity market is unpredictable as dynamic capabilities are unstable as well due to

continuous changes

4. The Role of the Manager

The role of the ManagerManagerial practices in Dynamic Capabilities framework

Leadership in Dynamic Capabilities: Disney CaseThe Role of the Manager

20s 30s 60s 80s 2005

Roy O. DisneyDonn TatumE. Cardon WalkerRon W. Miller

Disney corporate culture

Competitve advantage:Innovative animation techniques

Creative collaboration routines

Adopt Touchstone Pictures’ dynamic

capabilities to Disney animation

Reconfigure & Integrate new resources

QUESTIONS?