Managing in a Global Context DYNAMIC CAPABILITIES Managing in a Global Context Montonen Maria Nguyen Huyen Nguyen Thi Hong Yen Nuttens Robin
Presentation Outline 1. Nature of Dynamic Capabilities 2. Market Dynamism 3. Evolution of Dynamic Capabilities 4. The Role of the Manager
1. Nature of Dynamic Capabilities
What comes to your mind when you think about: Dynamic Capabilities?
Dynamic Capabilities VS RBV Nature of Dynamic Capabilities "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)
Dynamic Capabilities VS RBV RESOURCES CAPABILITIES COMPETITIVE ADVANTAGE STRATEGY Nature of Dynamic Capabilities
Dynamic Capabilities VS RBV Nature of Dynamic Capabilities
Dynamic Capabilities VS RBV Nature of Dynamic Capabilities DC RBV 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
2. Market Dynamism
Patterns of effective dynamic capabilities depend on market dynamism How does market dynamism affect dynamic capabilities? Market Dynamism A firm can be in a market of moderate dynamism or high velocity dynamism Patterns of effective dynamic capabilities depend on market dynamism Dynamic capabilities differ in their dependence on existing knowledge
Moderately dynamic market Moderately dynamic vs. high velocity markets Market Dynamism 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
Sustainability of the capabilities differs with market dynamism What are the implications? Market Dynamism Sustainability of the capabilities differs with market dynamism Causal ambiguity of dynamic capabilities differs with market dynamism
3. Evolution of Dynamic Capabilities
Order of implementation Which factors influence the evolution of dynamic capabilities? Evolution Learning mechanism 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 Market dynamism Moderately dynamic market: variation High velocity market: selection Order of implementation Consequential
How to create competitive advantages in high velocity market? Questions Evolution 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
Managerial practices in Dynamic Capabilities framework The role of the Manager
Leadership in Dynamic Capabilities: Disney Case The Role of the Manager 20s 30s 60s 80s 2005 Roy O. Disney Donn Tatum E. Cardon Walker Ron W. Miller Reconfigure & Integrate new resources Competitve advantage: Innovative animation techniques Adopt Touchstone Pictures’ dynamic capabilities to Disney animation Creative collaboration routines Disney corporate culture
Questions?