In the Search of Dynamic Capabilities: An Assessment and Identification of the Microfoundational Means to attain Strategic Change

Abstract

This thesis aims to develop theoretical insights and extend existing research within strategic management by proposing a theoretical framework for microfoundational means to attain strategic change through the lens of a dynamic capabilities view.
While much strategy research suggests that such organisational capabilities are central to firms’ competitiveness and ability to attain strategic change, very little is known about their emergence. It is an overall problem in most strategic management literature that, given its inherent organisational level focus, there is an implicit assumption of homogeneity at the individual level, that is, micro-level components are explained from macro-level concepts.
By pursuing a methodological individualism explanatory stance, this thesis creates theoretical insights into how lower level constituent components of dynamic capabilities are formed at an organisational level and potentially aid the process of strategic change. This study thus sheds light onto how causality unfolds within and between the individual and organisational levels and how this impact macro-level constructs.
Based on a thorough examination of existing academic literature, a theoretical integrative framework is developed. To attain strategic change, firms must develop dynamic capabilities to create, extend, and modify the ways in which they operate through reconfiguration of existing operational capabilities. It is found that to attain the desired capability configuration and strategic goal that yield the process strategic change, the organisation has to learn and create the required knowledge for, firstly, being able to recognise when routines counteract strategic direction, and secondly, to build competencies that aid endogenous innovation and the formation of dynamic capabilities. This requires individuals to correctly interpret and understand what actions are needed of them, but likewise for them to possess the required confidence in own capabilities to execute required behaviours.
The proposed theoretical framework aid with an understanding of firm-specific capabilities and how combinations of these are developed and how they can be sources of strategic change.