Tuesday, February 3, 2015

Adaptive Capacity and the Dynamics of Operational Capabilities

AGGARWAL Vikas A., POSEN Hart E., WORKIEWICZ Maciej
Read the working paper
INSEAD Working Paper 2015/09/EFE

The extant strategy literature characterizes operational capabilities as relatively static, requiring the intervention of higher-order dynamic capabilities in order for firms to adapt to external change. We suggest that operational capabilities may themselves have the capacity to adapt in the context of external change, influencing our understanding of the need for dynamic capabilities. In the spirit of recent work on the microfoundations of capabilities we employ a computational model in which operational capabilities are a macro (organization-level) outcome of the micro phenomenon of individual-level learning. Using this model we find that operational capabilities may adapt in turbulent environments, even in the absence of dynamic capabilities, and identify mechanisms through which inter-firm heterogeneity in the adaptive capacity of operational capabilities may emerge.