Dynamic Capabilities and Strategic Management: Explicating the Multi-Level Nature of Dynamic Capabilities - Insights from the Information Technology Security Consulting Industry

Abstract

The dynamic capabilities perspective has become one of the most vibrant approaches to strategic management. Despite its growing popularity, it has faced criticism because of ambiguity and contradictions in dynamic capabilities literature. There has been increasing calls to address the fragmentation in the literature and provide empirically collaborated insights if it is to fulfil its potential as a distinct approach to strategic management. The microfoundations research agenda remains an emerging theme in the dynamic capabilities literature and since the overarching emphasis of a microfoundational approach is in the explanatory primacy of the micro-level especially in its relation to macro-level entities, it covers a wide array of subjects at several levels. One of the main criticisms of the microfoundations approach is a lack of multi-level analysis and there has been calls for multi-level theory development to connect levels within particular contexts since dynamic capabilities are path dependent and context-specific. This thesis explores the multi-level nature of dynamic capabilities in the Information Technology Security context and empirically investigates the impact of microfoundations of dynamic capabilities on firm capability renewal and reconfiguration. It overcomes the challenge associated with fragmentation in dynamic capabilities by presenting a conceptual model for the multi-level nature of dynamic capabilities. By explicating where dynamic capabilities reside, we can more purposely impact on them to advance our scholarly understanding and proffer practical managerial interventions to directly enhance specific abilities of sensing, seizing and reconfiguring to achieve superior outcomes. The research employed the Gioia qualitative case study research methodology and research methods used were 35 semi-structured interviews and observations. The research findings suggest that firms renew and reconfigure their capabilities to align with the changing industry and industry standards, and client needs. Firms also renew and reconfigure capabilities and capability framework due to internal strategic organisational learning and to align with firm’s specific business strategies. Capability renewal and reconfiguration is vital to achieve technical and evolutionary fitness. In addition, findings inform that dynamic capabilities in the form of ability to sense, seize and reconfigure exhibit at macro, meso and micro levels. Actor’s external engagement with significant institutions enables superior sensing ability. Accumulated experience is exploited to gain credibility with clients to win business, and demystifying firm processes and clarity of language in firm artefacts achieve superior knowledge articulation and codification processes by actors. Structuring of simple routines and capabilities enable ease of internal knowledge transfer but susceptibility to intellectual property theft by outsiders whereas complex routines and capabilities create challenges for knowledge transfer but are harder for competitors to discern and copy. Drawing on the research findings, the thesis presents a conceptual model for the multi-level microfoundations of dynamic capabilities in knowledge-intensive domains with relevance for theory and practice.