The Impact of Dynamic Capabilities through Continuous Improvement on Innovation: the Role of Business Process Orientation

Abstract

Although there is much emphasis on the importance of continuous improvement as a dynamic capability and business process orientation, little attention has been paid to their interactions and joint effects on a firm's innovation performance. In this paper, we empirically explore the interaction effect of continuous improvement as a dynamic capability and business process orientation on time‐to‐market speed. By employing a unique and hand‐collected dataset of Austrian manufacturing companies, it is shown that firms increase their innovation performance when they implement both—a process‐oriented organizational design and continuous improvement methodologies. Copyright © 2013 John Wiley & Sons, Ltd.

How dynamic capabilities affect adoption of management innovations

“…Consistent with most research on the relationship between dynamic capabilities and innovation (e.g., Ambrosini et al, 2009;Aragón-Correa & Sharma, 2003;Cheng & Chen, 2013;Clausen, 2013;Hart & Dowell, 2010;Helfat et al, 2007;Kohlbacher, 2013;Ridder, 2011;Teece, 2007;Teece et al, 1997), this research confirms the positive effects of dynamic capabilities on the process of adoptive management innovation by advocating a multi-dimensional construct view of a dynamic capability (e.g., Barreto, 2010;Teece, 2007;Wang & Ahmed, 2007). Teece (2007) identifies three components from a macro-perspective: sensing, seizing and reconfiguring; while the study identifies four components from both a macro-and micro-perspective of dynamic capabilities: sensing capability, absorptive capacity, relational capability, and integrative capability.…”

“…Given that the context in which firms deal with various emerging sustainable issues is highly complex and sometimes ambiguous, some studies suggest that dynamic capabilities be applied throughout the entire process by which firms undertake sustainable innovation. For example, Clausen's (2013) research shows both direct and indirect relationships between dynamic capabilities and management innovation; Kohlbacher (2013) empirically examines the impact of dynamic capabilities on innovation performance through continuous improvement; Lazonick and Prencipe (2005) seek to analyze the role of dynamic capabilities in sustaining the entire innovation process, and argue that innovation depends on 'strategic control' and 'financial commitment' (i.e., two dynamic capabilities); Liao et al (2009) argue that the firm's ability to mobilize its resources and capabilities and align them dynamically with changing opportunities is of vital importance to constantly innovate, survive and create a competitive advantage and Wu, He, Duan, and O'Regan (2012) show that dynamic capabilities facilitate firms' strategic changes toward sustainability and higher competitive advantage through searching, prioritizing, positioning, planning, modifying, and leveraging. In summary, researchers emphasize the relationship between dynamic capabilities and management innovation throughout the process, and argue that a firm's dynamic capabilities could significantly enhance its ability to innovate, especially in the case of radical management innovation (O'Conner, 2008).…”

“…Second, how can dynamic capabilities efficiently enhance the process of adoptive management innovation? Previous research emphasizes the relationship between dynamic capabilities and innovation (e.g., Ambrosini, Bowman, & Collier, 2009;Aragón-Correa & Sharma, 2003;Cheng & Chen, 2013;Clausen, 2013;Hart & Dowell, 2010;Helfat et al, 2007;Kohlbacher, 2013;Ridder, 2011;Teece, 2007;Teece et al, 1997), and contends that a firm's dynamic capabilities could significantly enhance its ability to innovate (O'Conner, 2008), especially in the case of radical management innovation. Nonetheless, the literature contains gaps in discussing how dynamic capabilities internally enhance the performance of management innovation.…”

The Strengthened Business Process Matrix - A Novel Approach for Guided Continuous Improvement at Service-Oriented SMEs

“…Because of their critical role, business processes have been studied widely. Recent studies have focused, for example, on the systemic characteristics of business process management (BPM) (Segatto et al ., ), BPM lifecycles (Macedo de Morais and Kazan, ), the role of BPM in change management (Dallavalle de Pádua et al ., ; Jurisch et al ., ; Sikdar and Payyazhi, ), and innovation and efficiency performance (Kohlbacher, ; Niehaves et al ., ; Sanders Jones and Linderman, ), as well as the definition of an approach toward optimal process and organization design (Hearn and Choi, ).…”

Alliance strategy: context, process, and requirements

“…First, organizational innovation often refers to enhancement of coordinated capabilities a firm uses to compete (Grant, 1996). Dynamic capabilities reflect the organization's ability to integrate, build, and reconfigure internal and external competencies to cope with rapidly changing environments (Agarwal and Selen, 2009;Kohlbacher, 2013). While such strategic management studies tend to develop generalized approaches to organizational innovation processes, other research has examined how innovation actually evolves across hierarchical levels (Burgelman, 1996;Whittington, 2006).…”