The implementation of dynamic capabilities for small and medium-sized enterprises in creating innovation

Abstract

Purpose The purpose of this paper is to analyse the adaptation process of small and medium-sized enterprises (SMEs) to volatile environment supported with learning, knowledge and innovation. Design/methodology/approach This study used an inductive approach to analyse qualitative data obtained from an SME operating in the international market. Various data collection methods, including interview, focus group discussion and observation, were used to allow the researchers to undertake triangulation. Findings This study demonstrates that managers should be eager to adjust their innovation to a changing environment and continually update pre-determined plans. Learning is an ongoing process required for innovation, requiring up-to-date support from knowledge produced via learning. For this reason, learning is required in all dynamic capability processes. Research limitations/implications The single case study design offers deep and detailed insights regarding the process of how firms create innovation based on learning in an uncertain environment. Future research could investigate whether the findings of this study are generalisable using a large number of subjects and a cross-sectional method. Originality/value This study offers insight to relatively empirical evidence on how firms respond and adjust to volatile environment using an integrative perspective covering learning, knowledge and innovation. In addition, this offers insight regarding how knowledge can be developed based on learning from the environment and converted into innovation through dynamic capabilities.

The process of developing dynamic capabilities: The conceptualization attempt and the results of empirical studies

“…The issue of developing dynamic capabilities is all the more important because developing and embedding dynamic capabilities in a company’s management processes can identify and prevent harmful forms of path dependence, avoid blockages and maintain levels of competence building and organizational changes adequate in terms of market evolution or management [ 32 ]. This state of affairs, which translates into problems with the practical use of the demands regarding the concept of dynamic capabilities [ 33 ], especially in relation to organizational effectiveness [ 10 , 34 – 36 ], encouraged us to propose and further test a model for the process of developing dynamic capabilities, affecting the economic effectiveness of an organization.…”

“…Eriksson [ 43 ] notes that in the literature on the subject, dynamic capabilities are treated in terms of processes whose dynamic nature is related to their impact in time. Some authors [ 12 , 33 , 44 ] indicate that dynamic capabilities include both organizational and managerial processes aimed at identifying the needs or opportunities for change and making changes. Collis [ 5 ] emphasizes that dynamic capabilities influence the pace of change regarding ordinary capabilities, taking into account dependency paths and market positions; as also indicated by the studies of Eisenhardt and Martin [ 6 ], which assume that dynamic capabilities influence the organizational and strategic procedures that underpin resource based decisions.…”

“…The implementation of activities undertaken at the stage of searching for opportunities is based on the use of mechanisms for monitoring the environment and the needs of stakeholders [ 59 ], which allow for the identification of the processes of changes in the environment, constituting the basis for searching for opportunities [ 56 ], as well as the capture of weak signals in the environment [ 33 ], the assessment of the correctness of developing the set of dynamic capabilities used [ 60 ], the change of employees’ attitudes and the generation of a set of options for potential dynamic capabilities [ 32 , 60 , 61 ], on which managers’ attention should be focused. The model assumes that the dynamic capabilities associated with searching for opportunities include:…”

“…The literature points to their being a relationship between knowledge management and dynamic capabilities [ 7 , 11 , 28 , 33 , 60 , 64 ], emphasizing the key importance of dynamic capabilities for the acquisition, creation, absorption, distribution and reconfiguration of knowledge for the processes of competitive advantage. Organizational knowledge, developed by learning processes, is perpetuated in new ways of doing things, new organizational routines or new logic in the functioning of an organization [ 40 ]; which are difficult to replicate [ 33 ].…”

“…The literature points to their being a relationship between knowledge management and dynamic capabilities [ 7 , 11 , 28 , 33 , 60 , 64 ], emphasizing the key importance of dynamic capabilities for the acquisition, creation, absorption, distribution and reconfiguration of knowledge for the processes of competitive advantage. Organizational knowledge, developed by learning processes, is perpetuated in new ways of doing things, new organizational routines or new logic in the functioning of an organization [ 40 ]; which are difficult to replicate [ 33 ]. Zollo and Winter [ 11 ] prove that dynamic capabilities are de facto the result of organizational learning [ 14 ] and established ways of collective activity, through which an organization systematically generates and modifies its operational behaviour [ 65 ] in a way that increases its level of effectiveness.…”