Strategic Reconfigurations
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Strategic Reconfigurations

Building Dynamic Capabilities in Rapid Innovation-based Industries

Edited by Stuart Wall, Carsten Zimmermann, Ronald Klingebiel and Dieter Lange

This path-breaking book provides unique insights into the organisational realities of strategic reconfigurations in uncertain markets, thus advancing the dynamic capability perspective.
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Chapter 4: The Knowledge-based Perspective on Dynamic Capabilities

Aino Kianto and Paavo Ritala

Extract

4. Knowledge-based perspective on dynamic capabilities Aino Kianto and Paavo Ritala ABSTRACT The theory of dynamic capabilities deals with the fundamental questions of strategy in changing environments. Theoretical analysis underpinning the dynamic capabilities approach is, however, biased by some important limitations concerning the basis of how organizations actually change themselves. These limitations are due to a failure to recognize the socially constructed nature of knowledge, to focus too much on the role of top management, and to exaggerate the controllability of organizational knowledge. These limitations can be overcome, to some extent, with the help of the emerging knowledge-based view of the firm. From this perspective, the organizational change capacity can be explained from a perspective of more generic, meta-level, and higher-order capabilities that are connected with organizational knowledge. This chapter complements the existing discussion by identifying three knowledge-based higher-order capabilities: connectivity, learning culture, and knowledge management. INTRODUCTION The paradigm of dynamic capabilities has been introduced in the recent strategic management literature as a theoretical answer to the problem of how firms are able to achieve sustained competitiveness in turbulent environments. Dynamic capabilities, consisting of a ‘firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments’ (Teece et al. 1997, 516) are argued to be the key to the mastery of continuous change required in rapidly and unpredictably transforming hypercompetitive environments. More explicitly, dynamic capabilities have been defined as learned, path-dependent, and stable patterns that govern the change of organization’s ordinary capabilities (Collins 1994; Eisenhardt...

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