Electronic Thesis and Dissertation Repository

Degree

Doctor of Philosophy

Program

Business

Supervisor

Dr. Pratima Bansal

Abstract

Dynamic capabilities explain how firms adapt to environmental dynamism by modifying their underlying resources and capabilities. However, despite a robust understanding of how dynamic capabilities are influenced by different dimensions of environmental dynamism (eg. velocity), scholars have not explained how dynamic capabilities develop in the presence of different configurations of environmental dynamism. Common configurations of environmental dynamism include environmental shifts, which pertain to discontinuous environmental change, and ongoing environmental change, which depicts hypercompetitive environments. In this thesis, I explore how dynamic capabilities develop in the context of a configuration of environmental dynamism that I call persistent disturbances, defined as repeated temporary events confronting firms. My research investigates how firms build and further develop dynamic capabilities in the presence of persistent disturbances.

In my research, I engaged in an inductive historical case study to build new and to elaborate on existing dynamic capability theory. I chose the North American automotive industry for my context, focusing on the time period between 1965 and 2010, during which the industry was confronted with persistent disturbances in the form of labour difficulties, economic cycles, competitive pressures, energy challenges, and government regulations. I focused my analysis on three firms: General Motors, Chrysler, and Ford. I created a longitudinal dataset consisting of both qualitative and quantitative data obtained from archival sources including annual reports and the Ward’s Automotive Yearbooks. I analyzed these data in three iterative stages. First, I focused on identifying the persistent disturbances that had impacts on automotive firms. Second, I explored how the firms in my study responded to those persistent disturbances. Third, I built new theory and elaborated existing theory pertaining to how dynamic capabilities develop over time in the presence of persistent disturbances.

My analysis yielded important findings. First, I found that, in response to persistent disturbances, dynamic capabilities developed through a process of capability layering. The result was a dynamic capability architecture that comprised layers of capabilities that functioned to facilitate change. Dynamic capability development proceeds from early periods of coping towards increasing technical fitness as firms build new dynamic capability layers by adding and modifying the capabilities that functioned as building blocks supporting the dynamic capability. My research also distinguished persistent disturbances from other configurations of environmental dynamism and offer insights regarding how different configurations of environmental dynamism influence dynamic capability development.

Overall, this thesis makes important contributions to dynamic capability theory and to understanding the role of environmental dynamism in strategic management scholarship. My thesis also has important implications for practice.


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