A framework for the implementation of dynamic capabilities in successfully diversified conglomerates

Abstract

Currently an overwhelming number of businesses have adopted diversification strategies and are exhibiting great success and have a prominent footprint on the global market. On the contrary, there is divergent scholarly thinking on the diversification-performance link and a wide-spread condemnation for the adoption of diversification strategies. As a result, managers of successful diversified companies are running far ahead their scholarly counterparts. Priori constructs, developed through an extensive and wide ranging literature review, focused the theory building power of the inductive case study research methodology employed. Through the lens of the emerging dynamic capabilities theory, four of the most highly successful diversified conglomerates over an extended period, were selected through the extreme case variant method, and were investigated in a longitudinal study from 1997 to 2013, to realise some of the key insights to their success. The outcomes of the research provided a rich explanation of how all five elements of dynamic capabilities are implemented in response to the increasingly dynamic environment within an entrepreneurial approach to sustain competitive advantage. The understanding of dynamic capabilities was extended through the emergence of two new themes, people and supportive structures. The findings gleaned are encapsulated within a simple framework that business practitioners can implement. In addition, the findings bring together a vast body of knowledge and provide a meaningful contribution in response to the lack empirical findings in business practice.