Dynamic capabilities in elite firms: a text mining approach

Abstract

Despite decades of enquiry into why some firms consistently outperform their peers, the specific organisational capabilities that underpin such longevity remain under-explored. Henderson et al. (2011) first isolated firms whose success cannot be dismissed as luck. Saville and Gurr (2024) extended this work by statistically vetting 25,507 global firms over four decades and identifying 400 elite firms. Their work provided compelling evidence that superior return on assets (ROA) is attributable to skill rather than randomness. Responding to their call for deeper explanation, this study investigates the elite firms through the Dynamic Capabilities Theory (DCT). This study aims to determine the dynamic capabilities (sensing, seizing, and transforming) that most strongly explain sustained superior performance (SSP). The study will offer investors, managers, and strategists’ actionable guidance on which capability investments matter most. Additionally, the study will further enrich the Dynamic Capabilities Theory with novel, firm-level evidence from a uniquely vetted global cohort. Keywords: Dynamic capabilities; sensing, seizing, transforming; sustained superior performance; Return on assets (ROA).