Organisational learning and dynamic Capabilities : a case study

Abstract

Dynamic capabilities can help a firm to interpret and respond to an environment of rapid technological change. Although there is broad research consensus that they are higher order capabilities comprising routines, their nature and how they develop remains open to debate. A view of dynamic capabilities as capacities, which can shape and reshape and configure and reconfigure ordinary capabilities so as to remain competitive, is taken to examine how dynamic capabilities develop through learning. An emerging theme in the strategy literature is that managerial cognition may be important, even central, to the development of capabilities. In line with this theme, models are proposed on how managers learn to learn and how technological and organisational sensemaking practices can facilitate cognition. In addition, characteristics of two types of learning, expert and entrepreneurial, are proposed to explain how managers learn and recognise opportunities. The distinct learning patterns relate to content-oriented and process-oriented views of strategy respectively. Further, suggestions are made on how entrepreneurial learning in particular, may be beneficial in a highly dynamic environment. A process oriented, case study is conducted of three securities custodians facing an environment of increasing dynamism, competitiveness, and interconnectedness due to information technology developments in financial markets. The findings are shown to support the claim that managerial theories on learning are required to develop and sustain dynamic capabilities. In addition, the findings provide evidence that these theories may form through two learning patterns, depending on how managers frame problems and recognise opportunities. An important contribution of this study is the analytical framework of dynamic capability learning that was developed during the case analysis. The framework enables organisational learning experiences relating to dynamic capability development to be captured. The thesis concludes with implications for both managers and scholars.