The process of creating dynamic capabilities

The concept of dynamic capability (DC) is receiving significant attention from scholars in strategy and organisation research. However, most of the research is conceptual in nature. In this thesis, the process of how DCs are created in two firms is examined using the grounded theory methodology (GTM) with the aim of developing a substantive theory of DC creation. Data were collected using theoretical sampling, and unstructured and semi-structured interviews. These data were then analysed using the constant comparison method to identify and explain the process through which DCs are created. The findings from the study reveal that DCs are created through continuous internal activities such as in-house innovation, human resource activities (HRAs), and external activities with partners through collaboration and acquisitions. Firms learn from these activities, which lead to changes in the static organisational capabilities and the development of higher order capabilities, the DCs. From this study, a framework has been developed for considering and managing the process of creating DCs at a strategic level. The framework explains the reasons why these firms develop and renew their DCs, identifies the key resources required, and examines the activities through which DCs are developed and renewed. The framework is both iterative and simultaneous. Implications for academics and practitioners are discussed, and limitations and directions for future research are outlined.