In this special issue, we have collected 13 articles that offer new vantage points for research on dynamic capabilities. We offer a selection of thought-provoking papers that advance current thinking on dynamic capabilities and provide directions for new inquiries using the dynamic capability framework. The microfoundations of dynamic capabilities have increasingly received interest. This special issue offers a range of conceptual methodological approaches to deepen our understanding of the issues surrounding the microfoundations of dynamic capabilities.

Dynamic capabilities (DCs) are organizations' ability to integrate, build, and reconfigure competences, on which they draw to adapt to changes. Despite a significant stream of literature exploring DCs, the following question remains: how do dynamic capabilities allow organizations to adapt to changes and succeed? To fill this gap, this paper outlines a theory of DCs, based on an analysis of strategic behavior (micro)formation at the individual and collective levels. This theory conceptualizes an evolutionary paradigm in which the intentions of organizational agents are intertwined with environmental influences. It defines DCs as ‘instruments able to entrepreneurially solve problems of evolutionary fitness of organizations.’ In doing so, it advances theoretical conceptualization of DCs and their microfoundations to provide insights into how an entrepreneurially led organization may confront and solve problems and ultimately prosper.

Microfoundations allow the unpacking of processes by which dynamic capabilities are created. Along this line, managerial cognition has been proposed as a variable related to the dynamic capabilities. However, the high number of cognitive variables reported hinders the theoretical contributions. Thus, this study classifies the managerial cognitive variables of chief executive officers (CEOs) into three types of dynamic managerial capabilities: (1) managerial sensing, (2) managerial seizing, and (3) managerial reconfiguration. We estimate the correlation of these managerial capabilities with firms' dynamic capabilities. We use a three-level random effects model to synthesize 101 correlations reported from 2007 to 2021, representing 6,153 CEOs around the world. This meta-analysis reveals a positive relationship between CEOs' managerial cognition and dynamic capabilities, especially with respect to those cognitive variables that support managerial sensing as the perception of opportunities and entrepreneurial alertness.

Dynamic capabilities are central to firms' strategic decision-making and have received increasing attention in recent years due, in part, to the development of the information society. This research explores how web-based and human information sources interact and advance the development of dynamic capabilities. We use a mixed-methods approach executed in two studies. Study 1 reports insights gleaned from in-depth interviews with 12 senior managers. Study 2 provides the findings from a survey completed by 139 senior managers. The analysis indicates that the use of web-based and human information sources facilitates all dynamic capabilities types – sensing, seizing, and reconfiguring. Furthermore, sensing mediates the effects of the information sources on seizing and reconfiguring. This research highlights the strategic potential of using business information sources to advance dynamic capabilities while differentiating between the most commonly used information sources and inspecting their individual and synergistic effects on the advancement of dynamic capabilities.

Sequential ambidexterity is a specific dynamic capability which can play an important role in the technological catch-up of latecomer firms with limited knowledge and resources. Through a longitudinal case study, the trajectory of a latecomer firm's transformation from a generic technology manufacturer to a world-class innovator is analysed. This paper finds that sequential ambidexterity can be the basis of building dynamic capability, which enabled a latecomer to become a market leader through three major transitions. It shows how the building of dynamic capability through sequential ambidexterity is dependent on four mechanisms: senior manager cognition of the environment; organization learning orientation; organization structure design; and process reconfiguration. Building dynamic capability is also dependent on alignment between these mechanisms within the firm. Theoretically, the paper enhances understanding of the micro-foundations of developing dynamic capability through sequential ambidexterity. It also suggests that three contingent dimensions in determining the optimal approach to ambidexterity are: (i) industry leading versus catch-up firms, (ii) the scale of the firm, and (iii) the diversity of the downstream market. Furthermore, the paper provides practical insights for latecomer firms seeking to catch-up with industry leaders.

Prior research has emphasized the importance of dynamic capabilities to organizational transformation. In this paper, we explore how dynamic capabilities can have varying roles in change, and only potentially create transformational outcomes. By conducting ethnographic phenomenon driven research and observing the interactions of specific customer data related capabilities over a long period of time, we relate the potential for change to the way in which capabilities' interact, and identify three different mechanisms for change. Transformation requires a disruption of existing operational capabilities, which may result from one of the three identified mechanisms. Introducing a more theoretically consistent and practical taxonomy for (dynamic) capabilities may help in resolving some of the criticisms for their unclear practical implications. Further, our findings underline the importance of studying capabilities in their networks within organizations and over time.

Drawing on the configuration argument of strategic fit – i.e., an effective alignment of a firm's strategy with its environment, internal structures, and processes – and the resource-based view, this paper clarifies the impact of alliance strategy, alliance management resources, and alliance management capabilities on innovation performance in collaborative ventures. This study of 441 collaborative ventures in the electronics industry offers empirical support for the configuration argument. First, greater alliance strategy formalization influences innovation performance directly and indirectly. Alliance management capabilities – that reflect organizational routines to implement an alliance strategy – partially mediate this effect. Second, alliance management capabilities leverage alliance management resources in that the effect of the former on innovation performance is moderated by the latter. Furthermore, greater innovation strategy formalization affects innovation performance and moderates the direct effect of alliance strategy formalization on innovation performance; an effect that increases with technological uncertainty.

How organizations utilize capabilities to achieve competitive advantage and improve performance has received an abundance of scholarly attention. Both ordinary and dynamic capabilities (DC) enable organizations to achieve higher performance when leveraged appropriately and under favorable conditions. The complexity of an organization's motives for why and how different capabilities are acquired drives us further to explore what complementarities organizations might achieve and under what contexts. Specifically, we explore how firms engaging in mergers and acquisitions (M&A) to acquire dynamic and/or ordinary capabilities experience different market reactions and levels of short- and long-run value creation given environmental uncertainty. Our results support the acquisition of ordinary capabilities for predicting positive short-term market reactions and of DC for longer-run firm performance post-M&A, with uncertainty factors moderating these relationships. We discuss both the theoretical and practical implications of uncertainty and acquisitions of these capabilities and offer suggestions for future research.

This conceptual paper focuses on the importance of extending the collaborative dynamic capabilities (C-DCs) view and its emphasis on the boundary spanning strategic communities (SCs) from firm-centric to the network-centric perspective. The C-DC view is an original theoretical perspective that offers a good explanation of corporate-level transformations in the context of cross-sectoral convergence. Although the focus of prevailing research on large firms as cornerstones of SCs is valid, it does not fully capture the more complex dynamics that take in the horizontal networks of firms. We show that C-DC and SC theoretical perspectives can be adapted to the context of regional industrial clusters and contribute to their strategic renewal. The paper conceptualizes the different challenges and nature of leadership that prevail in SC-based firms networks. It also presents the different enabling aspects of collaborative DCs (with regard to trust building, co-specialization and capability synthesis) in firm- vs. network-centric environments.

In a Schumpeterian economic model, dynamic capabilities (DC) help entrepreneurial firms create competitive advantages. However, advancing the construct of DC in entrepreneurship is hampered by the incompatibility of some key assumptions in entrepreneurial ventures. In this paper, we propose that dynamic managerial capabilities (DMC), which builds upon the DC perspective by drawing attention to the role of managers, is a better alternative in analyzing entrepreneurship research. We find support for our ideas in a systematic analysis of extant research. Our review highlights the evolution of DMC literature in entrepreneurship and traces its dominant intellectual structures. In concurrent analysis, we highlight the limitations of utilizing DC. Additionally, we shed new light on the emergence of organizational capabilities, and present new avenues for future research.

Risks and uncertainties of increasing severity and variety characterise the operating environments of most multinational enterprises (MNEs). Surprisingly limited attention has been given to understanding the antecedents and nature of risk and uncertainty management capabilities. In this study, we contribute to the organisational capability research, by examining the antecedents of risk and uncertainty management capabilities and theorising how MNEs develop and transfer risk and uncertainty management capabilities across borders. By drawing on empirical evidence from MNEs operating in New Zealand, we conceptualise the role of environmental factors – including country risk profile and regulatory environment – in shaping firms' risk and uncertainty management capabilities. We also inductively theorise about the organisational factors that support the development of risk and uncertainty management capabilities in MNEs, and explain which factors influence their cross-border transferability. Finally, we discuss our study's limitations and offer future research directions.

This study empirically examines the role of market dynamism and a firm's relational capability in the development of dynamic capability. A moderated hierarchical regression method has been used on the survey data of 218 Indian firms to test the objectives of the study. The findings suggest that relational capability (namely, customer linking capability and strategic partnering capability) is an important driver of dynamic capability. However, the effectiveness of relational capability is dependent on the market dynamism; particularly, when competition intensifies, the impact of customer linking capability declines, whereas the impact of strategic partnering capability on dynamic capability becomes stronger. Furthermore, the finding suggests that even though environmental uncertainty represents an important element of market dynamism, it is a driver, rather than a moderator, of dynamic capability. The study contributes to the extant literature by explicitly specifying the relational capability as a specific competence to develop dynamic capability under different market conditions.

Although research has shown that business model innovation (BMI) is an effective means to remain competitive in the digital age, many firms do not respond appropriately and often fail to exploit new digital opportunities. In this study, we adopt a microfoundational approach to understand the role and effects of dynamic capabilities (DCs) on BMI in the context of digitalization. Furthermore, we test how this relationship is influenced by contextual factors. Our results from a survey of German manufacturing firms demonstrate the importance of building strong DCs for effective BMI in the context of digitalization. We also highlight the advantages of an entrepreneurial leadership and mindset in this context. The study further suggests that environmental turbulence in the digital context acts as an antecedent to DCs and BMI, rather than moderating their relationship. While strategic factors indirectly affect BMI as antecedents of DCs, we found no evidence of an influence of the organizational structure.