Dynamic Capabilities: A Review and Research Agenda

A Research Model of Dynamic Capabilities
A primary interest in management research is to identify relationships between
organisational variables. Dynamic capabilities, as an emerging concept, need to be
examined in an integrated framework incorporating the antecedents and consequences.
Below, we propose and delineate a research model (see Figure 1).
Market dynamism
(Figure 1 about here.)
As aforementioned, the conceptualisation of dynamic capabilities encompasses market
dynamism as an influential factor for firm capability development and evolution
(Eisenhardt and Martin 2000). A dynamic market environment can be caused by a
leading factor or a combination of several factors, including industry technological
innovation, regulatory change, economic cycle and the changing competitive nature of
the industry. Tripsas (1997) illustrates that radical technological innovation in the
typesetter industry was a major factor of market dynamism. Firms with higher dynamic
capabilities developed technological capability and adapt themselves accordingly.
Conversely, in a study of the US movie industry Lampel and Shamsie (2003)
illuminate that regulatory change altered industry dynamism that, in turn, influenced
firms’ dynamic capabilities during the 1950s-1960s. Until the 1940s, Hollywood was
dominated by eight large integrated hierarchical firms, which held key resources
internally for long periods of time. Barriers to entry and imitation of key resources and
capabilities were high. The movie making process was characterised by a cycle of
internal creation of resource bundles – finished products were created using internal
resources and released through studio owned distribution channels into exhibition
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