Session 176

The Influence of External Uncertainty on Capability Development

Track C

Date: Tuesday, October 13, 2009


Time: 10:00 – 11:15


Room: Meeting Room 6

Session Chair:
Dimo Ringov, ESADE Business School

Title: Dynamic Capabilities & Firm Performance: Evidence from Mutual Funds


  • Dimo Ringov, ESADE Business School

Abstract: This study examines whether superior performance in dynamic markets is achieved through routinized change processes (cf. Winter, 2003; Zollo & Winter, 2002) or more flexible, entrepreneurial acts of management (cf. Teece, 2007). It is argued that the relative effectiveness of the former versus latter view of dynamic capability critically depends on the uncertainty of the environment firms operate in. Examining the performance of U.S. diversified domestic equity mutual funds over the years 2003-2007, this study finds that highly routinized change processes do not lead to improved performance in relatively stable or moderately dynamic environments yet substantially degrade performance in highly uncertain environments.

Title: Dynamic Capabilities and Path Dependency: Benefits and Limits to Change


  • Frances Fabian, University of Memphis

Abstract: The central role for path dependencies in dynamic capabilities both hints at the complexity concepts inherent in running iterative routines, but also issues regarding whether a firm can change both operational and dynamic capabilities versus find themselves “locked in” to certain paths. This is especially important when the environment undergoes substantial shock and uncertainty, making existing capabilities “outdated.” We examine what kinds of costs and difficulties may occur in applying dynamic capabilities to address this outdated status. Specifically, we categorize existing operational capabilities along the dimensions of strategic importance (high, low) and lock-in (high, low) to consider when different dynamic capabilities may effectively come into play, and similarly, when firms may choose not to, or find themselves unable to, adapt to environmental shocks.

Title: Growth Rings: Patterns of Resource Bundle Emergence and Dynamics in New Ventures


  • Renee Rottner, University of California-Santa Barbara

Abstract: The idea that the ‘firm is a bundle of resources’ is central to the resource-based view (RBV), and while we know much about particular resources and capabilities, we know far less about how resources and capabilities are bundled, change, and interact. This inductive study of new ventures identifies eight resource bundles and four resource bundling dynamics: resource diversity, resource balance, managerial bundling skill, and bundling speed. I argue that these dynamics by which resources are bundled and rebundled affect new firm survival by increasing the ability of the firm to withstand uncertainty and shocks. These dynamics are illustrated with a new comparative case method called ‘growth rings.’

Title: Strategic Focus and the Quest for Temporary Advantage


  • Nils Stieglitz, Frankfurt School of Finance and Management
  • Thorbjørn Knudsen, University of Southern Denmark
  • Markus Becker, University of Southern Denmark

Abstract: In this paper, we ask whether strategic flexibility or strategic focus is the right way to reap temporary advantages in turbulent business environments. Rather than investing in adaptive capability, strategic focus suggests firms can gain advantage if they stand fast in the face of uncertainty. We develop a modeling structure that allows us to compare the viability of focus and flexibility when firms struggle to achieve temporary advantage in uncertain business environments. Quite surprisingly, we find that strategic focus is the right strategy when uncertainty frequently shifts the basis of successful business models, a finding that seriously questions the viability of strategic flexibility in very turbulent and uncertain business environments.

All Sessions in Track C...

Mon: 12:45 – 14:00
Session 173: Proactive Strategies to Manage an Uncertain World
Session 181: Sustaining Innovation
Mon: 15:45 – 17:00
Session 174: The Effect of Environmental Conditions on Organizational Reconfiguration
Session 183: Managing Collective Emotions under Strategic Uncertainty
Mon: 17:15 – 18:30
Session 175: The Influence of Uncertainty on Investment Behaviour of Firms
Session 185: New Forms and Governance Modes for Coping with Uncertainty
Tue: 10:00 – 11:15
Session 176: The Influence of External Uncertainty on Capability Development
Tue: 11:30 – 12:45
Session 177: How to Make the Right Decisions During Uncertain Times?
Tue: 14:30 – 15:45
Session 178: Does the Past Predict Future Exploratory or Exploitative Innovative Behaviour?
Wed: 10:00 – 11:15
Session 179: Environmental Dynamism and Firm Behavior
Session 182: Cognitive Processs under Uncertainty
Wed: 11:30 – 12:45
Session 180: The Dynamics of Top Management Team in Achieving Long Term Performance
Session 184: Value Creation Under Uncertainty

Strategic Management Society

Washington DC