Developing Dynamic Capabilities in Environments of Persistent Disturbances
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Western University Scholarship@Western Electronic Thesis and Dissertation Repository 4-19-2012 12:00 AM Developing Dynamic Capabilities in Environments of Persistent Disturbances Brent A. McKnight The University of Western Ontario Supervisor Dr. Pratima Bansal The University of Western Ontario Graduate Program in Business A thesis submitted in partial fulfillment of the equirr ements for the degree in Doctor of Philosophy © Brent A. McKnight 2012 Follow this and additional works at: https://ir.lib.uwo.ca/etd Part of the Strategic Management Policy Commons Recommended Citation McKnight, Brent A., "Developing Dynamic Capabilities in Environments of Persistent Disturbances" (2012). Electronic Thesis and Dissertation Repository. 483. https://ir.lib.uwo.ca/etd/483 This Dissertation/Thesis is brought to you for free and open access by Scholarship@Western. It has been accepted for inclusion in Electronic Thesis and Dissertation Repository by an authorized administrator of Scholarship@Western. For more information, please contact [email protected]. DEVELOPING DYNAMIC CAPABILITIES IN ENVIRONMENTS OF PERSISTENT DISTURBANCES (Spine title: Dynamic Capabilities and Persistent Disturbances) (Thesis Format: Monograph) by Brent McKnight Graduate Program in Business Administration A thesis submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy The School of Graduate and Postdoctoral Studies The University of Western Ontario London, Ontario, Canada © Brent McKnight 2012 THE UNIVERSITY OF WESTERN ONTARIO School of Graduate and Postdoctoral Studies CERTIFICATE OF EXAMINATION Supervisor Examiners ______________________________ ______________________________ Dr. Tima Bansal Dr. Glenn Rowe Supervisory Committee ______________________________ ______________________________ Dr. Mark Zbaracki Dr. Jean-Philippe Vergne ______________________________ ______________________________ Dr. Robert Klassen Dr. Robert Lannigan ______________________________ ______________________________ Dr. Fernando Olivera Dr. Maurizio Zollo The thesis by Brent Alexander McKnight entitled: Developing Dynamic Capabilities in Environments of Persistent Disturbances is accepted in partial fulfillment of the requirements for the degree of Doctor of Philosophy ______________________ _______________________________ Date Chair of the Thesis Examination Board ii Abstract Dynamic capabilities explain how firms adapt to environmental dynamism by modifying their underlying resources and capabilities. However, despite a robust understanding of how dynamic capabilities are influenced by different dimensions of environmental dynamism (eg. velocity), scholars have not explained how dynamic capabilities develop in the presence of different configurations of environmental dynamism. Common configurations of environmental dynamism include environmental shifts, which pertain to discontinuous environmental change, and ongoing environmental change, which depicts hypercompetitive environments. In this thesis, I explore how dynamic capabilities develop in the context of a configuration of environmental dynamism that I call persistent disturbances, defined as repeated temporary events confronting firms. My research investigates how firms build and further develop dynamic capabilities in the presence of persistent disturbances. In my research, I engaged in an inductive historical case study to build new and to elaborate on existing dynamic capability theory. I chose the North American automotive industry for my context, focusing on the time period between 1965 and 2010, during which the industry was confronted with persistent disturbances in the form of labour difficulties, economic cycles, competitive pressures, energy challenges, and government regulations. I focused my analysis on three firms: General Motors, Chrysler, and Ford. I created a longitudinal dataset consisting of both qualitative and quantitative data obtained from archival sources including annual reports and the Ward’s Automotive Yearbooks. I analyzed these data in three iterative stages. First, I focused on identifying the persistent disturbances that had impacts on automotive firms. Second, I explored how the firms in my study responded to those persistent disturbances. iii Third, I built new theory and elaborated existing theory pertaining to how dynamic capabilities develop over time in the presence of persistent disturbances. My analysis yielded important findings. First, I found that, in response to persistent disturbances, dynamic capabilities developed through a process of capability layering. The result was a dynamic capability architecture that comprised layers of capabilities that functioned to facilitate change. Dynamic capability development proceeds from early periods of coping towards increasing technical fitness as firms build new dynamic capability layers by adding and modifying the capabilities that functioned as building blocks supporting the dynamic capability. My research also distinguished persistent disturbances from other configurations of environmental dynamism and offer insights regarding how different configurations of environmental dynamism influence dynamic capability development. Overall, this thesis makes important contributions to dynamic capability theory and to understanding the role of environmental dynamism in strategic management scholarship. My thesis also has important implications for practice. Keywords: Dynamic Capabilities; Resilience; Environmental Dynamism; Automotive Industry iv Acknowledgments There are many people that have helped me in ways big and small along this challenging journey. I wanted to take a moment to note a few of them. Dr. Tima Bansal provided strong and engaged mentorship to me that influenced every aspect of my becoming a professor. Tima taught me skills and knowledge about conducting scholarly research and delivering high quality teaching, and constructively challenged me at crucial junctures. Looking back it is easy to see how I owe her a debt of gratitude across the different aspects of my development as a scholar. Tima also opened up every possible door for me and actively supported me in countless ways. I am grateful for Tima’s strong and steadfast support. I would like to thank my examination committee – Dr. Maurizio Zollo, Dr. JP Vergne, Dr. Glenn Rowe, and Dr. Robert Lannigan. Each member of the committee engaged strongly with my thesis work, and offered insightful comments and suggestions that have already helped me drive my work forward. Thank you very much for your dedication. My supervisory committee also played a very important role in pushing my thinking and ensuring that the dissertation proposal I arrived at was achievable and realistic. Thank you to Mark Zbaracki, Fernando Olivera, and Rob Klassen. Thank you to a variety of Ivey faculty members that have offered support to me over the years. I deeply appreciate the mentoring and support that Oana Branzei provided both from the perspective of research through collaboration but also teaching from the perspective of a coach. A special thanks to Charlene Zietsma who supervised me during the first two years of my v degree; her ongoing support has been a welcome source of comfort. Thank you as well to Jeff Frooman at the University of New Brunswick who has been a strong support for me throughout my studies. I appreciate Mike Valente and Adam Fremeth both making a point to attend presentations that I gave and offering support, advice and commentary. Guy Holburn and Claus Rerup have each offered me valuable and insightful advice and guidance; thank you. I would also like to acknowledge financial support that made my PhD journey more comfortable. I received funding from the Brock scholarship, made possible by Bill and Anne Brock’s generous donation to the school. This scholarship provided welcomed financial support over the first four years of my degree. In addition, grants from the Ontario Graduate Scholarship Program and the Social Sciences and Humanities Research Council were greatly appreciated. My fellow PhD students at Ivey, past and future graduates of the Ivey PhD program alike, have been a source of strength and support. There are too many to name here, but they know who they are. The community of scholars is strong at Ivey and that community made the journey both more intellectually stimulating and personally rewarding. I am grateful also to Rob and Anna Esselment and their growing family, Janey, Heath and Bea, for graciously opening their home to me when I needed an overnight visit. Thank you as well to Starbucks store #4757 for providing me with a destination where I could be productive when I needed to get out of my home office. Both employees and regular customers alike offered a remarkable amount of support and encouragement throughout the process, particularly as the final milestone neared. vi Finally, I would like to thank my family for their enduring support. My parents, Brian and Patricia, and Meaghan’s parents, Gordon and Marylyn, have both been very supportive, providing help in a myriad of different ways big and small. Most important I would like to thank my wife Meaghan. Pursuing a PhD is a privilege and I am eternally grateful for the support that Meaghan has provided to me over the duration of my studies. When we began this journey, there was just the two of us. But over the journey our family became wonderfully more complicated - adding two beautiful children Liam and Owen. It is theirs and your love and compassion above all that provided the enduring