Subsidiaries, Competencies and the Implementation of Dynamic Capabilities
Document Type Conference Paper
Irish Academy of Management Conference Paper, NUI Galway, September 2009
Practitioners are increasingly urged by popular press and academia to add value and develop their business units by building dynamic capabilities; but both the academic theory and press fail to give a comprehensive definition as to what constitutes a dynamic capability and how they can be developed. The purpose of this paper is to explore and ultimately build upon the current literature in addressing this need, thereby contributing to managerial and academic thinking on dynamic capabilities and then to discuss the potential managerial implications in a subsidiary context. This is in response to identifying the gap both theoretically and empirically in ascertaining the factors which impact upon the development of dynamic capabilities in a restrictive subsidiary context amidst turbulent global environments. How subsidiaries can develop dynamic capabilities and establishing the relationship between dynamic capabilities and contribution is thus a pivotal area of analysis and inquiry. It is therefore imperative that it be investigated how subsidiaries can, within the confines of their organisational structure, protect and enhance their position within the MNC through building dynamic capabilities.
The intent of this paper is to explore the literature at this juncture in identifying and construing the most prevalent debates within the theoretical grounding to date. These avenues of inquiry include defining the dynamic capability (DC) concept with clarity, illustrating its distinction from organisational capabilities, and a discussion of the hierarchies of capabilities identified. This is in addition to discussing issues of sustainability and competitive advantage as a central area of debate. The discussion of the DC framework is set in the context of MNC subsidiaries, in exploring the managerial implications of developing DC’s and how this can influence upon subsidiary performance.