Dynamic capabilities in international expansion
Section snippets
Dynamic capability: concepts and importance
Capability possession (i.e., having distinctive resources), capability deployment (i.e., allocating distinctive resources), and capability upgrading (i.e., dynamic learning and building new capability) are three critical components of dynamic capability. Broadly, distinctive resources are critical assets, knowledge, or capabilities that are firm specific, difficult to imitate, and can generate economic return and competitive edge in the market. The essence of a firm lies in its ability to
Capability possession
Capability possession concerns a firm’s established distinctive resources, including critical assets, knowledge, or capabilities that are firm-specific, difficult to imitate, and can generate economic returns and a competitive advantage. These resources are organizationally embedded. Only critical firm-specific resources can create a sustained competitive advantage and explain performance differences compared to major rivals. For instance, Coca-Cola’s vast number of bottling facilities
Capability deployment
The competitive advantages of firms in today’s economy stem not merely from distinctive resources but also from the manner in which they are deployed (Teece, 1998). To optimally deploy knowledge assets, it is necessary for firms to know what contingencies may affect the efficiency of such deployment. Resources will generate stronger competitive advantages when they are applied through an appropriate configuration with external and internal dynamics in a competitive environment (Wernerfelt, 1984)
Capability upgrading
a Transferring critical capability across borders does not remove the need for firms to create new knowledge and capabilities in geographically dispersed settings. The success of a global business depends not merely on possessing and deploying capabilities but also on learning and acquiring new knowledge. Building, diffusing, and transferring learning capabilities are all processes vital to the growth of MNEs. “Learning capability” is the capacity to generate and generalize ideas and to acquire
Conclusion
This article addresses the notion that the success of a global business depends not merely on its return-generating resources but also on its ability to deploy and upgrade critical capabilities. The importance of deploying and upgrading capabilities is accentuated in today’s world economy characterized by increasing technological advancement and business globalization. A contingency perspective on capability deployment and upgrading is also needed. MNEs should allocate and upgrade capabilities
References (27)
- et al.
Dynamic core competencies through meta-learning and strategic context
Journal of Management
(1996) Toward an economic theory of the multiproduct firm
Journal of Economic Behavior and Organization
(1982)- Bartlett, C. A., & Ghoshal, S. (1987). Managing across borders: New strategic requirements. Sloan Management Review,...
- et al.
Building firm-specific advantages in multinational corporationsThe role of subsidiary initiative
Strategic Management Journal
(1998) International production and the multinational enterprise
(1981)The eclectic paradigm of international productionA restatement
Journal of International Business Studies
(1988)- et al.
Diversification strategy and internationalizationImplications for MNE performance
Strategic Management Journal
(1989) Competition for competence and inter-partner learning within international strategic alliances
Strategic Management Journal
(1991)A theory of multinational enterprise
(1982)- et al.
International diversificationEffects on innovation and firm performance
Academy of Management Journal
(1997)
The international operations of national firmsA study of direct investment
The internationalization process of the firmA model of knowledge development and increasing foreign market commitment
Journal of International Business Studies
Knowledge of the firm, combinative capabilities, and the replication of technology
Organization Science
Cited by (340)
Firm performance drivers within a dynamic emerging market ecosystem
2024, Journal of International ManagementMNEs' capabilities and their sustainable business in emerging markets: Evidence from MNE subsidiaries in China
2024, Journal of International ManagementMaking sense of dynamic capabilities in international firms: Review, analysis, integration, and extension
2024, International Business ReviewDynamic capability deployment: The roles of dominant logic and international entrepreneurial orientation
2024, International Business ReviewRole of resource investment management and strategic resource deployment capabilities in internationalization-performance relationship
2024, Journal of International ManagementSustainable expansion: Capabilities for “New food source” - Companies
2023, Future Foods