Question 1
There are several theories that relate design features of organizations and strategy to the dynamism of
the environment.
a) Eisenhardt and Martin (2000) argue that dynamic capabilities are a necessary but not
sufficient condition for competitive advantage. What does this mean, and why is this the
case?
Dynamic capabillities are necessary but not sufficient conditions for competitive advantages because
they are about sustaining competitive advantages when the environment is changing by reconfiguring,
combining and integrating the resource-base of the company in order to meet the new environment
without delivering huge sacrificies in terms of losing its advantages.
That is, dynamic capabilities are not so much about capabillities in terms of being superior in something
(such as manufacturing or logistics), but more about the capabillities for staying superior in that
something when the environment changes.
Non-dynamic capabillities in terms of superior resources and competencies, such as superior
productivity lines because of competencies derived from experiential learning, on the other hand, are
much more about achieving competitive advantages.
These non-dynamic capabillities, however, deliver huge sacrificies when the environment is changing
because they can erode or loose their value – think of the superior productivity lines that loose their
value because of new technology.
Therfore, these non-dynamic capabillities can only explain short-term success and temporal advantages,
but no sustained competitive advantages because these advantages erode when the environment is
changing, whereas dynamic capabillities can explain sustained competitive advantages and long-term
success since these capabilities enable the organization to sustain its competitive advantages.
In conclusion, dynamic capabillities are necessary to maintain and sustain competitive advantages given
the high dynamic markets in todays economies, but are not sufficient since they need non-dynamic
capabillities for being superior at something to achieve competitive advantaegs at the first place to be
able to maintain any advantage at all.
Question 2
a) To cope with changing environments, Argawal and Helfat (2009) state that firms may be
better off engaging in continuous strategic renewal instead of discontinuous
transformations but that it is difficult for firms to engage in continuous renewal. Please
explain why it is difficult for firms to engage in continuous renewal?
Argawal and Helfat (2009) argue that firms and their product life-cycle, given the dynamism of todays
markets, at some point have to renew themselves in order to survive because of maturity
Specifically, they argue that firms can focus on this strategic renewal by engaging either in disconitnous
renewal or continuous renewal.
- Continous renewal stands for incremental change in which the organization is adaptating
proactively by smaller steps to cope with the changing environment
- Discontinuous change is more about radical change in which the organization is completey
altering its strategy at some point.
There are several theories that relate design features of organizations and strategy to the dynamism of
the environment.
a) Eisenhardt and Martin (2000) argue that dynamic capabilities are a necessary but not
sufficient condition for competitive advantage. What does this mean, and why is this the
case?
Dynamic capabillities are necessary but not sufficient conditions for competitive advantages because
they are about sustaining competitive advantages when the environment is changing by reconfiguring,
combining and integrating the resource-base of the company in order to meet the new environment
without delivering huge sacrificies in terms of losing its advantages.
That is, dynamic capabilities are not so much about capabillities in terms of being superior in something
(such as manufacturing or logistics), but more about the capabillities for staying superior in that
something when the environment changes.
Non-dynamic capabillities in terms of superior resources and competencies, such as superior
productivity lines because of competencies derived from experiential learning, on the other hand, are
much more about achieving competitive advantages.
These non-dynamic capabillities, however, deliver huge sacrificies when the environment is changing
because they can erode or loose their value – think of the superior productivity lines that loose their
value because of new technology.
Therfore, these non-dynamic capabillities can only explain short-term success and temporal advantages,
but no sustained competitive advantages because these advantages erode when the environment is
changing, whereas dynamic capabillities can explain sustained competitive advantages and long-term
success since these capabilities enable the organization to sustain its competitive advantages.
In conclusion, dynamic capabillities are necessary to maintain and sustain competitive advantages given
the high dynamic markets in todays economies, but are not sufficient since they need non-dynamic
capabillities for being superior at something to achieve competitive advantaegs at the first place to be
able to maintain any advantage at all.
Question 2
a) To cope with changing environments, Argawal and Helfat (2009) state that firms may be
better off engaging in continuous strategic renewal instead of discontinuous
transformations but that it is difficult for firms to engage in continuous renewal. Please
explain why it is difficult for firms to engage in continuous renewal?
Argawal and Helfat (2009) argue that firms and their product life-cycle, given the dynamism of todays
markets, at some point have to renew themselves in order to survive because of maturity
Specifically, they argue that firms can focus on this strategic renewal by engaging either in disconitnous
renewal or continuous renewal.
- Continous renewal stands for incremental change in which the organization is adaptating
proactively by smaller steps to cope with the changing environment
- Discontinuous change is more about radical change in which the organization is completey
altering its strategy at some point.
