Corporate Dynamic Capabilities And The Intertemporal Performance Relationship

Resource-based view focuses on characteristics of resources & capabilities and market conditions leading to competitive advantage from strategy content. Because environmental change will reduce value of resources and capabilities, theoretical questions from strategy process how firms achieve their resources and capabilities are emphasized by strategy scholars. Dynamic capability is the very theory which deals with how firms facing environmental change build their new capabilities.Based on reconceptualization of dynamic capabilities, the paper demonstrates four dimensions of dynamic capabilities, prior knowledge base, strategic learning, intervention and second-order routines. Second time-period performance corresponding to dynamic capabilities is inter-temporal performance. Two core hypotheses of the thesis are that dynamic capabilities lead to the emergence of new capabilities and inter-temporal performance. Four dimensions of dynamic capabilities can be logically regarded four stages by which firms acquire second-period capabilities, though they may emerge by turns or cyclically in reality. Expecting coming technological change will destroy their existing capabilities and make resources obsolete, firms start from first-period knowledge base and set about strategic learning with second-period business orientation. Furthermore, strategists strategically intervene the knowledge evolution of the internal firm, deploy internal and external resources and change old routines by second-order routines. Finally, new resources configuration is done, new capabilities is built, which result in inter-temporal performance. The thesis uses China video industry as research objective, duration of video firm is separated into two neighbouring terms, namely VCD and DVD. Research finds that two core hypotheses are supported. That is to say, dynamic capabilities, on the one hand, have the significantly positive impact on inter-temporal performance directly. On the other hand, through second-period capabilities, dynamic capabilities indirectly affect inter-temporal performance, which supports viewpoints that dynamic capabilities is heterogeneous and capabilities-building process itself can be sources of competitive advantage to some extent, so the counterpart proposition that dynamic capabilities is homogeneous is refuted.The integration strategy process, i.e. dynamic capabilities, with strategy content, i.e. second-period capabilities and inter-temporal performance, has many benefits.