Narrow Results

The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difficult-to-trade knowledge assets and complementary assets), and the evolution path(s) it has adopted or inherited. The importance of path dependencies is amplified where conditions of increasing returns exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding internally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing internal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants.

Research into organisation theory contains abundant evidence of the positive effects of ambidexterity on a firm's performance, and of the influence of organisational context on ambidexterity. The present research tests whether organisational context affects innovation ambidexterity. Our results, based on a dataset of 108 large innovative firms, show that firms combining exploration innovation and exploitation innovation should adopt long-term practices that favour risk-taking and creativity, and thereby build an organisational context suited to innovation ambidexterity. Competences were found to have a strong moderating effect. These results have important managerial and theoretical implications. In the case of innovation, firms that simultaneously pursue exploitation and exploration activities should carefully consider how they combine competences and organisational context.