Unbundling dynamic capabilities in successful Asian-Pacific shipping companies
| DOI | https://doi.org/10.1108/JABS-11-2015-0192 |
| Date | 02 May 2017 |
| Published date | 02 May 2017 |
| Pages | 113-134 |
| Author | Andrejs Čirjevskis |
| Subject Matter | Strategy,International business |
Unbundling dynamic capabilities
in successful Asian-Pacific
shipping companies
Andrejs C
ˇirjevskis
Andrejs C
ˇirjevskis is
Professor at the RISEBA
University of Business,
Arts and Technology,
Riga, Latvia.
Abstract
Purpose –This paper aims to add to the understanding of dynamic capabilities (DC) as sources of
competitive advantage of successful Asian-Pacific shipping companies by demonstrating that DC
development unfolds in three steps, from recognition that the environment has changed, to the decision
to deploy DC, to assets re-orchestration.
Design/methodology/approach –Based on an approach involving two illustrative case studies, the
author analyzed DC development of Chinese and Singaporean-based shipping groups in depth. The
analysis was centered on DC by investigating how strategic decision-making on vertical integration,
diversification and implementation of new technologies can be underpinned by developing DC to
create sustained advantages.
Findings –The author found that strategic components of DC are rooted in strategic decision-making
to initiate changes on the corporate and even on an operational level.
Research limitations/implications –While capability development is thoroughly studied, capability
erosion has not been integrated into the research. The exploration of human capital as a firm’s
idiosyncratic resource in assets orchestration capabilities can be future work.
Practical implications –The proposed research contributes to the debate on micro foundations of DC
and provides insights for practitioners striving for retaining competitive advantages.
Social implications –Regarding implications for the society, the research shows how the DC serve to
generate competitive advantages. The author has presented a logical structure of the competitive
advantage paradigm as a product of DC and business models that can be useful to decision makers.
Originality/value –The research offers insights into the composition of micro foundations of DC and
demonstrates that DC can be unbounded into well-known and concrete strategic and operational
management activities.
Keywords Asia-Pacific, Competitive advantage, Dynamic capabilities, Shipping companies
Paper type Research paper
1. Introduction
The exploration on how to manage organizational resources and capabilities to sustain
competitive advantages remains the intriguing unit of research of strategic management
science. Two major frameworks to identify the sources of competitive advantages are the
resource-based view (RBV) and dynamic capabilities view (DCV) on competitive
advantages, which have been successively developing since 1990. Barney defines that
sustained competitive advantages must be found in the valuable, rare, imperfectly imitable
and non-substitutable, so-called VRIN resources already controlled by a firm (Barney,
1991). Barney called VRIN resources as “idiosyncratic firm attributes” of the firms’
competitive advantages. Over the past 20 years, RBV has been used extensively to explain
differences in firm performance (Chandick et al., 2015). According to Lin and Wu (2014),
researchers have theorized that when firms possess VRIN resources, they can achieve
Received 18 November 2015
Revised 4 February 2016
Accepted 27 July 2016
DOI 10.1108/JABS-11-2015-0192 VOL. 11 NO. 2 2017, pp. 113-134, © Emerald Publishing Limited, ISSN 1558-7894 JOURNAL OF ASIA BUSINESS STUDIES PAGE 113
sustainable competitive advantage by implementing value-creating strategies that
competitor firms will have difficulty in imitating (Acedo et al., 2006;Armstrong and Shimizu,
2007;Grant, 1991;Lockett et al., 2009;Ray et al., 2004). The critics of RBV argue that it
seems to tell managers to obtain VRIN resources and develop appropriate competitive
advantages of the organization, but it is silent on how this should be done (Connor, 2002;
Miller, 2003). Proponents of RBV recommend developing the RBV into a more viable theory
of competitive advantage, especially if it is moved into a genuinely dynamic framework
(Kraaijenbrink and Wijnhoven, 2008). The dynamic capability (DC) approach has emerged
as an attempt to untangle the complex problem of competitive advantage sustainability in
rapidly changing environments (Eisenhardt and Martin, 2000;Teece et al., 1997). Lin and
Wu (2014) argue that the DCV approach explains firm competitiveness more effectively
than the RBV (Deeds et al., 2000;Eisenhardt and Martin, 2000;Makadok, 2001;Teece
et al., 1997;Wu, 2010;Zahra et al., 2006;Zollo and Winter, 2002;Zott, 2003). Schilke (2014)
argues that the DCV may be regarded as an extension of the RBV; while the RBV primarily
addresses a firm’s existing resources, the DCV emphasizes the reconfiguration of these
resources.
The term “dynamic” refers to capacity to renew competences so as to adapt to the
changing business environment (Teece et al., 1997). The term “capabilities” emphasizes
the key role of strategic management in appropriately adapting, integrating and
reconfiguring internal and external organizational skills, resources and functional
competences to match the requirements of a changing environment. Hence, DCV studies
investigate the attribute, origination, process, influence and contribution of the DC (Barreto,
2010;Helfat and Peteraf, 2009;Narayanan et al., 2009;Lin and Wu, 2014;Teece, 2009;
Zahra et al., 2006;Zhou and Li, 2010;Zollo and Winter, 2002;Zott, 2003), and most
researchers argue that DC increase competitive advantage. Helfat and Peteraf (2009)
define DC as “the capacity of an organization to purposefully create, extend, or modify its
resource base” and as such to reach a higher economic value than their competitors. In
addition, DC are regarded as a transformer for converting resources into improved
performance (Lin and Wu, 2014).
However, management theories regarding DC are young and fragmented, and generally,
there is not much of a guide for executives, except on certain narrow issues (Teece, 2011).
For example, an excellent contribution has been published by Teece (2011), showing how
each of Apple’s major product introductions reflected aspects of the major categories of
DC. An interesting snapshot of internal and external DC of Google Glass product
development has been provided by Chatterij and Patro (2014).Lin and Wu (2014) show
that DC act as mediating variables between resources and firm’s performance. In addition,
Lin and Wu (2014) demonstrated the direct and indirect influences (mediating effect) of
resources and DC on performance. Moreover, Wu et al. (2014) presented the eight key
management processes involved in the deployment of the scanning, sensing and
reconfiguration capabilities for corporate social responsibilities (CSR) management. These
processes represent the common managerial routines by which the DC for CSR management
are performed to develop and implement various CSR initiatives and practices in the leading
firms across different industrial sectors and geographic regions. Beske et al. (2014)
demonstrated DC in sustainable supply chain management practices of the food industry. In
addition, Zahra et al. (2006) present a broad, stylized model of the various activities associated
with the creation of DC and, in turn, their effect on a company’s performance. Kuuvulainen
(2012) explored what roles DC can play in Finnish high-tech small and medium-sized
enterprises (SMEs) in international growth strategies. What is more, Karna et al. (2015)
distinguish two types of capabilities: ordinary capabilities, those that enable a firm to “make a
living” (Winter, 2003) on a continuous basis, for example by helping it to optimize its processes
and thereby reduce costs (Kaleka, 2002), and DC, to renew their stock of ordinary capabilities
over time (Collis, 1994;Teece and Pisano, 1994). Examples for DC include those that facilitate
strategic decision-making (Douglas and Ryman, 2003;Mithas et al., 2011), and examples for
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