The Diffusion of Dynamic Capability in Organizations in Digitalizing Operating Environments

Digitalization introduces new technologies changing organizations, industries, and operating environments. New capabilities and expertise are required, as organizations need to rethink their value offerings, operating models, and ways of collaborating and conducting day-to-day tasks. While dynamic capabilities are often viewed as managerial capacities of sensing, seizing and transforming, recently the focus on employees in creating organizational capacity for change has increased. Likewise, the need for a more nuanced understanding of the development of dynamic capabilities in digitalization has been noted. The aim of this dissertation is to better understand, how dynamic capability develops and spreads in organizations across different work roles. The research problem is how dynamic capability diffuses in organizations in digitalizing operating environments.

The research problem was studied by an interpretive qualitative multiple-case study with three case organizations representing the perspectives of a technology user, technology creator, and technology and process integrator. The main data collection method was semi-structured, theme-based interviews. In total 59 individual interviews with 36 informants were conducted, and additionally several discussions were held with company representatives. The data were collected and analysed over the period of 2018–2022 by inductive and abductive approaches, qualitative thematic analysis, and drawing from the guidelines of interpretive field research and grounded theory methodology. The reliability and validity were evaluated by utilizing the criteria of qualitative, interpretive, and case-study research.

As findings, a model of how dynamic capability in today’s digitalizing operating environments appears as a multilevel phenomenon comprising of operative dynamic capability and managerial dynamic capability is presented. The managerial- and operative level dynamic capabilities manifest differently in different work roles and contribute to organizational development through reciprocal actions of the management and employees. Additionally, the following managerial propositions are given on how the diffusion of dynamic capability could be supported in organizations: (1) exercising continuous and genuine stakeholder participation, (2) ensuring clear goals, implications, way to, and benefits of change, (3) securing resources for individual development at work, (4) addressing underlying tensions hindering collaboration, and (5) deploying organizational practices enabling interpersonal dynamic capability.

As theoretical contributions, the findings provide new understanding on dynamic capabilities as reciprocal phenomena between the management and employees. As practical implications, the findings help management in their organizational and capability development efforts. As digitalization accelerates pace invoking requirements of continuous adaptation, it seems vital for organizations to utilize their full potential of sensing, seizing, and renewing capacities. The findings presented in this dissertation aim to support these endeavours. As future research, mixed methods approaches, closer investigations on the essence of operative dynamic capability, more comprehensive considerations on organizational contextual factors, further longitudinal study incorporating both employee and managerial views, and examinations on utilizing the presented propositions in practice in organizations are suggested.