Dynamic capability and staff induction practices in small firms

Purpose – The dynamic capability view serves to explain how particular practices ensure the firm's performance and competitiveness within a continuously changing environment. In this paper, the staff induction processes of two small firms in The Netherlands (management consultancy and biotech (BT) start‐up) are examined from a practice‐based view. The authors explore whether the staff induction processes of these firms can be regarded as practices, and if so, whether and how these firms have developed a dynamic capability in staff induction. Design/methodology/approach – Case studies are conducted in the management consultancy and biotechnology sectors to explore the practising of dynamic capability. Findings – The findings suggest small firms can effectively develop and master their staff induction processes (as practices), but do this on the basis of ad hoc problem solving rather than a dynamic capability. If small firms develop any dynamic capability at all, they apparently do so towards specialized resources and processes that are perceived as most critical to the firm's continuity and performance (e.g. product development in the case of the BT firm). As such, this study confirms Winter's hypothesis about the fundamentally different cost structures of dynamic capabilities and ad hoc problem solving, which explains why dynamic capabilities tend to be rare and ad hoc problem solving prevails in many small organizations. Originality/value – The paper examines the interaction between staff induction practices, dynamic capabilities, learning strategies, and ad hoc problem solving in two small firms. Implications for practitioners are that consciously engaging in learning strategies helps to adapt practices and build a dynamic capability in staff induction.