Exploring Micro-Foundations of Dynamic Capabilities: Insights from a Case Study in the Engineering Sector

This paper makes a contribution to the discussion on micro-foundations of dynamic capabilities – actions and interactions in organizations that enable continuous organizational renewal. More specifically, we propose the idea that dynamic capabilities of an organization are a positive function of corresponding dynamic capabilities of individual and collective actors in the organization. Further, we develop the assumption that not only individual acts of managers but also those of individuals and teams without managerial responsibility relate to dynamic capabilities of the organization. Following a holistic view, we also take into consideration empowering working conditions as an enhancing factor of this function. To examine these roots of dynamic capabilities, we use a multi-level model of competence provided by Wilkens, Keller, and Schmette (2006) that operationalizes the concept of dynamic capabilities provided by Teece (2007) on a concisely behavioral base. We investigated our hypotheses with a standardized questionnaire in a case study of a German plant engineering company with 112 participants and found primary support for our assumptions. Our results show an impact of individual dynamic capabilities on dynamic capabilities of the organization that is mediated by team dynamic capabilities. Psychological and social–structural empowerment moderated this relationship. A case-specific interpretation and implications for future research and practice are discussed.