The Importance of Dynamic Capabilities in the Face of Discontinuous Changes in the Automotive Industry - An Empirical Study of German Automotive Suppliers

Type de publication:

Conference Paper


Gerpisa colloquium, Paris (2017)


Change, Dynamic Capabilities, German Automotive Suppliers


The main challenge facing today's firms is the ability to adapt to discontinuous changes (Birkinshaw et al., 2016). Despite the size, predominant human and financial resources as well as market power of automotive firms, they also have to adapt to discontinuous changes. But the causes of discontinuous changes are manifold. There are new competitors – mainly from Asia as well as other industry sectors like ICT, which are attacking established automotive firms through innovation and growth in times of increasing discontinuities. In addition to these newcomers the impact of other change forces is also accelerating. Changing consumer needs, stronger emission regulations, new mobility approaches, shorter product life cycles and a high innovation pressure are just a few examples of challenges, which automotive firms will have to meet in the near future (Fojcik, 2013; Proff & Fojcik, 2015). The automotive industry is thus faced with unprecedented discontinuous changes.

All these forces and challenges illustrate the increasing discontinuity within the automotive industry. In order to counteract these discontinuities, automotive firms need to identify and implement new approaches (Donada, 2013). Strongly discussed approaches in the literature are first order and second order dynamic capabilities (e.g. Eisenhardt & Martin, 2000; Di Stefano et al., 2010; Vogel & Güttel, 2013; Helfat & Martin, 2015). Dynamic capabilities in general are defined as capabilities that “…can be disaggregated into the capacity (1) to sense and shape opportunities and threats, (2) to seize opportunities, and (3) to maintain competitiveness through enhancing, combining, protecting, and, when necessary, reconfiguring the business enterprise’s intangible and tangible assets…” (Teece, 2007). Thus dynamic capabilities are a “…firm’s potential to systematically solve problems, formed by its propensity to sense opportunities and threats, to make timely- and market-oriented decisions, and to change its resource base…” (Baretto, 2010). Although the importance of dynamic capabilities is un-disputed, there is a lack of empirical studies in the literature, and especially related to the automotive industry, that highlight the relationship between dynamic capabilities and the accumulation and reconfiguration of operational resources and competences. However, this con-nection is necessary to understand how dynamic capabilities influence the existing resource and competence base of automotive firms and how automotive firms can achieve sustainable competitive advantages despite increasing discontinuities.
Against this background, this paper examines the importance of dynamic capabilities and their influence on the accumulation and reconfiguration of operational resources and competences during discontinuous changes in the automotive industry. A quantitative analysis of 216 German automotive suppliers shows that first order dynamic capabilities and second order dynamic capabilities have a positive and direct effect on the accumulation and reconfiguration of a company's operational resources and competences. At the same time, second order dynamic capabilities also influence the accumulation and reconfiguration of a company's operational resources and competences indirectly and positively by reinforcing the impact of first order dynamic capabilities. The results give important indications as to how automotive suppliers can manage a discontinuous change. In particular, the interactive relationships between dynamic capabilities and operational resources as well as competences may help automotive suppliers to ensure a balanced implementation of dynamic capabilities. In order to accumulate and reconfigure their base of resources and competences adequately, automotive suppliers should implement first order and second order dynamic capabilities. By taking account of the interactive relationships indicated, automotive suppliers are likely not only to adapt success-fully to the many challenges, but also maintain existing competitive advantages and develop new competitive advantages.

Taken together, the paper explains the importance of dynamic capabilities and their influence on the accumulation and reconfiguration of operational resources and competences. The analysis and its results will be summarized in the conference paper. Following that, further investigation of German automotive firms related to dynamic capabilities will be conducted.

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