Dynamic Capabilities and Organisational Routines Sample Clauses

Dynamic Capabilities and Organisational Routines. ‌‌ The reason why many new technology businesses fail can often be found in the high- velocity environments they usually face. As we have learned from chapter 1.1, these conditions incorporate high levels of uncertainty. Uncertainty usually implies “a lack of predictability, of structure, of information” (Xxxxxx 1962, p. 6) and has to be clearly distinguished from risk. In the case of risk, ex ante calculations can be performed that indicate the probability for an event to occur. This is not possible in the case of uncertainty. Uncertainty is a key component of entrepreneurship. In fact, only uncertainty can explain extraordinary profits as well as failures of entrepreneurial firms (Knight 1921; Brouwer 2002). Uncertainty in entrepreneurship can be associated with the market, the technology, the competition, and the environment (Xxxxxxx and Xxxxx 1989). Market uncertainty represents the unpredictability of customer demand and end user preferences (Xxxxxxxx and Xxxxx 1994). Technological uncertainty is related to the design of products and services and the production processes. In general, sources of product development may range from existing bodies of knowledge to unknown technologies that are not yet developed. While the first group is associated with low uncertainty, entirely new technologies imply high levels of uncertainty (XxXxxxx 1995; Xxxxxxx xxx Xxxx 0000; Davila 2000; Dissel 2003). Since entrepreneurial firms usually focus on innovation, they have to cope with high levels of technological uncertainty. Competitive uncertainty includes the formation of alliances or the unforeseen entry of a competitor. The fourth aspect of uncertainty accounts for the changes in industry standards (Xxxxxxx and Xxxxx 1989). Within these changing environments, firms have to continually acquire, upgrade, and develop resources to grow and maintain a competitive position in the market (Wernerfelt and Xxxxxxxxxx 1988). Thus, companies require the ability to adapt to new settings with minimal resources in a very short period of time (Xxxxxx and Xxxxxx 1982; Xxxxx and Xxxxxx 1994). Consequently, entrepreneurial firms have to reconfigure their resource base quickly. The capabilities of manipulating a firm's resource configuration in order to adapt to high-velocity environments are referred to as dynamic capabilities (Xxxxxxxxxx and Xxxxxx 2000). In line with the definition of Teece, Xxxxxx, and Xxxxx (1997) Xxxxxxxxxx and Xxxxxx (2000) define dynamic capabilities as a “firm...