Dynamic capabilities and their implications for firm performance

The dynamic capabilities view has attracted increasing attention in literature in recent years. However, there are still some notable gaps in research. For instance, the antecedents of dynamic capabilities are still not thoroughly understood and how dynamic capabilities relate to firm performance remains unaddressed. Specifically, insufficient research has integrated dynamic capabilities and substantive capabilities in the study of firm performance. More empirical research in the dynamic capabilities field is needed. Moreover, very few studies have investigated dynamic capabilities from a marketing perspective. The purpose of this study is to develop a model of dynamic capabilities, to better understand the components of dynamic capabilities and their antecedents and consequences. This study identifies three specific dynamic capabilities from a marketing perspective, namely marketing agility, relational marketing capability, and marketing integrative capability. Five resources and four processes are investigated as important antecedents of dynamic capabilities. The mediating effect of dynamic capabilities on the relationships between resources, processes and firm performance are assessed. This study proposes two specific substantive capabilities: innovation capability and corporate social responsiveness, and analyses the relationships among dynamic capabilities, substantive capabilities and firm performance. The relationships between dynamic capabilities and substantive capabilities are analysed under different levels of market turbulence, a moderator of these relationships. Five propositions are formulated to examine the relationships in the conceptual model. Data were collected through personally administrated questionnaires. This study sampled 1000 Chinese food processing firms. The majority of the respondents are senior and middle level managers. A total of 518 usable questionnaires were obtained. After refining the construct measures and ensuring the construct reliability and validity, the hypotheses were analysed using hierarchical regression analysis, structural equation modelling and moderation analysis. The results show that most of the resources contribute to the development of two or three types of dynamic capabilities. Dynamic capabilities are primarily not the mediators of the relationships between resources, processes and firm performance. Dynamic capabilities influence firm performance indirectly through substantive capabilities. The relationships between three dynamic capacities (marketing agility, relational marketing capability and marketing integrative capability) and innovation capability are stronger under low market turbulence. The contribution of this study is to extend knowledge of dynamic capabilities by developing and empirically testing an integrated model of dynamic capabilities and firm performance. This study enriches the literature on the antecedents of dynamic capabilities. It explores the mediating effects of dynamic capabilities on the relationships between resources, processes and firm performance. This research tests whether dynamic capabilities directly or indirectly (through substantive capabilities) influence firm performance. This study investigates the moderating effects of market turbulence. Managers can benefit from this study by focusing on the resources and processes critical to developing specific dynamic capabilities. By advancing dynamic capabilities, firms develop and renew substantive capabilities leading to improved firm performance.