Evolution or revolution? Dynamic capabilities in a knowledge-dependent firm

Macpherson, Allan, Jones, Oswald and Zhang, Michael (2004) Evolution or revolution? Dynamic capabilities in a knowledge-dependent firm. R and D management, 34 (2). pp. 161-177. ISSN 0033-6807

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Abstract

In this paper we examine the technological and organizational innovations which have facilitated rapid growth in a small firm. Evidence from the case suggests that the relational elements of inter-firm transactions provide entrepreneurs with the opportunity to expand their organizational capabilities. The importance of business networks is that they have resources which can supplement internal skills and knowledge. The two owner-directors of RWL have been instrumental in building relationships with suppliers and customers which have benefited all parties. In doing so, they have renewed their own firm's dynamic capabilities by creating a structure and associated routines that focus on opportunity recognition and exploitation. These new capabilities are based on a recognition that competitive advantage can be created by acting as a knowledge-integrator. In that sense, RWL is a knowledge-dependent firm because there is no emphasis on the acquisition of intellectual property rights nor even an attempt to retain knowledge in-house. In pursuing this strategy to achieve growth, the directors have resolved a number of concurrent crises that suggests it is necessary to revisit traditional linear models of firm growth (Greiner, 1972; Churchill and Lewis, 1983).