Overcoming path-dependent dynamic capabilities

Abstract

While seminal work on dynamic capabilities highlights path-dependent trajectories as an important and distinguishing property, recent studies tend to marginalize this feature in favor of an ahistorical and unbound conceptualization. Following the recent “history turn” in strategy and organization research, we examine the essential yet inadequately understood role of path dependence in dynamic capability building and adaptation. Precisely, we demonstrate that dynamic capabilities, as pattern-based, learned, and context-specific entities, are prone to become path-dependent under the effect of self-reinforcing mechanisms. We further show that in the face of discontinuous environmental shifts, path-dependent dynamic capabilities can—paradoxically enough—turn dysfunctional as they perpetuate current, potentially outdated ways through which a firm reconfigures its resource base. Based on this analysis, we identify ad hoc managerial action as the basis for path transformation and path dissolution, as well as path switching and new path creation, which represent complementary ways to deal with path-dependent dynamic capabilities. Our theorizing extends a contingency perspective on dynamic capabilities by shedding light on the limits and potential alternatives of pattern-based adaptation.