How do Dynamic Capabilities Lead to Superior Competitive Performance? Uncovering the Dynamics of a Complex Relationship

To deepen our understanding of how dynamic capabilities induce superior competitive performance, we develop a process model that integrates different conceptualizations of dynamic capabilities and divergent theories of organization change. We use this process framework to construct a computational-based simulation model that examines how dynamic capabilities influence the acquisition and duration of superior competitive performance across different environmental and decision making scenarios over time. We find that firms possessing dynamic capabilities are not necessarily able to sustain superior competitive performance in high velocity environments, and that to achieve the best competitive performance record over time, top management teams need to learn how to properly balance the tradeoffs between the accumulation of systemic dynamic capabilities and the speed with which environmental adaptation decisions are made.