Drnevich Dissertation - Chapter 3. Ordinary and Dynamic Capabilities: Implications for Firm Performance and Competitive Heterogeneity

A common issue in strategic management research involves sources of interfirm performance differences. Research on this issue assumes such competitive heterogeneity is attributable to variation in firm level factors of resources and capabilities, but this is difficult to establish empirically. This study begins to address this gap by examining the roles of Information Technology (IT) based capabilities in firm performance. Specifically, we examine whether differences in the heterogeneity of “zero-order” ordinary capabilities and “first-order” dynamic capabilities contribute to differences in firm performance. Results offer empirical support that both types of capabilities, as well as their heterogeneity, can influence performance, but that these effects vary. These observations offer potential implications for research on RBV, dynamic RBV, Dynamic Capabilities, and Competitive Heterogeneity. Working Draft: March 21, 2006