Dynamic capabilities, deliberate learning and environmental dynamism: a simulation model

This article presents a simulation model of the development of knowledge, operating routines and dynamic capability in organizations at varying levels of environmental dynamism. We draw on system dynamics modeling to explore trade-offs and ambiguities in the decision to invest in deliberate learning processes to enhance the development of dynamic capabilities. The model incorporates mindfulness and tool utility (positive) effects as well as experience and inertia (negative) effects on dynamic capability. The simulation experiments conducted with the model suggest that the impact of deliberate learning on dynamic capability is non-linear, complex, and in some instances counter-intuitive. This is evident from the thresholds (tipping points) that arise from the differential effects of articulated knowledge, codified knowledge and operating routines on dynamic capability at different levels of environmental dynamism.