The sources of dynamism in dynamic capabilities

We develop a multi-level theory of dynamic capabilities (DCs) that explains resource dynamics by giving a central role to persons and interpersonal interactions rather than to abstract, firm-level entities. Our theory integrates the contrasting approaches to DCs in individual-, interpersonal-, and organization-level scholarship. Existing organization-level approaches portray DCs as collective endeavors but do not specify how they emerge and operate within organizations, while microfoundational approaches illuminate actors’ contributions but reduce a firm’s DCs to the cognitions and actions of a few top managers. Our integrated theory instead explains DCs as effortful social accomplishments emerging from individual employees’ capacity to leverage interpersonal relationships conducive to productive dialogue. The framework we propose offers new ground for understanding how DCs can be sources of sustainable competitive advantage.