Stages of Organizational Transformation in Transition Economies: A Dynamic Capabilities Approach
Sarah E. A. Dixon, Klaus E. Meyer and Marc Day
University of Bath; University of Bath; Henley Business School, University of Reading abstract How do organizations previously dominated by the state develop dynamic capabilities that would support their growth in a competitive market economy? We develop a theoretical framework of organizational transformation that explains the processes by which organizations learn and develop dynamic capabilities in transition economies. Speciﬁcally, the framework theorizes about the importance of, and inter-relationships between, leadership, organizational learning, dynamic capabilities, and performance over three stages of transformation. Propositions derived from this framework explain the pre-conditions enabling organizational learning, the linkages between types of learning and functions of dynamic capabilities, and the feedback from dynamic capabilities to organizational learning that allows ﬁrms in transition economies to regain their footing and build long-term competitive advantage. We focus on transition contexts, where these processes have been magniﬁed and thus offer new insights into strategizing in radically altered environments.
INTRODUCTION Enterprises in transition economies have faced unusually radical transformation processes, while lacking both the resources and capabilities to face competitive markets, and the internal routines and processes that would facilitate organizational change (Newman, 2000; Uhlenbruck et al., 2003). At the outset, ﬁrms were often constrained by their socialist institutional imprinting (Kriauciunas and Kale, 2006). Their operational capabilities were also geared towards a now defunct economic system. This system had discouraged entrepreneurship, innovation and experimentation, such that the dynamic...