1. Relating as a dynamic capability in innovation projects TRACK 44 Dynamic Capabilities: Theoretical Approaches and Practical Applications Dr Maria Kapsali

2. Outline Research Questions 1. Theory 2. Evidence 3. Recommendations 1. How can project relating as a dynamic capability produce innovative advantages? 2. What are the external factors to influence relating to become a dynamic capability? 3. How can the project as a capability lead to competitive advantage?

3. Theoretical question Capabilities in temporary organizations (projects) are not investigated Projects depend heavily on their relational capabilities which are not investigated adequately and there is no literature on the dynamic capabilities for the successful operation of innovation projects or even the role of the a project as a dynamic capability in a process to create knowledge advantages in markets Because Because Because The more adaptive but uncertain the outcomes Therefore organizations resort to using temporary production organizations (such as projects) to innovate Dynamic capabilities are embedded in production processes The more dynamic the environment the more uncertain and less detailed the process and the less defined the capabilities

4. What the DC literature says 2 Contradictions in the DC literature: the debate whether dynamic capabilities are either structured and persistent or emergent and evolving the relevance of market dynamism in the nature of dynamic capabilities

5. 1. How can project relating as a dynamic capability produce innovative advantages? The process of relating is so agile, fluid and integrative, it becomes the means of exploration and exploitation, reconfiguration and recreation of knowledge to address changes in contextual demands, relations and internal operations. The dynamic capability embedded in project relational processes is trial- and- error learning from partners and the alignment of innovative behaviours and processes to recombine and articulate knowledge. Relating as a capability is integral to knowledge articulation routines (Williamson, 1999; Priem and Butler, 2000) that create a competitive advantage in the form of innovation.

6. 1. How can project relating as a dynamic capability produce innovative advantages? For that, project relating takes on the characteristics of a third-order, dynamic capability instead of a second-order knowledge-building core capability (Wang and Ahmed, 2007). According to Pisano (2000) projects constitute a part of an organization’s bundle of dynamic capabilities since they integrate learning in novel environments and they go beyond the deterministic impact of learning experience in the limits of path-dependency.

7. Continued It is proven that the volume and explicitness of external linkages is positively correlated with knowledge articulation and dynamic learning processes (Koput eta. 1996). A variety of core capabilities (adaptive, absorptive or innovative) rely on relating (Winter, 2003). Drivers of dynamic learning mechanisms are the managerial power of integration, the volume and intensity of external linkages, previous experience, repeated practice, codification of experience and ambiguity (Chen and Lee, 2008). Eventually managerial boundary management to integrate internal with external network resources becomes the important. Tensions and polarities in project relations in their networks make them difficult to define and categorize how they are embedded in production processes as capabilities

8. Evidence 4 Case studies based on EU PF5 Information Society Healthcare technology projects There are two types of project relating that are prominent: external with the main stakeholder (policy) which is formalized and focused on process evaluations; and internal within the project team cliques. The latter was actually dictated by the EU policy standards on consortium participation and in effect drawing the boundaries on managerial boundary action. This led to subsequent loss of managerial leverage as a group leader and inflexibility in handling change in project activities. The outcome of this was that projects often complied with performance standards and had trouble achieving their innovation goals.

9. Evidence 2. What are the external factors to influence relating to become a dynamic capability? Projects are actually inhibited to produce innovation when they relate through their boundaries with policy implementation instruments that are operationally oriented. This diverts the relational processes from learning towards boundary management formal processes. This has an adverse effect on the role of the project as a core capability in innovation strategies and relating as a dynamic capability in the process of producing innovation. The main conclusion of this study was that relating in innovation project is not just another systemic function but can be considered as a third-order dynamic capability. The argument is that relating becomes the means for competitive advantage as a third-order dynamic capability that supports dynamic learning processes. Learning is more important in innovation projects than contractual arrangements because it is the best way to handle professional cognitive distance, the absence of trust and formal rules of interaction and preserve the stability of internal operation.

10. Evidence 2. What are the external factors to influence relating to become a dynamic capability? The conclusion is that a project succeeds in its role as a core strategic capability to fulfil strategic goals only when it develops itself relational dynamic capabilities that are not rigid but provide operational flexibility to deal with change.

11. Recommendations: study relating 3. How can we study the project as a capability leading to competitive advantage? The challenge for theory is to conceptualize relating and provide more functional descriptions and causal explanations on how relating works and how it can work better as a third-order capability.

12. Recommendations 3. Which are the obstacles to do this? Although relating has been examined in other organizational literatures, its use is sporadic and theoretical focus specifically upon it will spur an entirely new field of enquiry that will actually be applicable to several organizational forms (not only projects) and link the field of strategy with other fields.

13. Recommendations 3. Which is the way to do this? To fill the gap in the RBV literature about how capabilities can lead to competitive advantage. To link the literatures of project networks with that of strategy-DC and boundaries under the umbrella of relating.

14. Thank you for your attention Questions?