Session 2

Capability Dynamics in MNCs

Track D

Date: Thursday, March 18, 2010


Time: 13:15 – 14:45


Room: Kokoustila 4

Session Chair:

Title: Capability Development Within MNCs: Evolutionary vs. Dynamic Capability Perspective


  • Paula Kilpinen, Aalto University

Abstract: Although the evolutionary perspective and the dynamic capabilities view are claimed to be highly complementary, they offer quite different views on capability development within firms. While the evolutionary perspective views capability development an outcome of internal and external selection, the dynamic capability view considers capability development an outcome of internal strategy processes. Supported by a multiple case study and rich data from three MNCs this paper seeks to understand to what extent capability development is driven by firm strategies and to what extent is it driven by other internal and external forces. Moreover, it seeks to specify what constitutes the ‘internal selection environment’ as well as to understand how firms set internal selection criteria or anticipate external selection criteria as they relate to capability development.

Title: Dynamic Capability Building in the Steel Industry


  • Gregory Ludwig, Northumbria University
  • Jon Pemberton, Edinburgh Napier University

Abstract: The existing body of knowledge within the Dynamic Capabilities View (DCV) assumes risk minimisation via establishment of extensive monitoring activities of external changes in combination with capability optimisation through renewal efforts. This proposal challenges the main DCV principles through in-depth industry application culminating in an alternative framework for dynamic capability building processes within the Russian steel industry. The discussion leads to the development of a tentative framework for fluctuation control of resource value and the impact of exogenous dynamics in combination with determination of contemporary valid time frames for future forecasts. Managerial insight into the almost byzantine maze of capability building activities is highly reliant on establishment of specific action, directly associated with unique optimisation processes, decision-making speed and monitoring of ever-changing definitions of threshold capability standards within the industry.

Title: Strategy Work in the Periphery: Why Do Some Regional Headquarters Disappear and Others Survive?


  • Perttu Kahari, Aalto University
  • Rebecca Piekkari, Aalto University
  • Wilhelm Barner-Rasmussen, Hanken School of Economics

Abstract: Our purpose is to examine the dynamics of regional headquarters (RHQ) within multinational corporations. We investigate the development paths of 40 RHQ located in Finland, a periphery for the foreign multinationals that own these units. Our aim is to explain why the roles and responsibilities of RHQ have changed over a period of 11 years and why some have been relocated or even closed down. Our longitudinal research design draws on qualitative and quantitative data from two extensive databases collected in 1998, 2000, 2004 and 2009. Our research effort contributes not only to the international business literature on regional headquarters, but on the HQ function in MNCs more generally. We explain how changes in MNC strategies change regional management structures – and how changing regional management structures enact MNC strategies and make them become reality.

Title: The Evolving Role of Corporate Center in Strategy-making Process: Case of a Russian Multi-business Group


  • Andrey Laptev, Severstal

Abstract: This research was inspired by a practical problem of finding an optimal role for corporate center in strategy process of a multi-business corporation. Previous studies on multi-business groups’ strategy were mostly focused on strategy content. On the process side, alternative visions of corporate center as a detached “asset manager” or involved “activist” provided useful conceptual insights but had little empirical backing. This study addresses this gap by adding empirical investigation of actual (vs. prescribed) roles of corporate center in a distinct emerging market context. Initial findings demonstrate the importance of CEO leadership style and volatile external environment in shaping this role. Corporate center demonstrated remarkable flexibility as its focus evolved over time, driven by changes in asset structure, external environment and CEO priorities.

All Sessions in Track D...

Thu: 13:15 – 14:45
Session 2: Capability Dynamics in MNCs
Thu: 15:15 – 16:45
Session 6: Processes and Practices of Decision Making
Thu: 17:00 – 18:30
Session 4: Processes and Practices of Building Dynamic Capabilities
Fri: 10:15 – 11:45
Session 7: Orchestrating Dynamic Capabilities
Fri: 13:15 – 14:45
Session 8: Operationalizing the Concept of Dynamic Capabilities

Strategic Management Society