History and the micro‐foundations of dynamic capabilities

• Published date: 01 March 2020
• Author: Charles Harvey,Diego Coraiola,William Foster,Roy Suddaby
• Date: 01 March 2020
• DOI: http://doi.org/10.1002/smj.3058

SPECIAL ISSUE ARTICLE

History and the micro-foundations of dynamic

capabilities

Roy Suddaby

1

| Diego Coraiola

2

| Charles Harvey

3

| William Foster

2

1

Peter B. Gustavson School of Business,

University of Victoria, Victoria, Canada

2

Department of Social Sciences, University

of Alberta - Augustana Campus, Alberta,

Canada

3

Newcastle University Business School,

Newcastle University, Newcastle, United

Kingdom

Correspondence

Roy Suddaby, Peter B. Gustavson School

of Business, University of Victoria,

Business & Economics Building Room

254, 3800 Finnerty Rd, Victoria, BC V8P

5C2, Canada.

Email: rsuddaby@uvic.ca

Funding information

Social Sciences and Humanities Research

Council of Canada, Grant/Award Number:

112234

Abstract

Research Summary:The capacity to manage history is an

important but undertheorized component of dynamic capa-

bilities. We argue that the capacity to manage the interpre-

tation of the past, in the present for the future, is a critical

ability that informs a firm's ability to successfully enact

changes needed to adapt to disruptive technology. We

identify and elaborate three specific cognitive interpreta-

tions of history—history as objective fact, history as inter-

pretive rhetoric, and history as imaginative future-perfect

thinking—and demonstrate how these different views of

history can be mobilized by managers to sense, seize, and

reconfigure around opportunities made available by under-

standing the invisible thread of technology.

Managerial Summary:History is typically understood to

be a constraint on a manager's ability to effect change.

A firm's past is assumed to create inertia in routines and

structures that compromise a firm's ability to change. We

show how acquiring a broader understanding of the role of

history can improve a manager's ability to enact organiza-

tional change. Studying the evolution of technology over

time and across products allows managers to sense opportu-

nities created by technological change. Using different nar-

rations of the past as continuous or disruptive can improve

a manager's ability to motivate or resist change. Using the

past to construct convincing scenarios of the future, man-

agers can enroll key stakeholders in the industry to support

a strategic direction that advances the firm's strategic goals.

Received: 22 September 2017 Revised: 1 April 2019 Accepted: 29 April 2019 Published on: 14 August 2019

DOI: 10.1002/smj.3058

530 © 2019 John Wiley & Sons, Ltd. Strat Mgmt J. 2020;41:530–556.wileyonlinelibrary.com/journal/smj

KEYWORDS

change, dynamic capabilities, micro-foundations, rhetorical history

1|INTRODUCTION

History has played an important role in the development of strategic management theory. In some

cases, the role of history is explicit—strategy and structure (Chandler, 1962), path dependence

(Arthur, 1994), and technological lock-in (David, 1985). In other cases—geographic clusters (Porter,

1998), the resource-based view (Barney, 1991)—history is implicit. In both uses, however, history is

seen to be exogenous to the firm and, therefore, beyond managerial control.

Some theorists, however, see history as an endogenous resource of the firm. Long-standing insti-

tutions such as the British monarchy (Hobsbawm & Ranger, 1983), the nation-state (Anderson,

1983; Duara, 1995), and the church (Koselleck, 2004) are seen to endure through their ability to con-

struct powerful historical narratives that create identity, and facilitate or inhibit change. Institutions

persist by perceiving history as an endogenous and manageable resource.

Practitioners have begun to elaborate precisely how history can be managed. A growing number

of specialized consulting firms—the Winthrop Group, The History Factory, History Associates—

offer “heritage management”services for large corporations. Firm history, they argue, can be crafted

to create brand identity, retain employees, or motivate change. A growing list of practitioner publica-

tions detail precisely how history can be managed (Lasewicz, 2015; Mooney, 1986; Roowan, 2009;

Seaman & Smith, 2012; Smith & Steadman, 1982; Weindruch, 2016). Rather than viewing history

as a variable beyond managerial control, these academics and practitioners see history as a core man-

agerial competence.

We adopt this view here. Our thesis is that “the capacity to manage perceptions of the past, in the

present, for the future, is a critical cognitive capacity that underpins the micro-foundation of any

dynamic capability.”Most theory in strategic management is premised on the assumption that the

firm's ability to adapt to a distant and highly uncertain future environment is based on resources

acquired in the past and deployed in the present. The notion of dynamic capabilities, however, intro-

duces an important degree of temporal agency in which some firms sense future opportunities, seize

them in the present, and reconfigure the firm by decoupling it from burdensome routines and prac-

tices from the past. We build on Teece's (2007) articulation of dynamic capabilities by theorizing

how firms use the past, not only to anticipate change in the future and adapt accordingly, but to

“actively manage perceptions of the past to enact compatible futures.”Managers acquire a degree of

agency by adopting a view of history as an enabler rather than an impediment to change (Suddaby &

Foster, 2017; Suddaby, Foster, & Trank, 2010).

2|DYNAMIC CAPABILITIES AND HISTORY

There are competing versions of the concept of dynamic capabilities (Peteraf, Di Stefano, & Verona,

2013) that diverge, largely, on the question of whether dynamic capabilities can explain strategic

adaptation of the firm in rapidly changing environments. Teece and colleagues (Teece, 2007; Teece,

SUDDABY ET AL.531