Assessing dynamic capabilities of incumbents in the face of unprecedented industry transformation: the case of the automotive industry

The purpose of this paper is to develop a holistic approach to the assessment of dynamic capabilities (DCs). Holistic refers to incorporating all DCs of an organisation relevant for determining and executing the firm's strategy.

A two-phase study was conducted. First, secondary sources, such as media, industry and annual reports, are being used to initially assess CASE (connected, autonomous, shared and electric) and implications for incumbent car manufacturers in a structured way. Second, semi-structured interviews with automotive managers and further automotive stakeholders offer in-depth insights into CASE, as well as incumbents' strategies and the underlying rationale.

The proposed framework for assessing DCs offers a holistic approach and provides new angles of analysis. First, the time dimension is considered using scenarios since timing is vital in strategy and implementation. Second, capabilities are broken down into technological and non-technological, sharpening strategic decision-making of automakers. Third, the analysis considers external VUCA (volatility, uncertainty, complexity and ambiguity) as they interplay with internal DCs.

Further testing of the proposed DC assessment approach offers a promising opportunity for future research. This paper focuses on the automotive industry, but it is worth investigating the extent to which the approach can be used in other dynamic industries, such as finance or retail.

The approach proposed highlights the importance and nuances of considering external perspectives in the DC assessment and the relevance of non-technological capabilities in the automotive industry. Thereby, it contributes to the literature on capability assessments and the operationalisability of the DC lens.