Special Issue of International Business Review
Multinational Dynamic Capabilities:
How Multinational, How Dynamic, How Capable?
Submission Deadline: 31 March 2025
Guest Editors
David M. Brock, Ben Gurion University and University of Pretoria
Michael A. Hitt, Texas A&M University and Texas Tech University
Michael Holmes, Florida State University and University of Johannesburg
R. Duane Ireland, Texas Tech University and Texas A&M University
Kai Xu, University Texas San Antonio
Background
In the twenty-first century, multinational enterprises (MNEs) are experiencing increasing pressures emanating from technological, sociopolitical, and institutional changes (Ahlstrom, Arregle, Hitt, Qian, Ma & Faems, 2020). Unprecedented environmental jolts such as the financial crises of 2008 and the recent Covid-19 pandemic have intensified these pressures (Hitt, Holmes & Arregle, 2021). As a result, MNEs with international operations in multiple regions and countries across the globe must be prepared for changes in their local and global environments and be able to adapt. Major sociopolitical events (e.g., wars in Ukraine and the Middle East) are less easily predictable and often require more complex and challenging transformational responses. Such sociopolitical changes frequently lead to institutional changes to which it is difficult to respond in the short term. Further, many MNEs are re-evaluating their global supply chains, foreign direct investment strategies, and approaches to recruit and retain human capital. All of this occurs in a larger milieu that includes rivals' strategic reactions and responses as well.
Successfully navigating this changing and complex environment requires that MNEs have a range of dynamic capabilities (DCs), including the high-order ability to develop DCs (Helfat & Peteraf, 2015). Brock & Hitt (2024) refer to these as meta DCs-for example, agility, building, sensing-as opposed to strategic DCs like ambidexterity, asset orchestration, and innovation. MNEs develop dynamic capabilities to meet the needs of changing local environments and alter those capabilities quickly and with increasing frequency (Hitt et al., 2021). According to Hitt et al. (2021), MNEs must "build hybrid and agile organizations that integrate multiple strategies, logics, and structures; such an integration is the foundation for organizations understanding how to attend to diverse stakeholders' (including governments') interests." The critical nature of DCs to MNE success heightens the importance of building our knowledge in this robust and complex domain. Research published in this special issue should not only foster the scholarly pursuit of knowledge on DCs in the international context, but also have potentially significant implications for the long-term viability and success of MNEs.
The Challenge
Research on DCs in the international context has significantly increased over the past two decades, and this trend is reflected in the recent IBR Special Issue on "Dynamic capabilities and international entrepreneurship" (e.g., Gao, Gudergan & Lin, 2024; Mostafiz, et al., 2024). However, recent reviews (Brock & Hitt, 2024; Pitelis, Teece & Yang, 2023; Zahra, Petricevic & Luo, 2022) note that research has yet to address questions on a range of vital strategic and contextual dimensions concerning the nature, development, usage, and role of DCs in MNEs and their international strategies. Zahra et al (2022) begin their list of topics for future enquiry with the need for systematic analysis of DC scope and locus within multinationals. Additionally, Verbeke (2022) concludes that while the DC construct is unquestionably an important building block in strategic thinking, its applicability in the international arena requires more in-depth examination. Pitelis et al (2023) suggest a framework for future research that includes modality and simultaneous relationships. Additionally, Brock & Hitt (2024) identified two important sets of unanswered questions, one regarding the international dimensions and the other regarding the dynamism of the capabilities.
The multi-faceted and expanding jargon used to describe DCs in multinational settings contributes to a lack of clarity about these issues. Examples of this terminology include "Global dynamic capabilities" (Griffith & Harvey, 2001), "Multinational capabilities" (Tallman & Fladmoe-Lindquist, 2002), "Dynamic international capabilities" (Pinho & Prange, 2016), and "Global dynamic managerial capability" (Tasheva & Nielsen, 2022), among others. Another set of terms refers to the order or level of the dynamism of capabilities. For example, Collis (1994) points to meta-capabilities, Winter (2003) mentions higher-order and first-level capabilities, and Brock & Hitt (2024) discern a number of meta- and strategic DCs. This IBR Special Issue aims to publish work that clarifies, consolidates, and extends the constructs related to DCs in the international context. These issues are important because MNEs' scale and scope can either facilitate or hinder their efforts to change and because MNEs operate in multiple country environments (and often multiple product markets) that can demand different types of DCs.
Key Themes and Research Questions for the Special Issue
This Special Issue welcomes both theoretical and empirical manuscripts. Appropriate topics for submissions include, but are not limited to, the following foci:
Dynamic Capabilities and International Strategies
There is a strong need to improve our understanding of which capability configurations are necessary to support the various strategic options facing international firms-within the research on entry modes and on international strategies more broadly. While researchers such as Li et al. (2015) have linked entry mode to learning, and Pitelis et al. (2023) present a comprehensive conceptual framework, the extant literature has yet to explore the capabilities most relevant for different international market entry modes (Anand & Delios, 2002; Zahra, Ireland & Hitt, 2000). We envisage research that could show how relatively low orders of international capabilities are better suited for simpler entry strategies such as exporting and licensing while more highly developed and sophisticated capabilities are needed for more complex entry modes such as joint ventures, cross-border M&As, and wholly owned subsidiaries. For example, research on the types of capabilities important for successful international alliances could build on work by Chen et al. (2009) and Schilke & Goerzen (2010).
Additional research is also needed to specify the bundles of resources and capabilities that are important for developing and successfully implementing different international strategies. For example, there is a need to investigate the various types and orders of capabilities suited to localization/responsiveness versus more regional and global strategies, leading to a nuanced and precise understanding of the importance of specific resource/capability bundles for different international strategies. Because of their complexity, implementing international strategies requires a configuration of capabilities. We need to understand what capability configurations lead to the most successful implementation of the different international market entry strategies and integrational competitive strategies in different types of international markets (e.g., emerging markets versus developed markets). Which capability configurations are necessary to support the various strategic options facing international firms-within the research on entry modes and on international strategies more broadly? Which bundles of resources and capabilities are required for different international strategies?
Relationships among Levels of DCs in International Contexts
Several authors (Brock & Hitt, 2024; Collis; 1994; Wang & Ahmed, 2007) define meta dynamic capabilities as those that help develop other dynamic capabilities. Importantly, these meta DCs entail a sensing function that identifies when firms need to make changes and the types of changes that are necessary. Thus, they help the firm to be entrepreneurial and innovative in creating new capabilities and/or new configurations of capabilities in unique and dynamic environments (Hitt, Holmes & Mistry, 2024). Strategic dynamic capabilities are DCs with a focus on more specific strategic areas, such as specific geographic markets. For example, ambidexterity allows multinational firms to develop and enrich current capabilities and/or create new capabilities needed to navigate effectively in each of their local environments (Teece, 2007, 2012, 2014). Thus, these capabilities help firms to become more agile and resilient.
Recent research provides several examples, both general and specific. Fourné et al (2014, p. 13) make a general point concerning agility, explicitly stating that "agility is a meta-capability that enables them to create and deploy" other capabilities; and they go on to specify other DCs (including at least one other meta-DC), namely, "sensing local opportunities, enacting global complementarities, and appropriating local value-by which MNEs are able to operate successfully across emerging and established markets" (p. 13). Similarly, Khan & Lew (2018, p. 151) assert that reconfiguration capabilities relate to "a company's organizational value capturing abilities, expressed by the re-alignment of resources, the redesigning of the organizational architecture, and their meshing, followed by seizing opportunities." Moreover, Tang & Gudergan (2018, p. 547) connect leverage (e.g., leveraging capabilities across multiple international markets) to "experience-based dynamic capabilities."
Turning to examples of meta DCs operating on specific DCs, Michailova & Zhan (2015) mention building capabilities and resources like innovation and knowledge, which can improve flexibility in other areas as well. Matysiak et al (2018, p. 238) argue that seizing involves resource orchestration, or "designing efficient (cross-border) governance structures to create and exploit the intended resource–capability recombinations." Finally, recent research identifies sensing as both "a driver of reconfiguring" (Maksimov, et al., 2019, p. 724) and the capability to "learn from the market for adaptation" (Ayden, et al., 2021, p. 8).
These observations suggest a need for research to examine the linkage between meta and strategic dynamic capabilities across multiple and diverse international markets. While research has produced initial ideas regarding the potential effects of meta DCs on creating and enriching strategic DCs, further research is clearly needed to deepen our understanding of the relevant mechanisms in these processes, especially when these processes cut across multiple product and geographic divisions. We also need to identify and understand the specific types of dynamic capabilities required in different international markets. For example, are certain types of meta and strategic DCs best suited to specific cultures and institutional environments, developed vs. emerging economies, and in the formal economy vs. the informal economy?
Developing Appropriate Measurements for International DCs
Following Verbeke's (2022) call for credible measures of capabilities in international firms and the review by Brock & Hitt (2024), we propose the following two foci for research designs to enhance understanding of dynamic capabilities in international research: one focused on the capabilities themselves and the other on the context.
Operationalizing the international dimensions of DCs
In their recent review of DCs in international business research, Zahra et al. (2022) note that "we know little about the types of these DCs and even less about their different dimensions" (p. 585). Similarly, Brock & Hitt (2024) find only a few publications that succeed in capturing aspects of the "international-ness" (or international dimensions) of a capability. For example, Uner et al. (2020) operationalize a "capability to internationalize quickly" (the agility/speed capability) using the year of internationalization and the number of countries served; Ayden et al. (2021) provide lists of ten or more items to measure each capability (sensing, seizing, reconfiguration; see their Table 3); and Bruyaka & Prange (2020) provide details of countries entered and years (see their Tables 3 & 4) to operationalize exploration, exploitation, and (derived) ambidexterity.
We envisage studies that provide more precise details, including specific measures, of the international dimensions of capabilities. For example, it would be helpful to know whether the capability being studied differs from country to country; if (and why) the firm deploys the same capability in different cultures; and which attributes of a capability vary by country. We also encourage studies that examine the construct validity of new or extant measures, including their content, convergent, discriminant, and predictive validities (e.g., Schwab, 1980).
Operationalizing the international dimensions of context
Studies are also needed to provide details and measures relevant to the international context – for example, details of the cultural, regulatory, and other institutional environments of the countries in the study as they relate to firms' capabilities. Many studies provide only limited details of the international context in which they were operating. For example, many state that the research context involved multinationals from a specific country (e.g. Chinese multinationals), or perhaps in a specific region, or from emerging economies, but studies often provide few details to help understand the precise dimensions and effects of that context. For example, while emerging economies have some weak institutions, they may vary in the types of institutions that are weaker; and formal institutions are commonly interrelated with informal institutions in those environments (Holmes, Miller, Hitt & Salmador, 2013). Likewise, some countries have advanced factor markets and infrastructures, but weak institutions, or vice versa (Hoskisson, Wright, Filatotchev, & Peng, 2013). Thus, we need more complex research designs to capture these contexts and their effects on capabilities.
We envisage studies that provide relevant details and measures of the international dimensions of context. For example, one might measure institutional forces (Xu et al., 2021), environmental complexity (Luo, 2002), factor markets (Galdino, Molina-Sieiro, Lamont & Holmes, 2023), and/or cultural clusters (Bruyaka & Prange, 2020), or the heterogeneity of informal and formal institutions within a country (Luiz, 2015),
Honing the measures of international context for developing and using capabilities could be helpful in understanding the effects of various contextual dimensions on the DCs. For example, in which contexts are meta capabilities and strategic dynamic capabilities most critical to firm success? Are certain types of contextual dimensions (e.g., government policies versus cultural attributes) more important for specific DCs than others? Which contextual levels are the most important in the use of DCs within subsidiaries? How do the different configurations of contextual dimensions affect the application of DCs used by the headquarters and local subsidiary units?
Examples of Research Questions that deal with Specific DCs:
· What institutional forces are significant for developing the four components of an agility capability (proactive market sensing, responsiveness, flexibility, and speed) in foreign markets?
· Is ambidexterity a requirement for the performance of MNEs? Is this relationship mediated by the degree of environmental change?
· Which capabilities for managing international firms' resource portfolios are most relevant to subsidiaries in developed versus emerging market countries?
· How can MNEs strengthen capabilities to build DCs and transfer them between local subsidiaries?
· Do different kinds and levels of embeddedness influence entrepreneurial capabilities in MNEs?
· How do levels of environmental complexity in home and host markets affect MNE innovation?
· To what extent (and under what conditions) will knowledge creation in high-velocity markets be enriched when MNEs combine global and local knowledge?
· How can MNEs identify a capability in one national context that might be deployed more effectively in another country? What are the primary determinants of the effective deployment of DCs across international markets?
· What cultural variables and aspects of cultural distance have the greatest influence on the international firm's strategic localization capabilities?
· Which reconfiguration capabilities are most suited for advanced markets? Which reconfiguration capabilities are most suited for emerging markets?
· Which cultural clusters are most relevant for developing sensing capabilities?
· How is the MNE's ability to seize opportunities affected by the juxtaposition of HQs and subsidiaries in different geographic regions?
The Submission Process
The deadline for submission of manuscripts is 31 March 2025.
Submissions will be accepted beginning 15 January 2025 via the IBR website: https://www.sciencedirect.com/journal/international-business-review
Please consult the IBR Guide for Authors before submitting your manuscript and ensure you submit your manuscript for this Special Issue by ticking the appropriate box at the above site. Manuscripts will be double-blind reviewed following the standard IBR review procedure. For additional information, please contact one of the Guest Editors of the Special Issue:
· David Brock (brockd@gibs.co.za)
· Michael Hitt (mhitt@mays.tamu.edu)
· Michael Holmes (mholmes@business.fsu.edu)
· Duane Ireland (duane.ireland@ttu.edu)
· Kai Xu (kai.xu@utsa.edu)
For more details:
https://www.sciencedirect.com/journal/international-business-review/about/call-for-papers#multinational-dynamic-capabilities-how-multinational-how-dynamic-how-capable
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David M. Brock
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Editor-in-chief | Journal of Professions and Organization
Professor | Guilford Glazer Faculty of Management | Ben-Gurion University | Tel: +972-525-491-351
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