3.3 Continuing development
Given its utility, it is unsurprising that extension of the RBV approach continues, as the two following examples illustrate. Tello-Gamarra and Zawislak (2013, p. 4) argue that the extent of the internal focus indicated by the list in Section 2.3 tends to downplay the skills and capabilities an organisation needs to ‘maintain a constant link with its surroundings and to address the market and carry out transactions.’ They therefore suggest that a further ‘transactional’ capability needs to be recognised:
A transactional capability is defined as a repertoire of abilities, processes, experiences, skills, knowledge and routines that the firm uses to minimise its transaction costs … the transactional capability has two dimensions, one (a) customer-centred, and another, (b) supplier-centred.
Again, the point can be made that transaction costs are not only a concern of commercial, for profit ‘firms’, but of many types of organisation, as indeed are suppliers and customers, although the latter may not be defined in terms of a commercial transaction if, for example, the organisation in question is a government agency or other entity supplying a public service.
The second example returns us to a question posed earlier in the course: if, as is widely accepted, innovation as a source of competitive advantage is achieved when organisations possess or develop their technological capabilities, why is it that some organisations that invest in this capability are not innovative? Or, why do other organisations who invest far less enjoy innovative performance? It is claimed the answer can be found in a more recently identified (or perhaps it would be more accurate to say ‘labelled’) capability, which is in fact ‘a meta capability called innovation capability’ (Zawislak et al., 2012, p. 15).
The innovation capability is understood as both the technological learning process from the firm translated into technology development and operations capabilities, as well as the managerial and transactional routines represented by the management and transaction capabilities. The integration between these four capabilities effectively promotes innovation which creates competitive advantages.
On the basis of a wide ranging and extensive review of literature on innovation and capabilities, Zawislak et al. conclude that all firms have all four capabilities, but that ‘to be innovative at least one of the firm’s capabilities must be predominant.’ (p. 14). This predominance is not fixed, and may therefore shift over time. In short, some capabilities are clearly ‘dynamic’ and therefore potentially highly significant. I hope this brief review of the RBV demonstrates that the approach fully acknowledges that the capabilities of organisations are multiple, and that what they are and how they combine and interact over time – and therefore how they are developed, reconfigured, managed, and so on – is crucial to understanding and explaining why some organisations are successful at innovation and others are not, even when they may appear to possess the same capabilities. The material that follows seeks to analyse and explain in more detail some of the key features of capabilities and thus the relationship between organisations and innovation.