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Research Summary Our inductive field study identifies specific emotion regulation (ER) actions as affective underpinnings of dynamic managerial capabilities. ER refers to the management and modification of one's own and other people's emotions for a specific purpose. Our study shows how differences in managers' attention to ER influence the extent to which they can mobilize resources to pursue market opportunities. We show how their ER of the self helps them mobilize human capital resources by creating psychic benefits, whereas their ER of others helps mobilize social capital by facilitating legitimacy judgments. Our emerging theory explains how the capacity for ER constitutes an important foundation of dynamic managerial capabilities and how it is linked with other key conceptual underpinnings of the construct, namely managerial human and social capital. Managerial Summary Strategic change processes can be full of ups and downs and have been likened to an emotional roller coaster. In this context, senior managers do not only to have to cope with their own emotions to deal with challenging situations; they also have to pay attention to the emotions of other stakeholders such as employees and investors to maintain or gain these stakeholders' support. Our field study identifies and explains the systematic behaviors that senior managers can use in strategic change contexts to regulate their own emotions as well as those of other stakeholders in order to productively address and overcome difficult business conditions.

Despite the growing importance of digital transformation, empirical research on the drivers of digital transformation is still lacking, creating a knowledge gap. The purpose of this study is to explore the effect of digital orientation and digital capability on digital transformation, as well as the mediating effect of digital transformation on revenues and business models of SMEs during the COVID-19 pandemic. This paper examines a new conceptual framework designed on resource-based theory perspectives by using survey data of 246 SMEs in Latvia. To achieve the research purpose, this study used a mediation analysis to examine the direct effect of digital orientation and digital capability on digital transformation, as well as to explore the mediating effect of digital transformation on SME outcomes. Our results reveal that both digital orientation and digital capability have direct positive effects on digital transformation. We also found that digital transformation has a positive mediating effect from digital orientation on revenue and business model, as well as from digital capability on revenue. These findings could be useful for policymakers, managers and practitioners to clarify how digital orientation and digital capability intermediated through digital transformation affect the outcomes of SMEs.

We develop the construct of global dynamic managerial capability (GDMC) and identify its underlying sources: (1) international human capital, (2) international social capital, and (3) international managerial cognitions. Consistent with dynamic capabilities view and upper echelons theory, we suggest that GDMC leads to global asset orchestration, which in turn, results in superior company performance in a two-stage process. First, GDMC leads companies to adopt global strategies that spread the risk of internationalizations across different entry modes and geographic regions. Second, the (re)configuration of global assets positively influences subsequent firm performance and thus mediates the relationship between GDMC and performance. Recognizing the triad of factors that form global dynamic managerial capability is crucial when selecting future managers of multinational corporations. Hence, firms with increasing international exposure – both domestically via foreign competition and internationally via foreign market presence – may seek to compose their upper echelons with a suitable combination of international human and social capital as well as internationally diverse cognitions in the pursuit of sustained competitive advantage.

PurposeManagers play a critical role in shaping the development of firms due to the risky and long-term nature of innovation. Although the managerial effect on strategic change has long been factored into organizational theories, scholars still lack a complete understanding of the specific managerial capabilities that drive innovation in today's digital economy. The present study builds on dynamic managerial capabilities theory to close this research gap. The paper proposes managers' dynamic capabilities and their three underlying drivers – managerial human capital, social capital, and cognition – as a direct antecedent to digital firms' innovativeness.Design/methodology/approachThe study draws on survey data from German Industry 4.0 manufacturing firms, which were analyzed using regression analysis.FindingsThe results confirm managers' dynamic capabilities as facilitators of innovation. In contrast to previous research on nondigital industries, the findings demonstrate that only the complete portfolio of managers' dynamic capabilities promotes innovativeness in digital firms. The study provides evidence for the importance of dynamic managerial capabilities in the digital economy yet contradicts previous research on nondigital industries related to the advantageousness of managers' human capital, social capital, and cognition for innovation.Originality/valueThe study contributes to the literature by being the first to holistically test the effects of dynamic managerial capabilities on innovation in digital firms. The results offer a nuanced account of managers' dynamic capabilities, thereby expanding dynamic managerial capabilities theory to the digital economy.

PurposeResource cognition – identifying valuable resources and capabilities and assessing their potential for redeployment – is a pivotal management capability for strategic renewal. This study explores how managerial cognition in this activity may be biased, leading to erroneous results.Design/methodology/approachThis study employs an action research approach: A full resource cognition project was conducted together with the top management of a case firm, including the CEO and members of the supervisory board.FindingsResource cognition may be distorted by four cognitive biases: The insulation bias – tending to keep one's perspective insularly to the current business; the novelty bias – tending to exclusively focus on innovation and recent achievements; the status quo bias – tending to view opportunities from the current situation and structural set-up; and the scaffolding bias – tending to adopt concepts and examples indiscriminately to the firm.Originality/valueActive participation in a resource cognition project provided first-hand and insightful practice-based evidence on resource cognition. Aware practitioners can take preventive steps to avoid cognitive biases. This study sheds light on the under researched issue of resource cognition.

Dynamic managerial capabilities focus on managers' resource-related decisions. Asset orchestration, a central component of dynamic managerial capabilities and of resource management, highlights the importance of integrating (matching) resource investment and deployment decisions. Building on these recent theoretical advances, we examine the contingent nature of resource investment and deployment decisions. The results, based on a sample of banking firms, indicate that firm performance suffers when managers' investment decisions deviate from the norms of rivals for both human and physical capital. However, when deployment decisions support investment decisions, greater investment deviation, both high and low, generally enhances performance. Specifically, firm performance is optimized by making congruent resource investment and deployment decisions as opposed to maximizing or economizing either decision independently. Therefore, resource management via asset orchestration is vital for superior performance.

Microfoundations allow the unpacking of processes by which dynamic capabilities are created. Along this line, managerial cognition has been proposed as a variable related to the dynamic capabilities. However, the high number of cognitive variables reported hinders the theoretical contributions. Thus, this study classifies the managerial cognitive variables of chief executive officers (CEOs) into three types of dynamic managerial capabilities: (1) managerial sensing, (2) managerial seizing, and (3) managerial reconfiguration. We estimate the correlation of these managerial capabilities with firms' dynamic capabilities. We use a three-level random effects model to synthesize 101 correlations reported from 2007 to 2021, representing 6,153 CEOs around the world. This meta-analysis reveals a positive relationship between CEOs' managerial cognition and dynamic capabilities, especially with respect to those cognitive variables that support managerial sensing as the perception of opportunities and entrepreneurial alertness.

In a Schumpeterian economic model, dynamic capabilities (DC) help entrepreneurial firms create competitive advantages. However, advancing the construct of DC in entrepreneurship is hampered by the incompatibility of some key assumptions in entrepreneurial ventures. In this paper, we propose that dynamic managerial capabilities (DMC), which builds upon the DC perspective by drawing attention to the role of managers, is a better alternative in analyzing entrepreneurship research. We find support for our ideas in a systematic analysis of extant research. Our review highlights the evolution of DMC literature in entrepreneurship and traces its dominant intellectual structures. In concurrent analysis, we highlight the limitations of utilizing DC. Additionally, we shed new light on the emergence of organizational capabilities, and present new avenues for future research.

We investigate the conditions under which managerial cognition affects the timing of incumbent entry into a radical new technological market. We address this question using a longitudinal study of communications technology firms entering the fiber-optics product market. Using a hazard rate model, we investigate the relevance of cognition based on the direction of CEO attention. We find that attention toward the emerging technology and the affected industry is associated with faster entry, and attention to existing technologies is associated with slower progress. Second, we assess the extent to which the effect of cognition is dependent upon the levels of relevant organizational factors and find that CEO attention to the emerging technology may amplify the effects of industry orientation. Managerial cognition is important in understanding organizational outcomes, and considering both the direction of cognition and its interaction with organizational factors provides a more nuanced view of entry behavior. These results contribute to the literatures on incumbent response to technical change and new product development by suggesting that context-specific managerial cognition has a separate and important influence on the degree and direction of strategic renewal. We argue that managerial cognition is therefore a dynamic managerial capability that can shape adaptation by established firms.

PurposeThe purpose of this paper is to examine the important role of intangible resources under resource based view (RBV) such as dominant logic (information filter and learning/routines) and dynamic managerial capabilities (managerial human capital, HC; social capital, SC and managerial cognition, MC) in small and medium sized enterprises (SMEs) innovation performance in Hefei, Anhui province China.Design/methodology/approachAn empirical study was conducted while distributing 498 questionnaires among different SMEs in Hefei, of which around 429 responses were received. Structural equation modeling (SEM) was employed to test the proposed hypotheses.FindingsThis research study is an endeavor to fill the missing link in the existing literature, and empirical analysis of this research supports all the hypotheses confirming that dominant logic and dynamic managerial capabilities are valuable intangible resources and positively and significantly influence the SMEs innovation performance. Results also indicate that managerial human capital, social capital and managerial cognition (dynamic managerial capabilities) play a significant mediating role between dominant logic and SMEs innovation performance.Research limitations/implicationsThe findings suggest that those SMEs which are lacking tangible resources should build and nurture their top management capabilities and dominant logic and SMEs effectively utilizing these intangible resources can enhance their innovation performance.Practical implicationsThe findings suggest that SMEs lacking tangible resources should build and nurture their top management capabilities and dominant logic and SMEs effectively utilizing these intangible resources can enhance their innovation performance.Originality/valueThis paper argues theoretically (under RBV and dynamic capabilities view-DCV) and demonstrates empirically that in an emerging economy, i.e. China characterized by highly volatile, dynamic and uncertain competitive environments, SMEs lack tangible resources; therefore, intangible resources (e.g. dominant logic-DL and dynamic managerial capabilities-DMC) are vital for SMEs innovation performance and competitive advantage.