How Leaders Use Values-based Guidance Systems to Create Dynamic Capabilities

Rosabeth M. Kanter; Matthew  Bird; Ethan  Bernstein; Ryan  Raffaelli

Chapter | The Oxford Handbook of Dynamic Capabilities | 2020

How Leaders Use Values-based Guidance Systems to Create Dynamic Capabilities

by Rosabeth M. Kanter, Matthew Bird, Ethan Bernstein and Ryan Raffaelli

Abstract

How do strategic leaders create change-adept organizations? Based on qualitative field research, this chapter argues that well-defined institutionalized purpose, values, and principles act as an organizational guidance system that integrates and strengthens the micromechanisms that enable leaders to build dynamic capabilities and, therefore, change-adept organizations. From empirical case studies, we distill micromechanisms through which organizational guidance systems create fertile soil for dynamic capabilities. The five micromechanisms are values-based decision heuristics; intrinsic motivation with positive emotions; an organizational control system based on entrepreneurial self-organization, self-management, and peer regulation; an organizational identity that (a) fosters a longer-term perspective and (b) widens the firm's scope; and ecosystem creation. While much of the dynamic capabilities literature has focused on testing causal relationships between key performance variables and constructs, our goal here is to "open up" the regression model, provide a closer qualitative inspection of the "how-to" micromechanisms, and thereby advance a multidisciplinary research agenda.

Keywords: Change; dynamic capabilities; field research; intrinsic motivation; organizational identity; ecosystem; Organizational Change and Adaptation; Mission and Purpose; Motivation and Incentives; Research; Management Systems; Change;

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Kanter, Rosabeth M., Matthew Bird, Ethan Bernstein, and Ryan Raffaelli. "How Leaders Use Values-based Guidance Systems to Create Dynamic Capabilities." Chap. 2 in The Oxford Handbook of Dynamic Capabilities, edited by David J. Teece and Sohvi Leih. Oxford University Press, forthcoming. (Pre-published online September 2015.)

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How Leaders Use Values-based Guidance Systems to Create Dynamic Capabilities

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