Building dynamic capabilities of adaptation and innovation: a study of micro-foundations in a transition economy

What are the microfoundations of dynamic capabilities that sustain competitive advantage in a highly volatile environment, such as a transition economy? We explore the detailed nature of these dynamic capabilities along with their antecedents by tracing the sequence of their development based on a longitudinal case study of an organization subject to an external context of radical transition — the Russian oil company, Yukos. Our rich qualitative data indicate two distinct types of dynamic capabilities that are pivotal for organizational transformation. Adaptation dynamic capabilities relate to routines of resource exploitation and deployment, which are supported by acquisition, internalization and dissemination of extant knowledge, as well as resource reconfiguration, divestment and integration. Innovation dynamic capabilities relate to the creation of completely new capabilities via exploration and path-creation processes, which are supported by search, experimentation and risk taking, as well as project selection, funding and implementation. Second, we find that sequencing the two types of dynamic capabilities, helped the organization both to secure short-term competitive advantage, and to create the basis for long-term competitive advantage. These dynamic capability constructs advance theoretical understanding of what dynamic capabilities are, whilst their sequencing explains how firms create, leverage and enhance them over time.

Stages of organizational transformation in transition economies: A dynamic capabilities approach

How do organizations previously dominated by the state develop dynamic capabilities that would support their growth in a competitive market economy? We develop a theoretical framework of organizational transformation that explains the processes by which organizations learn and develop dynamic capabilities in transition economies. Specifically, the framework theorizes about the importance of, and inter-relationships between, leadership, organizational learning, dynamic capabilities, and performance over three stages of transformation. Propositions derived from this framework explain the pre-conditions enabling organizational learning, the linkages between types of learning and functions of dynamic capabilities, and the feedback from dynamic capabilities to organizational learning that allows firms in transition economies to regain their footing and build long-term competitive advantage. We focus on transition contexts, where these processes have been magnified and thus offer new insights into strategizing in radically altered environments.

The transition of the Polish real estate market within a Central and Eastern European context

The real estate market in Poland is a relatively immature market, but one that has been experiencing substantial transformation. The development of the market has been encouraged by a number of factors, including changes arising as a result of new legislation and the migration of capital between capital markets. The progress of the real estate sector towards a western style competitive market has taken place within the gradual transformation of the Polish economy into a free market economy. As investment grade property is in relatively short supply in Poland, investors consider opportunities within the wider CEE block. An analysis of the risk-return characteristics of the three largest CEE real estate markets namely, Poland, Hungary and Czech Republic, shows that the returns in these markets have been negatively correlated with the UK. As these economies and markets evolve, and being part of the wider EU trading block, their economic performance will slowly converge and become more synchronized with their western counterparts. However, the catch-up of the CEE markets to western European performance cycles will be protracted and consequently there are likely to be significant ongoing portfolio risk reduction opportunities

Money laundering and the shadow economy in Kazakhstan

Purpose The purpose of this paper is to assess and highlight the approach taken towards the legal control of illicit money laundering taken in the Republic of Kazakhstan, in particular, the role played by an amnesty on the legalisation of illicit funds. This is particularly important as a basis for a wider discussion about the proper limits of the “criminalising” approaches commonly taken in anti-money laundering regulations. Design/methodology/approach The discussion and evaluation in the paper is based upon a conceptual analysis of the money laundering regime in Kazakhstan, in particular, the legal framework and policies of implementation adopted. Findings The paper demonstrates that the problems that are posed by the shadow economy in post-Soviet transition societies can make the blanket criminalisation of money laundering a self-defeating approach, unless accompanied by measures which allow for the achievement of “market-constituting” effects. Research limitations/implications The paper draws on experience and practice in one jurisdiction only (Kazakhstan); it also limits its focus to one particular example of a money laundering amnesty policy. Both of these limitations, therefore, suggest avenues for further comparative research. Originality/value The paper’s conclusions about the interactions between the shadow economies of transitional societies and the global anti-money laundering agenda have wider application in assessments of international law in this area.