A Study of the Relationship between Dynamic Capabilities and Firm’s Dynamic Growth – A Case in Taiwan

Abstract

Despite the many studies discussing dynamic capabilities and firm growth, there is still limited empirical evidence for the combination of the two. This paper aims to understand how firms build dynamic capabilities to respond to the dynamics of firm growth. The contributions of this study are as follows: In the different stages of firm growth, a) the way a firm builds its dynamic capabilities within five stages of firm development is similar to the ideas suggested in the product life cycle, such as incubation, birth, growth, stabilization, and re-creation; b) a firm’s dynamic capabilities play different roles and are used to enhance product quality and solve key problems; c) managers should try to develop adequate dynamic capabilities without overlooking the mediating role of total quality management in the relationship of firm strategy and performance and needs to fully understand that the promotive determinant of dynamic capabilities also changes over time.