Reactive and Proactive Dynamic Capabilities

This chapter investigates the dynamic capabilities of market creators and followers by studying the nature of the environments they face. The turbulent and rapidly changing business environment forces a firm seeking to sustain its competitiveness to choose whether to enter an emerging market or create a new market. Both directions can lead firms to success in a market but only when they cultivate appropriate dynamic capabilities. In the mobile industry, for instance, the different approaches for success of Apple, market creator of the smart phone, and Samsung, a successful follower in that emerging market, provide an example for considering and understanding such capabilities. In this study, the authors examine ways in which several theories attempt to explain the success of Apple and Samsung. They introduce the idea of classifying dynamic capabilities into reactive and proactive types, each of which can lead to success. The classification is enriched into a knowledge-based framework by applying the knowledge chain theory. The framework also accommodates concepts from other theories that are reviewed. This study makes contributions to understanding knowledge-based competitiveness: (1) the classification of dynamic capabilities into “proactive” and “reactive” gives a unified understanding of how both a pioneer and followers can succeed in a market; (2) the framework delves into mechanisms of how competitive advantage from the two kinds of dynamic capabilities is produced through the lens of the knowledge chain theory; (3) the framework can serve as an action guide in coping with turbulent business situations.