The how and the who: an empirical investigation of the dynamic capabilities transformation mechanism in internationalized enterprises

Empirical work on Dynamic Capabilities (DCs) is in its infancy, the DCs transformation phenomenon remains under-explained. This paper adds to DCs’ theory by articulating a DC perspective on international strategy. It examines the operation of the DCs transformation mechanism in internationalized enterprises. Using quantitative research, hypotheses are tested in internationalized manufacturing companies. It finds that companies transform technological, strategic, operational/ structural and HR-related capabilities. The transformation areas are interrelated, composing an integrated DC transformation mechanism. Companies which a) operate in a hyper-competitive industry b) are highly internationalized, and c) don’t have a risk-averse strategy of market expansion, are the ones that have transformed their capabilities after their internationalization. There is no significant evidence of DC transformation in companies dependent on the local market, nor to those that show evidence of an opportunistic internationalization behavior. Thus, there is evidence that active and engaged internationalization involvement is highly related to DCs transformation.