The differential effect of environmental jolts and information sources on dynamic capabilities

Abstract

Challenges in the business environment are typically categorized as threats or opportunities. Firms develop dynamic capabilities to cope with these challenges and improve strategic fit. However, evidence of a causal relationship between unpredictable environmental challenges (jolts) and dynamic capabilities is inconclusive. This study explores how information about positive (opportunity) and negative (threat) jolts communicated via two information sources affects dynamic capabilities. A 2 × 2 experiment was conducted among 131 managers. The findings indicate that human-based information sources dominate web-based information sources, particularly when the information reveals potential threats. The use of human information sources is associated with stronger dynamic capabilities than reliance on web information sources. Moreover, the findings confirm that the manifestation of dynamic capabilities differs between opportunities and threats.