Performance Effects of Dynamic Capabilities: The Interaction Effect of Process Management Capabilities

Abstract

Process management is a performance-relevant capability that integrates exploitation of existing processes and exploration of new processes. Although important, it has been neglected and not well addressed organizational-level practice within the dynamic capabilities view (DCV). Therefore, this two-study survey research examines whether process management (i.e., process exploration and process exploitation) capabilities represent potential mediating/moderating mechanisms between dynamic capabilities (i.e., learning and coordinating) and business performance. Specifically, a dual-stage moderated mediation model has been developed and tested on the cross-industry sample of 104 Croatian companies (Study 1) and international sample of 529 manufacturing companies (Study 2). Conditional process analyses using PROCESS macro for SPSS revealed that: (1) the coordinating capability has a supplementary effect on learning capabilities in pursuing process exploration; (2) high process exploration and low process exploitation capabilities result in highest levels of business performance; and (3) the multi-capability mix should be used to explain business performance results. Our findings give support to the capability view of business process management.