Dynamic capabilities in airport management : A study of Jönköping Airport

Dynamic capabilities in airport

management

A study of Jönköping Airport

Bachelor’s thesis within Business administration

Author: Erik Tollén

Olof Frånlund

Acknowledgements

We would like to express our appreciation and gratitude to our tutor, Professor Mona Eric-son. She supported us throughout the process with guidance and valuable comments. We would also like to thank our contacts and interviewees at Jönköping Airport for their support, welcoming attitude and patience. Our sincere and deep gratitude is given to Carla Whelan, Herman Larsson and Stefan Karlsson.

Finally, we would like to extend our gratitude to Isabel Dreveborn, Linnea Theilkemeier and Azin Taheri for your valuable thoughts and comments throughout the process. Olof Frånlund & Erik Tollén

Bachelor’s Thesis in Business Administration

Title: Dynamic capabilities in airport management: A study of Jönköping Airport Author: Erik Tollén, Olof Frålund

Tutor: Prof. Mona Ericson

Date: 2010-12

Subject terms: Dynamic capabilities, airport management

Abstract

Background:

The deregulation of the airline and airport sectors has introduced airport managers to free market competition.

Purpose:

The purpose of this thesis is to identify dynamic capabilities in a regional airport, examine which of the predominant views they correlate to and whether dynamic capabilities concern different levels of strategy.

Method:

This study uses a qualitative method. Data are collected through a documentary review and interview. The documentary review con-cerns the features of and trends in the airport sector. The interviews were conducted with three managers of Jönköping Airport, experi-enced at managing regional airports in Sweden and Europe.

Conclusion:

The study identified several dynamic capabilities correlating in various degrees to the different predominant views. Some of dy-namic capabilities found were of the kind that might be expected at most firms, such as strategic decision-making and product de-velopment. Others were more specific for the sector, such as the ability to build a highly adaptable work force. However, none were irrelevant across businesses. This is thought to be a result of the focus on higher management.

The study also found that different dynamic capabilities concern different levels of strategy. Strategic decision-making concern corporate-level strategy, while product development is concerned with business-level strategizing. We suggest this is one way of approaching the proposition made by Winter (2003) that there are different levels of dynamic capabilities ad infinitum.

Table of Contents

1

Introduction ... 1

1.1 Background ... 1 1.2 Problem discussion ... 2 1.3 Purpose ... 3 1.4 Delimitations ... 3 1.5 Disposition ... 3

2

Theoretical framework ... 5

2.1 Antecedents to the Dynamic Capabilities View ... 5

2.1.1 The Resource-Based View ... 6

2.1.2 The Core Competences View ... 7

2.1.3 Evolutionary economics ... 8

2.2 The emerging Dynamic Capabilities Framework ... 8

2.2.1 Predominant views ... 8

2.2.2 Key differences... 13

2.2.3 Examples ... 16

2.3 Theoretical emphasis ... 17

3

Method ... 19

3.1 Introduction ... Error! Bookmark not defined. 3.2 Qualitative study ... 19 3.3 Data collection ... 19 3.3.1 Documentary review ... 19 3.3.2 Interviews ... 20 3.3.3 Trustworthiness ... 21

4

Empirical presentation ... 23

4.1 Introduction ... 23 4.2 Documentary review ... 23

4.2.1 Deregulation and the introduction of Low-Fare Airliners... 23

4.2.2 Competitive strategies for airports ... 24

4.2.3 Airlines’ choice of airport ... 25

4.2.4 The airport sector in Sweden ... 26

4.3 Airport managers ... 27 4.3.1 Carla Whelan ... 27 4.3.2 Stefan Karlsson ... 29 4.3.3 Herman Larsson ... 30

5

Analysis... 33

5.1 Introduction ... 33

5.2 Key features in Airport Management ... 33

5.3 Dynamic Capabilities at Jönköping Airport ... 34

5.3.1 The implementation of the Basic Airport concept ... 34

5.3.2 A new strategic approach ... 35

5.3.3 Higher-level Dynamic Capabilities? ... 37

5.4 Discussion regarding key differences ... 39

6

Conclusions and further studies ... 42

6.2 Further studies ... 43

References ... 44

Tables

Chart 4-1 Alliancing at Jönköping Airport ... 29 Chart 6-1 Dynamic capabilities identified at Jönköping Airport and the

1 Introduction

The airport sector has had a tremendous development the last couple of years due to the regulation of the airport and airline sectors. Form government owned slow moving in-frastructure to private agile players in a struggle to increase market share and regional attractively. This study concerns how Airport Managers can use the emerging dynamic capabilities approach to tackle increasing market dynamism.

1.1 Background

Globalisation and the pace of technological development have had an influence on competition in most industries. In the aviation industry, particularly the airport and air-line sector, change has been rapid in the last decades. Previously in many European countries the aviation industry was seen as a matter for the state and thus not subjected to competitive forces. The deregulation of both sectors has introduced the field of com-petitive airport and airline management. This process is described by Carney and Mew (2003) as numerous administrative experiments seeking to redefine relationships be-tween airport regulators, financers and managers.

Freathy (2004) identifies the following drivers of change for the airport sector.

 Declining aeronautical revenues

 Decline in state control

 Abolition of duty free on intra EU travel

 The World Health Organisation (WHO) framework convention on tobacco control

 Changing patterns of consumer behaviour

 Political/terrorist threat/health concerns

These are external factors over which managers have no control, influencing the macro-environment in which airports operate.

The major driving force behind airport governance reform is the growing commerciali-zation of the aviation industry (Freathy, 2004). Airports and airliners were long seen as state matters and there was very little competition, since both were primarily state-owned. However, in 1997 the aviation market was deregulated in Europe, since aviation was no longer seen as a matter solely for public service (Barrett, 2000). Therefore, air-ports can no longer count on being subsidized to the same extent as when they were un-der public governance, but have to rely on their own profitability in a competitive mar-ket. This has become increasingly difficult without being able to benefit from the for-merly higher profit margins of tax and duty free sales, forcing airports to pursue other commercial activities, one of such as air freight business (Freathy, 2004).

The airport and airline sectors have in a couple decades gone from no competition to what some authors describe as hyper-competition (e.g. Jarach, 2001). The change has forced airports and airlines to strive for efficiency, as fare prices have declined, because of the introduction of low-fare airlines and also airports. This has, however, created op-portunities for secondary and regional airports with excess capacity to cannibalize on

The deregulation process, globalization of major players and the start-up of new airports will force every single actor to change their market conduct. The change has started the evolution of airport management practices (Jarach, 2001).

Barrett (2000 p. 26) concludes his article by stating

“The role of airport management in the new environment will be quite different to the uncompetitive undynamic past.”

The transition from state owned airliners and airports to a commercialized, competitive industry in an increasingly globalised market makes way for an overall more dynamic market (Freathy, 2004). Higher market dynamism puts higher demands on managers to continuously adapt and evolve the firm to the environment in which it operates (e.g. Teece, 1997; Eisenhardt and Martin, 2000).

1.2 Problem discussion

The commercialization of the airport sector has introduced the field of airport manage-ment in a business sense. This is referred to, by Jarach (2001), as the evolution of air-port management practices. He describes a new market-driven approach towards the “airport as a firm” concept, transforming the concept of an airport and what purposes it is supposed to serve.

There are different approaches to choose from when engaging in competitive strategy-making. The evolution in management theory has lead to different views of the firm that has taken turn in dominating the way in which strategy has been approached. In more recent years, focus has been shifted from activities intended to disrupt the activities of competitors and the environment, to a resource-based view (RBV) focused on how the firm can be shaped to best fit the need of its business and industry (Teece et al., 1997). The firm is seen as a bundle of resources. These are the tangible and intangible assets – the physical, financial and human resources as well as intellectual capital – of the firm (Johnson et al., 2008). The logic of the RBV is that competitive advantage can be achieved by firms that possess resources that are valuable and rare. If the resources also are inimitable and non-substitutable, the competitive advantage may be sustainable (e.g. Wernerfelt, 1984). However, the existence of sustainable competitive advantage is be-ing debated in light of market dynamism (e.g. Eisenhardt and Martin, 2000). From this resource base the firm can in turn build capabilities. Strategic capabilities are a combi-nation of resources and competences possessed by the firm, giving it the ability to per-form at the lever required to survive and prosper (Johnson et al., 2008).

The RBV and core competences framework do not, however, by itself explain why two firms with the same set-up of resources and capabilities are not equally successful. Eisenberg and Martin (2000) argue that this is because they have different dynamic ca-pabilities, making them unequally good at adapting to a dynamic, changing environ-ment. Thus, there need to be a further aspect to capabilities, than the ordinary capabili-ties themselves – dynamic capabilicapabili-ties (Teece et al., 1997).

However, Winter (2003) states, the literature on the distinction between substantive and dynamic capabilities is still in its infancy, as no consensus has yet emerged. There are several predominate views in terms of the nature, role, relevant context, creation and development mechanisms, heterogeneity assumption, outcome and purpose of dynamic capabilities (Barreto, 2010). Without contradicting any of these definitions, they can in

short be described as the ability of a firm to adapt its ordinary capabilities, or bundle of resources, to changes in the environment in order to stay competitive.

The lack of consensus regarding these aspects of the emerging theory make it compli-cated to use in management practice. As the field of airport management is going through some substantial changes, dynamic capabilities should be of great importance to managers in the sector. This makes it important to research the role of dynamic capa-bilities in airport management. Freathy (2004 p. 197) summarizes the challenge for air-port managers.

“…to continue to develop coherent yet flexible strategies that provide the direction and growth required in order to remain competitive, while at the same time being respon-sive to changing market circumstances”.

The increasingly dynamic features of markets highlight the importance of dynamic ca-pabilities (Eisenhardt and Martin, 2000). In the global and dynamic airport sector, where the pace of change as well as competitive rivalry has increased at the same time as revenues decline (Freathy, 2004), the need for managers to understand and develop dynamic capabilities should be of importance.

If dynamic capabilities are different for every ordinary capability (Eisenhardt and Mar-tin, 2000) and ordinary capabilities vary between industries (Wernerfelt, 1984), there should be a need to study them separately in specific industries. As we have found no research concerning dynamic capabilities in the airport sector, we see the need for such a study to be performed. We will therefore fill the gap by identifying dynamic capabili-ties relevant for airport managers.

The problem thus concerns what definition or definitions bear merit as to the the differ-ent aspects of dynamic capabilities, as well as how they are relevenat in a certain sector, in this case the airport sector.

As one key difference regard whether there are different levels of dynamic capabilities, we also comment on whether dynamic capabilities concern different levels of strategy.

1.3

Purpose

The purpose of this thesis is to identify dynamic capabilities in a regional airport and examine which of the predominant views – presented by Teece et al., Eisenhardt and Martin, Winter, Adner and Helfat and Zahra et al. – they correlate to.

1.4

Delimitations

The main source of empirical data in this thesis are derived from interviews with Air-port Managers at Jönköping AirAir-port, thus, the findings will only concern the corporate and business level.

1.5

Disposition

This thesis is structured in the following way: First an introduction which describes the problem and our purpose. This chapter is followed by the Theoretical framework where the concept of dynamic capabilities is presented together with earlier theories that have led up dynamic capabilities. The third chapter concerns the method used in this thesis

a documentary review and a presentation of interviews conducted with managers at Jönköping Airport. The next two chapters provide our analysis and conclusions. In the chapter concerning analysis, our theoretical framework is filled with the findings pre-sented in the empirical presentation. In the conclusion chapter the main findings from the analysis is presented together with a discussion regarding the need for further stud-ies.

2

Theoretical framework

“...while the concept of dynamic capabilities is appealing, it is a rather vague and elu-sive one which has thus far proven largely resistant to observation and measurement.”

~ Kraatz and Zajac (2001, p. 653)

This quote has still, nine years after the article was published, got some merit in terms of describing the evolutionary state in which the emerging dynamic capabilities frame-work still reside. Even though a large amount of research has been published, it is still too early to talk about a theory or framework. There are different views as to which path this concept should take in terms of purpose, definition, etc. While some researchers see the concept in close relation with the RBV, others believe it to be more closely related to evolutionary economics (Barreto, 2010). Because of the emergent state in which the concept still resides, we will present the foundation of the antecedents to the dynamic capabilities approach. We start off the dynamic capabilities section by presenting some predominant views, then moving on to some key differences and examples. Finally, we present our theoretical emphasis.

2.1

Antecedents to the Dynamic Capabilities View

Johnson et al. (2008, p. 3) define strategy as “the direction and scope of an organiza-tion over the long term which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder ex-pectations.” They describe three different levels of strategy (p. 7).

 Corporate-level strategy is concerned with the overall scope of an organisation and how value will be added to the different parts (business units) of the organisation.

 Business-level strategy is about the various business included in the corporate strategy should compete in their particular markets.

 Operational strategy are concerned with how the component parts of an organisation deliver effectively the corporate- and business-level strategy in terms of resources, processes and people. Strategy is concerned not only with the firm’s activities intended for achieving competi-tive advantage, but also those focused on sustaining that advantage (e.g. Teece et al., 1997, McGee et al., 2005). Strategic decision-making involves doing trade-offs, choos-ing the path which will most likely lead to realization of the goals, the strategic intent, of the firm (Hamel and Pralahad, 1990). Adner and Helfat (2003) talk about the re-source governance function of corporate managers, including the allocation of rere-sources between businesses.

Teece et al. (1997) state that, even though numerous researchers have attempted to offer an explanation as to the source of competitive advantage, some clusters of theory has emerged. These frameworks are Porter’s competitive forces (Porter, 1980 competitive strategy), the strategic (conflict) approach (e.g. Shapiro, 1989), the resource-based view (RBV, Wernerfelt, 1984) and the core competences view (Hamel and Pralahad, 1990). However, in the article Teece et al. (1997) developed what they call the dynamic capa-bilities approach or view.

While the RBV offers an explanation to why some firms perform better than others in the same marketplace, it does not explain why firms with the same bundle of resources

plained by the fact that dynamic capabilities vary amongst firms (e.g. Teece et al, 1997; Eisenhardt and Martin, 2000). Teece and colleagues point out that identifying new op-portunities and organizing effectively and efficiently to embrace them are generally more fundamental in private wealth creation and capture, than business conduct aimed at keeping competitors off balance, raising their costs and excluding entrants. However, they continue, the different frameworks are in many ways complementary and an appre-ciation of all of them is necessary in achieving competitive advantage.

2.1.1 The Resource-Based View

The resource based-view (RBV) was introduced by Wernerfelt (1984). The framework offers an explanation to the question why some firms do better than others on a particu-lar market, even though they operate in the same environment. This is because they pos-sess different resources, making them unequally adapted to the demands of the market place.

Resources are the physical (i.e. equipment, location), human (expertise/know-how) and organizational (i.e. superior sales force) assets that can be used to implement value cre-ating strategies (Wernerfelt, 1984; Eisenhardt and Martin, 2000). Johnson et al. (2008) talk about tangible and intangible assets which can be divided into physical, financial and human resources and intellectual capital (Johnson et al., 2008). (However, Johnson et al. believe the RBV would be more appropriately labelled the Capabilities View, why they use the term capability instead of resource in the assumptions, as do Newbert, 2008.)

Resources are “stocks of available factors that are owned by or controlled by the firm”, whereas capabilities “refer to a firm’s capacity to deploy Resources, usually in combi-nation, using organizational processes, to effect a desired end” (Amit and Shoemaker, 1993 p. 35)

Johnson et al. (2008) describe the RBV from the following three key concepts, or core assumptions

 Organizations are not heterogeneous, but have different capabilities.

 Copying or imitating the capabilities of another firm can be difficult or even im-possible.

 Competitive advantage is achieved on the basis of capabilities that rivals do not have or have difficulties obtaining.

Newbert (2008) states that based on these assumptions, the following hypothesis are made.

 A firm that utilize its rare and valuable capabilities will attain competitive ad-vantage.

 If the capabilities are inimitable and non-substitutable the advantage can be sus-tained.

 Such an advantage will enable the firm to improve both short- and long-term performance.

So, in order to provide an advantage to the firm, resources need to be valuable and rare. And, for the advantage to be sustainable, they also need to be difficult to imitate and non-substitutable (e.g. Wernerfelt, 1984). This is often referred to as the VRIN condi-tions (Bowman and Ambrosini, 2003). These are the unique resources of the firm (Johnson et al, 2008).

While capabilities were previously seen as a sub-group to resources (e.g. Barney, 1997), they are now seen as something different. The distinction between resources and capa-bilities are emphasized by Makadok (2001, p. 388). Makadok defines capacapa-bilities as “a special type of resource, specifically an organizationally embedded non-transferable firm-specific resource whose purpose is to improve the productivity of the other re-sources possessed by the firm”. While rere-sources are “stocks of available factors that are owned or controlled by the organization” available on a market basis, capabilities are “an organization’s capacity to deploy resources”. Capabilities are built by the bun-dling of resources. Thus, capabilities cannot easily be transferred from one organization to another, without transferring ownership of the organization itself (see also Teece et al, 1997). The resources would be left if the organization was dissolved, while capabili-ties would disappear (Makadok, 2001).

However, Teece et al. (1997) have a different vocabulary regarding resources and capa-bilities. The undifferentiated assets lacking firm-specific aspects (such as land, unskilled labour and capital) are referred to as factors of production, while resources are firm-specific assets difficult if not impossible to imitate (such as trade secrets, specialized production facilities and engineering experience). These resources are difficult to trans-fer between firms because of transaction and transtrans-fer cost and because they may contain tacit knowledge. Organizational routines and processes (such as quality, miniaturization and systems integration) are created when such firm-specific assets are put together into clusters so that they enable distinctive activities. These can typically be deployed across multiple product lines and may extend even outside the firm to embrace alliance part-ners. The assumption that undifferentiated off-the-shelf assets is not the foundation of competitive advantage leads the Teece et al. (1997) to the conclusion that the balance sheet is a poor reflection of the firm’s ability to achieve and sustain it, since it typically contains such assets (Teece et al, 1997).

The RBV does not, however, offer an explanation to why firms that have the same bun-dle of resources are not equally successful. Eisenhardt and Martin (2000) state that this is because markets are dynamic and the ability to adjust accordingly vary amongst firms. Firms have unequally effective dynamic capabilities, making some firms more successful than others.

2.1.2 The Core Competences View

A theory developed from the RBV is the core competences view (e.g. Hamel and Prala-had, 1990). Core competences are mentioned in textbooks as well as the dynamic capa-bilities literature referred to below, why we believe it deserves to be mentioned in this context.

Johnson et al. (2008, p. 97) define the term as “the skills and abilities by which re-sources are deployed through an organization’s activities and processes such as to achieve competitive advantage in ways that others cannot imitate or obtain.”

Teece et al. (1997), on the other hand, define those competences that define a firm’s fundamental business as core. Accordingly, one must look at the products and services of a firm (and those of its competitors) to determine which its core competences are. They give the example of Eastman Kodak, where imaging might be considered a core competence.

2.1.3 Evolutionary economics

Another perspective on the firm that, beside the RBV, has influenced the views of dy-namic capabilities is evolutionary economics (Barreto, 2010). Teece et al. (1997) as-sumed an evolutionary economics perspective in their article that put dynamic capabili-ties on the agenda. They pointed out the important role played by routines, path depend-encies and organizational learning, drawing on the evolutionary theory of the firm (Nel-son and Winter, 1982). Consistent with this view, Teece and colleagues assumed that the asset positions and evolutionary paths govern the creation and evolution of dynamic capabilities. In essence, this view explains what the firm is today by the choices made in its previous history, which also sets the boundaries and limitations for the choices pres-ently available for the future. Path dependencies are“...where early events and decisions establish policy paths that have lasting effects on subsequent events and decisions” (Johnson et al., 2008, p. 187).

2.2

The emerging Dynamic Capabilities Framework

“To turn really interesting ideas and fledgling technologies into a company that can continue to innovate for years, it requires a lot of disciplines.” ~ Steve Jobs Since Teece et al. (1997) put dynamic capabilities on the agenda a remarkable amount of research has been published on the subject. The definitions and paths presented have, however, become rather disconnected and points in different directions. Barreto (2010) argues that the dynamic capabilities view, or approach, has not yet reached the level of a theory. There is no concurrence as to the main construct, congruence, boundaries or contingencies of the concept, since the literature on the subject presents diverging views as to the nature, role, relevant context, creation and development mechanisms, hetero-geneity assumptions, outcomes and purpose of dynamic capabilities. After studying some key literature, we are inclined to agree with Barreto in this aspect. The lack of consensus regarding key features of the concepts make it necessary for us to present the main ideas and definitions regarding dynamic capabilities in order to be able to discuss our view.

2.2.1 Predominant views

Teece et al. (1997) introduced the dynamic capability approach as a fourth approach to competitive strategy, extending the RBV. They focus on wealth creation in private firms that operate in environments of rapid technological change. Teece and colleagues sug-gest that, for such firms, wealth creation relies heavily on honing internal technological, organizational and managerial processes in the firm, rather than focusing on business conduct intended to interfere with rival firms. Therefore, focus should be shifted from competitors to identifying new business opportunities and organizing the firm to em-brace them. In light of the logic of the RBV, this is to be seen as a different kind of ca-pability. The framework that should be used is that of dynamic capabilities. While product development is an ordinary or substantive capability, the ability to adapt the

capability to changing needs is a dynamic capability. As their aim was to complement the RBV with a dynamic feature, they consider dynamic capability as a means to create sustainable competitive advantage – the explanation to why some firms are more suc-cessful than others in changing environments.

Teece et al. (1997) consider resources to be firm-specific, imitable and non-substitutable assets which may contain tacit knowledge, while “undifferentiated inputs” are those that lack those components, such as land and labour. Organizational rou-tines/competences are when firm-specific assets are put into cluster enabling distinctive activities to be performed. Core competences are those central to the firm’s value crea-tion, thus one need to look at products/services to see which is central to the specific business or sector. A strategic capability needs to be honed to a user need, unique and difficult to replicate. If an asset is homogenous and could be bought or sold, it is thus not strategic. Their definition of a dynamic capability is (Teece et al., 1997, p. 516) “The firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments.”

Furthermore, Teece et al. (1997) conclude that, while the different frameworks (Porter’s five forces, strategic conflict, etc.) are complementary, they are in some ways also com-petitive. The trick lies in working out when to use which framework, and they offer some guidance. The role of dynamic capabilities is high-lighted when there is higher market dynamism. Another point made by the authors is that all textbook strategies and choices are not available to the firm at any given time because of the role of routines, path dependencies and organizational learning. Bygones are seldom bygones, they ar-gue, since organizational learning comes from past experience and choices. The evolu-tionary path adopted or inherited will influence how alternatives for future choice are valued. Since the dynamic capabilities rest on paths, asset positions and processes that are firm-specific, they are heterogeneous in nature. However, as they say they merely

“sketched an outline for the dynamic capabilities approach” and suggested their article could form a starting-point for research (Teece et al, 1997, p. 530).

Teece has, however, since the 1997 article, produced two new definitions.

“The ability to sense and then seize opportunities quickly and proficiently.” (Teece, 2000, p. 35)

“Dynamic capabilities can be disaggregated into the capacity (a) to sense and shape opportunities and threats, (b) to seize opportunities, and (c) to maintain competitiveness through enhancing, combining, protecting, and, when necessary, reconfiguring the business enterprise’s intangible and tangible assets.” (Teece, 2007, p. 1319)

Teece seems to have abandoned the term ability to instead state that dynamic capabili-ties disaggregate into a capacity, hereby building a bridge between seeing them as mul-tiple capabilities or one ability/capacity.

Even though the concept has been mentioned previously, the 1997 article put dynamic capabilities on the agenda and has generated a growing flow of research. Alternative conceptualisations emerged, both closely connected to the RBV and more in the light of evolutionary economics, varying significantly in terms of nature, role, context, creation and evolution mechanisms, outcomes, heterogeneity and purpose (Barreto, 2010).

Another noted contribution to the evaluation of the dynamic capabilities framework is provided by Eisenhardt and Martin (2000). Since RBV does not offer an explanation to why firms that have the same bundle of resources are not equally successful, they rea-son, there must be some other factor affecting performance. Because markets are dy-namic, the factor must be that the ability to adjust to change varies amongst firms – firms have unequally effective dynamic capabilities. Their definition of dynamic capa-bilities is

“The firm’s processes that use resources – specifically the processes to integrate, reconfigure, gain, and release resources – to match or even create market change. Dynamic capabilities thus are the organizational and strategic routines by which firms achieve new resources configurations as markets emerge, collide, split, evolve and die.” (Eisenhardt and Martin, 2000, p. 1107)

Strategic decision-making and product development are examples of dynamic capabili-ties provided by Eisenhardt and Martin. The increasingly dynamic features of markets high-light the importance of dynamic capabilities. For a long time they were seen as completely idiosyncratic for each firm and thus were deemed impossible to examine in such a way as to create a theory good enough to apply to every firm. Eisenhardt and Martin (2000) argue that, while there are numerous idiosyncratic features in dynamic capabilities, some key features can be found. They argue that since there is usually a “best practise” in achieving a certain something, the most effective way, some key fea-tures must inevitably arise from firms striving towards the same goals. The presence of key features, they argue, makes it less important in what way a dynamic capability is at-tained, as much as that it is in fact attained (Eisenhardt and Martin, 2000).

According to the logic of the RBV, sustainable competitive advantage occurs when ca-pabilities are not only valuable and rare, but also inimitable, immobile, and non-substitutable (VRIN). Dynamic capabilities are typically valuable. However, Eisenhardt and Martin (2000) argue, they are not sustainable because of equifinality. Since the key features are the same, all successful firms will develop what they see as the same dy-namic capability. It does not matter how they are attained, as long as they are. This ren-ders inimitability and immobility irrelevant to sustained advantage. Dynamic capabili-ties are substitutable because they need to have key features in common to be effective (“best practice”). This, they conclude, suggests that dynamic capabilities as such cannot be the source of sustainable advantage.

Eisenhardt and Martin (2000) state that dynamic capabilities differ with market dyna-mism. While Teece et al. (1997) only applied dynamic capabilities in light of rapidly changing environments; Eisenhardt and Martin (2000) argue that they are also relevant to moderately dynamic markets. Examples of such markets are the chemical, paint and computer mainframe industries where change is linear and predictable. Here, dynamic capabilities rely heavily on organizational knowledge and the motto could be seen as learning-before-doing and dynamic capabilities are complex. In high-velocity markets such as the PC industry, there is more of a learning-by-doing approach to change, as it is nonlinear and less predictable. Dynamic capability is simple, experimental, and itera-tive, focusing on creation of situation-specific knowledge rather than set policies (Eis-enhardt and Martin, 2000).

Eisenhardt and Martin (2000) conclude that dynamic capabilities are casually ambigu-ous, in moderately dynamic markets because they are complicated and difficult to

ob-serve, in high-velocity markets because they are simple. This makes it difficult for com-petitors to identify the cause of the competitive advantage, making it impossible to de-termine what to copy (Daniel and Wilson, 2003).

Winter (2003) defines dynamic capabilities in the following way.

“Those that operate to extend, modify or create ordinary (substantive) capabilities.” (Winter, 2003, p. 991)

He reasons that the ordinary “zero-level” (ordinary) capabilities are those concerned with “how we earn a living today”, while there can be a range of higher levels of capa-bilities “ad infinitum”. Product development is seen as a higher level of capability, since it is focused on finding new ways of reaching new and existing customers. It is what Winter calls a first-order dynamic capability. Another example is the capability allow-ing for openallow-ing new outlets reachallow-ing new geographic markets. This, Winter argues, is proof there is such a thing as dynamic capabilities. However, there can be even higher levels of dynamic capabilities, concerned with for example how product development routines are changed over time. These are referred to by Winter as higher-order dy-namic capabilities.

However, change can come without the involvement or existence of dynamic capabili-ties. Winter (2003) reason change often takes its origin in changes in the external envi-ronment outside the control of the firm, predicted or not, for good or for worse. For Winter, adaptation to such changes is not a matter of dynamic capabilities, but what he refers to as ad hoc problem solving. In contrast to dynamic capabilities, this type of change is not routine, highly patterned or repetitious. The cost aspect of the two differs. Having a dynamic capability but no occasion to use it is a cost burden. And having such a capability and aggressively trying to find occasions might be as much of a mistake. Meanwhile, the cost of ad hoc problem solving goes away when there is no problem to solve. This could also be achieved if people, when there is a problem, step out of their ordinary roles in ordinary capabilities and takes up dynamic capability roles until the problem is solved. However, following Winter’s (2003) definition of a dynamic capabil-ity, these usually require highly specialized people to work full time in that role. Gener-ally, the more patterned and detailed, the more cost, according to Winter (2003). These cost factors, he argues, make it uncertain whether it is advantageous to invest in first-order dynamic capabilities when competitors rely on more cost efficient ad hoc problem solving. The cost of dynamic capabilities must always be regarded in the light of poten-tial benefits. Is the investment going to pay off?

Winter argues that investment in organizational learning may lead to higher-order namic capabilities which can facilitate the creation and modification of first-order dy-namic capabilities. This leads to a more flexible situation, since change may diminish the value of investment in first-order dynamic capabilities if they become obsolete. There is, however, nothing indicating that higher-order capabilities always is superior to lower-order capabilities, since Winter (2003) means that the value of both can be dimin-ished by exogenous change.

Winter concludes that the confusion regarding dynamic capabilities probably comes from it being linked tightly to generalized effectiveness at dealing with change and ge-neric strategies for sustainable competitive advantage. Dynamic capabilities are not

uni-formly or inevitably advantageous. It could be a way of simply raising overall cost if not seen as specific investments where benefits motivate the cost.

“The concept of dynamic capability is a helpful addition to the tool kit of strategic analysis, but strategic analysis itself remains a matter of understanding how the idiosyncratic attributes of the individual firm affect its prospects in a particular competitive context.” (Winter, 2003, p. 995)

Adner and Helfat (2003) studied the corporate effects on profitability and introduced the concept of dynamic managerial capabilities, to help explain differences in managerial decisions and corporate strategy, with the following definition.

“Dynamic managerial capabilities are the capabilities which managers build, integrate, and reconfigure or-ganizational resources and competences. The concept of dynamic managerial capabilities is a direct analogy to more general organizational “dynamic capabilities”.” (Adner and Helfat, 2003, p. 1012)

Adner and Helfat (2003) refer to studies suggesting there is a strong influence of top management on firm response to external change, and high-light the role of individual leadership. They propose that the concept of dynamic capabilities can help to explain differences in the response, and propose that dynamic managerial capabilities are rooted in three underlying factors: managerial human capital, managerial social capital, and managerial cognition, which separately and in combination, influence the strategic and operational decision of managers. They also conducted an empirical study on corporate effects on profitability, the result of which they argue strongly suggest that corporate strategy and managers matter. They conclude, however, by stating that a fuller under-standing of dynamic managerial capabilities awaits further research.

Helfat et al. (2007, p. 4) provided an additional definition of dynamic capabilities “The capacity of an organization to purposefully create, extends, or modify, its resource base”

Zahra et al. (2006) offer, besides a definition of dynamic capabilities, some input on how substantial (ordinary) and dynamic capabilities are related to one another, how the relationship is moderated, the effects of organizational age and how the value of dy-namic capabilities are effected by organizational knowledge and market dynamism. They define dynamic capabilities as

“The abilities to reconfigure a firm’s resources and routines in the manner envisioned and deemed appropri-ate by its principal decision-maker(s).” (Zahra et al., 2006, 918)

They refer to the ability to solve a problem as a substantial capability, the presence of rapidly changing problems as an environmental characteristic and the ability to change the way the firm solves its problem as a dynamic capability – a higher-order capability to alter capabilities. This would make product development a substantial capability and the ability to change product development to comply with a changing environment a dynamic capability. This also means that there is a special dynamic capability for each substantial capability and that the strengths of these capabilities may vary within and between firms. A firm may have a strong dynamic capability regarding product devel-opment at the same time as the ability to reconfigure its accounting systems is weak (Zahra et al., 2006).

Zahra et al. (2006) believe dynamic capabilities exist regardless of market dynamism. However, their potential gain is clearly higher in more dynamic markets. They should

not be confused with environmental factors, as they believe e.g. Teece et al. (1997) has done.

While dynamic capabilities may enable firms to pursue opportunities in new and effec-tive way, Zahra et al. (2006) propose that they do not guarantee success or survival, thus making it important to distinguish between the dynamic capabilities themselves and their potential outcomes, i.e. the quality of the resulting substantial capabilities. There-fore, the management of these capabilities and the role of managerial choice are central to their impact on firm performance. The authors recognize that building and using dy-namic capabilities are costly and potentially will result in losses if they do not lead to the desired outcomes. In contrast to the view of Eisenhardt and Martin (2000), Zahra et al. believe that equifinality is not an obstacle for seeing dynamic capabilities as potential sources of sustainable competitive advantage.

Zahra et al. (2006) make a number of additional propositions. They propose that capa-bilities strengthen with use, but repeated use of substantial capacapa-bilities without change make them harder to change. While repeated use of dynamic capabilities increase the cost of substantial capability utilization, it decreases the cost of future dynamic capabil-ity utilization. Integration skills, major or continual change in the environment, as well as lack of success with current substantial capabilities, increase the tendency to develop and use dynamic capabilities. As to the effect of capabilities on performance, it is mod-erated by organizational knowledge; lower knowledge increases losses while higher in-creases gains.

2.2.2 Discussion on key differences

Barreto (2010) has made an effort to summarize and evaluate the research on dynamic capabilities produced since dynamic capabilities were put on the agenda by Teece et al. (1997). He sees the diverging definitions and the disconnected body of research point-ing in different directions as a major cause for confusion. He discussed differences in terms of the nature, role, relevant context, creation and development mechanisms, het-erogeneity assumptions, outcomes and purpose of dynamic capabilities. As it is impor-tant for our purpose to clarify the different positions, we will follow his example as we discuss the views presented above. Depending on which assumptions and views that are used, we find it probable that different dynamic capabilities will be identified in a par-ticular firm.

The first aspect not agreed upon is the nature of dynamic capabilities. Some authors have followed the path set out by Teece et al. (1997) in regarding dynamic capabilities as abilities, capabilities or capacities (e.g. Helfat et al., 2007; Teece, 2000, 2007; Win-ter, 2003; Zahra et al., 2006). On the other hand, Eisenhardt and Martin (2000) consider them to be specific and identifiable processes where the nature of effective dynamic ca-pabilities varies according to market dynamism. In his 2007 definition, Teece build a bridge between seeing the phenomenon as a single ability or different capabilities, by proposing that the firm’s different dynamic capabilities add up to a capacity. The argu-ment presented by Zahra et al. (2006) that a firm could have better dynamic capabilities regarding certain ordinary capabilities, while others are less effective, suggest that they should be regarded in plural and related to the corresponding ordinary capability.

The next topic is what role dynamic capabilities should be considered to have. Some au-thors are inclined to build on the reasoning of the RBV, using definitions including the

ability to adapt the resource base and/or capabilities (Teece et al., 1997; Eisenhardt and Martin, 2000; Winter, 2003; Helfat et al., 2007). Winter (2003) has taken a position ar-guing for a system of “zero-level” capacities (concerned with the day-to-day short-term survival) and higher-level capabilities needed to administer them. Product development is considered as a first-level dynamic capability while there are even higher levels. Win-ter’s “zero-level” capabilities correspond to what others refer to as ordinary, substantive or substantive capabilities (e.g. Eisenhardt and Martin, 2000; Zahra et al., 2006). In a similar manner, Zollo and Winter (2002) talk about operational routines and dynamic capabilities. Regardless of the vocabulary, we believe most authors have described a similar situation, where dynamic capabilities are at a higher, and certainly more ab-stract, level than resources/ordinary capabilities/operational routines/competences, which are more concerned with day-to-day activities. We will use the phrase “ordinary capabilities” in our analysis and conclusions.

Regarding the relevant context of dynamic capabilities, Teece et al. (1997, p. 509) pro-posed that

“Our approach is especially relevant in a Schumpeterian world of innovation-based competition, price/performance rivalry, increasing returns, and the “creative destruc-tion” of existing competences.”

There are diverging views whether the external environment matter, and if so, how. Teece et al. (1997) introduced the concept in the context of rapidly changing environ-ments. According to Eisenhardt and Martin (2000), dynamic capabilities are relevant in both high-velocity (corresponding to the phrase “hypercompetitive market conditions”) and moderate dynamic markets (although in different ways). However, Eisenhardt and Martin’s (2000) definition include creating change. This, one could argue, would make dynamic capabilities relevant in all markets, since that would make firms able to force change in their aim towards achieving competitive advantage. Zahra et al. (2006) state that the dynamic features of the market is not in itself a necessary component. Zollo and Winter (2002) agree with this view, stating that dynamic capabilities exists even in low rates of change, however more valuable in more dynamic markets. Others, e.g. Maka-dok (2001), go so far as to imply that the external environment is irrelevant in the con-text of this argumentation.

We believe this difference is something that follows what merit is given by each author to “ordinary capabilities”. If they are seen as nothing more that factors of production, some kind of higher element is required for long-time survival even in more static mar-kets. We suggest that there is need for adaptation in every industry in order to achieve long-term survival. However, the ability is obviously more valuable where markets are more dynamic and change has a higher impact, as pointed out by e.g. Zahra et al. (2006) and Zollo and Winter (2002). Eisenhardt and Martin’s argument could be valuable to emphasize that dynamic capabilities look different and may be simple or complex. For the sake of them existing or not, Makadok has a point in not including market dyna-mism.

The next topic on which researchers disagree is regarding the creation and development mechanisms of dynamic capabilities. Eisenhardt and Martin (2000) believe that repeated practice (and consequent experience), past mistakes and the pace of experience are likely main mechanisms in developing dynamic capabilities. Zollo and Winter (2002) highlight the role of learning mechanisms and the importance of deliberate cognitive

processes such as knowledge articulation and codification, in addition passive experi-ence accumulation. The more deliberate approach is more effective where there is less experience relevant to the task at hand. Zahra et al. (2006) also stated trial and error, improvisation and imitation. Several authors argue that the improvisational by-doing or trial and error approach is more relevant for new ventures, while learning-before-doing from experience are more relevant for established firms (e.g. Eisenhardt and Martin, 2000; Zahra et al., 2006).

Another key aspect is the diverging heterogeneity assumptions proposed regarding dy-namic capabilities. As our study only include one firm, namely Jönköping Airport, our data will not be adequate for commenting on the validity of the different heterogeneity assumptions. However, there is still the possibility to make some more general remarks. In this aspect, authors are divided in two diverging views. There are those who believe dynamic capabilities are essentially firm-specific (e.g. Teece et al., 1997), while others believe there are commonalities (e.g. Eisenhardt and Martin, 2000). Those relating dy-namic capabilities closely to the RBV are inclined to be in the former category. The im-portance of path dependencies on firms’ investment and commitment history is an ar-gument for regarding them idiosyncratic (Barreto, 2010). This is in stark contrast of Eisenhardt and Martin’s (2000) argument that “best practices” lead to essential com-monalities, however idiosyncratic in details. Since several authors seem to consider product development (which is a well researched area where there should be numerous commonalities) a dynamic capability, one could argue that the latter view bears more merit.

One of the most important aspects to management practice where there are diverging views is regarding the outcomes of dynamic capabilities. Teece et al. (1997, p. 509) stated that “[t]he approach endeavours to explain firm-level success and failure. We are interested in both building a better theory of firm performance, as well as informing managerial practice.” They are joined by authors taking positions for a direct effect of dynamic capabilities on performance (Teece et al., 1997; Makadok, 2001; Zollo and Winter, 2002; Teece, 2007). Teece et al. (1997) introduced it as a framework intended to explain firm-level success and failure, competitive advantage and private wealth crea-tion. More recently Teece (2007, p. 1320) stated that “the ambition of the dynamic ca-pabilities framework is nothing less than to explain the sources of enterprise-level com-petitive advantage over time” and “[that] dynamic capabilities lies at the core of enter-prise success (and failure)”. In contrast to this position, others argue for an indirect link. Eisenhardt and Martin (2000) consider dynamic capabilities as necessary but not sufficient conditions for competitive advantage. Zahra et al. (2006) mean that the value is only as high as the quality of the resulting capabilities and add that they may actually have a negative influence on performance when utilized unnecessarily and under the wrong cause-effect assumptions. Winter’s (2003) argument concerns the cost aspect. He believes that dynamic capabilities involve substantial costs and are without any benefit when they are not utilized. He argues that it often could be better to rely on more cost efficient ad hoc problem solving.

Last but not least, there have been some diverging statements as to the purpose of dy-namic capabilities: e.g. to address rapidly changing environments (Teece et al., 1997), to match and create market change (Eisenhardt and Martin, 2000), pursuing improved effectiveness (Zollo and Winter, 2002), reconfiguration of interest according to the de-sires of the principal decision makers (Zahra et al., 2006) and purposeful change of

re-source base (Helfat et al., 2007). These essential differences highlight the early state the emerging framework still resides in.

2.2.3 Examples

In order to make the discussion regarding dynamic capabilities easier to grasp, we pre-sent some examples given by the researchers prepre-sented above, as well as some examples of dynamic capabilities identified in studies of firms.

According to Eisenhardt and Martin’s (2000) definition, there are different categories of dynamic capabilities. There are those that integrate resources, such as product develop-ment and strategic decision-making skills; those focused on reconfiguring resources within the firm, such as recreation and brokering routines; and those concerned with the gain and release of resources, such as knowledge creation routines and alliancing and acquisitions routines. Teece et al. (1997, p. 518) talk about organizational and manage-rial processes which “have three roles: coordination/reconfiguration (a static concept); learning (a dynamic concept); and reconfiguration (a transformational concept).” Reconfiguration processes include consolidation, which usually take place following an acquisition or merger (Bowman and Abrosini, 2008). It may concern core activities such as marketing, selling and manufacturing at the centre, as well as support activities in SBUs. Bowman and Abrosini (2008, p. 295) points out six modes of corporate re-source creation from the basic dynamic capabilities by which the firm alter its rere-source base

 Reconfiguration of support activities (consolidation at the centre of the firm)

 Reconfiguration of core processes (such as marketing, selling and manufacturing to achieve scale economies)

 Leverage of existing resources (for example by extending the scope of resources such as brand and culture to different SBUs, what Teece et al. (1997) refer to as replication)

 Encouraged learning (by allowing spending of time and resources on R&D, en-couraging experiments and tolerating failure etc.)

 Provoked learning (by tough performance control SBUs may only create advan-tage trough the elimination of organizational slack, which may create a cost ad-vantage)

 Creative integration (by integrating resources such as managers in multi-functional teams in product development, or coordinating external resources) Which dynamic capabilities are central for a firm depends on the environment and dy-namism of the industry in which it operates (e.g. Eisenhardt and Martin, 2000). For ex-ample, a study of the role of dynamic capabilities in e-business transformation by Daniel and Wilson (2003), using the definition of dynamic capabilities provided by Eis-enhardt and Martin (2000), revealed dynamic capabilities such as

 A rapid cycle of strategy development and Implementation

 The skill to develop and critically evaluate business cases incorporating substan-tial alterations to the business model with uncertain information

 The ability to build commitment to a strategic change both within the organiza-tion and with other stakeholders

 Iterative development of customer value propositions melding planned and ex-periential approaches

 Ability to reconfigure the sales/service process to exploit new channel capabili-ties

 Ability to integrate new and existing IT systems without stifling innovation

 Tautly coupled e-business and corporate strategy formulation

 Ability to integrate new and existing channels to offer multi-channel service Clearly, some of these capabilities would not be central for a firm in a completely dif-ferent industry, while others are central for most firms. As mentioned above, Eisenhardt and Martin (2000) present strategic decision making, product development, alliancing and knowledge creation as examples. In our view, these are good examples of dynamic capabilities required in most firms, showing substantial commonalities.

2.3

Theoretical emphasis

The purpose of this thesis is to examine what dynamic capabilities can be found at a specific firm (Jönköping Airport) and how the findings correlate to the different views presented above.

The logic of the RBV will provide the foundation of our reasoning. Possessing the re-source base with the best environmental fit will give the firm a competitive advantage. The dynamic capabilities framework provides a further aspect to this logic, adapting it to the increasingly dynamic features of markets (Teece et al., 1997). However, as can be derived from the presented views on dynamic capabilities, no consensus as to their defi-nition, role and use can be said to exist as of yet. As a consequence, we will approach the empirical data with an open mind without first “take sides” regarding the nature, role, context etc. of the concept. However, some commonalities between the predomi-nant views exist and make the concept easier to grasp. First of all, the researchers re-ferred to all agree there is such a thing as dynamic capabilities.

According to Zahra et al (2006), the single largest source of confusion regarding dy-namic capabilities is whether the term refers to substantial capabilities in volatile envi-ronments, or the ability to alter substantial capabilities (regardless of the degree of mar-ket dynamism). All authors referred to above, however, seem to agree on the fact that there is a distinction between dynamic capabilities and the more traditional ordinary ca-pabilities.

While the question of where the line should be drawn is being debated, many seem to agree on a view of the relationship between ordinary and dynamic capabilities as pre-sented by Zahra et al. (2006). Accordingly, we will define ordinary capabilities as the firm’s ability to solve problems, while dynamic capabilities are the abilities to adapt and evolve such abilities. In turn, (ordinary) capabilities are built by the bundling of re-sources and competences (e.g. Makadok, 2001; Johnson et al., 2008).

Whether there are different levels of dynamic capabilities or not (Winter, 2003), or if they should be called dynamic capabilities or dynamic managerial capabilities (Adner

cal results give rise to the question regarding levels, this aspect will be discussed in the analysis.

Common for all definitions referred to are that they talk about capabilities in plural. Thus, it is not a single capability that applies regardless of what ordinary capability is in question, but one dynamic capability for each ordinary one (Eisenhardt and Martin, 2000). A firm can have strong dynamic capabilities regarding certain ordinary capabili-ties, while others are weaker (Zahra et al., 2006). However, Teece’s (2007) definitions are more in the line of talking about the ability that different dynamic capabilities add up to. This might be the bridge between those who see them as merely specific proc-esses and those believing them to be more closely related to generic strategies.

Eisenhardt and Martin further state that there are different types of dynamic capabilities. There are those that integrate resources (such as product development when and strate-gic decision-making), those that are focused on reconfiguration of resources within the firm (such as routines of replication and brokering of knowledge-based resources) and those related to the gain and release of resources (such as knowledge creation routines as well as alliance and acquisitions routines) (Eisenhardt and Martin, 2000). They may involve processes of coordination, replication, learning and reconfiguration (Teece et al., 1997). We have chosen to focus on the types high-lighted by the authors and pre-sented in the examples section above, as it helps us approach the empirical data. Our aim is to identify such capabilities by interviewing Airport managers.

We have chosen to focus on the aviation industry and particularly airport management. We want to determine what dynamic capabilities are central for airport management in general and regional Swedish airports in particular. To do so we need to identify the sector-specific factors, key features and challenges of airport management in a Swedish regional airport. If we can identify the problem areas, we will find the most important capabilities and areas of change.

3

Method

“When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps.” ~ Confucius

3.1

Choice fo method

In this chapter, our method to conduct this study is presented. It describes why we have chosen the method and how we have approached the data collection via a documentary review and by interviews. In the chapter we will discuss the implications of the choices we have made. The choice of Jönköping Airport as the object of study happened by chance. We had previously got a good connection enabling us to ask them for inter-views, and had established a degree of trust. We had also some previous knowledge about the organization which helped us approach it with a dynamic capabilities ap-proach.

3.2

Qualitative study

In this study we use a qualitative method. Since dynamic capabilities is not an espe-cially well defined phenomena, our main mean of gathering information is by using in-terviews, and there is a lack of measurable data (Merrian, 1998).

If we were using a quantitative method, we would not have be able to go that deep into the specific context regarding dynamic capabilities in airport management in, since it is virtually impossible to define them by using quantifiable means.

Since all airports are different and we only focused on one specific research object, Jönköping Airport, our studies cannot be applicable on airports in general. However, our documentary review will provide a more general approach on airport management. We have divided our empirical presentation in two parts - documentary review and in-terviews. The documentary review consists of information about airport management, the airport sector and the aviation industry collected from the literature. This will form a background and act as a bridge between the theoretical presentations via the interview towards our analysis.

3.3

Data collection

According to Ghauri and Grönhaug (2005), data are carriers of information that needs to be interpreted in order to become information. The documentary review was chosen to form a broader background for our research subject, and provide us with knowledge suitable for formulating relevant questions, that could link airport management to dy-namic capabilities. The interviews were conducted in order to retrieve the information necessary to identify dynamic capabilities at Jönköping Airport. The data collected from our interviews and documentary review will serve as a vital component in our analysis, as it provides some real-world examples of dynamic capabilities in a regional airport.

3.3.1 Documentary review

In order to get an understanding for the environment in which airports operate, we de-cided to do a documentary review. This part contains a presentation about the major drivers for change in the airport sector, marketing strategies and organizations of

air-ports, as well as a brief history of the Swedish aeronautical sector. This part is formed as a bridge between the theoretical framework where the concept of dynamic capabili-ties is presented and the interviews conducted with airport managers. This section will also serve as a background to the analysis where we will identify dynamic capabilities. We approached the literature using key words as “airport management”, “competition” and identified some relevant articles.

3.3.2 Interviews

Eisenhardt and Martin (2000, p.1114) wrote “Sometimes even the managers themselves do not know why their dynamic capabilities are successful. For example, the CEO of a major biotech firm told one of the authors, “we have the best research process in the industry, but we don’t know why.””

This quote shows the difficulties to identify dynamic capabilities by simply asking managers at a particular firm, especially as the term do not appear to be used in practice as of yet. One has to ask more general questions and engage in open discussions regard-ing the subject in order to obtain the necessary information.

According to Merrian (1998), interviews are often the main source of information needed for understanding the phenomenon in a qualitative study. We have interviewed Marketing Manager Herman Larsson and Operations Manager Stefan Karlsson, as well as Airport General Manager Carla Whelan at Jönköping Airport. We met Herman Lars-son two times, Stefan KarlsLars-son one time, and Carla Whelan on a number of occasions. The first interviews were unstructured in order for us to get a first grasp of the area of Airport Management and how we could find dynamic capabilities from that context. The resulting main interviews are the ones presented in the “interview” section below, however, some elements of information retrieved at other occasions might be found here as well. These interviews was conducted in a semi-structured way where our list of questions, or interview guide (Merriam, 1998), contained topics and specific questions which we would like the interview to cover. The use of this technique enables us to pur-sue specific topics that we could not anticipate from our interview guide. By using a mix of specific and more general question, we got a broad source of information as well as more in depth knowledge about certain topics, that we identified as specifically im-portant. Another factor that influenced our choice of a semi-structured interview ap-proach is that dynamic capabilities are causally ambiguous (Eisenardt and Martin, 2000). This makes them hard to find by asking predetermined questions as it may be not possible even for managers themselves to be aware of all aspects of a dynamic capabil-ity. Merriam claims that less structured formats assume that individual respondents de-fine the world in unique ways thus the questions have to be more open-ended than in a more formal interview.

Our focus during the interviews was to determine which processes and capabilities were engaged in the process of coping with change.

The interviews were conducted at Jönköping Airport and by email with Carla Whelan due to some external events. The last interview, and first and only with Stefan, was conducted as a group interview together with Herman Larsson due to their tight sched-ule. The interviews started with a short briefing about our subject and what we wanted them to focus on. We told them to speak as freely as they liked and that was is our task to pick the necessary information from what they said. The interviews were recorded in