Dynamic Capabilities : A multiple case study on successful entrepreneurs in South Africa

Abstract: This thesis applies the dynamic capabilities framework to identify and examine the dynamic capabilities creating sustainable competitive advantage in the context of a developing economy. The attempt to explain sustainable competitive advantage by reacting to environmental changes has at all times been a highly discussed topic for research. The globalized and unstable environment often found in developing areas increases the need for more dynamic models when analyzing how to gain competitive advantage. To meet this demand, the dynamic capability framework introduces a very promising effort to better understand superior enterprise performance over time.   This thesis intends to increase the understanding of the role of dynamic capabilities and analyze the knowledge of successful entrepreneurs in small and medium enterprises effectively can outperform competition in the unstable South African environment. More specific, the focus is mainly on strategic decisions and the empirical study consists of qualitative case studies of four successful entrepreneurs. This data is collected through semi-structured interviews in Cape Town. The strategic decisions are first analyzed within each case – applying selected parts of an existing framework – and thereafter a cross-sectional analysis is done in order to find both the similarities and differences between entrepreneurs. The findings suggest that all entrepreneurs in the analysis have the characteristics and skills to create dynamic capabilities within the process of sensing, seizing and reconfiguring opportunities. Furthermore, three main factors – maintaining a consistent long-term vision, placing the customer need in focus, and using the competence and resources wisely – are identified as features, which made these four entrepreneurs successful and helped them sustain the superior firm performance over time. In addition, these three factors must be adaptable to rapid and unexpected changes. Overall the findings suggest that when analyzing competitive advantage, the sensing, shaping and reconfiguration of opportunities must be seen as constant.  Lastly, the complete process containing different fundamental classes of dynamic capabilities should not be separated.   The study demonstrates the relevance of the dynamic capabilities approach in identifying competitive advantage, which is based on the firm’s dynamic capabilities. The fact that small and medium enterprises are important for the economic growth in developing countries makes this study an important field for research.