SOAS Research Online

Abstract

Firms are the engine of economic development. Extant literature shows that firms are heterogeneous in learning and capability building, and more so in their growth orientation and strategic capabilities to sense and exploit opportunities. Using the dynamic capabilities approach, particularly the framework set out by Teece (2007, 2012, 2014, 2019), this study examines how firms address expansion opportunities of scale and scope in Egypt’s development context. Employing an inductive theory building from cases method (Eisenhardt, 1989; Eisenhardt & Graebner, 2007), findings show that firms’ differential behaviour concerns three areas: action orientation, learning, and engaging with uncertainty. Based on three influential theories of psychology: the approach-avoidance theory, the goal orientation theory, and the attachment theory, the thesis advances four propositions. The first proposition aims to disentangle dynamic capabilities from the willingness to act under uncertainty. Dynamic capabilities are concerned more with what makes the action effective. The second proposition introduces a new construct, ‘belief-enhanced capabilities’, to help distinguish dynamic from ‘practice-enhanced’ operational capabilities. The third proposition identifies the belief in knowing, as opposed to a belief in possessing knowledge, as an important factor that drives deliberate and effective learning. The fourth proposition identifies the belief in exploring, as opposed to a belief in controlling, as an important factor that drives extensive exploration of novel alternatives. The advanced argument is that those two beliefs (in knowing and exploring) represent antecedents of dynamic capabilities. The thesis concludes by identifying four belief-based behavioural profiles that arguably explain decision-makers’ differential attitudes in addressing expansion opportunities in a development context. This profiling helps set the stage for designing policy interventions that encompass a behavioural dimension.