Looking back to look forward: a systematic review of and research agenda for dynamic managerial capabilities

Heubeck, Tim Article — Published Version Looking back to look forward: a systematic review of and research agenda for dynamic managerial capabilities Management Review Quarterly Provided in Cooperation with: Springer Nature Suggested Citation: Heubeck, Tim (2023) : Looking back to look forward: a systematic review of and research agenda for dynamic managerial capabilities, Management Review Quarterly, ISSN 2198-1639, Springer International Publishing, Cham, pp. 1-45, https://doi.org/10.1007/s11301-023-00359-z This Version is available at: https://hdl.handle.net/10419/305784 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Vol.:(0123456789) Management Review Quarterly https://doi.org/10.1007/s11301-023-00359-z 1 3 ORIGINAL PAPER Looking back tolook forward: asystematic review ofandresearch agenda fordynamic managerial capabilities TimHeubeck1 Received: 14 March 2023 / Accepted: 21 June 2023 © The Author(s) 2023 Abstract Given the complexities of today’s hypercompetitive economy and challenges imposed by recent crises, managerial capabilities have become critical for realizing strategic change. Dynamic managerial capability (DMC) theory offers a useful theoretical lens for analyzing how managers make strategic decisions to build and sustain competitive advantages in dynamic environments. Despite receiving less attention than the broader field of dynamic capabilities, the existing body of research has reached a point where a comprehensive synthesis of the current state of knowledge is warranted. Past reviews of DMCs are either outdated or do not comprehensively examine this multifaceted construct, making a review of research highly necessary and timely. This review systematically synthesizes 54 empirical studies on DMCs. It contributes to the literature by systematically synthesizing DMC research and summarizing these findings into a multi-level framework. This review demonstrates that research on DMCs has significantly progressed over the years, for example, through conceptual expansions, new levels of analysis, or methodological advancements. The developed framework provides an overview of the nomological network surrounding DMCs. A systematic historical analysis of research limitations and recommendations offers a rich research agenda for DMCs. These findings guide scholars and managers by overviewing the foundations of DMCs, demonstrating why strong DMCs are critical for achieving sustainable competitive advantage, and how this theory applies to management practice. Altogether, this review presents an up-todate review of DMC literature by systematically synthesizing its developments— looking back—and pointing to central research opportunities—looking forward. Keywords Dynamic managerial capabilities· Human capital· Managerial cognition· Social capital· Strategic change· Systematic literature review * Tim Heubeck tim.heubec[email protected] 1 Faculty ofLaw, Business, andEconomics, Chair ofInternational Management, University ofBayreuth, Universitaetsstrasse 30, 95447Bayreuth, Germany T.Heubeck 1 3 JEL Classification M10· M12 1 Introduction Dynamic managerial capability (DMC) theory, as an extension of dynamic capability (DC) theory, offers a valuable lens for analyzing how managers from different hierarchical levels affect strategic change in dynamic environments (Adner and Helfat 2003; Helfat and Martin 2015a). DMCs refer to “the capabilities with which managers build, integrate, and reconfigure organizational resources and competences” (Adner and Helfat 2003, p. 1020). The strength of these capabilities is critical for competitive advantages because managers differ in their ability to make strategic decisions and orchestrate the firm’s asset portfolio (Adner and Helfat 2003; Helfat and Martin 2015a). DMCs are a multifaceted construct composed of three interdependent subcomponents: managerial human capital (Becker 1983; Castanias and Helfat 1991, 2001), managerial social capital (Geletkanycz etal. 2001; Burt 2009), and managerial cognition (Hambrick and Mason 1984; Huff 1990; Walsh 1995; Johnson and Hoopes 2003). While the empirical research on DMCs is growing, the field remains highly fragmented, with various approaches used to study these managerial capabilities. The lack of a systematic synthesis of the theoretical and methodological developments may have hindered the field’s progress. Existing reviews are either outdated (e.g., Helfat and Martin 2015a, covering the studies until 2013), limited in scope (e.g., George etal. 2022, focusing on entrepreneurship), or assess the DMC subcomponents in isolation (e.g., Durán and Aguado 2022a, b; Durán etal. 2022, focusing on human, social, or cognitive capital). However, research has significantly progressed since these reviews, studying DMCs in various settings, assessing their impact on outcomes beyond financial performance, and illuminating the interactions between the underlying managerial resources. Additionally, ongoing digitalization has emerged as a crucial influence on the appropriability and effectiveness of DMCs (Bendig etal. 2022; Heubeck 2023). Due to these developments, the literature lacks a comprehensive and systematic synthesis of the current state of research, which is also integral to guide future research and derive management implications. This review aims to fill this research gap through a systematic analysis of DMC research. A holistic and multi-level framework is developed based on a systematic literature review (SLR) of 54 empirical studies. Although nonempirical articles may also offer valuable insights, reviewing empirical articles is common practice in literature reviews (e.g., Jasti and Kodali 2014; Hueske and Guenther 2015; Winschel and Stawinoga 2019), as they provide objective evidence for theoretical assumptions, advance current knowledge through systematic and rigorous methods, and help identify critical research gaps (Flynn etal. 1990; Becheikh etal. 2006; Kuckertz and Brändle 2022). Following previous research (e.g., Schilke etal. 2018; Evers etal. 2023), the selected studies are analyzed by assessing the current state of knowledge along five lines of inquiry: (1) How are DMCs defined, and which theories/concepts are integrated (theoretical/conceptual background)? (2) At which level and hierarchical 1 3 Looking back tolook forward: asystematic review ofandresearch… echelon are DMCs investigated (level of analysis)? (3) In which dynamic contexts are DMCs analyzed (element of dynamism)? (4) Which research methods, data, and operationalizations are used to study DMCs (empirical methods)? (5) Which characteristics, antecedents, outcomes, mechanisms, and contingencies of DMCs are studied (characteristics/relationships)? These findings were used to develop a holistic and multi-level DMC framework, which clarifies their underlying characteristics and contextualizes these capabilities. This review also aims to forge pathways for future DMC research, leading to two final research questions (RQs): (6) What are the limitations of existing DMC research? (7) Where and how can future research advance DMC research? This review contributes to research by systematically synthesizing what DMC research has achieved since Adner and Helfat’s (2003) seminal article. The findings demonstrate that the field is far from uniform, with scholars analyzing DMCs using various methodologies and conceptualizations. Nonetheless, the findings show that DMC theory is a fertile perspective for (1) analyzing the causal chain through which managers impact strategic change; (2) determining which managerial capabilities are needed to cope with competitive pressures and discontinuous change; and (3) assessing the role of managers from various hierarchical levels. The derived framework can guide future researchers by holistically capturing the conceptualization of DMCs and the nomological network surrounding these capabilities. By looking back at DMC theory through the derived framework, research can now look to the future of DMCs. The subsequent historical analysis of limitations and research recommendations delivers a comprehensive outlook on the field. Besides guiding research, this review offers valuable advice to management practitioners, for example, regarding the staffing of key management positions or the specific managerial capabilities that benefit strategic decision-making. This article presents an up-to-date and holistic review of empirical DMC research by systematically synthesizing its developments and pointing to central research opportunities. 2 Theoretical background 2.1 From dynamic capabilities todynamic managerial capabilities Teece and colleagues’ (1997) DC theory builds on the resource-based view (e.g., Wernerfelt 1984; Barney 1991) in conjecturing that firms need to possess DCs to modify their current asset portfolio and processes in response to changing conditions (Di Stefano etal. 2010; Schilke etal. 2018). Specifically, DCs refer to a firm’s ability “to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments” (Teece etal. 1997, p. 516). They fundamentally differ from operational capabilities (Leemann and Kanbach 2021) that secure the “operational functioning of the firm” (Cepeda and Vera 2007, p. 427). While operational capabilities are required in relatively stable environments to sustain current operations, induce efficiency gains, and reduce process variations (Dosi etal. 2000; Zollo and Winter 2002; O’Reilly and Tushman 2008), DCs are required T.Heubeck 1 3 for strategic change in dynamic environments because they allow firms to develop, adjust, and build ordinary capabilities (Winter 2003; Schilke 2014; Leemann and Kanbach 2021). In today’s highly globalized digital economy, DCs are critical for firms to respond to environmental changes, address new demand conditions, or cope with technological developments (Helfat etal. 2007; Martin 2011; Teece 2014). As a result, DCs have garnered interest from various management disciplines (Helfat et al. 2007; Schilke etal. 2018). Teece’s (2007) refinement of the underlying DC microfoundations, including sensing opportunities and threats in the environment, seizing those opportunities, and reconfiguring the firm’s asset portfolio, has continued to shape management research (Teece 2014; Matysiak etal. 2018) and been subject to further refinements (e.g., Leemann and Kanbach 2021). Although DC theory remains the dominant lens to analyze strategic behavior as the foundation for competitive advantages under changing conditions (Teece 2014; Fainshmidt etal. 2016; Arndt etal. 2022), it fails to explicitly consider the agency of strategic decision-making due to its focus on organizational capabilities (Felin and Foss 2005; Augier and Teece 2009; Aguinis etal. 2022). DC theory also neglects that organizations are essentially social systems composed of individuals that make strategic decisions (Felin and Foss 2005; Felin etal. 2012; Kurtmollaiev 2020). Adner and Helfat (2003) introduced the DMC theory to complement the coarsegrained DC perspective. DMC theory focalizes the managerial impact on strategic change, extending previous theorizing by explicitly considering the role of individual actors and their capabilities, social interactions, and agency in making strategic decisions. The main difference between managerial and organizational DCs is that the former always involve at least some managerial intent in their development and deployment, while the latter develop largely automatically without specific intention (Martin 2011; Beck and Wiersema 2013). Compared to DCs, DMCs bridge the external environment and individual-level management capabilities with greater deployment flexibility in responding to market dynamics than firm-level capabilities (George etal. 2022). Central to DMC theory is the managerial role in orchestrating the firm’s asset portfolio (Adner and Helfat 2003; Sirmon and Hitt 2009). Following the ideas of contingency theory (e.g., Lawrence and Lorsch 1967; Van De Ven and Drazin 1985), strong DMCs are necessary to achieve a ‘fit’ between the search/selection of resources and their configuration/deployment (Helfat etal. 2007; Sirmon etal. 2007; Sirmon and Hitt 2009). Especially in dynamic environments, DMCs are consequently essential for managers to systematically modify the firm’s asset portfolio, efficiently pool assets to generate superior value, and mitigate the deterioration of existing assets (Sirmon and Hitt 2009; Dong etal. 2009; Fainshmidt etal. 2017). DMC theory offers a micro-level perspective on strategic change by focalizing the impact of individual managers on organizational decision-making and behavior (Abell etal. 2008; Kor and Mesko 2013; Helfat and Martin 2015a). It fundamentally argues that the firm’s adaptability hinges on the capacity of its management to orchestrate the asset portfolio in response to environmental change (Adner and Helfat 2003; Sirmon and Hitt 2009). Figure1 provides a visual summary of the preceding arguments as the basis for the subsequent chapters. 1 3 Looking back tolook forward: asystematic review ofandresearch… 2.2 The underlying components ofdynamic managerial capabilities Three distinct managerial resources underpin DMCs: human capital, social capital, and cognition (Adner and Helfat 2003). Although these capabilities are shaped by managers’ innate abilities and past experiences, they fundamentally differ in their characteristics (Castanias and Helfat 1991; Beck and Wiersema 2013). Human capital pertains to the current managerial capabilities, social capital offers access to external resources and capabilities, and cognition captures the managerial capacity to develop new or modify existing capabilities (Helfat and Peteraf 2015; Razmdoost etal. 2020). DMCs are a multifaceted construct that incorporates the interactions between these three resources as a source of heterogeneity between managers and organizations (Helfat and Martin 2015b; Heubeck and Meckl 2022a). 2.2.1 Managerial human capital Managerial human capital is the first resource underlying DMCs, which managers acquire through formal training (e.g., investments in education) and informal training (e.g., on-the-job or trial-and-error-learning) (Mintzberg 1973; Becker 1983; Castanias and Helfat 2001). Managers differ in their human capital “both in the types of skills individuals possess and the degree of skillfulness” (Castanias and Helfat 1991, p. 160). In other words, human capital provides the necessary skill set to make and implement strategic decisions based on restructuring the firm’s asset portfolio (Bailey and Helfat 2003; Sirmon etal. 2007; Helfat and Martin 2015a). Underlying managerial resources Underlying processes Corporate and competitive strategies Dynamic managerial capabilities Human capital Knowledge and skills Social capital Social networks Cognition Cognitive templates and processes Origins of managerial resources Innate abilities Past experiences Asset orchestration Asset configuration and deployment Asset search and selection Organizational performance Fig. 1 Sources and effects of dynamic managerial capabilities (based on Adner and Helfat 2003; Beck and Wiersema 2013) T.Heubeck 1 3 Managers possess different types of human capital, which can be categorized into four types according to their specificity and transferability: firm-specific, industryspecific, related-industry, and generic human capital (Castanias and Helfat 2001). Generic human capital from general education has the broadest applicability and greatest transferability, making it valuable across organizations and inferring greater flexibility in unknown or complex situations. Conversely, firm-specific human capital is highly specialized knowledge developed, for example, during tenure at a specific firm. Therefore, it represents the most specific and least transmissible type of human capital (Castanias and Helfat 1991, 2001; Bailey and Helfat 2003). 2.2.2 Managerial social capital Managerial social capital is the second component of DMCs and refers to the benefits available to managers through their formal and informal relationships with internal and external actors (Adler and Kwon 2002; Adner and Helfat 2003; Burt 2009). Social capital has a structural, relational, and cognitive dimension (Nahapiet and Ghoshal 1998). The structural dimension refers to the general characteristics of the network, while the relational dimension describes the nature of social relationships, and the cognitive dimension depicts the psychological characteristics of the network, such as values or norms (Nahapiet and Ghoshal 1998; Tsai and Ghoshal 1998). Social capital is critical for the managerial ability to orchestrate assets and access external resources and capabilities (Adler and Kwon 2002; Beck and Wiersema 2013). It can also spur learning processes by facilitating the exchange of complementary and non-redundant assets (Kogut and Zander 1992; Blyler and Coff 2003). Although social capital can reinforce human capital, the former requires repeated interactions and shared experiences, while the latter primarily develops through individual experiences (Beck and Wiersema 2013; Kwon and Adler 2014). Because organizations are social institutions, social capital and its benefits to managers and organizations are critical for realizing strategic change (Granovetter 1985; Blyler and Coff 2003; Burt 2009). 2.2.3 Managerial cognition The final DMC subcomponent, managerial cognition, refers to “managerial beliefs and mental models that serve as the basis for decision making” (Adner and Helfat 2003, p. 1021). Managerial cognition differs from human and social capital in that it comprises (1) mental processes that determine how managers gather, interpret, categorize, and store information, such as alertness and learning (Walsh 1995; Ashcraft 2006; Colman 2015); and (2) mental structures that inform decision-making with abstractions of complex choice situations and serve as a reference for sense-making, such as references frames or heuristics (Neisser 1976; Schneider and Angelmar 1993; Walsh 1995; Durán and Aguado 2022b). Cognition is an innately ambiguous resource for managers. On the one hand, managers cannot make entirely rational choices due to finite information processing capacities (Walsh 1995; Adner and Helfat 2003; Helfat and Peteraf 2015). Outdated mental models can cause biased outcomes because they inform decision-making 1 3 Looking back tolook forward: asystematic review ofandresearch… with “impoverished views of the world” (Gioia, 1986, p. 346). On the other hand, cognition also places less strain on information processing capacities and expedites information processing by simplifying decision-making processes. Therefore, managerial cognition is an essential prerequisite for swift decision-making in dynamic environments (Walsh 1995), yet managers must possess considerable cognitive skills to continuously adapt their cognitions to transformed environmental conditions (Walsh 1995; Tripsas and Gavetti 2000). 2.2.4 Interactions betweendynamic managerial capabilities DMCs are the conglomerate of managerial human capital, social capital, and cognition (Adner and Helfat 2003). Human and social capital are highly interrelated, as managers can acquire industry-specific or related-industry human capital by serving as directors on a firm’s board in the same or a related industry (Castanias and Helfat 2001). Because social capital increases the exchange of information and knowledge, it can also boost human capital (Coleman 1988; Adner and Helfat 2003). Conversely, high levels of human capital can increase social capital by making managers desirable business partners (Castanias and Helfat 2001). In addition, extensive human capital may provide managers with a broader cognitive skillset, expand their horizons, and update their worldviews (Melone 1994; Beck and Wiersema 2013). In return, greater cognitive skills may facilitate learning processes that benefit human capital (Adner and Helfat 2003; Ployhart and Moliterno 2011; Helfat and Martin 2015a). Finally, managerial social capital and cognition also interact in shaping DMCs. Social capital allows managers to expand their cognitive skillset by gaining experiences in unfamiliar environments. Further, social capital shapes cognition by infusing decision-making processes with socially-constructed worldviews (Fiske and Taylor 1984; Adner and Helfat 2003). Social capital facilitates individual cognitions to grow into shared cognitions—so-called dominant logics—that shape strategic decision-making processes (Prahalad and Bettis 1986; Jammulamadaka 2020). Managerial cognition molds the subjective perception of social interactions and relationship partners, influencing the type and nature of social relationships developed over time (Beck and Wiersema 2013; Helfat and Martin 2015a). While each subcomponent may affect strategic decision-making independently, DMC theory recognizes the importance of aggregating these three distinct yet complementary managerial attributes into a unique resource bundle in dynamic conditions (Adner and Helfat 2003; Beck and Wiersema 2013). Therefore, the interactions between the three subcomponents are central to DMC theory and cause additional heterogeneities in managerial decision-making (Adner and Helfat 2003; Helfat and Martin 2015a). T.Heubeck 1 3 3 Methodology 3.1 Literature search strategy: planning phase A SLR was conducted to answer the research questions, which typically consists of three phases: planning, executing, and reporting (Tranfield etal. 2003; Post etal. 2020; Kraus etal. 2022). In the planning phase, relevant selection criteria and keywords were determined. The literature search covered 20years, from the first conceptualization of DMC theory by Adner and Helfat (2003) until the end of 2022. This approach enables a comprehensive assessment of DMC research, unlike reviews that focus on a specific application (e.g., George etal. 2022, who focus on entrepreneurship) or subdimension of DMCs (e.g., Durán and Aguado 2022a, b; Durán etal. 2022, who focus on managerial human capital, social capital, and cognition, respectively). Business, management, and accounting journals were screened to gain a comprehensive overview of the field (Schilke etal. 2018). The search comprised articles referencing the term “dynamic managerial capabilit*” in their title, abstract, or keywords containing an article’s central topics (Vrontis and Christofi 2021). All articles that do not explicitly mention the term “dynamic managerial capabilit*” in their title, abstract, or keywords were excluded. This criterion was adopted to select articles explicitly linked to DMC theory. This selection procedure aligns with the overarching research goal of synthesizing existing studies that build on and contribute to DMC theory. 3.2 Article selection: execution phase During the second phase of the SLR, the three largest scientific databases—Scopus, Web of Science, and EBSCOhost—were searched for English-language, peerreviewed journal articles (Pranckutė 2021; Kraus etal. 2022). This approach aligns with best practices (Vrontis and Christofi 2021; Kraus etal. 2022; Kunisch etal. 2023) and minimizes search bias (Dabić etal. 2021). After removing duplicates (N = 151), the remaining articles were filtered based on the journal’s topic area and ratings and the article’s focus. First, only studies published in reputable business, management, or accounting journals (ABDC ≥ B, VHB JOURQUAL3 ≥ B, or SJR 2021 ≥ Q2) were included in the review. This selection procedure ensures that included articles are from high-quality journals and significantly contribute to the field (Widmann etal. 2021; Cartwright etal. 2021; Göcke etal. 2022). Second, the search excluded all articles that did not explicitly relate to DMC theory based on a screening of their title, abstract, and keywords (N = 42). This search procedure yielded 84 articles. These articles were carefully read and evaluated to ensure their relevance to DMC theory. Articles that insignificantly address DMC theory or are nonempirical were excluded (Brutus etal. 2013). The first criterion was examined by screening whether and how the articles define DMCs. The SLR revealed two dominant references (Adner and Helfat 2003; Helfat 1 3 Looking back tolook forward: asystematic review ofandresearch… integrating DMC theory and entrepreneurship (Helfat and Martin 2015b, a), George etal. (2022) highlight this linkage by demonstrating that “the entrepreneurship literature is firmly rooted in the intellectual base of DMC” (p. 18). Fourth, one-eighth of the reviewed articles integrated international business literature. For instance, Tasheva and Nielsen (2022) derive the concept of global DMCs required to address the challenges of international business. This finding shows that DMC theory provides a suitable micro-level lens for studying the origins of competitive advantage in a globalized economy. Fifth, the results show that seven articles incorporated the resource-based view, which is consistent with the focus of DMCs on asset orchestration (Sirmon and Hitt 2009; Beck and Wiersema 2013). Finally, six articles linked DMCs to the upper echelons theory. Although upper echelons theory represents the prevalent theoretical lens to conceptualize how top managers affect firm-level outcomes (Kurzhals etal. 2020) and shares many of the same underlying assumptions, such as bounded rationality (Hambrick and Mason 1984; Adner and Helfat 2003) have not explicitly drawn on this theory. Thus, there remains significant unrealized potential to improve the current understanding of the managerial impact on strategic change. Other notable integrated theories and concepts include contingency theory (5 articles), the knowledge-based view (5 articles), and innovation (4 articles). All remaining theories and concepts have been mentioned less than four times with DMC theory. In contrast to the larger field of DCs (Schilke etal. 2018; Arndt etal. 2022), these findings showcase a widespread consensus among scholars on defining DMCs, with the original understanding proposed by Adner and Helfat (2003) dominating the research field to this day. The findings also demonstrate that DMCs have been connected to various related theories, indicating that DMC theory offers ample opportunities to extend the current understanding of how managers affect strategic change in dynamic environments. 4.2.2 Level ofanalysis DMC theory analyzes “the role of managers, individually and in teams” (Helfat and Martin 2015a, p. 1282, emphasis added). The individual-level perspective prevails (72.2%), with articles, for example, studying top managers such as chief executive officers (CEOs) (e.g., Durán and Aguado 2022b; Durán etal. 2022; Guan etal. 2022). One-sixth of the articles adopted an aggregated perspective, analyzing management teams such as top management teams (TMTs) or boards of directors (e.g., Roelandt etal. 2022; Wang etal. 2022). Finally, the remaining articles (11.1%) employed a multior cross-level perspective in investigating the interactions between individual-level and aggregated DMCs (e.g., Martin 2011; Harvey 2022). Although DMC theory initially focused on the role of top managers, and this perspective still dominates (68.5%), it also provides a suitable theoretical basis for studying lower management levels (Helfat and Martin 2015a). The reviewed articles have widened the conceptual boundaries of DMC theory, as evidenced by 31.5% of articles that include lower management levels. For instance, Karadağ and Şahin (2021) and Greven etal. (2022) focus on the role of middle managers, and Harvey (2022) and Heubeck and Meckl (2022b, a) study DMCs at multiple levels. T.Heubeck 1 3 This expansion of DMC theory is warranted due to the increasing degradation of organizational hierarchies and the mounting importance of middle management for strategy implementation (Rouleau 2005; Rajan and Wulf 2006). Notwithstanding, researchers should include a sound theoretical rationale for studying lower-level managers, as they differ from lower-level managers in their capabilities and personalities (Hitt and Tyler 1991; Wai and Rindermann 2015; Holmes etal. 2021). Studies should not target lower-level managers simply because of difficulties obtaining sufficient responses from high-ranking executives. DMC research has decisively progressed since Helfat and Martin’s (2015a) call for multiand cross-level investigations. As demonstrated by the findings, scholars have opened the conceptual boundaries of DMC theory by including different perspectives (e.g., aggregated or multi-level) and hierarchies (e.g., middle management). 4.2.3 Element ofdynamism DMC theory focuses on the role of managers in dynamic environments, making it crucial to comprehend the source of dynamism it is analyzed. To achieve this, the descriptions of dynamism were gathered from the articles and then categorized, resulting in two externally-oriented categories and one internally-oriented category. The first externally-oriented category, general external dynamism, encompasses predictable and global environmental changes that affect all firms or those in specific industries. This represents the largest share of articles (83.3%) and includes global trends such as increasing globalization and digitalization (e.g., Tasheva and Nielsen 2022; Bendig etal. 2022) or industry dynamics (e.g., Sirmon and Hitt 2009; Martin 2011). The second externally-oriented category, discontinuous change, is mentioned by one-eighth of the articles and involves significant and unpredictable changes in the external environment, such as global crises (e.g., Oxtorp 2014; Nikookar and Yanadori 2021) or radical industry transformations (e.g., Peteraf and Reed 2007, 2008). Accounting for just over a quarter of the reviewed articles, the internallyoriented category strategic reorientation pertains to internal changes, such as new market entry (e.g., Ener 2019; Holzmayer and Schmidt 2020), organizational transformation (e.g., Salvato 2009; Guenduez and Mergel 2022), or business model innovation (e.g., Akter etal. 2022; Heubeck and Meckl 2022b). Although the articles contain different sources of dynamism, this review evinces that all authors specified some element of dynamism. These findings substantiate that DMCs are an integral response mechanism that safeguards organizational survival in dynamic environments (Helfat etal. 2007; Martin 2011; Beck and Wiersema 2013) and highlight the importance of understanding the source of dynamism in DMC research. 4.2.4 Research method, context, andoperationalization DMCs have been approached through various empirical methods, with most articles conducting quantitative research (74.1%), such as regression analysis, structural equation models, variance decomposition, and meta-analytical methods. The 1 3 Looking back tolook forward: asystematic review ofandresearch… remainder of the articles (25.9%) employed qualitative research methods, including case study analysis or qualitative comparative analysis. The research data were mainly obtained from primary sources (e.g., questionnaire or case studies; 53.7%), followed by secondary sources (e.g., database or archival data; 31.5%) or a combination of both (e.g., Martin 2011; Krause and Pullman 2021; 14.8%). The temporal research design did not exhibit a clear pattern, with cross-sectional research (53.7%) and longitudinal research (46.3%) used almost equally. The diversity of empirical data is demonstrated by the wide range of industries and types of organizations under investigation. The majority of articles collected data from multiple industries (57.4%). The remaining studies focus on single industries (42.6%), with a predominance of manufacturing industries (8 articles). The type of studied organization also varied among the articles, with many articles not containing conclusive information about the specific type of organization under investigation (16.7%). The remaining articles analyzed small and medium-sized enterprises (SMEs) or large firms (29.6% each) or examined firms of various sizes (24.1%).2 The reviewed articles also significantly differ concerning the countries examined, with a dominance of the U.S. (27.8%), followed by China (11.1%), and global samples comprising various geographical regions (9.3%). The recent articles reviewed in this study demonstrate that DMCs are primarily operationalized using capability-based measurements (87.0%), whereas earlier studies have often relied on strategy-based measurements (13.0%). This indicates that recent DMC research focuses on capturing DMCs by measuring the capabilities of managers, while early studies have employed strategy-based measurement due to methodological choices (e.g., Adner and Helfat 2003; Peteraf and Reed 2007, 2008, who use variance decomposition methods). In comparison, the dimensionalization of DMC is more heterogeneous. However, operationalizations using the tripartite division of managerial human capital, social capital, and cognition dominate (59.3%). Other prevalent approaches include context-specific capabilities (14.8%), the sensing–seizing–reconfiguration classification (13.0%), and asset orchestration (9.3%). Additionally, two studies operationalize DMC using managerial discretion (3.7%). These results demonstrate that Adner and Helfat’s (2003) original classification has had the largest impact on DMC research. At the same time, researchers have also adopted different measures of DMCs tailored to specific research settings. Regarding context-specific capabilities, articles analyze the role of DMCs in international business (e.g., Oxtorp 2014; Kim and Lim 2022), supply chain management (e.g., Roh etal. 2022), or information technology (Bendig etal. 2022). The sensing–seizing–reconfiguration tripod has been adopted from the DC literature and has influenced large parts of DMC research (e.g., Martin 2011; Haapanen etal. 2020; Kevill etal. 2021). Finally, DMCs have been proxied using asset orchestration and managerial discretion because these strategy-related factors are at the heart of DMC theory (Adner and Helfat 2003; Beck and Wiersema 2013). The former reflects a significant 2 In case information about sample characteristics was locatable (e.g., from descriptive statistics or appendices), firms with less than 250 employees were categorized as SMEs and those with more than 250 employees as large enterprises (Zhongming etal. 2021). T.Heubeck 1 3 decision of top managers (Sirmon etal. 2011), while the latter determines the scope of latitude in managerial decision-making (Finkelstein and Boyd 1998). For more detailed insights into how DMCs are measured, refer to Appendix2. This review highlights a great research diversity among DMC studies. Although the inconsistent empirical approaches may hinder methodological and theoretical advancements, the broad angle on DMCs might be necessary to capture and examine this elusive construct in different and novel contexts. For example, the recent study of Bendig etal. (2022) adopts the lens of DMC theory to examine the sources and effects of technology leadership. These findings corroborate the initial conjecture that DMC theory is a valuable micro-level lens on firms’ strategic decisionmaking “across a wide range of settings” (Helfat and Martin 2015a, p. 1282). 5 Dynamic managerial capability framework This chapter condenses the current state of research into a comprehensive and multi-level framework. This DMC framework draws on categories from existent research to sort the main research propositions and findings from the sample into (1) conceptualization, (2) antecedents, (3) outcomes, (4) mechanisms, and (5) contingencies (Schilke etal. 2018; Vrontis and Christofi 2021). The first category is further divided into (1) hierarchical level, (2) unit of analysis, (3) subcomponents, and (4) characteristics. The other four categories are sorted into (1) individual factors, (2) team factors, (3) organizational factors, and (4) environmental factors when applicable. 5.1 Conceptualization As outlined in Chapter4.2.2, DMCs have been studied at different hierarchical levels (i.e., top, middle, and lower management) and units of analysis (i.e., individual level, aggregate level, multior cross-level). Further, DMCs result from three distinct managerial resources: human capital, social capital, and cognition (Adner and Helfat 2003). These subcomponents have shaped large parts of DMC research, with more than half of the reviewed articles using this dimensionalization (e.g., Razmdoost etal. 2020; Nikookar and Yanadori 2021). The subcomponents’ definitions have also been adapted to the specific context in which DMCs were studied, such as entrepreneurship (e.g., Brown etal. 2021; Karadağ and Şahin 2021) or international business (e.g., Guan etal. 2022; Tasheva and Nielsen 2022). Building on this tripartite classification, scholars have expanded DMC theory by adding new subdimensions, such as emotions (e.g., Huy and Zott 2019), ambidexterity (e.g., Tai etal. 2019), or absorptive capacity (e.g., Nguyen 2021). Scholars have also drawn on DC theory to propose an alternate classification of DMC following Teece (2007) into (1) sensing opportunities and threats, (2) seizing opportunities, and (3) reconfiguring resources (e.g., Martin 2011; Haapanen et al. 2020; Kevill et al. 2021). These findings show that besides the original conceptualization of DMCs, research has also introduced new subdimensions or 1 3 Looking back tolook forward: asystematic review ofandresearch… adopted Teece’s (2007) alternate classification from the larger field of DCs. The theoretical advancement of the DMC subcomponents is driven by two central forces: the context in which DMCs are analyzed as the source of new subdimensions and increasing efforts pertaining to theoretical integration that lead to alternate classifications. Finally, the conceptualization of DMCs entails their characteristics, which are discussed in two of the reviewed studies. Kevill et al. (2021) argue that DMCs differ in their degree of vulnerability, building on Teece’s (2014) discussion centered around the vulnerability of DCs. While Teece (2014) has been mainly concerned about capability vulnerability due to the departure of key individuals (i.e., those within which those valuable capabilities reside), Kevill etal. (2021) show that irregular capability enactment due to temporal conflicts represents another source of capability vulnerability. Kim and Lim (2022) introduce the notion of versatile DMCs by drawing on resource versatility, which conjectures that versatile capabilities are re-deployable for alternative purposes (Nason and Wiklund 2018). This characteristic is critical to ensure the competitiveness of resource-constrained firms in dynamic markets (Mitrega etal. 2021). These findings showcase significant progress since Adner and Helfat’s (2003) original article. Research has adopted a more comprehensive range of perspectives on DMCs, investigated them at and across various hierarchical levels, proposed new or different subdimensions, and has started to grapple with their unique characteristics. The findings also show that DMC theory offers promising future research directions. For example, DMC characteristics are heavily under-researched. Further research recommendations are detailed throughout the following sections. 5.2 Antecedents The reviewed articles offer insights into the origins of DMCs by pointing to several sources at the individual, team, organizational, and environmental levels. At the individual level, research has identified several factors that induce DMCs. Among those are also the DMC subcomponents themselves due to their interdependencies. For instance, Chen etal. (2022) demonstrate that managerial cognition antecedes managerial human and social capital, while Heubeck and Meckl (2022b) find that managers with stronger human and social capital possess more cognitive skills than their lesser-skilled counterparts. Other individual-level antecedents to DMC include ambidextrous capa bilities (e.g., Roberts etal. 2021) and strategic human resource capital comprising education, tenure, experience, personality traits, and leadership style (e.g., Durán etal. 2022). The former study shows that ambidexterity is a dualedged sword to the ability of managers to seize opportunities, while the latter study demonstrates that DMCs benefit from specific strategic human resources of CEOs. Several team-level antecedents to DMCs were also identified from the review, such as knowledge and information sharing (e.g., Oxtorp 2014), common experiences (e.g., Jammulamadaka 2020), and technological experience (e.g., Bendig etal. 2022). For instance, Martin (2011) introduces the notion of an episodic team as a T.Heubeck 1 3 “stable group in which group member activities, although largely independent, are on occasion interdependent, collaborative, or both” (p. 120). The reviewed articles have also proposed various organizational antecedents, such as governance structures (e.g., Oxtorp 2014) or strategic orientation (e.g., Nijhof etal. 2019; Bendig etal. 2022). For example, Nijhof etal. (2019) prove that distinct strategic orientations lead to different DMCs influencing firms’ sustainability performance. Finally, the review revealed two environmental antecedents, showing that increasing external pressures facilitate the development of DMCs due to industry dynamism (Fainshmidt etal. 2017) or technological intensity (Bendig etal. 2022). This research stream demonstrates that DMCs are an essential response mechanism to external uncertainties, as managers with strong DMCs can quickly react to environmental changes. This multitude of antecedents demonstrates that DMC theory has significantly progressed over the past decades. The DMC framework integrates previously studied antecedents from all levels into a holistic overview. By categorizing existing research, this framework facilitates an in-depth understanding of the origins of DMCs and helps identify understudied areas. 5.3 Outcomes DMC theory has been the subject of significant academic interest due to its connection to critical organizational outcomes under conditions of change (Helfat and Martin 2015a). Building on the foundation of DC theory, strong DMCs can facilitate organizational performance by providing competitive advantages (Peteraf etal. 2013; Teece 2014; Schilke etal. 2018). Previous studies have established a robust relationship between DMCs and financial performance (e.g., Adner and Helfat 2003; Sirmon and Hitt 2009; Arrfelt etal. 2015). Additionally, recent research has proposed these managerial capabilities as conduits to other organizational outcomes, such as non-financial performance (e.g., Mostafiz etal. 2019a, b, 2021), product ambidexterity (e.g., Greven et al. 2022), innovation performance/ambidexterity (e.g., Khan etal. 2020; Nguyen 2021; Heubeck and Meckl 2022a), or sustainability performance (e.g., Nijhof etal. 2019). Moreover, DMCs have been linked to strategy-related outcomes, such as strategic change and transformation (e.g., Kale and Huzair 2017; Jammulamadaka 2020; Guenduez and Mergel 2022), strategy alignment (e.g., Tai etal. 2019), and related business diversification (e.g., Holzmayer and Schmidt 2020). DMCs have also been found to benefit capability-related outcomes, such as DCs (e.g., Jiang etal. 2021; Durán and Aguado 2022b; Durán etal. 2022), technical and evolutionary fitness (e.g., Martin 2011), or technological learning and capabilities (e.g., Kale and Huzair 2017). Studies have also investigated the benefits of DMCs for individuals and teams, although this research stream is much less researched. At the individual level, Karadağ and Şahin (2021) find that managerial human capital from entrepreneurial knowledge instills an entrepreneurial orientation in managers as the basis for 1 3 Looking back tolook forward: asystematic review ofandresearch… entrepreneurial behavior. At the team level, Harvey (2022) evinces that managers’ individual-level cognitions enhance team-level sensing. Roeland etal. (2022) demonstrate that stronger DMCs of directors increase the contribution of the board to opportunity development contingent on the board’s and firm’s characteristics. The SLR reveals that DMC research predominantly focuses on organizational outcomes related to performance, strategy, and capabilities. Outcomes of DMCs at other levels of analysis are nearly absent, as evident from scant research on their individualand team-level outcomes. Thus, there is great potential for exploring potential outcomes of DMCs beyond organizational ones. Relatedly, these findings reveal that DMC theory would benefit from an in-depth study of its possible outcomes on different levels. 5.4 Mechanisms The causal mechanisms represent a critical link between capabilities and outcomes. This conjecture is deeply engrained in DMC theory, as managers indirectly affect firm performance by impacting intermediate outcomes (Adner and Helfat 2003; Beck and Wiersema 2013; Helfat and Martin 2015a). For this reason, understanding the proposed mechanisms through which DMCs manifest in organizational outcomes is of particular interest to avoid potential black box issues. Two categories of mechanisms stand out from the literature. Following the original conceptualization of DMC theory, researchers have examined the intermediate effects of DMCs on organizational outcomes via organizational mechanisms such as dominant logic (e.g., Khan etal. 2019), asset orchestration (e.g., Tasheva and Nielsen 2022), and research and development investments (e.g., Nguyen 2021). For instance, Khan etal. (2019) evince that DMCs affect firm performance through their intermediate effects on the firm’s dominant logic, especially in turbulent environments. Widianto etal. (2021) provide further evidence for the intermediate effects of DMCs on firm performance. Their quantitative study reveals that DMCs do not enhance performance if the organization lacks the capacity for change. These findings show that researchers should assess the direct benefits of DMCs for organizational performance and consider their intermediate effects. The analysis also revealed that research has started incorporating individual-level mechanisms underlying the enactment of DMCs, including opportunity identification (e.g., Mostafiz etal. 2019a), entrepreneurial attitude (e.g., Karadağ and Şahin 2021), and market knowledge (e.g., Mostafiz et al. 2019b; Nguyen 2021). For instance, Mostafiz etal. (2019a) demonstrate that DMCs facilitate opportunity identification integral for firm performance. The study of Karadağ and Şahin (2021) supports the mediating role of two personal factors—entrepreneurial attitude and behavioral control—in the relationship between DMCs and entrepreneurial intention. These findings attest that researchers have been increasingly interested in understanding the underlying mechanisms through which DMCs manifest in organizational outcomes. They also demonstrate that research has predominantly focused on organizational-level mechanisms, while individual-level mechanisms remain understudied T.Heubeck 1 3 and team-level ones are absent. The causal mechanisms at and across different levels of analysis thus represent a promising direction for future research. 5.5 Contingencies Context has a potentially significant impact on the value and appropriability of DMCs (Schilke 2014; Schilke etal. 2018), as well as managers’ propensity to leverage their DMCs. This review reveals a plethora of contingencies of two relationships within the DMC framework. Existent research focuses on the contingencies between DMCs and their outcomes, while some studies have also examined contextual conditions of the antecedents–DMC relationship. Contingencies of the DMC–outcome relationship have been the focus of prior research. These fall into four categories. First, research has predominantly studied environmental contingencies related to the dynamics of the competitive environment, including environmental dynamism (e.g., Ener 2019; Razmdoost etal. 2020; Guan etal. 2022), market dynamism (e.g., Wang etal. 2022), demand uncertainty (e.g., Townsend and Busenitz 2015), and technological turbulence (e.g., Chen etal. 2022). This research stream concurs that DMCs are particularly beneficial for firms in more dynamic environments, where managers face more significant difficulties predicting and interpreting changes (Dess and Beard 1984). Therefore, large parts of DMC research have focused on the contingent value of DMCs in emerging or transitioning economies due to their increased dynamics (e.g., Khan etal. 2019; Guan etal. 2022; Wang etal. 2022). The study of Guan etal. (2022) provides evidence that DMCs are also beneficial in low-uncertainty environments and that specific types of DMCs facilitate firm performance more strongly in lowrather than highuncertainty environments. Research shows that although DMCs might be especially beneficial under high environmental dynamism, they are also integral for firms in low-dynamic environments. This review, therefore, substantiates that environmental dynamism is not necessarily a component of DCs nor a mandatory precondition but rather a critical contingency factor (Helfat and Winter 2011; Schilke 2014; Schilke etal. 2018). Although less represented, this review identified other environmental contingencies, including industry munificence (e.g., Fainshmidt et al. 2017), entrepreneurial labor market (e.g., Brown etal. 2021), and export assistance (e.g., Mostafiz etal. 2021). For instance, Fainshmidt etal. (2017) evince that industry munificence influences the appropriateness of DMCs in responding to discontinuous change, such as global crises. Nevertheless, the dearth of studies with nondynamism-related contingencies indicates significant potential for future research to explore new contextual conditions. Second, the review identified a set of organizational contingencies, such as firm size (e.g., Durán and Aguado 2022b), strategic orientation (e.g., Roberts etal. 2016; Symeonidou and Nicolaou 2018), transformation readiness (e.g., Guenduez and Mergel 2022), and diversification degree (e.g., Arrfelt etal. 2015), For instance, Guenduez and Mergel (2022) demonstrate that organizations can only successfully implement transformative processes through DMCs if they are ready for the transformation. 1 3 Looking back tolook forward: asystematic review ofandresearch… Third, the review determined several individual-level contingencies of DMCs. Among those are the DMC subcomponents themselves (e.g., Jiang et al. 2021), demographic management characteristics (e.g., Durán and Aguado 2022a), organizational tenure (e.g., Harvey 2022), founder startup experience (e.g., Symeonidou and Nicolaou 2018), and negotiation capabilities (e.g., Roh etal. 2022). Jiang etal. (2021) offer several significant implications for DMC theory by evincing that the positive effect of subsidiary managers’ global mindset (managerial cognition) on the quality of headquarters–subsidiary relationships (organizational DC) is moderated by managers’ cognitive flexibility (managerial cognition), leader-member exchange (managerial social capital), and overseas study experience (managerial human capital). Finally, the review also identified the contingent role of team-level factors. For instance, Roeland etal. (2022) evince that directors are more likely to leverage their human capital for opportunity development under the contingency of smaller boards and increasing board tenure. Haapanen etal. (2020) demonstrate that a lack of strategic consensus in the TMT is required so that DMCs facilitate international expansion. Thus, these studies show that the enactment of DMCs is highly context-specific, with specific structural board characteristics and TMT factors affecting the ability and motivation of top managers to deploy their capabilities to the firm’s benefit. Further, two articles address the conditions that affect the development of DMCs. Harvey (2022) demonstrates that “cross-unit interdependence can provide conditions in which the benefits of managerial cognition can be realized” (p. 3). This structural feature leads to increased communication and coordination within the firm relevant to managers’ sensing capabilities. Roberts etal. (2021) show that effective management support systems can remedy the decline in managers’ seizing abilities caused by high ambidextrous capabilities. These findings reveal that the contingencies of DMCs offer much-needed insights into the theory’s boundary conditions. While the broader DC theory has been repeatedly criticized for failing to clarify its conceptual boundaries (Arend and Bromiley 2009), this review solidifies that much progress has been made in specifying the boundary conditions of DMC theory. At the same time, the findings show that there remain many gaps in the literature that future research must fill. For example, there is a paucity of research on environmental contingencies besides environmental dynamism, individual contingencies that affect the propensity and motivation of managers to leverage their DMCs, and team-level contingencies in general. 5.6 Summary oftheframework The DMC framework presented in Fig.4 synthesizes the existent empirical research to propose an integrative and multi-level perspective on what DMCs are, which characteristics they exhibit, and where they are located (conceptualization); where they originate from (antecedents); which results they yield (outcomes); through which causal mechanisms they are enacted (mechanisms); and which factors augment or hinder their development and deployment (contingencies). The DMC framework is highly integrative as it synthesizes and categorizes current knowledge, holistic as it incorporates the entire operational sequence from the T.Heubeck 1 3 Fig. 4 Dynamic managerial capability framework: Conceptualization, antecedents, outcomes, mechanisms, and contingencies 1 3 Looking back tolook forward: asystematic review ofandresearch… consistent over time, indicating that the field still needs to address many challenges related to mechanisms, contingencies, theory, methods, and replication. Table 4 provides a summary of the development of research recommendations over time. To further assess the field’s progress, it was assessed whether the reviewed articles had addressed the central research opportunities derived by Helfat and Martin (2015a). These include (1) the joint incorporation of all three DMC subcomponents in studying strategic change; (2) the assessment of the interactions between the DMC subcomponents; (3) the clarification of the conditions under which DMCs facilitate strategic change; and (4) the addressing of multiand cross-level issues. Recent studies have addressed the first recommendation (e.g., Greven et al. 2022; Heubeck and Meckl 2022a; Tabares etal. 2022; Tasheva and Nielsen 2022). For instance, Heubeck and Meckl (2022a) demonstrate that DMCs only facilitate digital firms’ innovativeness, yet the underlying subcomponents have no effect. Tabares etal. (2022) demonstrate that the DMC subcomponents affect international performance differently. This research stream suggests that DMCs are a multifaceted construct with varying—potentially even harmful—effects on organizational outcomes. Research has also addressed the second research recommendation by illuminating the interactions between DMCs (e.g., Jiang etal. 2021; Chen etal. 2022; Heubeck and Meckl 2022b). Jiang etal. (2021) show that DMCs interact in affecting organizational DCs and that some interactions are also detrimental to the development of DCs. Heubeck and Meckl (2022b) evince that managers’ human and social capital enhance their cognitive skills in assessing potential opportunities for business model innovation. Although this research stream remains understudied, it has enhanced the understanding of DMCs by illuminating the interactions between its subcomponents. Table 4 Cluster analysis of research recommendations Research recommendations Clusters 1–3 Clusters 4–5 Relative change over the two periods 2003–2020 2021–2022 Frequency: absolute (relative) Frequency: absolute (relative) Conceptualization 6 (5.3%) 18 (12.7%) +200.00% Antecedents 6 (5.3%) 4 (2.8%) –33.3% Outcomes 10 (8.8%) 12 (8.5%) +20.00% Mechanisms 8 (7.1%) 12 (8.5%) +50.00% Contingencies 15 (13.3%) 19 (13.4%) +26.70% Theory 23 (20.4%) 28 (19.7%) +21.70% Methods 27 (23.9%) 30 (21.1%) +11.10% Replication 18 (15.9%) 19 (13.4%) +5.60% Recommendations per article 4.2 5.3 +26.20% T.Heubeck 1 3 The third research direction constitutes a significant research stream, which examines the contingencies of DMCs (e.g., Buil-Fabregà etal. 2017; Razmdoost etal. 2020; Brown etal. 2021; Guan etal. 2022; Roelandt etal. 2022). For example, Wang etal. (2022) show that the DMC–outcome relationship is contingent on market dynamism (i.e., an environmental contingency). Roeland etal. (2022) provide evidence for both team and organizational contingencies of DMCs. Buil-Fabregà etal. (2017) demonstrate that DMCs are also contingent on individual factors. As evident from the DMC framework, contingencies of DMCs have been a central concern for DMC research across all levels of analysis. Research has also taken the fourth research path (e.g., Townsend and Busenitz 2015; Harvey 2022; Roelandt etal. 2022; Tasheva and Nielsen 2022). Haapanen etal. (2020) show that different configurations of DMCs within TMTs are critical for international expansion, especially when they lack strategic consensus. Harvey (2022) sheds light on how managerial cognition influences a manager’s sensing abilities in shaping team-level sensing. These two exemplary studies illustrate that DMC research has grappled with multiand cross-level issues. This review shows that empirical research has addressed Helfat and Martin’s (2015a) major concerns. At the same time, this literature review has also revealed many unresolved issues and tensions that future research needs to tackle. Section7.2 transfers these issues into direct calls for future research. 7 Discussion This review had two intertwined goals: first, looking back by synthesizing the current state of empirical DMC research, and second, looking forward by identifying critical research gaps that warrant future attention. To achieve these two goals, a SLR identified 54 empirical articles directly related to DMC theory. The selected articles were analyzed using descriptive and thematic content analyses. The research articles were subsequently synthesized by developing a holistic, multi-level DMC framework. Finally, a systematic historical analysis assessed the development of limitations and research recommendations over time. 7.1 The current state ofresearch This review highlights a growing interest in the study of DMC, with numerous scholars and journals publishing articles on the topic in recent years. Its findings emphasize that DMC theory provides a unique perspective on how managers from different hierarchical levels can impact strategic change, both individually and in teams. This review corroborates that strong DMCs enable managers to efficiently orchestrate the firm’s asset portfolio, laying the foundation for competitive advantage in dynamic environments (Adner and Helfat 2003; Helfat and Martin 2015a). 1 3 Looking back tolook forward: asystematic review ofandresearch… This review addressed five RQs related to the current knowledge state. The first RQ pertained to the articles’ theoretical and conceptual backgrounds. The findings demonstrated that the fundamental understanding of DMCs is mainly consistent across the field. Additionally, the review corroborated that DMC theory is a fruitful theoretical platform (Arndt etal. 2022) that can benefit from integrating related theories. However, there is still significant potential for integrating complementary theories like the attention-based view (e.g., Ocasio 1997) or knowledge-based theories (e.g., Grant 1996). These theoretical integrations can continually adapt DMC theory to today’s ever-changing competitive landscape, in which knowledge has become a critical source of competitive advantage (Elrehail etal. 2023). Overall, this review has answered RQ 1 by demonstrating that Adner and Helfat’s (2003) understanding of DMCs continues to shape the research field, while their theory has been continually advanced and adapted through theoretical expansions. The second RQ addressed the level of analysis employed in DMC research. This review found that individual-level capabilities are the primary focus of DMC studies, while team-level or aggregated perspectives are less common. DMC theory emphasizes the significance of top managers’ capabilities in strategic decision-making, which has also been the central concern for research. However, with the flattening of organizational hierarchies and the growing importance of middle managers in strategy implementation, there has been a shift toward analyzing the DMCs of lower-level managers. In answering RQ 2, this review concludes that research has departed from its initial focus on top managers’ individual-level capabilities to a more comprehensive perspective on DMCs, for example, by studying the management capabilities of teams or middle managers. RQ 3 focused on the type of dynamism in which DMCs are studied. This review identified two external sources and one internal source of dynamism. Regarding the former, most studies examined DMCs in the context of general external dynamism, which refers to global changes affecting firms across different industries. A smaller share of studies examined DMCs as a response mechanism to discontinuous change, which causes significant and largely unpredictable changes to the entire economy or specific industries. Regarding the latter, studies were also concerned with the role of DMCs in facilitating strategic reorientation. In answering RQ 3, this review has shown that research is characteristically concerned with the role of DMCs in addressing the challenges of dynamic environments. It corroborates that strong DMCs are essential capabilities that allow firms to cope with external and internal changes. The fourth RQ focused on the reviewed articles’ methodological choices. This review discovered a diverse range of methodological approaches, with researchers utilizing various quantitative and qualitative research methods and drawing data from a variety of different sources (primary vs. secondary), temporal designs (cross-sectional vs. longitudinal), industries (single vs. multiple industries), and organizations (small vs. large firms). The historical review revealed that recent studies primarily operationalize DMCs using capability-based measures, whereas earlier studies primarily used strategy-based measurements. Although there is variation in how DMCs are measured, Adner and Helfat’s (2003) dimensionalization of DMCs into managers’ human capital, social capital, and cognition remains dominant. Overall, the findings related to RQ 4 demonstrate no universal approach to T.Heubeck 1 3 empirically examining DMC. However, this methodological richness illustrates that DMC theory can be applied to different contexts. Future research can benefit from this review in selecting the most suitable methodological approach for the specific research context. Lastly, the fifth RQ aimed to synthesize existent DMC research by systematically analyzing the characteristics of DMCs and the relationships in which they are studied. To achieve this, the articles were condensed into a holistic, multi-level framework that summarizes how DMCs are conceptualized and illustrates the studied antecedents, outcomes, mechanisms, and contingencies. Overall, the DMC framework offers helpful guidance for researchers in understanding the current state of research and bridges the gap to future research. 7.2 The future ofresearch The second overarching goal of this review was to discern pathways for future research, as captured by RQs 6 and 7. The first directions for future research can be derived from the DMC framework, as it bridges the gap between the past and present of DMCs by synthesizing prior research, identifying critical research gaps, and allowing for the integration of future findings. The framework illustrates that DMCs have been investigated at and across different hierarchical levels and perspectives, while complementary and alternative subcomponents have emerged in the literature. The characteristics of DMCs are a highly understudied area that warrants more attention, while the antecedents to DMCs have been studied from all perspectives. This framework offers a holistic lens on the individual, team, organizational, and environmental factors from which DMCs may originate. Although DMCs have garnered significant interest due to their linkage to organizational strategy and performance as the two central firm-level outcomes, scholars have also started to investigate the effects of DMCs on organizational capabilities and their benefits for individual managers and teams. Exploring non-performance-related outcomes of DMCs represents a significant opportunity for future research. The mechanisms through which managerial capabilities materialize are of particular concern to DMC theory, although the findings show that existing research does not often employ a two-staged approach in assessing the effects of DMCs. Thus, future research should holistically probe DMC theory by assessing the impact of DMCs on organizational strategy (intermediate outcome) and examining the performance effects of those strategies (final outcome). Studies have also started to investigate the individualand team-level mechanisms through which DMCs unveil. Especially the team-level mechanisms offer a fruitful area for future research as they enable the cross-level investigation of DMCs. Finally, large parts of DMC research have been concerned with its contingencies—the factors that promote or hinder the enactment of managerial capabilities. Existent studies have predominantly proposed organizational and environmental contingencies, which makes exploring additional individualand team-level contingencies a promising research endeavor. 1 3 Looking back tolook forward: asystematic review ofandresearch… Through a systematic historical analysis of research limitations and recommendations, this review also traced and summarized research recommendations from the studies. The findings of Sect.6 point to five central future research opportunities. First, although DMC theory has been expanded by integrating several related theories and concepts, future research should continue to integrate complementary theories and concepts to advance the theoretical understanding of what DMCs are and how they can impact strategic change, competitive advantage, and firm performance. Second, future studies should examine DMCs of management teams and employ multior cross-level perspectives to analyze how DMCs aggregate to affect strategic change. Expanding the research to lower-level management, especially in strategy implementation, is warranted as hierarchies flatten and may offer fresh insights into the relevancy of middle managers for competitive advantage. Third, future research should explore whether DMCs allow firms to deal with and respond proactively to unforeseeable environmental jolts, such as the COVID-19 pandemic. Fourth, future research is encouraged to specify the reasons for focusing on specific research settings and including organizational, industry, and country-specific factors in the research model. Fifth, future research should conduct more longitudinal studies to avoid causality issues, derive more suitable measures for DMCs, and replicate the study in different settings to increase the findings’ generalizability. 7.3 Managerial recommendations This review also highlights the significance of DMCs for managerial practice. First, strong DMCs are beneficial for firms, as most studies show a positive association between DMCs and critical firm-level outcomes, such as financial and non-financial performance (e.g., Mostafiz etal. 2019a; Kim and Lim 2022; Tasheva and Nielsen 2022), strategic change/transformation (e.g., Haapanen etal. 2020; Jammulamadaka 2020; Guenduez and Mergel 2022), or innovation (e.g., Khan etal. 2020; Heubeck and Meckl 2022a). DMCs enable firms to tackle both external and internal changes. Therefore, firms should retain highly skilled managers who create flexible and adaptable organizational structures, processes, and strategies. These managers can constantly monitor environmental changes, analyze their impact, and take appropriate actions such as reconfiguring resources, transforming structures and processes, and devising new strategies. Second, managers should develop strong DMCs because they provide benefits not only to firms but also to individual managers and management teams. On a practical level, this review reduces the complexities of DMC theory by determining which specific skills managers need to develop and points to three critical managerial skills: (1) managerial human capital, which managers can develop formally (e.g., through education or training) and informally (e.g., through learning from experience or on-the-job training); (2) managerial social capital, which managers can enhance by building strong networks within the firm (e.g., across departments) or alliances with external partners (e.g., suppliers, customers, or competitors); and T.Heubeck 1 3 (3) managerial cognition, which necessitates that managers continually adapt and question their mental models and processes to stay abreast of changes. Third, the two previous recommendations infer that firms should fill critical management roles with highly skilled individuals. DMC theory provides a valuable framework for assessing the skill levels of managers because it categorizes managerial skills according to their human capital, social capital, and cognition. Managers can use the operationalizations of these capabilities, as summarized in this review, to evaluate their current skill level or those of potential candidates for vacant management positions. Fourth, the framework derived in Chapter5 can serve as an essential tool for management practice, shedding light on what DMCs are, their origins, the factors that influence their effects on critical outcomes, the intermediate factors through which they materialize, and the outcomes they produce. The framework emphasizes that DMCs are located at all hierarchical levels, including individual managers and management teams at lower, medium, and top management levels. It also identifies specific individual, team, organizational, and environmental antecedents that contribute to the development of DMCs. Additionally, it summarizes the factors that determine the effectiveness of DMCs and the intermediate mechanisms through which they lead to beneficial outcomes. Lastly, it provides a comprehensive overview of the various outcomes associated with DMCs, including their impact on firm, team, and individual-level performance. Overall, the DMC framework offers practical management recommendations and makes transparent the unique characteristics and key implications of these critical capabilities for management practice. 7.4 Limitations It is important to note that this article, like any literature review, has some limitations. First, it is possible that relevant studies were not included in this review due to the selected databases, keywords, or filter criteria. Second, this review focused on peer-reviewed articles published in highly reputable English-language journals. The selection of this methodology may introduce language bias or result in the devaluation of non-English literature. Third, nonempirical articles may also offer relevant insights into DMCs. Last, this review only considered studies published until the end of 2022. Thus, future research may be needed to assess articles published after this date. The methodology used in this review can also be applied to future reviews of DMC theory. 8 Conclusion DMC theory is critical to strategic management literature because it explains how organizations can adapt to changing business environments and remain competitive. This ability to continually transform organizational strategies depends on the capacity of managers to quickly identify and seize opportunities while effectively reorganizing the firm’s resource portfolio to mitigate future risks and uncertainties 1 3 Looking back tolook forward: asystematic review ofandresearch… (Adner and Helfat 2003; Teece 2007). DMCs are crucial for competitive advantages in dynamic environments (Helfat and Martin 2015a), so they have become a central concern for empirical research. Despite their importance for firms, the existing literature lacks a comprehensive overview and analysis of the current state of research. Therefore, the overarching goal of this review was to systematically synthesize existing studies on DMCs to gain an in-depth understanding of these managerial capabilities in the context of strategic change. The review’s first main contribution is its overview of existing research. Based on a SLR of 54 empirical studies, the current state of empirical research was assessed and synthesized using descriptive and thematic content analyses. Specifically, the studies were evaluated regarding their theoretical and conceptual background (RQ 1); their level of analysis (RQ 2); their element of dynamism (RQ 3); and their research method, context, and operationalization (RQ 4). This review has synthesized the current state of knowledge into a holistic and multi-level DMC framework, which provides the first detailed overview of how DMCs are conceptualized, which factors antecede these capabilities, which outcomes they have, through which mechanisms they materialize, and on which factors their effects are contingent (RQ 5). This review’s second main contribution is identifying critical research gaps and opportunities. Through a systematic historical analysis, this review has traced the development of the field over time and demonstrated that although much progress has been made, there remain many unaddressed avenues for future research. At the same time, these findings show that DMC theory is a fruitful theoretical platform for analyzing organizational behavior in dynamic environments, and there remain many promising pathways for future researchers, as summarized in the direct calls for research. This review’s third main research contribution is the fresh insights and perspective it delivered to the field. By synthesizing prior research into a comprehensive DMC framework and analyzing research limitations and recommendations over time, this review provides a previously missing overview of the current state of research, thereby offering a solid foundation on which future research can build. For these contributions, this literature review has realized its overarching research goals of delivering a comprehensive synthesis of existent DMC research—looking back—and paving the way for future research on DMCs—looking forward. This review ultimately guides scholars and underscores the relevancy of DMCs for management practice. Supplementary Information The online version contains supplementary material available at https:// doi. org/ 10. 1007/ s1130102300359-z. Author contributions The author confirms sole responsibility for the following: study conception and design, data collection, analysis and interpretation of results, and manuscript preparation. Funding Open Access funding enabled and organized by Projekt DEAL. Project DEAL enabled Open Access funding. No other funding was received to assist with the preparation of this manuscript. Availability of data and materials The datasets generated and/or analyzed during the current study are available from the author upon reasonable request. T.Heubeck 1 3 Declarations Conflict of interests The author declares no relevant financial or nonfinancial conflicts of interest to disclose. He certifies that he has no affiliations with or involvement in any organization or entity with any financial or nonfinancial interest in the subject matter or materials discussed in this manuscript. The author has no financial or proprietary interest in any material discussed in this article. 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