Toward a fitness landscape model of firms' IT-enabled dynamic capabilities

TL;DR

This paper develops a fitness landscape model for firms' IT-enabled dynamic capabilities using an NK-model simulation, revealing how inter-capability dependencies influence optimal strategic adaptation.

Contribution

It introduces a novel NK-model-based fitness landscape approach to analyze IT-enabled dynamic capabilities and their interdependencies within firms.

Findings

Firms reach higher fitness with lower inter-capability dependency.

The model simulates strategic exploration of capability combinations.

Provides realistic scenarios for capability management.

Abstract

This chapter presents, extends and integrates a complexity science perspective and applies this to IT-enabled dynamic capabilities (ITDCs) of firms. By doing so, this chapter leverages statistical survey data and uses them as parameters for a simulation using the NK-model. This NK-model creates stochastically generated fitness landscapes that are parameterized using a finite number of (N) elements, or capabilities, and (K) complex interactions between those capabilities, and studies the performance (fitness) of systems. We simulate firm efforts to adaptively explore and walk through a fitness landscape of possible strategies of inter-related capabilities to reach toward higher levels of fitness of ITDCs. Also, our fitness landscape model provides realistic scenarios with a nexus of possible business strategies that can be employed considering the current status, interdependency, and alignment among capabilities in the organization. Our work suggests that firms achieve the highest fitness values when the interdependency among the individual capabilities is relatively small.