Transactive Memory Systems: A Microfoundation of Dynamic Capabilities

Abstract

A persistent puzzle in management research is competitive advantage and why certain firms excel in getting ahead while others falter (Knott, 2003).One explanation is the dynamic capability argument, which emphasizes a firm's superior ability in sensing new opportunities in its environment and seeking those opportunities by continuously adapting, integrating, and reconfiguring its key assets and competences (Teece et al., 1997).Researchers have called for more work to identify the micro-processes or mechanisms through which firms develop dynamic capabilities (Argote and Ingram, 2000;Spender and Grant, 1996;Teece, 2007).In this paper, we present transactive memory as a microfoundation of dynamic capabilities and describe how an organizational system for collectively encoding, storing, and retrieving knowledge can facilitate the combinative integration and renovation of an organization's knowledge assets. DYNAMIC CAPABILITY AS A SOURCE FOR COMPETITIVE ADVANTAGEIn spite of the consensus that dynamic capabilities play a crucial role in competitive advantage, complete consensus in defining the term has not been achieved.Teece et al. (1997) defined dynamic capabilities as 'the firm's ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments' (p.516).Zollo and Winter (2002) defined a dynamic capability as 'a learned and stable pattern of collective activity through which the organization systematically generates and modifies its operating routines in pursuit of improved effectiveness' (p.340).Helfat et al. (2007) defined a dynamic capability as 'the capacity of an organization to purposefully