Dynamic capabilities: a focus for management control in the public ...

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Nov 16, 2013 (3 years and 6 months ago)

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Dynamic capabilities: a focus for management control

in the public sector






Paul M Collier

La Trobe Business School


&


Zoe Yan Zhuang

Monash University















Corresponding author:

Paul Collier, La Trobe Business School, Donald Whitehead Building, Bundoora VIC 3086 email
p.collier@latrobe.edu.au

Tel +61 (0)3 9479 3323



This research was funded by Australian Research Council Linkage gra
nt
LP0989435
Developing a Resource Allocation Framework to support more effective police investigations
of major crime
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Dynamic capabilities: a focus for management control

in the public sector


Abstract


The opportunity to study how resources are used is

provided by theories of dynamic
capabilities, largely in the strategic management literature. D
ynamic capabilities a
re

"
t
he
organizational and strategic routines by which firms achieve new resource configurations
"
(Eisenhardt & Martin, 2000: 1107)
.


This

paper presents the results of a field study that explores the causal factors behind the
building and development of dynamic capabilities, how path dependencies are modified as
a result of learning, and whether there is a hierarchy of dynamic capabilities.


The research found that learning is central to the development of dynamic capabilities. A
hierarchy of dynamic capabilities can be seen to result from learning processes; while
organizational routines emerge through learning and the application of dynami
c capabilities
to form new paths and new methods of resource use.


The findings have important implications for the theory of dynamic capabilities and learning,
but also to expand notions of resource utilization and management control that are
particularl
y relevant in the resource
-
constrained public sector.

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Dynamic capabilities: a focus for management control

in the public sector



Introduction


Management control is typically concerned with the achievement of objectives
(Anthony,
1965; Flamholtz, Das, &
Tsui, 1985; Merchant & Van der Stede, 2003; Otley, Berry, &
Broadbent, 1995)
.
Management control systems accomplish strategy by directing and
controlling resource inputs, influencing the transformation process, and monitoring outputs
(Daft & Macintosh,
1984; Parker, Ferris, & Otley, 1989)
. However,
most of the attention of
the management control literature has been around controlling the necessary outcomes or
behaviours,
or of monitoring process efficiency,
with less attention
being paid
to resource
inpu
ts
, which are typically assumed to be given
.


Resources are crucial in achieving objectives, and particularly in the public sector are limited
by funding which is a consequence of economic and political imperatives. How limited
resources are used (as oppos
ed to the transformation process of inputs into outputs) has
received little attention in the management control literature although it has received more
attention in the organizational literature. In public sector settings where resources are
limited and
demand is largely uncontrollable and unpredictable, control systems must be
put in place for the effective management of those resources.


In the public sector environment, performance measurement systems provide an
inadequate means of control as there are

multiple, sometimes ambiguous, and often
conflicting objectives, in contrast with the relatively straightforward pursuit of financial
performance in the private sector. Input resources (monetary allocations by government)
are consumed largely in investmen
ts in people, and it is the capability of those people,
leveraged by the systems and policies and procedures that support and extend those
capabilities that determine how well resources are used to achieve objectives, however the
organization may define th
em.


The opportunity to study how resources are utilized, at least conceptually, is provided by
theories of dynamic capabilities which have been developed from the resource based view,
largely in the strategic management literature. D
ynamic capabilities
(D
C)
a
re

"
t
he firm's
processes that use resources
-

specifically the processes to integrate, reconfigure, gain and
release resources
-

to match and even create market change. Dynamic capabilities thus are
the organizational and strategic routines by which fi
rms achieve new resource
configurations as markets emerge, collide, split, evolve, and die"
(Eisenhardt & Martin, 2000:
1107)
.


The DC literature has identified various research opportunities.
Ambrosini & Bowman (2009)

have argued that most research papers

have used data that is illustrative of DC but the data
was not collected purposively to understand DC, hence empirical support for much of the
literature of DC is limited. Research needs to delve into the “detailed, micro mechanisms of
how these capabili
ties are deployed or how they ‘work’”
(Ambrosini & Bowman, 2009:
37)
through more qualitative field investigations.


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Barreto (2010)

argues the need for more research into the internal and external
contingencies that enable or inhibit the potential in their

DC, while
Di Steffano et al. (2010
)
suggested t
he complementarities available from a combination of internal and external
perspectives on DC. Similarly,
Ambrosini & Bowman (2009)

called for case st
udies of how DC
are created and the extent to which newly created resources can be attributed to specific
DC, luck, or exogenous change.


The theory of dynamic capabilities has not previously been applied in the accounting
literature other than in passing

(Henri, 2006; Coad & Cullen, 2006; Wouters & Wilderom,
2008; Grafton, Lillis, & Widener, 2010)
, and with limited exceptions
(Pablo, Reay, Dewald, &
Casebeer, 2007; Llewellyn & Tappin, 2003;
Ridder, Bruns, & Spier, 2005
;
Harvey, Skelcher,
Spencer, Jas, & W
alshe, 2010
;
Douglas, Jenkins, & Kennedy, 2012)

it has not

been applied to
the public sector.


Public services face largely fixed budgets, non
-
financial performance targets and uncertain,
and in some cases, uncontrollable demand. Given that public services

affect the majority of
the population,
it is critical that available resources are used efficiently and effectively

within the constraints of fixed budgets to achieve financial and non
-
financial outcomes
consistent with organizational missions and strateg
ies, and the expectations of government
as the funder, and citizens as the service recipients.


This research project aimed to apply a dynamic capabilities approach to understanding how
resources are utilized in one area of public service delivery, that
of policing
, and its
relevance for management control
. Our research aim was to explore the causal factors
behind the building and development of DC, how path dependencies are modified as a
result of learning, and whether there is a hierarchy from lower to
higher order DC.


Although the literature clearly distinguishes operation from dynamic capabilities (DC) and
identifies various categories of DC, a contribution of this paper is to reveal both vertical and
horizontal perspectives.

In the vertical perspecti
ve,
a hierarchy of DC: information,
relationship, strategic, political, and learning emerges with different DC leveraging the
operational capabilities, although the contingencies of the organization and its internal and
external environment will impact on
the specific DC that emerge and develop in any
particular organizational setting.


The horizontal perspective reinforces the
adaptive, absorptive and innovative

components
of DC
(Wang & Ahmed, 2007) which

recognizes path dependence
but also reveals how
paths
can diverge over time
, in which motivations for change must be considered.


A further contribution of the paper is the development of a three stage model:
sensing,
seizing, and transforming which brings together the idea of the horizontal development

of
DC towards improved resource use
, while path dependent organizational routines emerge
through learning processes and the application of dynamic capabilities into new paths and
new approaches to leveraging resources.


The more holistic model presented in this paper encapsulates and extends prior findings in
the DC literature, and grounds these findings in a field study designed to test these
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questions, in a research setting


the public sector
-

that has not been the fo
cus of much
research attention.


This paper is arranged as follows. In the first section the literature of dynamic capabilities is
presented
in the context of management control
and the research questions
are
formulated. The second section describes the r
esearch setting and method. The third
section comprises the research data from the field study and in the fourth section the
results are discussed. In the final section some conclusions are presented.


The literature of dynamic capabilities


From control t
o capabilities


Management controls have been variously defined but the recurring definition emphasises
a system that comprises various control mechanisms designed to increase the probability
that organizational actors behave consistently with the achieve
ment of organizational
objectives
(e.g. (Anthony, 1965; Otley & Berry, 1980; Flamholtz, Das, & Tsui, 1985; Otley,
Berry, & Broadbent, 1995; Abernethy & Chua, 1996; Merchant & Van der Stede, 2003).

Consistent with these definitions, the requirements for con
trol are objectives, predictive
models, measures and a choice of action. However, it has long been argues that
"organisational objectives are often vague, ambiguous and change with time ... measures of
achievement are possible only in correspondingly vagu
e and often subjective terms ...
predictive models of organisational behaviour are partial and unreliable, and ... different
models may be held by different participants ... the ability to act is highly constrained for
most groups of participants, includin
g the so
-
called ‘controllers’" (
Otley & Berry, 1980:
241).


It has been argued that the type of control applicable to public and not
-
for
-
profit activities
depends on four criteria: whether objectives are unambiguous, whether outputs are
measurable, whethe
r the effects of interventions are known, and whether the activity is
repetitive
(Hofstede, 1981). Given
Hofstede and
Otley & Berry’s critique, control in the
public sector might be construed as especially problematic.


In the public sector it has been fo
u
nd that the organisational control mix is a function of the
firm's institutional environment, with pressure being exerted through state funding
agencies, together with the mimicking by public sector managers of private sector practices
and the norms of pro
fessions (
Abernethy & Chua, 1996). This suggests the greater
importance in the public sector of political and garbage can models of control (Hofstede,
1981).
Three distinct but interlocking strategies of control have been introduced into the
public sector
in order to improve control: competition as a means of coordinating
decentralised units; decentralising operations while centralising strategic command; and the
development of performance measurement techniques (Hoggett, 1996).


Control systems have also b
een criticised for their dominant concern with upwards
accountability rather than promoting learning and improvement
(Sanderson, 2001). Otley
(1994: 296)

has long called for a wider view of management control: "The objective of the
control system now becom
es the encouragement of work groups at all levels to take control
into their own hands to a much greater extent than has been traditional, and to take
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responsibility for maintaining the viability of their part of the organization relative to its
environmen
t".


Control
systems accomplish strategy by directing and controlling resource inputs,
influencing the transformation process, and monitoring outputs
(Daft & Macintosh, 1984;
Parker, Ferris, & Otley, 1989)
. However,
most of the attention of the management control
literature has been around controlling the necessary outcomes or behaviours,
or of
monitoring process efficiency,
with less attention
being paid
to resource inputs

or the
capabilities which may be created or
sustained from those resource inputs. We argue that
the management control literature should pay more attention to the management of
capabilities, as a crucial organizational resource
.


Although his study was of performance measurement specifically,
Henri
(2006)

argued that
for the role of management control systems as a capability despite the perspective reflected
by the resource
-
based view that control systems do not represent a source of competitive
advantage. This paper develops this argument further by

drawing on the extensive literature
on dynamic capabilities, even though that literature has had little impact
to date
on the
literature of management control.


Dynamic capabilities


The paper by
Teece, Pisano, & Shuen (1997)

is generally regarded as the
foundation of the
dynamic capabilities (DC) approach, as an extension of the resource based view (RBV) which
explains how firms in a market sustain competitive advantage based on their bundles of
resources and capabilities. Resources are “stocks of availab
le factors” while capabilities are
“a firm’s capacity to deploy resources”
(Amit & Schoemaker, 1993:
35). In the public sector
in particular, we argue that the capability to use resources becomes as important as the
quantum of those resources.


However much of the literature reflects the roots of DC in
An Evolutionary Theory of
Economic Change
(Nelson & Winter, 1982)

which emphasizes the role of path dependence
and routines, an efficiency approach to performance that is contrasted with the market
position approach adopted by
Porter (1980)
. This evolutionary theory approach has been
traced by
Ambrosini & Bowman (2009)

back to the work of
Penrose (1959)
, in which value
creation comes not from the possession but the
use

of resources.


In the dynamic c
apabilities approach, 'dynamic' refers to the capacity to renew
competences so as to achieve congruence with the changing environment and 'capabilities'
emphasizes the role of strategic management in adapting, integrating and reconfiguring
internal and ext
ernal organizational skills, resources and functional competences to match
the changing environment

(Teece et al., 1997)
.


It is not the intention of this paper to undertake a detailed literature review of DC, this
having already been in three recent revi
ews of the literature on DC:
Barreto (2010); Di
Steffano, Peteraf, & Verona (2010); and Ambrosini & Bowman (2009)
, who provide a useful
starting point.


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Barreto (2010)

reviewed key articles on
DC

published in leading management journal
s

and
identified sev
eral core elements that underpin the conceptualization of
DC
. In terms of its
nature
,
DC

have been defined as abilities, capacities, processes, and routines. In terms of its
specific role
,
DC

are

related to the change of key internal components of the firm such as
resources, capabilities and operating routines.
Relevant context

could be highly dynamic
environments, moderately dynamic environment
s
, or relatively stable environments
(Barreto, 2010)
.

According to
Ambrosini & Bowman (2009)
, relevant context/environment
may include external factors (such as uncertainty, complexity and munificence that
influence the deployment of
DC
) and internal firm
-
specific factors (such as organizational
knowledge an
d resources). It has been assumed that
DC

are typically built rather than
bought and that their
creation and development

are embedded in organizational processes
(such as organizational learning) that are shaped by firms’ asset positions and the
evolution
ary paths they have adopted in the past. In terms of the
heterogeneity

of
DC
,
they

have been implicitly or explicitly assumed as essentially firm specific and unique. Finally,
direct
outcomes

of
DC

could be sustained competitive advantage, firm
-
level succe
ss and
failure, or value creation
(Barreto, 2010)
.


Barreto (2010)

and
Ambrosini & Bowman (2009)

identify the proliferation of definitions and
the disconnected body of research in relation to DC. In this paper we use Barreto’s (2010:
271) definition: “A dy
namic capability is the firm’s potential to systematically solve
problems, formed by its propensity to sense opportunities and threats, to make timely and
market
-
oriented decisions, and to change its resource base”. Importantly, Barreto uses
“potential” an
d “propensity” because DC are relative tendencies, rather than absolute
characteristics of an organization.


Barreto (2010)

accommodates various other definitions from his literature review, but its
strength is in recognizing DC as a single theoretical con
struct comprising four distinct, but
related dimensions: propensities to sense opportunities and threats; to make timely
decisions; to make market
-
oriented decisions; and to change the firm’s resource base.
Barreto suggests these dimensions might be weakly

correlated among themselves but that
researchers need to think not just about the aggregate construct of DC, but also each of the
four dimensions.


The literature review by
Di Steffano et al. (2010)

adopts a co
-
citation analysis to examine
the relationshi
ps among articles and authors across a research field.
Di Steffano et al.

identify four factors comprising relatively homogeneous groupings of articles that represent
communities of interest. The most common factor was foundational papers which define
the
constructs and its application and effects. The second most common were papers on the
relationship of DC with other theories, principally the RBV.


Di Steffano et al. (2010)

also used multi
-
dimensional scaling to identify those papers that
had an internal
organizational perspective, and those concerned with markets and other
matters external to the firm, with the majority of papers focused on internal matters.
Scaling also categorized those papers concerned with individual cognition and skills and the
role
of managers, and organizational routines focused on the organizational level, its
competences and routinized activities.
Di Steffano et al. (2010: 1200)

highlighted the
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research opportunities in the external domain and in “the complementarities available f
rom
a combination of perspectives”.


Examples of DC have been identified by many writers: research and development
(Helfat,
1997)
; acquisitions
(Karim & Mitchell, 2000)
; product innovation
(Danneels, 2002)
;
divestment of resources
(Moliterno & Wiersema, 20
07)
. DC have been implicitly typified by
the literature either in terms of a (vertical) hierarchy of capabilities and as a (horizontal)
transition between stages. This paper proposes that adopting both perspectives together
provides a more comprehensive vi
ew of DC.


The vertical perspective


Capabilities exist within a hierarchy from lower
-
order, operating
-
level capabilities to higher
-
order ones that govern or integrate lower
-
level ones
(Maritan, 2001)
.
Operational capabilities
such as manufacturing a product

are distinguished from dynamic capabilities which build,
integrate, or reconfigure operational capabilities
(Helfat & Peteraf, 2003)
.


Two distinct kinds of dynamic capabilities (DC) have been identified: relational capabilities
and acquisition
-
based capa
bilities
(Helfat et al., 2007)
. Relational capabilities create, extend,
or modify the firm’s resource base, to include the resources of its alliance partner.
Acquisition
-
based dynamic capabilities involve acquiring new resources that are distant
from the c
urrent knowledge base.


A further dynamic capability is political, because
managing political action
has to

reflect the

pace and complexity of contemporary political

and competitive environments

(Oliver &
Holzinger, 2008)
.Leadership has also been seen as an important enabler of DC
(Rosenbloom,
2000)

while
Ambrosini & Bowman (2009)and Salvato (2003)

suggested that managers were
more or less likely to deploy DC depending on how they perceived uncertainties in their
environme
nt.
Pablo et al. (2007)

use the organization’s ability to learn new practices or
routines as an example of a dynamic capability. They identified the critical role of
management skills in identifying, enabling and managing the use of a DC as a strategic
app
roach.


Of particular importance to how resources are used is the role of management in building
and developing DC for improved resource use. In their literature review,
Ambrosini &
Bowman (2009)

highlight the role of management but see management’s role
as
underpinning and enabling DC. By contrast,
Adner & Helfat (2003)

describe dynamic
managerial

capabilities as helping
to explain why corporate strategy differs between firms.
Dynamic
managerial
capabilities
emphasize the central role of managers:

"the ca
pabilities
with which managers build, integrate, and reconfigure organizational resources and
competences"
(Adner & Helfat, 2003:
1012).


This research study therefore sees the potential for a hierarchy of DC from the operational
to higher order
capabilities including, but perhaps not limited to, relational, acquisition
-
based, managerial and political capabilities. One of the research aims was to identify other
DC and to assess whether they comprised a hierarchy.


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The h
orizontal perspective


This
perspective considers how capabilities evolve and are used over time.

Building on the
original work of
Teece et al. (1997)
,
Teece (2007:
1319)
extended understanding of the
concept and proposed that “dynamic capabilities can be disaggregated into the capac
ity (1)
to sense and shape opportunities and threats, (2) to seize opportunities, and (3) to maintain
competitiveness through enhancing, combining, protecting, and, when necessary,
reconfiguring the business enterprise’s intangible and tangible assets”.


C
ollis (1994)

and
Winter (2003)

contrasted the day
-
to
-
day operational capabilities with
more future
-
oriented dynamic capabilities, reflecting a temporal difference.

Schreyogg &
Kliesch
-
Eberl (2007: 914)

argue that t
here is an inherent tendency of capabiliti
es to persist
because they become part of a
n organization’s

“patterned architecture” but
at the same
time there is a need

for continuous organizational renewal

in the face of environmental
change
.


Dynamic capabilities are recognized as being routines that

are path dependent.
(Helfat et al.,
2007:
115, italics in original) suggest a positions
-
processes
-
paths approach to future
research: “an organization’s resource base provides its starting point or initial
position
.
Paths

are the strategic alternatives avai
lable to the firm. And ‘the essence of a firm’s …
dynamic capabilities is … resident in the firm’s organizational
processes
’”.
Teece et al. (1997)

argued that DC were shaped by the firm’s assets (internal) and its institutional and market
environment (exte
rnal) which together affect the firm’s strategy; and that past and present
history constrains the future.


In similar vein to
Teece (2007)
,
Wang & Ahmed (2007)

i
dentifie
d

three components of
dynamic capabilities: adaptive, absorptive and innovative. Adaptive capability focuses on
effective search and balancing exploration and exploitation strategies. Absorptive capability
is concerned with

learning from partners, integrati
ng external information and transforming
it into knowledge at the firm level. Innovative capability is the ability to develop new
products/services, new methods of production, new sources of supply or new markets.


Eisenhardt & Martin (2000) and Madhoc & O
segowisch (2000)

show the importance of path
dependence, although
Aragon
-
Correa & Sharma (2003)

promoted a more contingency
-
based perspective. Contingencies may permit a better understanding of how paths diverge
over time.


DC and learning


Learning is a c
rucial ingredient to developing, u
tilising
,
and evolving

DC.
The evolution and
use of capabilities over time and the extent to which there can be discontinuities leading to
new paths that emerge from established ones is a function of organizational learnin
g
,
defined as
"the capacity (or processes) within an organization to maintain or improve
performance based on experience"
(DiBella, Nevis, & Gould, 1996:
(363) which involves
knowledge acquisition, sharing and utilization.


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Katkalo, Pitelis, & Teece (2010)

note that while routines partly serve the purpose of
minimizing agency by providing order and stability, DC are more than routines in that they
embody conscious human action.

Capabilities emerge incrementally and are the result of an
organizational learni
ng process
(Schreyogg & Kliesch
-
Eberl, 2007). In which an

important
task for management to lead the organization learning process by identifying and allocating
resources to those areas that provide organizational capabilities to achieve sustainable
competi
tive advantage
(Bierly & Hamalainen, 1995)
. This learning capability is "the capacity
of managers within an organization to generate and generalize ideas with impact"
(Ulrich,
Jick, & Von Glinow, 1993:

60).


Dynamic capabilities "develop through the coevo
lution of three mechanisms:

as the
tacit
accumulation of past experience, knowledge articulation, and knowledge codification
processes"
(Zollo & Winter, 2002
:
348).
Zollo & Winter

p
roposed a knowledge evolution
cycle which emphasizes the links between lear
ning, dynamic capabilities and operating
routines in which learning processes are responsible for the evolution of 'operating routines'
geared towards operational functioning, and 'dynamic capabilities' dedicated to the
modification of operating routines.

A knowledge evolution cycle as proposed by
Zollo &
Winter

(
2002)

suggests

how learning might enable the emergence or development of higher
order capabilities in the vertical perspective.


Three stages of dynamic capabilities can be identified from the literature by drawing on
Teece (2007)
,
Helfat & Peteraf (2009)
, and
Ambrosini & Bowman (2009)
. We term these
stages sensing, seizing, and transforming, by which prior paths and resource bases
emerge
into new paths and improved resource use, through the action of dynamic capabilities.


A
tentative
model of dynamic capabilities


The preceding discussion highlights both a vertical and horizontal perspective on the DC
literature and the importance of learning, both in breaking with path dependence in a
transition over time, and in developing higher order capabilities.


The three st
ages of dynamic capabilities: sensing, seizing, and transforming
(Teece, 2007)

can be linked with the vertical distinction between

operational and dynamic (e.g.
relational,
acquisition
-
based,
managerial
and political
)

capabilities.

Transitions both horizon
tally and
vertically take place through learning. This is shown diagrammatically in Figure 1, in which
the development of a new or existing capability leads to a new path and improved resource
use.


Insert Figure 1 about here


These two perspectives are eq
ually important and interdependent,
linked by the importance
of learning processes
. The process of sensing, seizing and transforming is a learning
one

that
results in the development of a hierarchy of new capabilities, each
successive hierarchical
capabili
ty
leveraging the other capabilities,
albeit

constrained by path dependence.


Path dependence is strongly influenced by the existing of control systems that are more
focused on achieving objectives than
learning and improvement
(Sanderson, 2001)
. As we
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h
ave seen, there are problems with the ambiguity of o
bjectives,
the measurability of

outputs,
and

the effects of interventions
(Otley & Berry, 1980;
Hofstede, 1981)

as well as
concerns over the accuracy of
predictive models

(Otley & Berry, 1980) and the
repetitivenness of activities

(Hofstede, 1981)
.

Control systems have not so far been seen as
a capability

(
Henri
,

2006)
. This issue is particularly problematic in the public sector.


DC and the public sector


Most public sector performance is defined in te
rms of efficiency and effectiveness, and is
measured routinely by a range of financial and non
-
financial indicators. Efficiency is
concerned with using the least resources to achieve a desired outcome, while effectiveness
is concerned with whether or not t
he desired outcome is achieved.


The objectives of financial and performance management systems are to maintain
aggregate fiscal discipline (i.e. to prevent overspending); to allocate resources in accordance
with government priorities or relative to deman
d (allocative efficiency); and to promote
efficiency in the use of budgetary resources in terms of the input/output relationship
(technical efficiency)
(Organisation for Economic Co
-
operation and Development, 1999)
.
Budgets provide constraints on resources

while non
-
financial performance targets and
measures are intended to focus and prioritize activity.


DC as a mode of improved resource use have received little attention in public sector
studies
(Pablo et al., 2007)
, although it has been argued that the
public sector faces even
more environmental change than the private sector due to frequent changes in policy and
short
-
term time horizons tied to election cycles
(Boyne, 2002)
.


In the public sector, when external resources are limited, organizations are f
orced to look
internally, such that strategy development involves taking account of internal resources and
a range of strategic actors: “strategy is about using available resources in a way that
maximizes organizational performance, however defined”
(Pablo

et al., 2007:
688). Dynamic
capabilities allow organizations to use internal resources strategically and advantageously.
Strategic approaches based on dynamic capabilities are particularly relevant for the public
sector because they focus on internal reso
urces rather than competitive market behaviour
(Llewellyn & Tappin, 2003)
.


Recently, researchers have started to apply the DC concept to public sector organizations
and strategies
.
Ridder et al. (2005)

used the concept of DC to observe the implementation
of
local government accounting reforms in Germany.
(Pablo et al. (2007)

examined how a
regional health authority in Canada developed a new strategic approach based on the
identification and use of an internal DC (learning through experimenting).
Harvey et
al.
(2010)

reviewed the conceptual, theoretical and methodological implications of applying
absorptive capacity, derived from the broader concept of DC, to the performance of public
organizations
.
Douglas et al. (2012)

developed a model using a DC perspect
ive of
competitive advantage as a basis for understanding managers’ perceptions of high
performance in an English local authority.


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Further to the previously mentioned research opportunities, and the need to further
develop an understanding of DC in the co
ntext of the public sector, the study described in
this paper is based on the design of a field study that sought to explore the causal factors
behind the building and development of DC, how path dependencies are modified as a
result of learning, and wheth
er there is a hierarchy of DC. In essence, the research sought to
test Figure 1.


The study was undertaken in an Australian police force, which granted access to study these
issues through an in
-
depth longitudinal study. The next section describes the rese
arch
setting and method.


Research
setting and
method


Following the work of
Pablo et al. (2007)

the research sought to better understand how a
public sector organization allocated finite resources to satisfy unpredictable and
uncontrollable demand was able to improve the use of those limited resources. Access was
gained to the department of a police

force that investigated serious and organized crime,
comprising some
550 detectives organized into specialist squads or task forces (hereafter
“work groups”) e.g. homicide, arson, sexual offences, armed robbery, fraud, drugs, etc.

For
reasons of confident
iality, the serious and organized crime unit within the police force is
referred to in this paper as “Police”.


The research was a longitudinal study over four years. This period covered the introduction
of a major restructuring involving the building and

development of dynamic capabilities.
Research access was granted to interview police, observe meetings, access qualitative data
on the progress of crime investigations, and quantitative data on the resources used by
police in each investigation, as well a
s strategy and policy documentation.
The nature of
serious and organized crime

and the complexity of the subsequent investigations mean that
it
can often take

several years from a crime being committed until a court outcome is
known. Therefore, a longitudi
nal study was necessary to track the progress of investigations
for a sample of crimes over their whole lifecycle.


The research covered
1.5 million
detective
hours
over a three and a half year period
; and a
data sample of 248
serious and organized crime
investigations
comprising 436,700 hours
(28% of the total
detective

hours

during that period
)
.


Qualitative data on the progress of the sample investigations over long time periods (in
many cases several years) was de
-
identified and extracted manually.

Qu
alitative

data was
also obtained from ‘Investigation Plans’ which were prepared for each investigation and
which described

the objectives, risks, investigative strategies,
and
resource requirements

of
each investigation
; and from ‘Completion Reports’ which

were prepared at the end of each
investigation to
evaluate the

successes and failures

of each investigation
.


Interviews with key informants were carried out but the primary focus was the observation
of
meetings

which involved
resourcing

decisions being m
ade or investigative progress being
reviewed at five different organizational levels
.

These meetings ranged from 6 participants
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(Tier 2 meetings); 12 (Tier 3 meetings); and up to 20 participants for Tier 5 meetings
(explained later in this paper).


A chro
nological approach and the identification of patterns in triangulated data were used
to organize the qualitative and quantitative data using methods described by
Yin (2003)
.
Draft reports have been given to the organization for review and correction of fac
tual errors
and the research has benefited from the insights provided by members of ‘Police’. The next
section presents the field study data.


The
field study


The context of resource use in policing


In policing, as in other areas of the public sector, bu
dgets limit activity, in terms of the
human and technological resources needed to carry out the investigative function. This
means that management attention is directed to improving the
use

rather than the overall
quantum

of resources.


The management of
resources in terms of outputs or outcomes, however, is problematic.
P
erformance measures (number of crimes, clearance rates, etc.) are used extensively for
volume crime (burglary, theft of motor vehicles, etc.) but are inappropriate for serious and
organiz
ed crime (homicide, armed robbery,
sexual offences
, etc.) where the seriousness of
the offence outweighs any numeric measure. There are also difficulties in relying on
measures such as
clearance rates.
The

availability of evidence
;

lack of control over
ind
ependent
decisions to prosecute
;

and the vagaries of witness evidence and jury
deliberations makes “success” in terms of Cour
t outcome a problematic concept.


Effectiveness
is more commonly

judged subjectively by whether all available lines of enquiry
hav
e been

exhausted. Such an assessment is part of the review of unsolved crimes

in Police
,
and
was regarded

as a satisfactory outcome in cases where there is an absence of evidence
to support a prosecution
, rather than performance being measured in terms of
the results
of a prosecution.


However, there are other important aspects of performance. One is the d
isruption of
criminal behaviour
,
especially
for
drug investigations. Disruption activity is difficult to
quantify (except perhaps in relation to drug or a
sset seizures

under Proceeds of Crime
legislation
) and it is unlikely that this can be assessed other than subjectively.

I
ntelligence
collection
, while not being admissible in Court proceedings, does enable Police to better
understand the actions of crimin
als and their
modus operandi
, and the relationships among
and between various criminal groups. However, by definition quantity does not equate to
quality.
Victim satisfaction

is another important outcome, with regular feedback to victims
on the progress of

investigations and their sensitive handling during court appearances. The
extent to which this is achieved is again, subjective.


Achieving
a defined
outcome

such as exhausting available lines of enquiry

with the least
waste of resources over the shortest

possible elapsed time seems to be an appropriate
aspirational goal for investigations. However, efficiency is problematic when it cannot be
14

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known in advance the likely results of pursuing each line of enquiry.

Therefore, the
development of capabilities to

make better use of resources is an important focus for
research, especially in a dynamic crime market environment.


Dynamic c
rime markets


There is a supply chain

in crime markets
: drugs lead to burglaries in order to fund drug
purchases. Burglaries
result in the transport of stolen goods to others who receive and
handle stolen property
, and

the proceeds of crime are subject to money laundering activity.
Research by
Crime and Misconduct Commission (2009)

used a model developed by
Frieberg
(1997)

and identified suppliers (those who commit a property offence); distributors and
retailers (e.g. pawnbrokers and other legitimate businesses); and purchasers (the ultimate
consumers) in crime markets.


Organized crime is market driven, chasing profits for

the least risk. Crime groups move
across markets to different crime types, chasing profits:

“Organized crime groups … are formidable in terms of their capabilities, resources
and resilience”
(Australian Crime Commission, 2009
:
5) .


It is the role of polic
ing to compete in these markets, where organized criminal groups have
evolved:


towards more flexible, loosely associated and entrepreneurial networks ... and
generally involve individuals of different ethnicities, skill sets and criminal interests ...
an
d have the capacity to expand their operations quickly ... in order to exploit
opportunities or maintain competitive advantage

(Australian Crime Commission,
2007
:
5).


Most research on organized crime has focused on the characteristics of organized crime
groups and less research has been carried out into the dynamics of crime markets
(Morrison, 2002)
.
In moderately dynamic markets (
volume crime
s such as domestic
burglary, theft, and assaults
), where there is substantial stability
in

police response and
inv
estigation, routines in the form of
operational

capabilities are embedded in the existing,
c
umulative
training,
knowledge
and experience
of police. In high velocity markets
typified
by
serious and
organized crime
,

where non
-
routine responses are
often
nece
ssary, dynamic
capabilities
are necessary to manage limited resources while responding to

specific
and
often unique
situations.

Such a dynamic situation was faced by Police in the period
immediately preceding the research study.


A critical event


Politica
l, press and public attention to crime was heightened as a result of a series of
organized crime related
murders which continued over several years. The focus on
performance measures, including levels of crime and detection rates had diverted much of
Polic
e attention towards reducing volume crime (burglary, theft, etc.) and away from the
less numerous but more serious and organized crime. The investigation of serious and
organized crime has little impact on reported performance trends but has a high public
15

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profile, which was exacerbated by the long running
series of organized crime related
murders
.


In the words of one
senior officer
:

“The underworld murders identified capacity gaps and issues of capability around processes
with a ‘dark side’. And there was
the opportunity to develop an organized crime strategy. We
got leverage against the political will to do something and received funding. Organized crime
was running over us because of legislation … We had focused on volume crime, not on public
surveys unti
l the underworld murders.”


Pressure came from government to address the problem, but Police themselves realized
that they needed to change their approach to how the investigation of serious and
organized crime was managed.


Detectives who investigate
serious and organized crime are highly trained and experienced.
They have spent considerable time in uniform duties and following detective training have
been assigned to geographic regions which investigate the more common volume crimes.
Only after they h
ave gained substantial “on the ground” experience can they apply for a
posting in one of the centralized work groups (squads or task forces) investigating serious
and organized crime across all geographic regions within the police force.


Historically the
work groups exerted considerable independence. Work group managers
(senior police) decided what crimes to investigate and how many resources (detectives) to
allocate, and for how long those resources should be used in investigations. Where
specialist resou
rces were needed (e.g. forensic or covert resources) these were requested
but personal relationships often influenced the allocation of those resources. The
operational capability to investigate crimes at the work group level was not questioned.
What manag
ement realized was that their capability to manage the total resource
effectively was far from ideal.


Police worked with government to obtain funding for a significant restructuring, and the
implementation of a new
Organized Crime Strategy
.

Police contracted an international
consulting firm to undertake a review of its management processes. A report was
subsequently produced, the recommendations of which were accepted. Implementation
responsibility fell largely to senior officers and staff wi
thin the
Strategic Unit

of Police
(hereafter
SUP
). Senior officers and staff of S
U
P became champions of the new strategy and
were instrumental in introducing the new capabilities.


The development of new capabilities


A key phrase that was repeated by seve
ral interviewees was “capacity, capability, debt”.
Capacity referred to the overall resource that was budget
-
limited. Capability was the ability
to use that resource efficiently and effectively. Debt referred to the amount of investigative
resource needed
to complete the outstanding lines of enquiry for all outstanding
investigations, a figure that was virtually impossible to estimate.


Improved resource management was seen as a capability that needed to be improved if the
criticisms of Police over the
orga
nized crime related murders
were going to be averted, and
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if Police were to refocus their attention not only on those specific murders but more
generally to address the rise in serious and organized crime.


There were several elements in the new model. Fi
rst, a Resource Prioritization (RP) process
was introduced. It was, in essence, similar to a triage system used in hospitals, under which
a higher priority was allocated depending on the seriousness of the crime, the victim impact,
the likelihood of reoffe
nding, etc. As investigations progressed, the RP could alter.


Second, a Tasking & Co
-
ordination (T&C) process was introduced. This process had been
developed by police forces in the United Kingdom
where it

had become
routin
ized as the
National Intelligenc
e Model
(Flood, 2004; John & Maguire, 2004
;
National Criminal
Intelligence Service, 2000)

although its origins had been in a shift from reactive to
a
more
intelligence
-
led, proactive policing
style
(Cope, 2004
;
Collier, 2006; Maguire & John, 2006)
.


In Pol
ice, T&C had been introduced as a five tier process. The RP (or triage) process was at
Tier 1. Tier 2 involved work group managers making

resource

decisions in relation to
each
individual investigation on a daily basis. Tier 3 involved a review by senior o
fficers with each
work group on a rotating basis to review the resource requirements and progress of
investigations in that work group. Tier 4 was a further review for designated ‘high risk’
investigations. Tier 5 was a
more holistic

review of all investig
ations by top management
in
terms of

Police’s strategic resource requirements.


While each work group manager was responsible for their investigations and allocating
resources under their control to those investigations, the review and monitoring carried
out
by the T&C process leveraged those limited resources more broadly across Police by
understanding the scale and complexity of all investigations across all work groups. T&C
moved detectives between work groups where this was necessary given each work gr
oup’s
resource and its investigative debt. The T&C process also allocated specialist resources that
were outside the work group’s control, such as criminal proceeds, analysis of seized
computers, forensic accountants and lawyers, translators, and covert re
sources such as
undercover detectives, listening devices, vehicle trackers, and cameras, etc.


An Investigation Plan was prepared for each investigation. This showed the objectives of the
investigation, resource requirements, specialist skill needs, risk a
ssessments, etc. At the
conclusion of each investigation a Completion Report was undertaken which evaluated
successes and failures and suggestions for future investigations.


At the same time as the RP and T&C processes were being developed, detectives
com
menced recording the times they spent on each investigation. This not only recorded
hours by
each
investigation

over time

but also provided valuable management information
in terms of the utilization of each work group’s total human resource.


Police also

undertook a review of various crime themes, using information from reported
crimes and intelligence from prior investigations to develop ‘intelligence packages’ that
targeted prolific criminals or crime trends that led to proactive investigations. A
senio
r
officer

commented:

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“They look at the strategic level, do a major crime strategy report and liaison with
industry and outside groups. They identify patterns, like recidivist offenders.”


T
h
ese various sources of

information became a key capability which h
ad not previously
existed.

Information systems supported police investigations, but like many public sector
organizations, funding had been piecemeal and inadequate over many years. Consequently,
there were many legacy systems that remained un
-
integrated,
and poorly designed for the
purposes of extracting

and analyzing useful
management information. This deficit in
information capability was recognized
by Police
but organizational finances prevented any
short
-
term solution.


Some resources were within the c
ontrol of work groups, primarily detectives. Other
resources were under the control of
more senior
management of all work groups

in Police
,
while
others had to meet the needs of the whole
p
olice
force as a whole throughout
its
geographic responsibility

(including volume crime)
, while still other resources were
dependent on police forces in other jurisdictions, and on other agencies (taxation, customs,
immigration, etc.).


Jurisdictional boundaries impact on efficiency and effectiveness for criminal justice agencies
but not for criminal groups. Cross
-
border crime involved Police working with other agencies
and with

police forces in other national and internal jurisdictions.
The relationships between
Police and these other agencies were important in ensuring cooperation to bring
investigations to a satisfactory conclusion.

While the RP process was appropriate for
managing the resources of work groups and the serious and organi
zed crime activities of
Police, resource dependency on external agencies was based on relationships with those
agencies. These relationships were to some extent formalized but in practice were often
optimized through networks of personal relationships buil
t over time. As people changed
roles frequently, there was a need to sustain those relationships informally and dynamically.


Beyond the investigation of individual crimes, trends and patterns discovered through
information and relationship capabilities ne
eded to be addressed at a more strategic level.
Although a small unit within Police,
SUP

undertook a strateg
ic planning

function
,
both
react
ing

to and anticipat
ing

changing trends and patterns in crime markets
in order to

develop police force
-
wide strategi
es. These were focused on, for example, illicit drugs, or on
emerging trends in crime between rival criminal groups (often associated with drug
dealing).
SUP

undertook a holistic approach, that included working with government to
influence legislative chang
e where this would address crime trends, and working with
partner organizations to address ‘target hardening’


making it more difficult for criminal
groups to commit crimes

-

such as crime prevention to avoid robberies of hotels and gaming
venues, a strate
gy that had proven to be successful in virtually eliminating bank robberies.


SUP

had been successful in obtaining government funds to appoint the consultants who
developed the Organized Crime Strategy that was instrumental in introducing the improved
reso
urce management capability. The research produced an evidence base which
SUP

may
be able to use to influence government to provide additional resources for Police
.
The
research recommended that information gained through the research be used to support a
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b
usiness case for additional resources, particularly in relation to the specialist resources that
were sometimes bottlenecks to investigative progress.


Learning and improvement was also evident through the longitudinal study. During the
course of the study
, changes were made to the RP and to the T&C process, which were
refined as a result both of senior staff changes and process improvements. Despite each
senior staff change, while variations were made, there was an ongoing commitment by
senior police offic
ers and by the staff of
SUP

to sustain and develop the new capabilities.


Much of the learning at the operational level came from the accumulated individual
experience of detectives. These were commonly shared informally among each work group.
To improve t
heir skill base, and extend it beyond the specializations of individual work
groups, detectives formed ‘communities of practice’. A
senior officer
explained:

“There are specialist communities of practice
. These are people who have volunteered to b
e
special
ists in a crime theme
-

for exa
mple homicide, sex crimes, arson
. These are mainly but
not necessarily in th
at

squad
for example, sex crimes;

and training is focused on that group
on how to investigate crime in that theme. However, not everyone in a squad
,

for example
homicide,

is a specialist in that crime theme. Other
s will be general investigators
.”


Much knowledge was accumulated in IT systems but there were inadequate organizational
processes to share and utilize the experience of detectives and the IT
-
based knowledge
across Police as a whole. The research recommended that Police analyze existing
information resources in IT systems over time and across work groups and use the
information about outcomes, and strengths and weaknesses in investigative pract
ices, to
learn and improve.


In the next section the implications of the field study for an understanding of dynamic
capabilities are presented.


Discussion


In the field study, management control is seen as non
-
traditional. The absence of
performance mea
sures (number of crimes, conviction rates), and the ambiguities of the
effectiveness of disruption tactics, intelligence collection, and victim satisfaction make
traditional forms of management control ineffective, even though budgetary resources and
budge
tary control (particularly over the costs of people) reflect the overall constraints on
activity.


In the field study, non
-
traditional forms of control dominated, in particular the resource
prioritization (or triaging) process, the five tier tasking and co
ordinating process, as well as
investigation plans, completion reports and the strategic focus provided by intelligence and
analysis of data. These were documented process
e
s, although they were qualitative in
nature. Nevertheless,
the field study reveals t
he development of both a hierarchy of
capabilities and the transition of those capabilities over time, and the role of learning.


In a broader sense, t
his field study has shown the relevance of dynamic capabilities (DC) to
the public sector and following
Pablo et al. (2007)

has argued that the literature of DC is
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relevant in building an understanding of how a public sector organization can allocate
limited resources to satisfy unpredictable and uncontrollable demand.


Senior police t
h
emselves

used
phrases

such as “capacity, capability, debt”, and there was a
conscious and explicit decision to improve the capability of the organization to investigate
serious and organized crime. This decision was to a large extent forced on Police through
the political, pre
ss and public attention to the high profile series of
organized crime related
murders
. However, this external motivation was not resisted by Police, as there was
realization by Police themselves that they needed to improve their capability to manage
their
existing resource base more efficiently and effectively. Hence, there was both an
external driver, and an internal motivation to improve capability.


The field study reveals a sharp distinction between the operational capability of
investigating crime, and

the higher level capabilities of managing the resource base,
reflecting the work of
Collis (1994)

and
Winter (2003)
. Operational capabilities were the
result of the training and experience of detectives which was to a large extent retained
within work gro
ups based on the nature of the criminal investigation (e.g. homicide, arson,
fraud have different investigative modes) although the communities of practice were one
way in which skill sets were transferred across a wider base of detectives.

These were the
key elements that enabled learning.


Of
particular

importance to this paper, and to an understanding of DC, was the development
of the higher order capabilities. These can be categorized as information, relationship,
strategic, political, and learning capabilities. These capabilities are shown in Table 1.


Insert Table 1 about here


In the field study, while there were constraints of legacy information systems, timesheet
information revealed the quantum and timing of resources going into investigations. The
Resource Prioritization process formalized the ‘t
riaging’ of crimes, while the five levels of
the Tasking and Coordination process provided a more formalized decision , monitoring and
review process for resourcing decisions. More effective use of limited resources also
resulted from the targeting of pro
lific criminals using available information generated about
trends and patterns that
produced ‘
intelligence packages


and tasking decisions. The
development of an improved
information capability

thereby leveraged the operational
capability

and contributed

significantly to improved resource use
.


Where investigations crossed jurisdictional boundaries and required reliance on other police
forces or criminal justice agencies,
close working r
elationships became important to gather
evidence, intelligence, and
cooperation to bring investigations to a satisfactory conclusion.
Relationship capability


or relational capabilities
(Helfat et al., 2007)

-

was an important
element of leveraging resource
s to achieve outcomes
.


Given the dynamism of crime markets descri
bed earlier in this paper, developing strategies
to address these threats was an important capability.
Strategic capability

was the focus of
SUP
, in which strategy development played an important role in changing work group
structures, including the format
ion of task forces to focus resources on high profile issues.

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Crime markets exhibit entrepreneurial behavior by criminal groups who exploit technologies
and legislative loopholes. The ability to influence government and other agencies was a
political cap
ability

(Oliver & Holzinger, 2008)
. As political pressures change in response to
election cycles
(Boyne, 2002)
, the capability to interact with government appropriately
needs to be dynamic. In Police, this influence extended to obtaining funds for the
rest
ructuring and new strategy implementation following
the series of organized crime
related murders
but extended to efforts in target hardening

with victims of serious and
organized crime
.


The final identified dynamic capability is the
learning capability
.
In the present field study,
there was a clear ability to share knowledge, skills and experience in the operational
capabilities within work groups.
There was learning by senior management that led to
continual development of the DC.
However, the research
a
lso
identified weaknesses in the
analysis and use of existing data over time and between work groups
and the need for

improvements
, much a consequence of legacy IT systems
. This was the most notable area in
which Police needed to enhance its dynamic capabi
lities
.


T
hese capabilities can be seen to form a hierarchy in which each level interacts with the
next level in a reflexive fashion.
This hierarchy of capabilities is shown in Figure 2.


Insert Figure 2 about here


Figure 2 shows how each DC is developed through learning and in turn acts on the next level
DC, with each DC contributing to a leveraging of operational capabilities, and consequently
to improved use in resources, irrespective of the quantum of resources.
Leadership was an
important ingredient in the introduction and development of each capability, as suggested
by
Rosenbloom (2000);

Ambrosini & Bowman (2009); and Salvato (2003)
.


The researchers observed an increasing routini
z
ation as the research progresse
d, with initial
resistance
to change
being overtaken by acceptance as Police themselves
realized

that these
new processes were managing resources mor
e effectively than in the past.
T
hese
new
processes

became routinized over time, and while path dependence
was present, learning
enabled the development of new capabilities and new paths.


The resource prioritization process, tasking and coordinating, investigation plans and
completion reports were control processes


although not in the traditional way in whic
h
the management control systems literature usually typifies control


but nevertheless
resulted in a balance between learning/improvement, and routinization/path dependence.


The capabilities can be seen not only in the hierarchy of Figure 2, but in the s
ense of a
horizontal path, as Figure 3 shows.


Insert Figure 3 about here


Based on the sensing, seizing, transforming continuum developed by
Teece (2007)
,
Helfat &
Peteraf (2009)
, and
Ambrosini & Bowman (2009)
, Figure 3 shows how, using the field study
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data, path dependence is modified through learning such that a new path emerges, with the
intent of improved use of resources. Figure 3 shows the impact of organizational activities
and processes, the resources themselves, and the dynamic capabilities that

are utilized. The
emergence of new paths and new and developing dynamic capabilities is influenced by both
the external environment (in the field study government funding, legislation and the
operation of crime markets); as well as the internal environmen
t of internal resource
allocations, policies and procedures, the actions of leadership, and information systems,
reinforcing work by
Teece et al. (1997)

on the role of these environments in developing DC.


Taken together, the horizontal and vertical perspe
ctives provide a useful way in which to
understand the central role of learning and leadership in moving from one path to another,
and their central role in developing a hierarchy of dynamic capabilities.



Conclusion


The focus of this research, in its pu
blic sector setting, has been that value creation comes
not from the possession but the use of resources

(Penrose, 1959). This research has
answered the call for purposive research that is designed to test the theoretical
development of the DC conceptualiz
ation (Ambrosini & Bowman, 2009)

and into the causal
factors and contingencies affecting the development of DC
(Barreto, 2010; Ambrosini &
Bowman, 2009)
.
This paper is also a response to the call for more attention
to public sector
studies applying a DC per
spective
(Pablo et al., 2007)
.


This paper has sought to explore the causal factors behind the building and development of
DC, how path dependencies are
sustained by control but
modified as a result of learning,
and whether there is a hierarchy from lower

to higher order DC.


In the field study, operational capabilities were clearly distinguished from dynamic
capabilities, supporting the work of Collis (1994)

and
Winter (2003)
. The literature identifies
various categories of DC. In the vertical
perspective, t
he research showed how a hierarchy
of DC: information, relationship, strategic, political, and learning emerges with different DC
leveraging the operational capabilities. While there are likely to
be
commonalities, it is not
suggested that an
y typology of DC is universal but that the contingencies of the organization
(Aragon
-
Correa & Sharma, 2003)

and its internal and external environment
(Teece et al.,
1997)

will impact on the specific DC that emerge and develop in any particular
organization
al setting.


The horizontal perspective reinforces the
adaptive, absorptive and innovative

components
of DC
(Wang & Ahmed, 2007)
. The horizontal view recognizes path dependence
(Helfat et
al., 2007; Nelson & Winter, 1982; Eisenhardt & Martin, 2000)

through

control
; but also
reveals how paths can diverge over time (Aragon
-
Correa & Sharma, 2003)

through learning
,
in which motivations for change must be considered.


A three stage model:
sensing, seizing, and transforming was derived from

Teece (2007)
,
Helfat &

Peteraf (2009)
, and
Ambrosini & Bowman (2009)

to develop the idea of the
horizontal development of DC towards improved resource use. The research results


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summarized in Figure 3
-

demonstrated the value of this model and the link between the
horizontal s
tages and the development of specific DC.


The research found that learning is central to the development of DC, in both a vertical and
horizontal sense. In the literature, learning has been seen as a DC itself
(Pablo et al., 2007)
,
while DC has also bee
n seen to develop through learning

(Zollo & Winter, 2002)
. The
literature reveals that leadership
(Rosenbloom, 2000; Ambrosini & Bowman, 2009; Salvato,
2003)

or dynamic managerial capabilities
(Adner & Helfat, 2003)

are important in the
development of new
DC.


In the research study, a hierarchy of dynamic capabilities can be seen to result from learning
processes,
in which

path dependent organizational routines emerge through
learning and
are sustained through control. New

dynamic capabilities
are developed

through learning
into new paths and new approaches to leveraging resources. The research found that
learning was at the centre of both new paths emerging and the development of new
hierarchies and that leadership was a crucial ingredient.


The more holist
ic model presented in this paper encapsulates and extends prior findings in
the DC literature, and grounds these findings in a field study designed to test these
questions, in a research setting


the public sector
-

that has not been the focus of much
res
earch attention

in the DC literature
. It also reflects the complementarities available from
a combination of internal and external perspectives on DC
(
Di Steffano et al., 2010
).


These findings have

important implications for the theory of dynamic capabilities and
learning, but also to expand notions of resource utilization and management control in the
resource
-
constrained public sector.

This paper has questioned the overly narrow
descriptions of ma
nagement control and the need for that literature to develop broader
understandings of non
-
traditional forms of control that enable learning and improvement
but without a loss of control. The management control literature may benefit by a greater
interest
in the contribution of the literature on dynamic capabilities, which may lead to the
development of c
ontrol systems that
promot
e

learning and improvement
(Sanderson,
2001)
;
and

for the
recognition

of management control systems as a capability

(
Henri
,

2006)



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Figure 1

Stages of capability development


Prior path

Sensing


Siezing


Transforming


New capability

and









or

resource









capability development

base



















New path and










Improved resource use


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Figure 2

Hierarchy of dynamic capabilities and evolution over time


Operational

Sensing


Siezing


Transforming


Informational capability

capability









leverage
s

operational











capability



































Strategic capability

Political capability

Learning capability

Relationship capability

Learning


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Table 1: Hierarchy of Capabilities in Police

Learning

Ability to acquire, use,
share and retain knowledge for continuous
improvement; the design of legacy IT systems; and the processes to analyze
and share knowledge beyond individual work groups.

Political capability

External focus and influence with stakeholders;

Role of Serious
and Organized Strategy section of Police (
SUP
) to influence
partner agencies (eg target hardening), influence legislation, etc.;

Evidence base to seek additional funds for resources, especially for
bottleneck resources.

Strategic capability

Reacting to, a
nd anticipating changing trends & patterns in crime markets;

Development by
SUP

of crime strategies for whole police force.

Relationship
capability

With other criminal justice agencies, e.g. other police forces, Customs,
Taxation, Immigration, regional
police, prosecutorial bodies, etc.

Information

capability

Resource Prioritization (RP);

5 levels of Tasking & Co
-
ordination (T&C);

Leveraging limited resources by allocation of detectives to investigations and
prioritization of specialist resources.

Tacti
cal assessments by Theme Desks of trends and patterns from reported
crimes;

Intelligence packages (target profiles, etc.);

Detective timesheets and management reports based on these timesheets.

Operational
capability

Investigative knowledge, skills and ex
perience gained from training and
experience shared within the work group;

Communities of practice that extended knowledge, skills and experience
beyond the work group;

Coping mechanisms for major disasters.


29

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Figure

3
: Main elements of dynamic capabilities in
the field study














A
dapted from
Teece (2007), Helfat and Peteraf (2009)
,

and Ambrosini and Bowman (2009)

Organisational
activities
/process
es

-
Strategic planning

-
Re
search

-
Prediction of crime market trends

Sensing


Prior path and

Resource bases


Transforming


New path and

i
mproved
resource
use
s


Seizing


Dynamic

Capabilities

-
Theme desk

-
ARM

-
Crime reports

-
Intelligence reports

Resources
used

Outcome

Resources
used

-

Theme desk

-

Crime reports

-

I
ntelligence
packages

Level of
capabilities
involved

-

Strategic

-


Information

-
Tasking and coordination

-
Investigation

Plan
s

-
Periodi
c

meetings

-
Feedback, a
ssessments and reviews

-
New
task forces, etc.

-

Resource Prioritization (RP)

-

T&C process (5 tiers)

-

Special
ist

resources

-

Other agency relationships

-
Crime strategies

-
Influencing government & others


-
Relationship


-
Information

-

Strategic

-

Political

-

Learning

Internal

Environment/
Constraints

-
Organisational

resources allocated
to serious & organized crime

-
I
nternal
p
olicies

and
procedure

-
Leadersh
ip and
managerial

behaviour

-
Information technologies (legacy systems
)


External Environment/Constraints

-
Government policy/funding

-
Legislation

-
Dynamic c
rime markets