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JOMXXX10.1177/0149206314561301Journal of ManagementHelfat, Martin / Dynamic Managerial Capabilities
Journal of Management
Vol. XX No. X, Month XXXX 132
DOI: 10.1177/0149206314561301
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Dynamic Managerial Capabilities: Review and

Assessment of Managerial Impact on Strategic
Change
Constance E. Helfat
Dartmouth College
Jeffrey A. Martin
University of AlabamaTuscaloosa
The dynamic managerial capabilities literature has developed over the past decade to the point
where a review and synthesis of relevant literature can move the scholarly conversation forward.
The concept of dynamic managerial capabilitiesthe capabilities with which managers create,
extend, and modify the ways in which firms make a livinghelps to explain the relationship
between the quality of managerial decisions, strategic change, and organizational performance.
We clarify theoretical constructs and their relationships, review and synthesize empirical
research on the role and impact of managerial capabilities directed toward strategic change, and
suggest avenues for future research. Our review begins with an overview of theoretical conceptions of dynamic managerial capabilities. Then we organize the remainder of the review around
the three core underpinnings of dynamic managerial capabilities: managerial cognition, managerial social capital, and managerial human capital. In our review, we examine evidence from
studies of dynamic managerial capabilities and reinterpret evidence prior to the introduction of
the dynamic managerial capabilities concept through that lens. Consistent with the dynamic
managerial capabilities concept, empirical research shows that managers differ in their impact
on strategic change and firm performance and that differences in managerial cognition, social
capital, and human capital lead to different outcomes.
Acknowledgments: We are grateful to Cathy Maritan and two anonymous reviewers for helpful comments related
to this paper. Research for this paper was generously supported by the Culverhouse School of Business at the University of Alabama and the Tuck School of Business at Dartmouth.
Supplemental material for this article is available at http://jom.sagepub.com/supplemental
Corresponding author: Jeffrey A. Martin, Culverhouse School of Business, University of Alabama, 361 Stadium
Drive, Tuscaloosa, AL 35487-0225, USA.
E-mail: jmartin@cba.ua.edu
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2 Journal of Management / Month XXXX
Keywords: dynamic capabilities; resource-based theory; entrepreneurship; cognitive perspectives; strategic human capital; managerial human capital; managerial social
capital; managerial cognition; strategic renewal; resource allocation/management; top management teams/upper echelon
The dynamic managerial capabilities literature has developed over the past decade to the
point where a review and synthesis of relevant literatures can move the scholarly conversation forward. Adner and Helfat (2003) introduced the concept of dynamic managerial capabilitiesthe capabilities with which managers create, extend, and modify the ways in which
firms make a livingto help explain the relationship between managerial decisions and
actions, strategic change, and corporate performance under conditions of change. The
dynamic managerial capabilities concept extends the dynamic capabilities perspective
(Eisenhardt & Martin, 2000; Teece, Pisano, & Shuen, 1997) by directing attention to the role
of managers, individually and in teams (Augier & Teece, 2009; Harris & Helfat, 2013; Helfat
& Martin, in press; Kor & Mesko, 2013; Martin, 2011a; Teece, 2012). Much as the dynamic
capabilities perspective provides a singular focus on strategic change, rather than organizational change more broadly, the dynamic managerial capabilities concept provides a singular
focus on managerial impact on strategic change. In addition, the concept of dynamic managerial capabilities augments the resource-based literature on managerial resources (Castanias
& Helfat, 1991, 2001) by incorporating the impact of managers on strategic change.
Moreover, with respect to the wide variety of literature on top and middle managers in both
established and entrepreneurial firms, as well as literature on specific types and modes of
strategic change, the concept of dynamic managerial capabilities provides a parsimonious yet
broad lens for understanding managerial impact on strategic change across a wide range of
settings. Finally, the concept explicitly links heterogeneity in managerial capabilities to heterogeneity in firm performance under conditions of change.
As identified by Adner and Helfat (2003), three core underpinnings of dynamic managerial capabilities provide the capacity to direct strategic change: managerial cognition
(Huff, 1990), managerial social capital (Burt, 1992), and managerial human capital
(Becker, 1964). To locate research relevant to dynamic managerial capabilities, including
the three core underpinnings, we searched all articles published from 1980 through 2013
in well-regarded management journals (Administrative Science Quarterly, The Academy
of Management Annals, Academy of Management Journal, Academy of Management
Review, British Journal of Management, Industrial and Corporate Change, Journal of
International Business Studies, Journal of Business Venturing, Journal of Management,
Journal of Management Studies, Management Science, Organization Science, Strategic
Entrepreneurship Journal, and Strategic Management Journal) and other selective
sources. We sought theoretical articles on dynamic managerial capabilities, as well as
empirical articles that contained evidence linking managers directly to strategic change or
performance under conditions of change. For this reason, we excluded a large number of
studies that address the relationship between managers and firm performance but do not
provide evidence of managerial impact on strategic change or firm performance under
conditions of change.
Helfat, Martin / Dynamic Managerial Capabilities 3
Table 1
Dynamic Managerial Capabilities Studies
Contributions With a Central Role for Dynamic
Managerial Capabilities
Adner & Helfat (2003)
Helfat et al. (2007)
Peteraf & Reed (2007)
OReilly & Tushman (2008)
Augier & Teece (2009)
Eggers & Kaplan (2009)
Salvato (2009)
Sirmon & Hitt (2009)
Martin (2011a)
Martin (2011b)
Teece (2012)
Beck & Wiersema (2013)
Harris & Helfat (2013)
Kor & Mesko (2013)
Ringov (2013)
Zott & Huy (in press)
Helfat & Martin (in press)
Helfat & Peteraf (in press)
Empirical & Conceptual

Empirical
Conceptual
Conceptual
Empirical
Empirical
Empirical
Conceptual
Conceptual
Conceptual
Conceptual
Conceptual
Empirical
Conceptual
Conceptual
Contributions With a Supporting Role for Dynamic Managerial

Capabilities
Eisenhardt & Martin (2000)
Rosenbloom (2000)
Zahra, Sapienza, & Davidsson (2006)
Teece (2007)
Agarwal & Helfat (2009)
Ambrosini, Bowman, & Collier (2009)
Helfat & Peteraf (2009)
Laamanen & Wallin (2009)
Barreto (2010)
Di Stefano, Peteraf, & Verona (2010)
Pitelis & Teece (2010)
Tushman, Smith, Wood, Westerman, & OReilly (2010)
Hodgkinson & Healey (2011)
Eggers (2012)
Eggers & Kaplan (2013)
Trahms, Ndofor, & Sirmon (2013)
Conceptual
Empirical
Conceptual
Conceptual
Conceptual
Conceptual
Conceptual
Empirical
Conceptual
Conceptual
Conceptual
Empirical
Conceptual
Empirical
Conceptual
Conceptual
Note: The contributions in this table use a variety of terms to refer to dynamic managerial capabilities, including not only dynamic
managerial capabilities but also the entrepreneurial capabilities of managers, entrepreneurial managers, and asset orchestrationthe
latter is subsumed in the conceptualization of dynamic managerial capabilities. Contributions are categorized as having a central role
for dynamic managerial capabilities if these capabilities are central to either the body of the paper or the conclusions of the analysis.
In other contributions shown on the right-hand side of the table, dynamic managerial capabilities are discussed but are less central
and play a supporting role.
We found 34 theoretical and empirical works in which dynamic managerial capabilities

play a central or supporting role (see Table 1). We also found 70 additional relevant empirical
studies from the literatures on entrepreneurship, upper echelons, the resource-based view,
strategic renewal, ambidexterity, diversification, international business, innovation, competitive dynamics, managerial cognition, managerial social capital, and managerial human capital. These studies substantially enhance our understanding of dynamic managerial capabilities
even though not originally framed in this way.
In what follows, we first clarify theoretical constructs and definitions with respect to the
general concept of dynamic managerial capabilities, extending the work of Adner and Helfat
(2003) and incorporating more recent literature. Then we highlight theoretical attributes of
the three underpinnings of dynamic managerial capabilitiesmanagerial cognition, managerial social capital, and managerial human capitalthat are especially relevant to strategic
change. Using this framework, we review and synthesize empirical research on the impact of
managerial capabilities directed toward strategic change and suggest avenues for future
research. As part of the review, we examine evidence from studies of dynamic managerial
capabilities and reinterpret evidence prior and subsequent to the introduction of the dynamic
managerial capabilities concept through that lens in order to more fully understand these
capabilities.
The Concept of Dynamic Managerial Capabilities

General Concept
Following the seminal article on dynamic capabilities by Teece et al. (1997), Rosenbloom
(2000) argued that some CEOs may have dynamic capabilities that can aid strategic change.
Building on this insight, Adner and Helfat originally defined dynamic managerial capabilities as the capabilities with which managers build, integrate, and reconfigure organizational resources and competences (2003: 1012). Helfat et al. then used the term to refer to
the capacity of managers to create, extend, or modify the resource base of the organization
(2007: 3). Recently, Harris and Helfat (2013) expanded the term to indicate that dynamic
managerial capabilities may affect not only the internal attributes of an organization but also
its external environment, in line with scholarship on dynamic capabilities more generally (for
comprehensive reviews, see Ambrosini, Bowman, & Collier, 2009; Barreto, 2010; Di
Stefano, Peteraf, & Verona, 2010). Table S1 in the online supplement provides representative
definitions of the term dynamic managerial capabilities and related concepts.
The functions of dynamic managerial capabilities include what Helfat et al. term asset
orchestration (2007: 24), involving the search for resources and capabilities; their selection,
investment, and deployment (Maritan, 2001); and their reconfiguration. Asset orchestration
can create value through the development and bundling of assets that affects firms abilities
to adapt to changing conditions in their industry environments (Sirmon & Hitt, 2009: 1376).
Likewise, Augier and Teece highlight managerial discretion in orchestrating necessary
responses to technological and market changes (2009: 411). Teece continues this line of
reasoning by stressing the role of individual executives in the dynamic capabilities framework . . . [in] . . . creative managerial and entrepreneurial acts (e.g., creating new markets)
[that] are, by their nature, strategic (2012: 1395-1397). In related work, Helfat and Martin
(in press) note that creativity and innovation within organizations depends in part on the
capacity of managers to sense and seize opportunities.
In a framework closely related to the concept of asset orchestration, Teece (2007) separates the microfoundations of dynamic capabilities into the capacity to (1) sense opportunities and threats; (2) seize opportunities by choosing among possible actions, making
investments, and deploying resources; and (3) reconfigure and transform organizations and
their resources and capabilities. Building on this framing in their work on ambidexterity,
OReilly and Tushman argue that dynamic managerial capabilities are critical and emphasize
the capacity of senior managers to ensure learning, integration, and, when required, reconfiguration and transformationall aimed at sensing and seizing opportunities as markets
evolve (2008: 189). Agarwal and Helfat (2009) further note the importance of dynamic
managerial capabilities in strategic renewal (see also Helfat & Peteraf, 2009). In related
work, Trahms, Ndofor, and Sirmon (2013) propose that in turnaround situations, asset orchestration by top management may play a key role in the divestment of resources and in the
acquisition, bundling, and reconfiguring of resources.
The concept of dynamic managerial capabilities also relates directly to entrepreneurship.
As Teece (2012) emphasizes, entrepreneurial managers create markets and orchestrate
resources. Thus, in an analysis of dynamic capabilities, Zahra, Sapienza, and Davidsson
(2006) highlight the role of the entrepreneur in reconfiguring organizational resources and
routines.
Dynamic managerial capabilities have important attributes that characterize capabilities

more generally. A capability refers to the capacity to perform a particular activity in a reliable and at least minimally satisfactory manner (Helfat & Winter, 2011: 1244). Several
features of this definition are worth noting. First, the activity has an objective (Amit &
Schoemaker, 1993) with a specific purpose and an intended outcome. Thus, capabilities fill
the gap between intention and outcome, and they fill it in such a way that the outcome bears
a resemblance to what was intended (Dosi, Nelson, & Winter, 2000: 2). As Dosi et al. note,
this intentionality with respect to the purpose of a capability may be most evident during the
process of developing the capability; its subsequent use for a specific purpose reflects this
intentionality. Second, a capability enables reliable, repeated activity; otherwise, no real
capacity to perform an activity exists. Finally, to perform the activity in a minimally satisfactory manner means only that the outcome of the activity is recognizable as such (Helfat &
Winter). Not all managers have dynamic managerial capabilities, and possession of a particular capability does not imply superiority: Just as there are better and worse ways to hit a golf
ball . . . there are more or less effective ways to perform an activity (Eisenhardt & Martin,
2000: 1108).
The foregoing characteristics apply to dynamic managerial capabilities, in that such capabilities have an intended purpose (e.g., orchestration of assets for a particular purpose) and
have outcomes that are recognizable as such (e.g., reconfigured assets). These capabilities also
support patterned behavior and activity. As Dosi et al. note, such patterning extends to intentional, deliberate . . . processes involved in skill . . . deployment by individuals (2000: 3).
Underpinnings: Managerial Cognition, Social Capital, and Human Capital

Dynamic managerial capabilities draw on a set of underlying managerial resources,
namely, managerial cognition, managerial social capital, and managerial human capital
(Adner & Helfat, 2003). These resources provide the basis for the patterned aspects of managerial intentionality, deliberation, decision making, and action (Martin, 2011b). These managerial resources also underpin managerial capabilities that sustain current operations or what
might be termed managerial operational capabilities. However, our interest here concerns
the dynamic aspects of these underpinnings and the ways in which these managerial resources
enable managers to effect strategic change, rather than other aspects of the broad literature on
managerial cognition, social capital, and human capital. Next, we briefly survey the theoretical literature on each of these underpinnings as they relate to dynamic managerial capabilities and the potential for strategic change, substantially extending and updating the discussion
in Adner and Helfat.
Managerial cognition. Managerial cognition consists of mental models and beliefs (also
termed knowledge structures; Eggers & Kaplan, 2013; Walsh, 1995), mental processes
(and managerial cognitive capabilities; Helfat & Peteraf, in press), and emotions (Hodgkinson & Healey, 2011). Given the large amount and variety of information that managers
confront, they employ knowledge structures to represent their information worlds (Walsh,
1995: 280). These knowledge structures influence managers biases and heuristics that come
into play in anticipating market changes, understanding the implications of different choices,
and ultimately taking action (Garbuio, King, & Lovallo, 2011).
Evidence indicates that managers have difficulty transferring their knowledge structures
from one context to another. Gavetti (2012), however, argues that some managers have the
capacity to make associations between knowledge structures in different contexts that enable
them to sense cognitively distant yet superior market opportunities. In addition, research suggests that when a manager has been exposed to change in a source context, the capacity to
transfer knowledge to different contexts increases in the long run (Gary, Wood, & Pillinger,
2012). By implication, managers with prior experience in changing markets and organizations are more likely to have developed knowledge structures that they can apply in multiple
contexts.
In addition to knowledge structures, mental processes and emotions underpin dynamic
managerial capabilities. With respect to mental processes (also termed mental activities),
Helfat and Peteraf point to managerial cognitive capabilitydefined as the capacity of an
individual manager to perform one or more of the mental activities that comprise cognition
(in press)as a critical underpinning of dynamic managerial capabilities. These mental
activities include attention and perception, reasoning and problem solving, language and
communication, and more. With respect to emotions, Zott and Huy argue that the capacity for
emotion regulation (the management and modification of ones own emotions; in press)
is an important element of dynamic managerial capabilities.
Managerial social capital. Managerial social capital consists of goodwill derived from
relationships, both formal and informal, that managers have with others and can use to obtain
resources and information (Adler & Kwon, 2002). Thus, formal and informal work relations
provide managers with conduits for information that may be helpful in sensing new opportunities (Adner & Helfat, 2003). For example, managers who are in brokerage positions, and
thereby link individuals in different networks within and across companies, can obtain more
diverse information (Burt, 1992) that, in turn, may facilitate environmental scanning and
subsequent identification of new opportunities.
Managerial social capital is likely to underpin dynamic managerial capabilities for seizing
and reconfiguring as well. For example, social ties outside of the organization can provide
access to resources, such as financing and skilled personnel, needed for investments to seize
opportunities (Pfeffer & Salancik, 1978). Advantageous positions in an internal social network, such as a position of centrality, also may confer power over resources that are useful
in seizing opportunities. Similarly, internal power and influence derived from social capital
(Coleman, 1988) may facilitate alterations in personnel, organizational structure, and physical assets involved in reconfiguration. Thus, in discussing social capital and dynamic capabilities, Blyler and Coff argue that firms would be unable to acquire, recombine, and release
resources (2003: 680) without the social capital of individuals.
Managerial human capital. Human capital, as conceptualized by Becker (1964), refers
to learned skills and knowledge that individuals develop through their prior experience,
training, and education. Recent work has expanded the concept to include not only knowledge and skills but also psychological attributes of cognitive ability (general intelligence)
and other abilities (personality, values, and interests) of individuals, termed KSAOs
(knowledge, skills, [cognitive] ability, and other abilities; Ployhart & Moliterno, 2011). For
purposes of this review, we separate human capital from cognition and related abilities and
discuss their interrelationships below. Thus, we use the term human capital to indicate the
core characteristics that human capital comprises . . . knowledge, education, experience, and
skills (Wright, Coff, & Moliterno, 2014: 361). Some managerial human capital is specific to
particular teams, units, functional areas, technologies, firms, and industries, and other knowledge is generic (Bailey & Helfat, 2003; Castanias & Helfat, 1991, 2001; Kor, Mahoney, &
Michael, 2007). All of these forms of managerial human capital can be beneficial to the firm.
As Campbell, Coff, and Kryscynski (2012) note, human capital need not be firm specific to
create value for organizations.
Managers can draw on their knowledge and expertise to sense opportunities and threats,
seize opportunities, and reconfigure organizational resources, capabilities, and structure.
Managers with different functional area, technological, industry-specific, and firm-specific
expertise are likely to differ in their absorptive capacity (Cohen & Levinthal, 1990) for different types of information and, therefore, to differ in the opportunities that they sense. With
respect to the seizing function of dynamic managerial capabilities, managers are likely to
differ in the investments and other commitments that they make as a result of differences in
their learned expertise. Similar logic applies to reconfiguration; differences in managerial
expertise derived from human capital are likely to cause managers to differ in their reconfiguration of organizational resources.
In addition to the human capital of individual managers, the concept of dynamic managerial capabilities encompasses teams of managers (Martin, 2011a, 2011b). This leads to
considerations of unit-level managerial human capital at the level of a team (Ployhart &
Moliterno, 2011) and suggests that complementarities between team members in their
human capital may have a positive impact on firm performance (Wright et al., 2014).
Multiple underpinnings in combination. The three underpinnings of dynamic managerial
capabilitiesmanagerial cognition, social capital, and human capitalnot only have separable effects but also interact with one another (Adner & Helfat, 2003). All three underpinnings
develop through prior experience; therefore, the same experience may contribute simultaneously to the three underpinnings of dynamic managerial capabilities (Beck & Wiersema,
2013). In addition, each of the underpinnings may affect one another. Managerial cognition affects the development of human capital by influencing the search for, and absorption
of, information during education, training, and work experience, as well as how managers
interpret and utilize this information. Ployhart and Moliterno developed a model that shows
how unit-level human capital is created from the emergence of individuals knowledge,
skills, abilities, and other characteristics by explicating an emergence enabling process
(2011: 128) that amplifies and transforms individual cognition into valuable human capital
resources. In addition, human capital can affect managerial cognition. For example, in an
experimental study, Melone (1994) found that the attention (an aspect of cognition) that
executives paid to different business issues in potential acquisitions depended on their expertise (human capital).
Social capital also affects the development of human capital through the knowledge that
managers obtain from their social relationships (Castanias & Helfat, 2001; Coleman, 1988).
For example, in a study of executives in a leadership development program, Leitch,
McMullan, and Harrison (2013) found that skill development (enhancement of human capital) benefited from social ties among executives (social capital) during the program.
Managerial human capital may also affect the development of social capital as managers seek
to form social relationships in order to tap the expertise of others or are sought after for their
expertise (Adner & Helfat, 2003).
Finally, social capital may affect cognition and vice versa (Adner & Helfat, 2003).
Information obtained from social ties may influence managerial beliefs about the external
environment and internal firm competencies. In addition, elements of managerial cognition,
such as perception and attention, are likely to affect which social ties managers seek to
establish.
Measuring the Performance of Dynamic Managerial Capabilities

Managers clearly differ with respect to the three underpinnings, and these differences
are likely to result in differential outcomes. Measuring the impact of these capabilities
on outcomes raises issues that are important to address before discussing the empirical
evidence. In particular, it is important to avoid a potential tautology of measuring
dynamic managerial capabilities as firm performance (Grant & Verona, 2013; Helfat et
al., 2007). Therefore, Helfat et al. recommend that empirical assessments of the performance of dynamic capabilities of all types use a two-step process that first traces their
impact on intermediate outcomes in the form of strategic change and then assesses the
impact of such change on measures of firm performance, such as survival, growth, and
financial performance. Although measuring any type of capability independent of its
outcomes can pose challenges, studies of dynamic managerial capabilities can use a twostep process to first trace the impact of the managerial resources that underpin dynamic
managerial capabilities on strategic change and then assess the contribution of such strategic change to firm performance. This empirical approach separates the intermediate
outcomes of dynamic managerial capabilities from subsequent organizational performance (Martin, 2011a; Patel, Bachrach, & Martin, 2014). An alternate approach that
avoids a tautology involves tracing the relationship of each of the managerial resources
to firm performance under conditions of change without assessing intervening strategic
change.
In what follows, we review evidence regarding the performance of dynamic managerial
capabilities. We include only studies that provide direct evidence of the impact of managers
on strategic change, or of the impact of managers under conditions of change, which compose a subset of the much larger literature on managers and firm performance. Some of the
studies assess the impact of managers only on strategic change, others assess the effect on
firm performance of strategic changes attributable to managers, yet others employ the twostep procedure discussed above, and others assess the relationship between the underpinnings of dynamic managerial capabilities and firm performance under conditions of change
(including measures such as survival and growth).
Empirical Evidence
Several studies, summarized in Table S2 in the online supplement, provide evidence of
managerial impact on strategic change and consequent firm performance but do not examine
the underlying managerial resources. These studies link strategic change or performance
under conditions of change to stable attributes or nonrandom decisions and actions of managers, and a number of the studies refer specifically to dynamic managerial capabilities.
With respect to strategic change in general, a qualitative study by Holbrook, Cohen,
Hounshell, and Klepper (2000) documents that during the early years of the semiconductor
industry, differences in firm performance stemmed in part from differences in the firms top
executives and their strategic approaches. In a statistical study, Bertrand and Schoar (2003)
also found that manager fixed effects were important determinants of corporate investment
policies, cost-cutting policies, R&D expenditures, diversification, and acquisitionsfactors
directed toward strategic changeand that manager fixed effects were significant determinants of firm performance.
Other research has examined the impact of managers on particular aspects of strategic
change. For example, several studies have focused on asset orchestration, an important function of dynamic managerial capabilities. Sirmon and Hitt (2009), in a study of dynamic
managerial capabilities, investigated managerial decisions to invest in and deploy resources
in U.S. regional banks and found that the best performance resulted when the fit between
resource investment and deployment was highest. Eggers (2012) also found that managerial
coordination of new product development was important to new product quality in the mutual
fund industry and argued that this was suggestive of dynamic managerial capabilities. In
another study of the U.S. mutual fund industry, Ringov (2013) found that less routinized
approaches to modifying asset portfolios, which he argued were consistent with dynamic
managerial capabilities, resulted in better fund performance in more highly dynamic external
environments.
Other studies have highlighted the role of top management in asset orchestration. Maritans
(2001) study of a large pulp and paper company found that direction from the top in initiating
investments in new assets and capabilities, combined with extensive interaction with business unit managers, was critical to strategic change. In a study of ambidexterity, a topic
closely related to dynamic managerial capabilities, Tushman, Smith, Wood, Westerman, and
OReilly (2010) found that senior team integration and involvement with the business units
in 13 different companies was necessary for successful innovation outcomes. Galunic and
Eisenhardt also found that top executives in a high-technology firm continuously realigned
product-market responsibilities (termed charters) of the business units in order to keep
pace with coevolving markets and technologies (1996: 280). Additionally, Martin (2011a)
found evidence of dynamic managerial capabilities in 6 large software firms in the United
States: Multibusiness teams, composed of the senior executive leaders of business units,
affected the reconfiguration of business unit resources, new product launches, establishment
of new business units, and financial performance.
Another set of studies documented managerial impact in response to external change.
Peteraf and Reed found that managerial adjustment of the fit between operations and administrative practices following deregulation of the U.S. airline industry led to improved efficiencyindicative of how managers exercise a dynamic capability for maintaining fit over
changing conditions (2007: 1107). Adner and Helfat (2003) also found that heterogeneity in
top management restructuring in the U.S. oil industry accounted for 4.5% of the variance of
firm performance, after accounting for all other sources of performance variation, and argued
that this resulted from differences in dynamic managerial capabilities. And in an analysis of
firms experiencing declining performance more generally, Morrow, Sirmon, Hitt, and
Holcomb (2007) found that difficult-to-imitate new product introductions and mergers and
acquisitions attributable to top management had a positive effect on stock market
performance.
Finally, studies have documented managerial impact on strategic renewal. Simons (1994)
found that newly appointed managers in 10 firms altered existing management control systems (routines and procedures) and used them to implement strategic turnarounds as well as
significant redirection of existing strategies. Salvatos (2009) study of strategic renewal at
Alessi through incremental change to its new product development processes also revealed
substantial and intentional top management intervention, which he argued was indicative of
dynamic managerial capabilities. In particular, these changes came about through Alessis
managers relentlessly locating, refining, and reproducing potentially adaptive innovations
emerging from local experimentation within the firm (Salvato, 2009: 402).
The foregoing studies provide evidence of systematic managerial impact on strategic
change and firm performance in both new and established firms. Asset orchestration through
new investment, resource reconfiguration, and resource retrenchment plays an important
role. Although many of the studies focus on top management, others involve middle management (e.g., the studies by Eggers, 2012; Ringov, 2013; and Salvato, 2009). In addition, the
studies of Holbrook et al. (2000), Galunic and Eisenhardt (1996), Maritan (2001), Salvato,
Simons (1994), Tushman et al. (2010), and Martin (2011a) provide clear evidence of managerial intent in guiding strategic change. The studies also point to heterogeneity in the impact
of top managers, suggesting that some managers have more effective dynamic managerial
capabilities than others and that some managers may lack these capabilities entirely.
Therefore, we next turn to evidence regarding the three underpinnings of dynamic managerial capabilities, which may help to explain these differences in managerial effectiveness in
fostering strategic change.
Evidence Regarding Managerial Cognition, Social Capital, and

Human Capital
Numerous studies have examined managerial cognition, social capital, and human capital.
Here we review only studies that contain direct evidence of managerial impact on strategic
change and/or performance under conditions of change. We first review studies that contain
evidence pertaining only to managerial cognition, social capital, or human capital and then
report on studies that have examined multiple underpinnings simultaneously. Figure 1 summarizes the types of variables used in these studies. The top of the figure shows the types of
variables used to measure managerial cognition, social capital, and human capital. These
variables are then used as predictors of a large number of different types of measures of strategic change or performance under conditions of change, as depicted in the figure.
Managerial Cognition
We found 21 studies with evidence regarding the relationship between managerial cognition and strategic change efforts and outcomes. Of these, 14 studies focus solely on managerial cognition without incorporating managerial social or human capital. We discuss these
studies below, summarized in Table S3 in the online supplement. We discuss the remaining 7
studies in the Multiple Underpinnings of Dynamic Managerial Capabilities section. We
Figure 1
Empirical Studies: Measures of the Underpinnings of Dynamic Managerial
Capabilities, Strategic Change, and Performance Under Conditions of Change
Managerial Cognition
Managerial Social Capital
Managerial Human Capital
Knowledge Structures:
Mental Representations &
Mental Models, Beliefs,
Resource & Strategic Schemas
Social Network Ties:

External, Internal
Education:
Level, Type of Background
Network Characteristics:
Size, Strength, Closeness,
Diversity, Centrality
Work Experience:
Position, Firm, Industry,
International, Functional Area,
Management/Leadership,
Entrepreneurial
Mental Processes/Cognitive
Capabilities:
Attention, Perception
Interpretation, Reasoning
Emotions: Emotion Regulation
Relationships:
Managers in Other Firms,
Business Contacts, Directors,
Government Oficials
Strategic Change
Market Entry/Product-Market Diversiication/International & Geographic Diversiication; Acquisitions/Divestitures;Alliances;
Technological Innovation/R&D/Patenting, Knowledge Creation/New Product Development; Organizational Redesign;
Turnarounds/Restructuring; Strategic Renewal; Investment in Physical, Human and Social Capital and New Capabilities;
Resource Allocation; Deployment of Human and Physical Capital/Asset Portfolio Modiication; Reduction in Environmental
Impact; Speed of Action/Response; New Product and Service Introduction; Organizational Ambidexterity
Performance Under Conditions of Change

Survival; Growth; Time to Market; Long-term Financial Performance; Change in Sales,
Income/Proit, Employment, Productivity, Market Share, Tobins q
organize the studies below according to the three components of managerial cognition:
knowledge structures, mental processes, and emotions.
A number of studies have documented that differences in managerial knowledge structures are associated with differences in strategic change. For example, Rosenbloom (2000)
demonstrated that the inertial mind-set of NCRs long-tenured managers impeded strategic
change, but eventually a new CEO with a different mind-set was instrumental in the companys late but successful entry into computing. Laamanen and Wallin (2009) also found that
in three entrepreneurial software firms, the preexisting mental representations of top management affected the ways in which the companies developed their operational capabilities.
In addition, Nadkarni and Barr (2008) found in four industries that managerial beliefs regarding the cause-effect relationship between the environment and firm strategy (termed causal
logics) completely mediated the relationship between industry velocity and speed of firm
response to shifts in the external environment. Then, using letters to shareholders from company annual reports, Kaplan, Murray, and Henderson (2003) showed that differences between
pharmaceutical companies in the mental models of top management with regard to advances
in biotechnology led to differences in strategic initiatives in the emerging biotechnology sector. Using letters to shareholders, Nadkarni and Narayanan (2007) also found that complexity
of strategic schemas (knowledge structures used by top management in making strategic
decisions) in 14 industries was positively related to strategic flexibility in resource deployment and competitive actions, which in turn was positively related to growth in sales and net
income as well as return on investment in industries undergoing greater change.
The foregoing studies document that differences in managerial knowledge structures are
associated with differences in strategic change and consequent firm performance. However,
some case studies have documented purely negative effects of managerial knowledge structures on strategic change. Tripsas and Gavetti (2000) found that the way in which executives
conceived of their business prevented Polaroid from successfully adapting as the camera
industry shifted to digital camerasdespite the fact that Polaroid had developed leading
edge digital imaging technology. Similarly, in a study of the demise of the typewriter company Smith Corona, Danneels (2011) showed that top managements mental representations
of company resources, termed resource schemas, reflected a misunderstanding of which
company resources had value and their potential application to new markets. These two studies suggest the downside of inflexible managerial knowledge structures in contrast to the
benefits for strategic flexibility of complex knowledge structures found by Nadkarni and
Narayanan (2007).
Several studies have also examined the role of mental processes in strategic change. With
respect to the mental process of attention, the aforementioned study of Laamanen and Wallin
(2009) found that the allocation of managerial attention affected which firm operational
capabilities became the focus of development. Eggers and Kaplan (2009) also showed that in
the communications technology industry, companies whose CEOs paid greater attention to
emerging fiber optic technologies entered new fiber opticbased product markets more
quickly. The previously mentioned study by Nadkarni and Barr (2008) also found that managerial attention to the task and general environment positively affected speed of firm response
to changes in the external environment. In addition, Helfat et al. (2007) documented the
failure of Rubbermaids CEO to attend to changes in the retail market, leading to a performance decline. Taken together, these studies suggest that managerial attention to external
change facilitates the extent and speed of strategic change, and lack of attention has the
opposite result.
With respect to the mental process of interpretation, Sharma (2000) found that executives
in the Canadian oil and gas industry who interpreted environmental issues (e.g., habitat protection) as opportunities were more likely to take voluntary actions to reduce negative environmental impact. Balogun (2003) also found that the ways in which middle managers
interpreted the restructuring process in a newly privatized U.K. utility affected their actions
and those of their teams. With respect to other mental processes, Baum and Bird (2010)
showed that successful intelligencereflecting the capacity to use reasoning and problemsolving processeswas positively related to swift action and multiple improvement actions
by entrepreneurs in the printing and graphics industry, which in turn were positively related
to venture growth. And in an experimental study of decision making, Bateman and Zeithamls
(1989) results showed that, consistent with prospect theory (Kahneman & Tversky, 1984),
executives reinvested more funds in a division when the decision had a gain-oriented rather
than a loss-oriented framing.
Finally, one study examined the relationship between managerial emotions and strategic
change. Zott and Huy (in press) found that differences in emotion regulation by founders of
six early-stage firms led to differences in company effectiveness in seizing business opportunities through the shaping of human and social capital resources within the firms.
The foregoing evidence demonstrates that managerial cognitionin the form of knowledge structures, managerial mental processes or cognitive capabilities (Helfat & Peteraf, in
press), and emotionhave an impact on strategic change and associated business performance. The evidence comes from almost 30 different industries using a range of methods,
including case studies, statistical analyses, and experiments. Consistent with the dynamic
managerial capabilities concept, differences between executives in their cognition were
related to differences in strategic change and firm performance. In some instances, such as
Polaroid and Rubbermaid, managers appeared to lack dynamic managerial capabilities altogether. That is, although managerial cognition underpins dynamic managerial capabilities,
not all managers have dynamic managerial capabilities and the requisite cognition to effectively pursue strategic change.
Managerial Social Capital

We found 13 studies containing evidence regarding the relationship between managerial
social capital and strategic change efforts and outcomes. Only five of the studies focus solely
on managerial social capital without also incorporating managerial cognition or human capital. We discuss these studies below, summarized in Table S4 in the online supplement. We
discuss the remaining eight studies in the later section on research that incorporates multiple
underpinnings of dynamic managerial capabilities simultaneously.
With respect to managerial social capital, studies have examined social ties, characteristics of social networks, and managerial relationships. Three studies document that external
social ties and social networks of managers affect strategic change. Haunschild (1993) found
that firms undertook more acquisitions when top managers had a larger number of external
director ties and greater network centrality. McDonald and Westphal (2003) showed that
CEO advice seeking from managers with nonredundant information outside of the firm had
a positive impact on the extent of change in product-market and geographic diversification.
In addition, Prashantham and Dhanaraj (2010) found that in three out of four new ventures in
the Bangalore software industry, entrepreneurs preexisting social relationships in the United
States and in U.S. multinational firms facilitated geographic diversification in the form of
entry into the United States.
Four of the studies also provide evidence that managerial social capital affects firm performance under conditions of change. For example, McDonald and Westphal (2003) found
that CEO advice seeking from managers with nonredundant information not only affected
diversification but also was positively associated with subsequent firm performance. In addition, a study by Collins and Clark (2003) of 73 high-technology firms showed that external
network range (diversity of contacts), strength of external ties, and internal network size
(number of contacts) of the top management team (TMT) as a whole was positively related
to sales growth. However, external network size, internal network range, and strength of
internal ties were not significant. Acquaah (2007) also found that social capital of top executives in small-to-medium-sized enterprises in Ghanadeveloped through relationships with
top managers at other firms, government officials, and community leaderswas positively
and significantly related to growth of sales, net income, and productivity, as well as return on
assets and sales.
These studies point to the benefits of external managerial social capital in particular for
strategic change in the form of acquisitions and diversification, as well as for firm performance under conditions of change, including with respect to firm growth.
Managerial Human Capital

Studies of managerial human capital have relied on measures of the amount and type of
education and work experience. Although researchers in the upper echelons tradition
(Hambrick & Mason, 1984) have viewed education and work experience as proxies for psychological constructs such as beliefs and values, researchers in this tradition have recently
used education or work experience explicitly as measures of human capital (e.g., Geletkanycz
& Boyd, 2011; Khanna, Jones, & Boivie, 2014). We take this approach here, consistent with
the literature on strategic human capital (Wright et al., 2014). Nevertheless, it is important to
acknowledge that education is correlated with managerial cognition (particularly general
intelligence, also termed cognitive ability; Ployhart & Moliterno, 2011) and that work
experience is correlated with both managerial cognition and social capital, per our earlier
discussion. We return to this issue later.
We found 51 studies with evidence regarding the impact of managerial education or work
experience on strategic change efforts and outcomes. These studies come from a variety of
research streams, including entrepreneurship and upper echelons, as well as the resourcebased view, international business, strategic renewal, ambidexterity, diversification, innovation, and competitive dynamics. Thirty-six studies have measures of education and/or work
experience but do not include measures of managerial cognition or social capital; these are
summarized in Table S5 in the online supplement. The remaining 15 studies incorporate
multiple underpinnings of dynamic managerial capabilities simultaneously, as summarized
in Table S6 in the online supplement. All of the studies contain quantitative analyses of the
amount or type of education and/or work experience for individual managers (primarily
CEOs or firm founders), the TMT, or both. Some studies include measures of heterogeneity
within the TMT, which may reflect complementarities of human capital discussed earlier,
even though the original studies did not necessarily interpret these measures in this way.
As a group, the studies include 21 different types of variables that measure education
and work experience. Given the large number of studies as well as the number and variety
of variables, we have divided the human capital variables into three sets, as reflected in
Tables 2, 3, and 4. We list each type of variable and indicate the sign of the estimated coefficient if statistically significant as well as statistically insignificant coefficients. The studies
that also contain measures of social capital or cognition are indicated with an asterisk. Each
table contains a different set of variables in the columns. Studies that do not include the column variables shown in a particular table are not included in that table. A blank space in a
column indicates that the variable was not included in the study in question.
Tables 2 through 4 indicate that the studies vary considerably in which variables they
incorporate. In addition, the number of studies that incorporate any one type of variable is
relatively low. The tables show that only two types of education variables (CEO/founder
level of education and TMT level of education) and six types of work experience variables
(TMT firm tenure, TMT firm tenure heterogeneity, TMT functional area heterogeneity, TMT
industry experience, founder[s] prior experience as entrepreneur/self-employed, and
founder[s] prior management/leadership experience) have evidence from 10 or more studies.
Although a majority of the results for each of the two education variables indicates a positive
and significant effect on strategic change or performance, a nontrivial proportion of the
results lacks statistical significance. The results are similar for five of the six work experience variables (not including TMT firm tenure), which have a majority or near majority of
15
Bruderl & Preisendorfer (2000)

Tihanyi, Ellstrand, Daily, & Dalton
(2000)
Carpenter & Fredrickson (2001)
D. Y. Lee & Tsang (2001)
Product-market entry
Change in extent of diversificationg
Firm survivald
Boeker (1997a)
Boeker (1997b)
Pennings, Lee, & van Witteloostuijn
(1998)*
Almus & Nerlinger (1999)
Global strategic posturei

New venture growth
New firm growth

International diversification
Venture growth
Market share and profit growth
Hambrick et al. (1996)
Thomas, Clark, & Gioia (1993)*
Competitive actions/responsesf
Number of new products and

services introduced
New venture growth and survival
Bates (1990)
Finkelstein & Hambrick (1990)
Stuart & Abetti (1990)
Grimm & Smith (1991)
Wiersema & Bantel (1992)
Cooper, Gimeno-Gascon, & Woo

(1994)
Hambrick, Cho, & Chen (1996)
New firm survival

Strategic changea
New venture early performance
Strategic change
New venture survivald
Change in extent of diversification
Cooper, Woo, & Dunkelberg (1989)
New venture performance
Dependent Variable(s)
Technical and administrative

innovation
Venture size
Van de Ven, Hudson, & Schroeder

(1984)
Bantel & Jackson (1989)
Article
NSe
NS
Mixed
Results
NS
NS
NS
+ (profit)
MS+ (market
share)
NS
+
Mixed Results
NS
NS
+ (larger
firms)
(small
firms)
TMT Firm
CEO/
CEO Tenure CEO Firm TMT Firm
Tenure
Founder Ed.
in Position Tenure
Tenure
Heterogeneity
Level
Table 2
Human Capital Variables Set 1
+ (market
share)
MS+ (profit)
Mixed Results
NSc
TMT Ed.
Level
NS
NS
NS
+ (business
management)
+
(technology)
+
(MBAh)
MS+ (science
PhD)
NS
TMT Ed. Level CEO/Founder

TMT Ed.
Heterogeneity Ed. Background Background
(continued)
Mixed Results
TMT Ed.
Background
Heterogeneity
16
Article
Strategic changea
Activity directed toward starting
a business
Time to first sale, profits
Sales growth
New venture survival, profit, and

employment
New venture growth
Tobins q
Generation/implementation of
new ideas
Knowledge creation capability
New products and services
Mode of foreign direct investment
Novelty in geographic location of
foreign direct investment
Revenues, number of employees,
profitability relative to
competitors, growth, occupancy
and customer satisfaction,
tourism and business strength
Optical technologies patents
Datta, Rajagopalan, & Zhang (2003)

Davidsson & Honig (2003)*
Bosma, van Praag, Thurik, & de Wit

(2004)
Colombo & Grilli (2005)
Kor & Mahoney (2005)
Moran (2005)*
Kaplan (2008)*
Haber & Reichel (2007)
Smith, Collins, & Clark (2005)*

Smith et al. (2005)*
Hermann & Datta (2006)
Barkema & Shvyrkov (2007)

Kor (2003)
Barker & Mueller (2002)
Export sales, percentage of sales

exported, number of employees,
sales revenues, profit relative to
competitors
R&D intensity relative to industry
Product line experimentation

Profits per film
Westhead, Wright, & Ucbasaran

(2001)
Miller & Shamsie (2001)

Miller & Shamsie (2001)
NS
j
(1416
years)j
NS
MS
MSn
+
+
(moderator)l
+
NS
+ (profit
only)
NS
+k
NS
+ (only
founders)
NS
TMT Firm
CEO/
Tenure
Founder Ed.
in Position Tenure
Tenure
Heterogeneity
Level
Table 2 (continued)
+
NS
NSm
NS
TMT Ed.
Level
MS+
(technology)
+
(management)
NS
+
(science/
engineering)
+ (economics/
management)
MS+
(science/
technology)

TMT Ed.
(continued)
NS
TMT Ed.
Background
Heterogeneity
17
Strategic initiatives in
biotechnology
Number of opportunities identified
Organizational ambidexterity
Venture emergence
Long-term (5-year) firm
performance
Responses to competitor actions
NS
+ (likelihood of
retaliation)
NS (lag in
retaliation)
NS
+
TMT Ed.
Level
MS+

TMT Ed.
NS
TMT Ed.
Background
Heterogeneity
Note: Tables 2, 3, and 4 represent three contiguous sets of human capital variables. Studies that do not include the column variables shown in a particular table are not included in that table. A blank
space in a column indicates that the variable was not included in the study question. Plus signs indicate positive and statistically significant at the .05 level or less; minus signs indicate negative and
statistically significant at the .05 level or less; MS+ indicates positive and statistically significant at the .10 level or less (marginally significant); MS indicates negative and statistically significant
at the .10 level or less; NS indicates nonsignificant at the .10 level or less; asterisks next to author names denote articles that contain measures of managerial cognition or social capital; Ed. =
education; TMT = top management team.
aStudy measured strategic persistence; table indicates impact on the converse.
bPrimarily in high discretion computing industry.
cIndividual managers.
dStudy measured firm dissolution; table indicates impact on the converse.
eNumber of years in decision-making role.
fPropensity, significance, noteworthiness, scope, execution speed for action characteristics; propensity, noteworthiness, scope, generation speed, execution speed for response characteristics.
gUnless firm performance was below the mean.
hNoninnovative firms.
iComposite of foreign sales, foreign production, and geographic diversity.
jFor Hollywood studio heads; study also found positive interaction of tenure and product line experimentation on profits per film.
kAs part of openness to change measure.
lModerates R&D intensity.
mIndividual product and sales managers.
nPrior to becoming CEO.
Gruber, MacMillan, & Thompson

(2012)
Wolf-Christian, Knig, Enders, &
Hambrick (2013)*
Marcel, Barr, & Duhaime (2011)*
Cao, Simsek, & Zhang (2010)*

Dimov (2010)*
Geletkanycz & Boyd (2011)*
Article
TMT Firm
CEO/
Tenure
Founder Ed.
in Position Tenure
Tenure
Heterogeneity
Level
Table 2 (continued)
18
NS
NS
MS
Employment growth of venture

International diversification
Global strategic posturee
Pennings, Lee, & van Witteloostuijn

(1998)*
Tihanyi, Ellstrand, Daily, & Dalton
(2000)
Carpenter & Fredrickson (2001)
Speed (less delay) to obtain

foreign sales
Firm survivald
Reuber & Fischer (1997)
+ (R&D/
engineering)
NS (marketing/
sales)
Mixed Results
+
Competitive actions/responsesc
Market share and profit growth
Product-market entry
NS
Hambrick, Cho, & Chen (1996)

Hambrick et al. (1996)
Boeker (1997a)
+
(marketing/sales)
NS
NS
Entrepreneurial strategy
Venture survival and growth
Low- vs. high-growth ventures
Strategy change
New venture survivalb
Time to market of first product

Technical and administrative

innovation
Sales growth in first 4 years,
annual sales
TMT Functional
Area Experience
+ (TMT)
+ (TMT)
+ (TMT)
TMT
CEO/TMT
Functional
International
Area
Heterogeneity Experience

(1994)
Cho & Hambrick (2006)*
Eisenhardt & Schoonhoven (1990)

Schoonhoven, Eisenhardt, & Lyman
(1990)
Grimm & Smith (1991)
Bruderl, Preisendorfer, & Ziegler
(1992)
Siegel, Siegel, & Macmillan (1993)
Eisenhardt & Schoonhoven (1990)
Bantel & Jackson (1989)
Article
CEO/Founder
Functional Area
Experience
Table 3
CEO/Founder
Industry
Experience
+ (for highgrowth firms)
TMT Industry
Experience
(continued)
NS (sales
growth)
MS+ (sales)
TMT Industry
Experience
Heterogeneity
19
R&D intensity relative to

industry
Sales growth
Venture survival, profit,
employment
New venture survival
Completed product development,
initiated marketing, obtained
inputs for new venture
New venture growth

Knowledge creation capability
New products and services
Entrepreneurial strategy
New venture survival and sales
Mode of foreign direct

investment
International alliance formation
Venture emergence
Barker & Mueller (2002)
Kor (2003)
Bosma, van Praag, Thurik, & de Wit
(2004)*
Delmar & Shane (2004)

Smith, Collins, & Clark (2005)*
Smith et al. (2005)*
Cho & Hambrick (2006)*
Hermann & Datta (2006)
Dimov (2010)*
H.-U. Lee & Park (2008)
Export sales, percentage of

sales exported, number of
employees, sales revenues,
profit vs. competitors

(2001)
Article
MS+
(throughput)
+ (technology)
+ (engineering/
R&D/
marketing)
CEO/Founder
Functional Area
Experience
TMT Functional
Area Experience
NS
MS+
NS
+ (TMT, high
uncertainty
industries)
MS+ (CEO)
TMT
CEO/TMT
Functional
International
Area
Table 3 (continued)
MS+ (export
variables)
NS (number of
employees, sales)
+ (profits)
CEO/Founder
Industry
Experience
NS
+ (product
development)
NS (marketing,
inputs)
+ (technology)
NS
NS
(tenure
and tenure
heterogeneity)
NS (survival)
+ (sales)
(continued)
TMT Industry
Experience
Heterogeneity
TMT Industry
Experience
20
Responses to competitor actions

Less erratic strategic decisions
Number of opportunities
identified
Strategic initiatives in
biotechnology
Marcel, Barr, & Duhaime (2011)*

Mitchell, Shepherd, & Sharfman
(2011)*
(2012)
Wolf-Christian, Knig, Enders, &

Hambrick (2013)*
+ (management)
(technology,
marketing)
+ (five functional
areas, includes
CEO)
TMT Functional
Area Experience
TMT
CEO/TMT
Functional
International
Area
NS
(biotechnology)
NS
CEO/Founder
Industry
Experience
NS
NS (includes the
CEO)
TMT Industry
Experience
TMT Industry
Experience
Heterogeneity
Note: Tables 2, 3, and 4 represent three contiguous sets of human capital variables. Studies that do not include the column variables shown in a particular table are not included in that table. A blank
space in a column indicates that the variable was not included in the study question. Plus signs indicate positive and statistically significant at the .05 level or less; minus signs indicate negative and
statistically significant at the .05 level or less; MS+ indicates positive and statistically significant at the .10 level or less (marginally significant); MS indicates negative and statistically significant
at the .10 level or less; NS indicates nonsignificant at the .10 level or less; asterisks next to author names denote articles that contain measures of managerial cognition or social capital; TMT =
top management team.
aIndividual managers.
bPrior to becoming CEO.
cPropensity, significance, noteworthiness, scope, execution speed for action characteristics; propensity, noteworthiness, scope, generation speed, execution speed for response characteristics.
dStudy measured firm dissolution; table indicates impact on the converse.
eComposite of foreign sales, foreign production, and geographic diversity.

relative to competitors
Li & Zhang (2007)
Article
CEO/Founder
Functional Area
Experience
Table 3 (continued)
Table 4
Article
Van de Ven, Hudson, &

Schroeder (1984)
Cooper, Woo, & Dunkelberg
(1989)
Bates (1990)
Schoonhoven, Eisenhardt, &
Lyman (1990)
Stuart & Abetti (1990)
Bruderl, Preisendorfer, & Ziegler
(1992)
Siegel, Siegel, & Macmillan
(1993)
(1994)
(2001)

Bosma, van Praag, Thurik, & de
Wit (2004)*

Forbes (2005)
Haber & Reichel (2007)
Dimov (2010)*
(2012)
Founder(s) Prior Experience

as Entrepreneur/SelfEmployed
Founder(s) Prior
Management/Leadership
Experience
+ (large company
experience)
+
NS
NS
NS
NS

Venture size
New firm survival
shipment
Early performance of new
ventures
New venture survivala
Compared low- vs. high-growth
ventures
Venture survival and growth
Venture employment growth
Export sales, percentage of
sales exported, number of
employees, sales, profit
relative to competitors
Activity directed toward starting
a business
Time to first sale, profits
New venture survival, profit,
and employment
Completed product
development, initiated
marketing, obtained inputs for
new venture
New venture survival
New venture growth
Strategic decision speed
New venture survival and sales
Revenues, number of
employees, profitability
vs. competitors, growth,
occupancy and customer
satisfaction, tourism and
business strength
Venture emergence
Number of opportunities
identified
NS
NS
NS
+
NS
NS
+ (profit)
NS (survival, employment)
+
+ (survival)
NS (profit, employment)
+
+
+
+ (survival)
MS+ (sales)
NS (+ only for revenues)
NS
NS
+ (TMT)
NSb
Note: Tables 2, 3, and 4 represent three contiguous sets of human capital variables. Studies that do not include the column variables
shown in a particular table are not included in that table. A blank space in a column indicates that the variable was not included in the
study question. Plus signs indicate positive and statistically significant at the .05 level or less; MS+ indicates positive and statistically
significant at the .10 level or less (marginally significant); NS indicates nonsignificant at the .10 level or less; asterisks next to author
names denote articles that contain measures of managerial cognition or social capital; TMT = top management team.
aPrior to becoming CEO.
bInteraction with entrepreneurial experience.
positive and significant coefficients but a substantial proportion of nonsignificant results.

TMT functional area experience, with 8 studies, displays a similar pattern. TMT firm tenure
is more equally balanced between positive and negative coefficients but also has several
nonsignificant results.
The rest of the variables in Tables 2 through 4 have fewer studies. For CEO and founder
educational background, a degree in science/engineering or management seems positive in
situations in which this experience is relevant, as does TMT background in technology/science, although three studies containing these variables have nonsignificant results. With
respect to heterogeneity of TMT educational background, two studies found positive effects,
two found nonsignificant results, and one found mixed results. Other work experience variables have few studies, and the results are mixed as well. For CEO tenure in the position, one
study found a positive effect, three found a negative effect, and three found nonsignificant
effects. CEO firm tenure has one positive and four negative effects. TMT international experience is positive in four studies, CEO international experience is marginally positive in one
study, and CEO/founder experience in the same industry has some positive and some nonsignificant results.
Overall, with the exception of CEO tenure in the firm and the job, the results show a
majority or near majority of positive and significant results, along with a nontrivial number
of insignificant results. Given these results, it seems reasonable to conclude that the studies
provide suggestive evidence that most forms of education and prior related work experience
do not harm strategic change and firm performance under conditions of change and are often
helpful. This tentative conclusion goes against the perception that prior managerial work
experience generally harms strategic change. Instead, top managers may have been selected
for their roles in part because of their human capital (Hambrick, 2007), and entrepreneurs
may have self-selected into their roles on the basis of their prior experience as well.
Multiple Underpinnings of Dynamic Managerial Capabilities

As noted earlier, the three underpinnings of dynamic managerial capabilities are related.
If we are to draw strong conclusions, it is important to consider all three underpinnings of
dynamic managerial capabilities together in each analysis. Otherwise, any one measure of
cognition or social capital or human capital may in fact reflect all three of these underpinnings simultaneously.
Some of the studies in Tables 2 through 4 that contain measures of education and/or work
experience also include separate measures of social capital or cognition. (No study includes
measures of all three underpinnings.) The eight studies that pertain to managerial social capital measured this construct in a variety of ways, including number of direct ties to business
contacts internal and/or external to the firm (Cao, Simsek, & Zhang, 2010; Geletkanycz &
Boyd, 2011; Moran, 2005; Smith, Collins, & Clark, 2005) and closeness or strength of the ties
(Moran; Smith et al.), prior experience with potential clients of accounting firms (Pennings,
Lee, & van Witteloostuijn, 1998), external communication and information gathering (Bosma,
van Praag, Thurik, & de Wit, 2004; Davidsson & Honig, 2003; D. Y. Lee & Tsang, 2001), and
involvement in business networks (e.g., trade associations, chambers of commerce, business
service organizations; Bosma et al.; Davidsson & Honig). These measures are similar to those
in the studies of managerial social capital reported earlier, which used measures of social ties,
characteristics of social networks, and managerial relationships.
These studies found that managerial social capital was positively related to strategic
change through a positive relationship with knowledge creation capability, which in turn
mediated the impact of social capital on the number of new products and services introduced
(Smith et al., 2005); the impact on organizational ambidexterity (Cao et al., 2010); and the
impact on innovation (idea generation and implementation; Moran, 2005). The studies also
found a positive relationship between managerial social capital and performance under conditions of change, including the likelihood of continuing in business (Pennings et al., 1998);
growth (D. Y. Lee & Tsang, 2001), having sales or positive profits (Davidsson & Honig,
2003), and survival, employment, and/or profits for entrepreneurial firms (Bosma et al.,
2004); and long-term performance for established firms (Geletkanycz & Boyd, 2011). By
controlling for managerial education and/or work experience, these studies strengthen the
conclusions of the studies discussed earlier that managerial social capital, particularly involving relationships outside of the firm, is positively associated with strategic change and performance under conditions of change.
Seven other studies in Tables 2 through 4 incorporated measures of managerial cognition
rather than social capital, including opportunity confidence, defined as the beliefs of entrepreneurs about the feasibility and future success of new ventures (Dimov, 2010); CEO
metacognitition, defined as the extent of the belief that one knows how to think about a
task in order to successfully accomplish that task (Mitchell, Shepherd, & Sharfman, 2011:
691); perceptions of top executives regarding causal links between types of competitive
attacks and firm performance (Marcel, Barr, & Duhaime, 2011); CEO perceptions of strategic issues as more versus less controllable (Thomas, Clark, & Gioia, 1993); CEO attention to
emerging technologies (Kaplan, 2008) and discontinuous technologies (Wolf-Christian,
Knig, Enders, & Hambrick, 2013); and entrepreneurial attention of the TMT (Cho &
Hambrick, 2006).
With one exception (Wolf-Christian et al., 2013), the studies found a positive effect of
managerial cognition. With respect to strategic change, the studies found that greater entrepreneurial attention was associated with a more entrepreneurial strategy (Cho & Hambrick,
2006) and more attention to emerging technologies was positively associated with investments in those technologies (Kaplan, 2008), more well-developed metacognition was associated with less erratic strategic decisions (Mitchell et al., 2011), perception of strategic issues
as more controllable was associated with introduction of more new products and services
(Thomas et al., 1993), and perceptions of causal links involving competitor actions was
related to responses to those actions (Marcel et al., 2011). Dimov (2010) also found that
greater opportunity confidence was positively associated with the success of new ventures.
The foregoing studies of managerial cognition incorporated either managerial beliefs
(generally considered as part of knowledge structures) or the mental processes of attention
and perception. Like the studies of knowledge structures and mental processes reported earlier, these studies found that differences in managerial cognition are associated with differences in strategic change and performance. By controlling for education and/or work
experience, these studies strengthen the findings of the studies of managerial cognition
reported earlier.
The studies in Tables 2 through 4 that included measures of social capital or cognition also
are consistent with the results of the other studies of human capital in these tables. In the
studies that include measures of social capital or cognition, slightly less than half the
coefficients for education and work experience are positive and significant, about half the
coefficients are nonsignificant, and a few coefficients are negative and significant. Although
no studies included all three underpinnings together, the evidence supports our earlier conclusion that human capital does not appear to harm strategic change and performance under
conditions of change and often has a positive effecteven when controlling for managerial
cognition and social capital.
Discussion and Conclusion

The dynamic managerial capabilities concept is distinct in its singular focus on the capacity of managers, individually and in teams, to effect strategic change. The theory argues that
firms whose managers have superior dynamic managerial capabilities can adapt and change
more successfully than firms whose managers have less effective or no dynamic managerial
capabilities. This, in turn, has implications for competitive advantage and disadvantage as
firms and industries evolve. We began our review by first clarifying and extending the concept of dynamic managerial capabilities, including with respect to the three core underpinnings of dynamic managerial capabilities: managerial cognition, managerial social capital,
and managerial human capital. These underpinnings support key functions of dynamic managerial capabilities, including asset orchestration and the closely related functions of sensing,
seizing, and reconfiguring. In our theoretical review, we integrated many strands of research
on these underpinnings and their role in asset orchestration and other aspects of strategic
change and illuminated interrelationships among the three underpinnings.
To assess the empirical evidence, we first discussed methods for estimating the contribution of dynamic managerial capabilities to strategic change and performance under conditions of change. Then we brought together findings from many different streams of literature.
Overall, the empirical evidence suggests that firms differ in their dynamic managerial capabilities and that these differences are an important source of heterogeneity in firm performance under conditions of change (e.g., Peteraf & Reed, 2007; Sirmon & Hitt, 2009).
Moreover, differences in strategic change and firm performance are underpinned by differences in managerial cognition (e.g., Zott & Huy, in press), managerial social capital (e.g.,
Prashantham & Dhanaraj, 2010), and managerial human capital (e.g., Sirmon & Hitt). Studies
have also found that these underpinnings have a joint effect on strategic change. For example, Davidsson and Honig (2003) found that both managerial human capital and social capital
influenced actions taken by entrepreneurs in starting a business, as well as time to first sales
and profitability. In addition, Kaplan (2008) found that both managerial human capital and
cognition influenced firms investments in new technical domains, positioning the firms to
adapt to changing markets.
Overall, our review extends and deepens the conceptualization of dynamic managerial
capabilities introduced by Adner and Helfat (2003) and provides an empirical and theoretical
foundation for future research. Moreover, we show how the dynamic managerial capabilities
perspective can add new understanding to related literatures, such as TMTs and entrepreneurship, in which leaders have a responsibility to guide organizational growth, adaptation, and
strategic change.
Our review also points to many unanswered questions and opportunities for future
research. First, with regard to the empirical evidence on the underpinnings of dynamic
managerial capabilities, the evidence regarding managerial social capital is sparser than for
the other underpinnings, suggesting a need for additional research regarding the impact of
managerial social capital on strategic change. In addition, no studies of which we are aware
have incorporated all three underpinnings together as predictors of strategic change and/or
performance under conditions of change. Incorporating the three underpinnings together
would help us better understand which underpinnings matter most for strategic change.
Moreover, most studies that included multiple underpinnings of dynamic managerial capabilities did not assess their interactions. Ascertaining whether such interactions have a positive or negative effect on dynamic managerial capabilities is an important avenue for future
research. For example, although research suggests that greater managerial social capital and
cognitive ability (general intelligence) increases human capital (Burt, 1992; Ployhart &
Moliterno, 2011), more extensive social ties may also lead to information overload and a
reduction in cognitive capacity available for information processing regarding any one issue
(Khanna et al., 2014).
Our review of the empirical literature also suggests that more research is needed to answer
the following question: Under which conditions do managerial cognition, social capital, and
human capital have a positive impact on strategic change and performance under conditions
of change? Although prominent studies have called attention to the negative impact of managerial cognitive rigidities on strategic change (e.g., Tripsas & Gavetti, 2000), our review of
the broader literature found substantial evidence to the contrary. Prior research also has suggested that the human capital of incumbent managers can be detrimental to strategic change
if these managers have education and prior work experience rooted in the original environment (see Finkelstein, Hambrick, & Cannella, 2009). However, our review showed that, with
the exception of CEO tenure in the firm and the job, few studies have found a negative effect
of CEO, founder, and TMT human capital on strategic change and firm performance under
conditions of change. Instead, the studies show either positive or nonsignificant effects of
various types of human capital. The precise conditions under which managerial human capital, cognition, and social capital have a positive, negative, or no impact on strategic change
remains an open question.
More generally, there are many multilevel and cross-level issues to address. For example,
the concept of dynamic managerial capabilities applies not only to individual managers but
also to teams of managers (Martin, 2011a). With respect to human capital, Ployhart and
Moliterno (2011) note that investigation of multilevel phenomena includes the relationship
between the human capital of individuals and of teams. This opens up several areas for
dynamic managerial capabilities research. For example, Beck and Wiersema (2013) argue
that breadth of experience among managers may improve a team-level capability for strategic change, as this would provide a broader understanding of the market environment and the
strategic actions available to the firm. However, other research has found that innovation can
benefit from teams with deep knowledge of a situation (Taylor & Greve, 2006). Surprisingly,
as shown in Tables 2 through 4, there is no conclusive evidence regarding the impact of heterogeneity in most types of TMT human capital (excepting TMT firm tenure heterogeneity,
which has a largely positive effect). This suggests the following question for future research
on dynamic managerial capabilities: Does diversity of the human capital of individual managers within a team have a beneficial impact on strategic change and firm performance under
conditions of change?
There is also relatively little evidence about how the social capital and cognition of individual managers interact, aggregate up to the team level, and then affect strategic change.
Ployhart and Moliterno (2011) and Moliterno and Mahony (2011) point to the need to understand cross-level effects in the emergence of managerial cognition and social capital.
Additionally, Kor and Mesko (2013) argue that the dominant logic of the firmthe conceptualization of its business (Prahalad & Bettis, 1986)stems from all three underpinnings of
dynamic managerial capabilities. Kor and Mesko further suggest that CEOs shape the dominant logic of TMTs and that their collective dynamic managerial capabilities can reshape the
firms dominant logic, thereby facilitating firm adaptation to change (Bettis & Prahalad,
1995). How these cross-level and multilevel factors affect strategic change and firm performance under conditions of change would be a fruitful area for future research.
The foregoing issues lead to the following question for future research: How does managerial team heterogeneity in the three core underpinnings of dynamic managerial capabilities
together affect strategic change and firm performance under conditions of change? There is
relatively little evidence about how the interaction of the three underpinnings at the team
level affects strategic change and performance under conditions of change. In addition, it
would be helpful to have more complete answers to the following question: How do dynamic
managerial capabilities and their underpinnings interact with firms resource portfolios to
influence strategic change?
Like the avenues for future research described above, a multilevel and cross-level perspective on dynamic managerial capabilities can provide a means to explore the microfoundations of dynamic managerial capabilities (Felin, Foss, Heimeriks, & Madsen, 2012). For
example, Argote and Ren (2012) develop a conceptual argument that transactive memory
systems (TMSs) are a microfoundation of dynamic capabilities that underpins collective
decisions to adapt, integrate, and reconfigure resources. A TMS refers to the understanding
within a group of which individuals possess which sorts of knowledge (Wegner, 1987) or,
more broadly, to the cooperative division of labor for learning, remembering, and communicating team knowledge (Lewis, 2004: 1519). TMSs are socially embedded, dependent on
individual knowledge and skills, developed through social interactions and collective problem-solving experience, and organizationally idiosyncratic, in which team members are cospecialized assets (Argote & Ren, 2012: 1377). Clearly, TMSs are conceptually related to
dynamic managerial capabilities at the team level, including managerial cognition (e.g.,
memory), managerial human capital (knowledge and skills), and managerial social capital
(social interactions). Moreover, well-developed measures and scales exist for determining
the presence of a TMS within a team (Lewis, 2003). These scales could provide the basis for
a study that tests for the existence of a TMS within a management team and measures the
impact of a TMS on the teams strategic change initiatives as well as the relationship to firm
performance.
The singular focus of the dynamic managerial capabilities concept on the ability of managers to effect strategic change offers many opportunities to add to the rich conversation of
why managers matter. We have identified a number of avenues to extend research on
dynamic managerial capabilities in new directions. In addition, the concept of dynamic managerial capabilities can inform other literatures concerned with strategic change, including
those on temporary advantage (DAveni, Dagnino, & Smith, 2010), ecosystem orchestration
(Pitelis & Teece, 2010) and strategic partnerships, and industry and firm evolution. Since
dynamic managerial capabilities involve strategic decision making, the topic is relevant to
research on strategy as practice as well (e.g., Whittington, 2006). Moreover, given the concern of dynamic managerial capabilities with (re)configuring the organization, the topic has
implications for research on resource allocation and organization design (e.g., Arrfelt,
Wiseman, McNamara, & Hult, in press). And last but not least, with its focus on individual
managers, dynamic managerial capabilities have a central role to play in research on the
microfoundations of organizational capabilities.
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JOMXXX10.1177/0149206314561301Journal of ManagementHelfat, Martin / Dynamic Managerial Capabilities

Dynamic Managerial Capabilities: Review and

2 Journal of Management / Month XXXX

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Empirical & Conceptual

Contributions With a Supporting Role for Dynamic Managerial

We found 34 theoretical and empirical works in which dynamic managerial capabilities

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The Concept of Dynamic Managerial Capabilities

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Helfat, Martin / Dynamic Managerial Capabilities 5

Dynamic managerial capabilities have important attributes that characterize capabilities

Underpinnings: Managerial Cognition, Social Capital, and Human Capital

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Helfat, Martin / Dynamic Managerial Capabilities 7

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Measuring the Performance of Dynamic Managerial Capabilities

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Evidence Regarding Managerial Cognition, Social Capital, and

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Managerial Social Capital

Managerial Human Capital

Social Network Ties:

Performance Under Conditions of Change

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Managerial Social Capital

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14 Journal of Management / Month XXXX

Managerial Human Capital

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Bruderl & Preisendorfer (2000)

Global strategic posturei

New firm growth

Market share and profit growth

Hambrick et al. (1996)

Thomas, Clark, & Gioia (1993)*

Number of new products and

Cooper, Gimeno-Gascon, & Woo

New firm survival

Cooper, Woo, & Dunkelberg (1989)

New venture performance

Technical and administrative

Van de Ven, Hudson, & Schroeder

TMT Ed. Level CEO/Founder

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New venture survival, profit, and

Datta, Rajagopalan, & Zhang (2003)

Bosma, van Praag, Thurik, & de Wit

Kor & Mahoney (2005)