How Was the Dynamic Capability Constructed in China’s Private Manufacturing Enterprises? A Case Study of Geely Auto

Jiang Yujie

Foreign Economics & Management Vol. 41, Issue 06, pp. 17 - 28,42 (2019)  DOI:10.16538/j.cnki.fem.2019.06.002

Summary

Dynamic capabilities are crucial for China’s private manufacturing enterprises to adapt to environmental changes and maintain their level of competitiveness. However, no thorough conclusions have been drawn as to how to cultivate dynamic capabilities, adapt to the increasingly complicated environment, and maintain competitive edges for China’s private manufacturing enterprises that lack management experience and adequate operational resources. Basing on the literature review about the " function-based theories” that cover the definition, elements, and dimensions of dynamic capabilities and the " formation-based theories” that include the organizational learning and leadership impact during the development of dynamic capabilities, this study introduces the study framework of the dynamic capability building mechanism in Japan’s manufacturing enterprises, followed by an exploration and interpretation of the building mechanism of dynamic capabilities in China’s private manufacturing enterprises, which was done via interviews with the staff of Geely Automobile and industrial insiders from 2012 to 2018.The findings suggest that the dynamic capability building paths inChina’s private manufacturing enterprises are mostly unplanned and responsive. Builders of dynamic capabilities are limited to senior managers with diverse functional backgrounds. External support from fully functional industrial-academic alliances also help to guarantee the smooth operation of basic organizational functions, whereas inadequate experience, capital and technology support, frequently environmental changes increase the uncertainties of organizational plans, which leads to an unplanned and responsive dynamic capability development path. The limited time for sensing, seizing and transferring, as well as the high employee dismissal rate narrow the builders of dynamic capabilities down to the loyal senior managers with diverse functional backgrounds. External support from fully functional industrial-academic alliances also helps to train the basic organizational capabilities of the middle-level and grass-roots staff, thus supporting the operation of basic organizational functions. To conclude, the main contribution of this study can be reflected in: Firstly, the consideration of factors such as organizational learning and leadership, and the systematic interpretation of the building mechanism of dynamic capabilities from such aspects as the building path, the personnel assigned to accomplish such task, and the organizational features, have further enriched the research on the " formation-based theories” in accordance with dynamic capabilities; Secondly, the comparative study on the dynamic capability building mechanisms adopted by enterprises in China and Japan, and the introduction of the subsequent conclusions into the context of developing private manufacturing enterprises in China, both efforts can be considered as not only significant in terms of providing actual and practical guidelines, but also beneficial for deepening the understanding of the organizational characteristics of China’s private manufacturing enterprises to help to establish corporate governance theories with oriental characteristics.

Keywords

dynamic capabilities; building mechanism; Geely Auto; case study