The Project-Based Firm: A Theoretical Framework for Building Dynamic Capabilities

Round 1

Reviewer 1 Report

The paper addresses a very interesting topic, that is, the need for companies to have dynamic capabilities-based frameworks to assure project and organizational dynamic capabilities needed to allow project-based firms (PBFs) to perform better under dynamic environments. The paper presents a dynamic capabilities-based framework for PBFs to perform in turbulent and uncertain environments. Albeit, the manuscript presents a solid theoretical background, as well as a soundness qualitative approach, there are some light aspects that could be considered for improvement, namely:

• • In the theoretical background, it could be interesting to explore the concept of the absorptive capacity of firms’ ability to recognize and exploit knowledge flows and it can act as a competitive advantage for spurring performance. This could be a benefit for the authors to introduce in the framework of capabilities and resources needed for companies to be able and equipped to perform under environmental changes, in the form of absorptive capacity enablers. In this vein, there are additional sources that authors should pay attention to, regarding the role of absorptive capacity on the organizational learning and employees’ innovative behavior, for instance Pereira, Dina, and João Leitão. 2016. Absorptive capacity, coopetition and generation of product innovation: Contrasting Italian and Portuguese manufacturing firms. International Journal of Technology Management 71: 10–37.
  • Authors could think about introducing the discussion around the firm's exploration versus exploitation strategies used to develop/absorb the dynamic capabilities-based framework for PBFs in the light of a sustainable approach. Other scholars have approached dynamic capabilities to improve performance in a sustainable mode (Impact of Dynamic Capabilities on Performance in Dairy Sheep Farms in Spain by María Teresa Bastanchury-López ,Carmen De-Pablos-Heredero ,Jose Luis Montes-Botella ,Santiago Martín-Romo-Romero and Antón García, Sustainability 2020, 12(8), 3368 https://doi.org/10.3390/su12083368; Validity of Dynamic Capabilities in the Operation Based on New Sustainability Narratives on Nature Tourism SMEs and Clusters, Alejandro J. Gutiérrez Rodríguez ,Nini Johanna Barón andJosé Manuel Guaita Martínez, Sustainability 2020, 12(3), 1004, https://doi.org/10.3390/su12031004; or under ambidexterity: Dynamic Capabilities and Firm Performance in the High-Tech Industry: Quadratic and Moderating Effects under Differing Ambidexterity Levels, Michael Yao-Ping Peng, Zhaohua Zhang ,Hsin-Yi Yen andShu-Mi Yang, Sustainability 2019, 11(18), 5004, https://doi.org/10.3390/su11185004).
  • I miss the existence of an empirical study, either qualitative (a case study) or quantitative, but hope to see it in future studies aligned with the present work, which as mentioned and justified by the authors is a conceptual study to be further developed.
  • Lastly, in section 4.3 Implications for managers, I think that authors could also address policy makers and knowledge providers, as both these stakeholders can benefit of such a study.

Author Response

Reviewer #1:

1. “In the theoretical background, it could be interesting to explore the concept of the absorptive capacity of firms’ ability to recognize and exploit knowledge flows and it can act as a competitive advantage for spurring performance.”

We agree that literature on absorptive capacity is highly related to dynamic capabilities and so we have incorporated a paragraph within the literature in the final part of section 2.2 where we present the concept of absorptive capacity and we connect it with the dynamic capabilities approach. Specifically, this is the added paragraph.

Another stream of research that might strength the theoretical foundations of the project capabilities approach is the one focused on the absorptive capacity of firms. Absorptive capacity is the ability of firms to recognize and exploit knowledge flows [46]. Specifically, knowledge creation depends on the firm’s absorptive capacity and its enablers, such us knowledge stock, people, and products [46]. Recently, some scholars have identified absorptive capacity as a dynamic capability that embraces four dimensions (i.e. identification of external knowledge, assimilation of external knowledge, transformation, and exploitation)[47], finding that is positively related to product innovation, portfolio performance, better decision making, and even the acquisition of competitive advantages [40,46,48].

2. “Authors could think about introducing the discussion around the firm's exploration versus exploitation strategies used to develop/absorb the dynamic capabilities-based framework for PBFs in the light of a sustainable approach.”

We also think that our paper relates with firm ambidexterity and the possible tensions in deciding when and how to explore and exploit. Even though we already had a little discussion in section 4.4 on the contributions our theoretical framework had for the ambidexterity literature, we have extended that paragraph, so we cover the trade-off between explorative and exploitative capacities and the possible solutions that our theoretical framework offers for dealing with that trade-off. Specifically, this is the added paragraph.

Thus, PBFs can be ambidextrous without a physical separation of exploration and exploitation into different project implementation. Furthermore, our theoretical framework might shed light on the organizational tensions arising when deciding how to allocate resources between the exploration and exploitation activities [69]. The supposed trade-off between explorative and exploitative capacities is smoothed in our theoretical framework since we do not present exploring and exploiting capacities as separate processes but as two parts of the same dynamic capability.

3. “I miss the existence of an empirical study, either qualitative (a case study) or quantitative, but hope to see it in future studies aligned with the present work, which as mentioned and justified by the authors is a conceptual study to be further developed.”

We are aware that missing an empirical validation for the theoretical framework is a limitation of the paper and so we explicitly addressed it in section 4.2. However, in order to address your suggestion, we have added a little information at the end of the section on the advances we are taking in validating the theoretical framework with different empirical working papers. Specifically, this is the added paragraph.

As a future avenue for research, empirical papers must be developed for testing our theoretical claims. Part of the empirical validation has already started since authors have several empirical working papers covering different parts of the theoretical framework whose results show that PBFs running the sensing-seizing-transforming routines such as adaptation of project management methodology to project environment, application of lessons learned to future projects, documentation of the impact of change requests, updating and modification of project plan and documents or the portfolio composition, etc. achieve better performance for their projects, programs and portfolios than the PBFs that do not run these routines.

4. “Lastly, in section 4.3 Implications for managers, I think that authors could also address policy makers and knowledge providers, as both these stakeholders can benefit of such a study.”

We agree that our study could have important implications for policy makers and so we have changed the name of section 4.3, and, we have included those implications in the last paragraph of the section. Specifically, this is the added paragraph.

Our theoretical framework has also several implications for policy makers since public sector allocate a great amount of public funds to projects, either directly, through public infrastructure projects, or indirectly, through public policies that foster innovation. It is crucial that policy-makers understand the relationship between projects, portfolios, and the overall organizational strategy hence supporting these projects that are actually align to strategic objectives and closing down those who are not, even if it is costly in political terms. Moreover, they should introduce several clauses in public tenders forcing winning companies to properly deploy some of the sensing-seizing-transforming routines like for example document their lessons learned in order to create a knowledge silo accessible for subsequent projects.

Reviewer 2 Report

Summary:

This research seeks to lay the micro-foundation of overarching organizational success and sustainable organization development by capitalizing the intangible assets (e.g., knowledge, knowhow, process, etc.) accumulated from the projects that the organization has committed to. To this end, the authors develops a concentric model the interconnects the sensing-seizing-transforming framework between the routine projects and the evolution of the organization.

General comments:

The authors have adopted an ingenuous approach to assimilate dynamic project learning into the organization structure, and I would appreciate if they can identify, just verbally, some real-life examples that have applied their approach, comparing organizational performance to those firms that did not. As mentioned in section 4.2, the authors can relegate empirical validation through difference-in-differences approach of quantifiable organizational performance to future research.

Specific comments:

Page 4. Seems repetitive to have “we adopt Teece’s framework”, “we apply this framework”, and “we adopt Teece’s general framework” in the second last and last paragraphs. The authors may consider paraphrasing and combining the above expressions to make this section more legible.

Also in the last sentence on page 4, it should be a “two-layer” framework without an “s”.

Page 5. In the inner circle, project seizing should end with “to be undertaken” in passive voice.

Page 6. Third line of third paragraph: the project team “assess” as you miss out the “s”.

Page 7. Last sentence of the second last paragraph has extra spaces between words. Also, the sixth last line of the last paragraph has an extra comma that is redundant.

Author Response

1. “The authors have adopted an ingenuous approach to assimilate dynamic project learning into the organization structure, and I would appreciate if they can identify, just verbally, some real-life examples that have applied their approach, comparing organizational performance to those firms that did not.”

We are aware that missing an empirical validation for the theoretical framework is a limitation of the paper and so we explicitly addressed it in section 4.2. However, in order to address your suggestion, we have added a little information on the advances we are taking in validating the theoretical framework with different empirical working papers. Specifically, this is the added paragraph.

As a future avenue for research, empirical papers must be developed for testing our theoretical claims. Part of the empirical validation has already started since authors have several empirical working papers covering different parts of the theoretical framework whose results show that PBFs running the sensing-seizing-transforming routines such as adaptation of project management methodology to project environment, application of lessons learned to future projects, documentation of the impact of change requests, updating and modification of project plan and documents or the portfolio composition, etc. achieve better performance for their projects, programs and portfolios than the PBFs that do not run these routines.

2. “Page 4. Seems repetitive to have “we adopt Teece’s framework”, “we apply this framework”, and “we adopt Teece’s general framework” in the second last and last paragraphs. The authors may consider paraphrasing and combining the above expressions to make this section more legible.”

We have paraphrased those expressions and choose to name all of them as Teece’s framework.

3.  “Also in the last sentence on page 4, it should be a “two-layer” framework without an “s”.” We have corrected the grammatical mistake.

4. “Page 5. In the inner circle, project seizing should end with “to be undertaken” in passive voice”. We have corrected the grammatical mistake.

5. “Page 6. Third line of third paragraph: the project team “assess” as you miss out the “s”.” We have corrected the grammatical mistake.

6. “Page 7. Last sentence of the second last paragraph has extra spaces between words. Also, the sixth last line of the last paragraph has an extra comma that is redundant.” We have corrected the grammatical mistake.