Leadership Development as a Micro-foundation of Dynamic Capability: A Critical Consideration

Although organizations that enact dynamic capabilities are not guaranteed success, dynamic capabilities can provide a potential source of improved performance for organizations (Helfat et al, 2007). Indeed, one of the reasons for the prominence that dynamic capabilities currently demands as a research topic is that dynamic capabilities are concerned with organizational performance (Easterby-Smith et al, 2009). Nevertheless, despite the potential dynamic capabilities may hold for micro-organizations, the study of dynamic capabilities within such organizations represents a research gap. The Department for Business, Enterprise and Regulatory Reform define micro organizations as those with ‘up to nine employees’ (Bridge et al., 2009: 175). Micro-organizations play an integral part in the UK economy. Indeed, at the beginning of 2012 enterprises employing between 0-9 people made up 95.5% of private sector enterprises in the UK and contributed 19.9% of the UK’s private sector turnover which equated to almost £624bn (Department for Business Innovation & Skills, 2012). As such, the study of dynamic capabilities in micro-organizations constitutes an important research gap within the field of HRD in small firms, which this paper begins to address.Since the inception of dynamic capabilities as a research topic there has been a growing call for advancing understanding of the micro-foundations of organizational capabilities (for example, Felin and Foss, 2005; Teece, 2012). This paper investigates the role that leadership development may play as a potential micro-foundation of dynamic capabilities. Leadership development and dynamic capabilities pay particular attention to the goals of interventions, the importance of context and environmental dynamism; yet their potential to enrich each other’s perspectives has rarely been explored. In addition to simply investigating the notion of leadership development as a micro-foundation of dynamic capability, we look to subject this notion to a critical examination.We begin by outlining the literature on dynamic capabilities, especially the emerging focus on the micro-foundations of dynamic capabilities. We then go on to discuss literature that has led us to consider whether leadership development may act as a micro-foundation of dynamic capabilities. Following this an overview of the methodology adopted to investigate this area will be given. This paper adopts the ontological view of strong structuration theory (Stones, 2005), which we argue highlights the salience of taking a critical perspective on the notion of leadership development as a potential micro-foundation of dynamic capability. The findings of our research suggest that the notion of leadership development as a micro-foundation of dynamic capability is by no means a simplistic one. Political and emotional barriers to this lead us to suggest that critical leadership development could be a more effective micro-foundation of dynamic capabilities than simply leadership development itself.