What Facilitates Dynamic Capabilities? The Role of Organizational Climate for Trust

While dynamic capabilities are important for competitive advantage, the antecedents of dynamic capabilities remain understudied. Because dynamic capabilities rely on collective learning and coordinated effort by organization members, the organization’s social climate, which shapes patterns in attitudes, behaviors, and interpersonal relationships among organizational members, may be a driver of dynamic capabilities. Specifically, employing social exchange and social information processing perspectives, we argue that organizational climate for trust facilitates adaptability and coordination among organization members, and thus enhances the firm’s sensing, seizing, and reconfiguring capabilities that in turn affect competitive advantage. Utilizing survey data from 209 Israeli firms, we find support for our theoretical predictions. However, we also find that climate for trust has a direct relationship with competitive advantage. Our study advances understanding of the antecedents of dynamic capabilities by highlighting the importance of organizational climate for trust as a social underpinning of dynamic capabilities and competitive advantage.