Dynamic Capabilities and Performance

This study tests Teece's conceptualization of dynamic capabilities in the context of small and medium-size firms competing in creative industries, in particular the European audiovisual production industry. This industry is characterized by immature and evolving markets where firms' dynamic capabilities are expected to lead to superior innovative performance. Using survey data from audiovisual producers in ten European countries we find that both sensing and seizing capabilities have a positive effect on firms' innovative performance. The effect, however, is curvilinear, and positive effects appear after when capabilities overcome a threshold level.

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