Effect of relational capability on dynamic capability: exploring the role of competitive intensity and environmental uncertainty

This study empirically examines the role of market dynamism and a firm's relational capability in the development of dynamic capability. A moderated hierarchical regression method has been used on the survey data of 218 Indian firms to test the objectives of the study. The findings suggest that relational capability (namely, customer linking capability and strategic partnering capability) is an important driver of dynamic capability. However, the effectiveness of relational capability is dependent on the market dynamism; particularly, when competition intensifies, the impact of customer linking capability declines, whereas the impact of strategic partnering capability on dynamic capability becomes stronger. Furthermore, the finding suggests that even though environmental uncertainty represents an important element of market dynamism, it is a driver, rather than a moderator, of dynamic capability. The study contributes to the extant literature by explicitly specifying the relational capability as a specific competence to develop dynamic capability under different market conditions.

Automated summary

This study examines the role of market dynamism and a firm's relational capability in the development of dynamic capability. The findings suggest that relational capability, specifically customer linking capability and strategic partnering capability, is a significant driver of dynamic capability. However, the effectiveness of relational capability depends on market dynamism, with customer linking capability declining in impact as competition intensifies and strategic partnering capability becoming more influential. Additionally, the study highlights that environmental uncertainty is a driver, rather than a moderator, of dynamic capability.