Dynamic Capabilities Perspective of the Firm in Response to the Crisis Economic Environment

Abstract

This study focuses on the corporate responses and transformation of management practices in crisis economic environment. The dynamic capabilities approach to the firm offers a good theoretical framework for understanding the process of a firm's learning and innovation products, processes and services in rapidly changing circumstances. We conducted a survey to learn business leaders' perceptions of economic crisis and how they have changed in response to the crisis from the dynamic perspectives of the firm. We found that inefficient financial resource selection and ineffective deploy-ment of financial resources by business groups, accompanied by heavy debt-driven business expansion, were the prime factors that contributed to the crises. Increased awareness of the importance of corporate competitiveness received the largest response; increased capability of crisis management, better preparation to deal with future crises through crisis management strategy and routinization of crises management were all important changes in response. The results of this study provide a theoretical framework to understand Korean firms' learning and innovating products and processes after the crisis.