Classification of DMCs

The emergent classifications of DMCs were resultant from a rigorous approach to continuously assessing “who, what, when, where, why, how and with what consequences” (Strauss & Corbin, 1998, p. 22). The data were subject to the constant comparative analysis, which compared data in and across cases and with the literature to build theory (Eisenhardt, 1989; Eisenhardt & Graebner, 2007). The process involved establishing patterns and developing themes as outlined in section 4.2 above, and shown in Appendix C.

The important classifications and the frequency of their occurrence within each of the 16 case episodes are shown in Table 4.7. In the table, the first column identifies the case study in which a particular classification of DMC was manifest, with each of the DMC classifications shown as headings (e.g., LBDMC, IBDMC, etc.), along with the corresponding case episode in which they were detected. (For example, case episodes 2B and 3C in the table presented below refer to the “Aggregator Model” and the “Joint Venture with a Community Bank” from Table 4.6 above.)

Table 4.7 DMC—Classification

Case Study Second-Order Constructs

LBDMC IBDMC PL ABDMC RC

Insurance Agency (2B), (3C), (4D) (2B), (3C), (5E) (2B) (4D) (1A), (2B), (3C), (4D), (5E)

Accounting Firm (8H) - - - (8H)

Bank (9I), (10J), (11K) (10J) (9I), (11K) - (3C)

Investment Advisor (12L), (14N) (12L) (15O) - (13M)

Real Estate Agency (16P), (18R) - (18R) - (17Q)

In the multi-case study, there were 11 instances in which LBDMC was classified, five where IBDMC was found, five episodes that involved PL, and nine in which the managers established relational capabilities (ABDMC is considered an RC). The insurer used DMCs in five different episodes, the accountant in one, the banker in three, the investment advisor in four, and the realtor in three.

The managers of the insurance agency and the bank used LBDMC in three different case episodes. The investment advisor and realtor used LBDMC in two episodes and the manager with the accounting firm in one. With respect to IBDMC, the insurer used it in three episodes, the bank and investment firm managers in one, and PL was used by each manager, aside from the accounting firm, and each of the managers also established an RC (the insurer established five, and was also the only manager demonstrating ABDMC).

The analysis further showed that each manager used DMCs in different combinations. For example, the manager of the insurer used DCs in combination with each other in four different episodes, as did the bank CEO (the RC with the insurer provides an interesting nexus, where DCs were actually developed and shared by two of the managers, in different firms in the multi-case study). The managers of the investment service, real estate agency, and accounting firm each had one DMC

combination within their firms. These DMC combinations are referred to here as portfolios.

4.4.1 DMC Portfolios

DMC portfolios involve using two or more DMC classifications together in order to create, extend, and/or modify resources. The idea of dynamic portfolios is analogous to the language of finance in that it invokes the idea of a range of investments in assets that are managerial capabilities, which are referred to as competitive intangibles. The portfolios are groupings of these managerial capabilities. These portfolios were developed by each of the managers of the SMEs, and they represent the DMCs that managers used during periods of rapid change in order to compete. The portfolios were inclusive of LBDMC, which, significantly, was a capability that was used with the other DCs a total of nine times (and it was the only DMC which each manager used with another DC in the case study); IBDMC was used with other DCs in five cases; PL with other DCs four times, and RC was also used in combination with other capabilities five times (six when the RC between the bank and insurer is added to the total).

4.4.2 Illustration of Classification of DMCs

The case episode 2B referred to as the “aggregator” in previous sections helps illustrate the classification process, and how the Principal of the insurer used DMCs vis-à-vis a portfolio of competitive intangibles. In that episode, the manager used LBDMC, IBDMC, PL, and established an RC (this was the only episode from the case study in which each of the classifications was manifest).

LBDMC was used in the development and operation of the aggregator. The capacity of the manager to use knowledge and skills through experience and “know how” (e.g., more than 40 years in the insurance business), and research (e.g., researching the other models and determining their strengths and weaknesses) was critical. LBDMC was evident in bringing the aggregator online (e.g., the manager had researched what had gone wrong with previous models, and found a new opportunity to counter the economic threats), which impacted and facilitated innovation-based capabilities (e.g., having researched the existing aggregator models, and studied what went wrong with them, the manager fundamentally changed the system in an innovative way).

The manager of the insurer made changes to the established model (e.g., by introducing new ideas, methods, and services) using a participative approach, and used

what was learned through experience to innovate and change the “system” as it exists using DMCs, analogous to the idea of double-loop learning (Argyris & Schön, 1974, 1978).

The use of these individual capacities impacted on ordinary or operational capabilities at the organizational level (e.g., the insurer’s ability to place insurance coverage with larger carriers was enhanced). This extended the insurer’s resource base (e.g., by pooling resources, including the buying power of 600 agencies), and this involved using new and innovative processes and procedures (e.g., innovative funding of the aggregator, as developed through learning about how the funding of other models failed; the resultant LPO that raised $1 million; the subsequent use of tiered commission structures in order to avoid the adverse-selection inherent in the other aggregator models).

The aggregator model represents an evolutionary innovation, brought about by advances in processes, and positions, and modification of path-dependent routines. The innovation involved entrepreneurial management and asset orchestration, with respect to the managerial search and selection and the configuration and coordination of resources and capabilities, inclusive of the capabilities of the participating executives that the manager assembled together in setting up the aggregator. This further impacted on learning-based capacities (e.g., in the form of adapting innovations to key areas such as finance, marketing, accounting, and management of the aggregator).

The manager of the insurer demonstrated the ability to take ideas and convert them into value-added services to meet the needs of a changing market. This involved comingling learning and innovation-based capacities, and participative leadership skills that facilitated the development and operation of the aggregator. It involved the behavioral DMCs that the manager of the insurer used (i.e., LBDMC, IBDMC, and PL), which were instrumental in establishing the relational capabilities that are the physical manifestation of their use to some extent in this case. These behavioral capabilities are considered essential. They are transformational. (These ideas are discussed in further detail in the results and conclusions chapter.)

The orchestration of resources and capabilities, including tangible and intangible assets (e.g., financial capital, physical capital, human capital) through the use of learning and innovative-based capacities, coupled with a participative leadership approach (e.g., the “ideas” committee), have facilitated the operation of a critical

relational capability that is the aggregator model. The RC was successfully developed into the new aggregator model—conceptualized here as the manifestation of a portfolio of competitive intangibles. These DMCs were used to impact on ordinary capabilities.

The capacity the manager used to purposefully create, modify, and extend the insurance agency’s resource base, augmented to include the resources of others (e.g., the alliance of 600 member firms), helped member firms survive and grow through time, in episodes of significant change, achieving advantage.