# Dynamic Capabilities and Strategic HRM: Fostering Resilience in Disruptive Business Environments

Sarra Wakrim, Siham Khaldi

► To cite this version:

Sarra Wakrim, Siham Khaldi. Dynamic Capabilities and Strategic HRM: Fostering Resilience in Disruptive Business Environments. 2nd International Conference on Humanities and Social Sciences: Fostering Global Resilience through Cross-cultural Collaboration, 27 - 28 November 2023, Porto, Portugal, ISCAP Porto Portugal; Université chouaib doukkali Eljadida Morocco, Nov 2023, Porto, Portugal. pp.359-370, 10.56002/ceos.0040cf. halshs-04630961

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# Proceedings of the 2nd International Conference on Humanities and Social Sciences

## Fostering Global Resilience through Cross-Cultural Collaboration

27-28 November 2023

Porto, Portugal

### Editors

Alexandra Albuquerque

Karima Bouziane
**Title**

Proceedings of the 2nd International Conference on Humanities and Social Sciences: Fostering Global Resilience through Cross-cultural Collaboration

**Editors**

Alexandra Albuquerque
Karima Bouziane

**ISBN**

978-989-9168-11-4

**DOI**

https://doi.org/10.56002/ceos.0040cf

The authors are responsible for the contents of their articles.

©2024 CEOS Publishing
Rua Jaime Lopes Amorim
4465-004 S. Mamede de Infesta
Porto, Portugal
Dynamic Capabilities and Strategic HRM: Fostering Resilience in Disruptive
Business Environments

Sarra WAKRIM and Siham KHALDI

Faculty of Legal, Economic and Social Sciences, Moulay Ismail University, Meknes, Morocco

**Abstract:** As the business environment grows increasingly disrupted, building resilience has become an imperative for organizational survival and competitiveness. This paper explores the critical nexus between dynamic capabilities theory and strategic human resource management (SHRM) in enabling organizational resilience. Through a comprehensive literature review, we examine the conceptual intersections between dynamic capabilities, strategic HRM, and resilience. We propose a theoretical framework that delineates how targeted SHRM practices can develop dynamic capabilities by continuously sensing opportunities and threats, seizing market options, and reconfiguring resources and competencies. Our model provides an integrated perspective on how targeted SHRM practices can develop the dynamic capabilities needed to foster resilience in turbulent business environments. Testing this model empirically can provide evidence-based insights for practice on configuring SHRM to build resilience.

**Keywords:** Business disruption, Organizational resilience, Strategic Human Resource Management, HRM practices, Dynamic Capabilities.

# 1. Introduction

In the relentless churn of today's business landscape, organizations find themselves navigating turbulent waters. The once-foreseeable future has given way to a paradigm of perpetual disruption. In this ever-evolving environment, the survival and prosperity of organizations hinge on their ability to adapt, recover, and even flourish in the face of adversity.

This journey of navigating and thriving amid disruptions is underpinned by two pivotal constructs: Organizational Resilience and Strategic Human Resource Management (SHRM).(Armstrong, 2021; Kim et al., 2022; Weick & Sutcliffe, 2007; Williams & You, 2021) Organizational Resilience embodies the capacity of an entity to absorb shocks, adapt swiftly, bounce back stronger and renew. It is the bedrock upon which survival is built, a dynamic response to an unrelenting cascade of challenges. Fuelling this resilience is the concept of Dynamic Capabilities, encapsulating an organization's ability to sense market shifts, seize opportunities, and strategically reconfigure its resources and competencies(Kurtz & Varvakis, 2016).

Our paper aims to provide a comprehensive review of the nexus between SHRM and organizational resilience, by exploring the theoretical underpinnings derived from the Dynamic Capabilities theory, which have shaped our understanding of this relationship, we will try to respond to our research question: "To what extent do strategic Human Resource Management (SHRM) can develop the dynamic capabilities needed to foster resilience in disrupted business environment?

The core of this article lies in the intersection of Dynamic Capabilities Theory and Strategic Human Resource Management (SHRM). We delve into how these interrelated concepts play a pivotal role in developing organizational resilience, and we propose a theoretical framework that connects dynamic capabilities, Strategic Human Resource Management (SHRM), and organizational resilience for
understanding how these elements interact. But before we journey deeper into the nexus of Dynamic Capabilities, SHRM, and Resilience, let us first understand each concept in isolation, uncovering their essence and individual significance.

In the following sections, we will explore the critical importance of Organizational Resilience in the current business environment, shed light on Dynamic Capabilities as the vehicle for resilience, and emphasize the indispensable role of SHRM in forging a path towards thriving amidst disruption.

**2. Procedure**

According to (Breslin & Gatrell, 2020) "literature reviews play an increasingly important role in theory development, understanding how they contribute to the process of theorizing is lacking". With this in mind, our study, aims to explore the nexus between strategic human resource management and organizational resilience with the lens of dynamic capability framework. Our research methodology begins with the identification of suitable databases such as Web of Science, Scopus and Google Scholar, to locate relevant articles. A combination of keywords and phrases were used to capture the broad spectrum of literature relevant to the study's objectives. The search strategy incorporated variations and combinations of the following terms: "Strategic Human Resource Management" OR "SHRM" "Dynamic Capabilities" AND "sensing" OR "seizing" OR "reconfiguring""resilien* AND (organi?ation* OR entreprise* OR firm* OR business* OR corporate* OR compan*)

Question marks and asterisks have been used to take account of the variation in search terms, for example:
(resilience, or resiliency or resilient, organiZation or
organiSation...).

The search was not limited to a specifically time frame, to not exclude seminal works and foundational theories that have significantly influenced the development of SHRM, dynamic capabilities, and organizational resilience.

Inclusion criteria were as follows:

* Peer-reviewed journal articles, conference papers, and book chapters.

* Studies that explicitly discuss the relationship between SHRM practices and dynamic capabilities or organizational resilience.

* Empirical and theoretical works that offer insights into the mechanisms through which HR practices influence sensing, seizing, and reconfiguring capabilities.

Exclusion criteria included:

* Non-peer-reviewed articles, opinion pieces, and grey literature.

* Studies focusing solely on operational aspects of HRM without strategic implications.

In sum, our methodological approach is based on searching scientific databases, using keywords and filters to target SHRM, dynamic capability and organizational resilience fields, with a particular focus on empirical papers to select articles reinforcing our proposed framework.

**3. Synthesis**

*Resilience, the ability to persist through disruption*

Cultivating resilience has become an imperative for organizational survival and competitiveness(Epaminondas Koronis & Ponis, 2018; Landini et al., 2020). In fact, navigating disruptions in today's business environment, requires the development of specific capabilities that enable organizations not only to survive, but also to continue to grow. These capacities are increasingly linked to organizational resilience, hence the growing interest in research in this field. The literature on organizational resilience is marked by a predominance of effort on conceptualizing and understanding the
concept (Burnard & Bhamra, 2019; Eltigani et al., 2021; Hillmann & Guenther, 2021; Lee et al., 2013; Linnenluecke, 2017; Wakrim & Khaldi, 2022). From this literature emerge a huge number of definitions, amidst this rich tapestry of definitions, an insightful synthesis emerges, allowing us to extract the essence of organizational resilience into four distinct aspects that collectively capture its multiple dimensions.

The first aspect we can note is the anticipation, which encompasses proactive measures taken by organizations to foresee potential threats and disruptions by emphasizing that resilient organizations can anticipate challenges, and plan for disruptions before they occur, enabling proactive measures to be taken in advance. This facet manifests itself in definitions that emphasize an organization's preparedness to deal with unexpected events even before they occur (E. Koronis & Ponis, 2018; Mafabi et al., 2012; McManus et al., 2008; Somers, 2009).

The second aspect presents the concept of organizational resilience in terms of Robustness/or effective recovery from disruptive events. These are the definitions grouped under the defensive vision. From this angle, organizational resilience is seen by some as the ability to endure and bounce back from disruptive situations and to return to the state prior to the unexpected situation (Boin & van Eeten, 2013; Branicki et al., 2019; Horne III & Orr, 1998; Khan et al., 2019; Linnenluecke & Griffiths, 2012; Sincorá et al., 2018).

A third aspect of organizational resilience goes beyond robustness and recovery and focuses on the agility and flexibility needed to enable organizations to adapt to change. These are the definitions grouped under the adaptive vision. In this sense, resilience is not simply about bouncing back and recovering, but also about adapting in a positive way, taking advantage of challenges as catalysts for growth. Authors who emphasize this aspect stress the transformative potential of disruption, encouraging organizations to seize opportunities for positive change (Castellacci, 2015; Robb, 2000; Sutcliffe & Vogus, 2003; Vogus & Sutcliffe, 2007).

Following on logically from this third aspect of adaptation, we find the last common aspect of the definitions of organizational resilience, namely transformation, which sees resilience as a catalyst for transformative change and innovation (Buyl et al., 2022; Hillmann & Guenther, 2021; Lengnick-Hall et al., 2011). This aspect embraces the idea that organizations can emerge from disruption not only stronger, but also transformed.

<figure><img src="image_3.png" /><figcaption>Figure 1: Organizational resilience's dimensions</figcaption></figure>

Source: The authors
The four dimensions of organizational resilience can be seen as interconnected; cyclical capabilities as illustrated in Figure 1. Indeed, anticipation would enable a better response to the disruptive event, and thus enable the organization to be robust, to adapt, to learn from the event and to renew itself. Learning from this experience would then enable better preparation for future events, and so on. At the end of this exploration, it becomes clear that organizational resilience is not static; rather, it is a dynamic force that draws its strength from its multidimensional nature.

## Dynamic Capabilities and Organizational Resilience

Dynamic capability theory is highly relevant for understanding organizational resilience in today's dynamic and uncertain business environment (Barrón & Sánchez, 2022). Dynamic capabilities are the specific processes and capabilities that enable organizations to sense and shape opportunities, seize opportunities, and maintain competitiveness through the enhancement, combination, protection, and reconfiguration of their resources (Teece, 2007; Zollo & Winter, 2002). Table 1, explain each of these dimensions.

<table><caption>Table 1: The three dimensions of Dynamic capabilities</caption><thead><tr><td>Dimensions of DCs</td><td>Explanation</td></tr></thead><tbody><tr><td>Sensing</td><td>ability to identify and interpret changes in the external and internal environment. It involves continuously monitoring the business landscape, gathering information, and analysing data to anticipate opportunities and threats (Zollo & Winter, 2002). By effectively sensing changes, organizations can proactively respond to disruptions and capitalize on emerging opportunities.</td></tr><tr><td>Seizing</td><td>ability to act upon identified opportunities and translate them into competitive advantages. It encompasses the organization's capacity to make strategic decisions, allocate resources, and mobilize its capabilities to exploit opportunities (Hu et al., 2023). Seizing requires agility, decisiveness, and the ability to quickly adapt and respond to changing market conditions (Markovich et al., 2022).</td></tr><tr><td>Reconfiguring</td><td>Ability to reconfigure its resources, processes, and structures to align with new strategic objectives and changing market dynamics. It involves the organization's capacity to integrate, combine, and reconfigure its assets and capabilities to adapt to disruptions and changing business requirements (Wulandhari et al., 2022). Reconfiguring enables organizations to transform their operations, innovate, and maintain their competitive edge in dynamic environments (Kleynhans et al., 2021).</td></tr></tbody></table>

Source: The authors

Furthermore, dynamic capability theory emphasizes the importance of learning and knowledge management in building organizational resilience. Disruptions often require organizations to acquire new knowledge, develop new skills, and integrate diverse sources of information (J. Wang et al., 2022). Dynamic capabilities enable organizations to effectively manage knowledge, facilitate learning processes, and leverage knowledge assets to respond to disruptions (Hu et al., 2022). By fostering a culture of learning and knowledge sharing, organizations can enhance their ability to anticipate and respond to disruptions, thus strengthening their resilience.

There is considerable effort in the search for empirical evidence on the relationship between dynamic capabilities and organizational resilience. Studies have shown that dynamic capabilities can mediate the relationship between valuable, rare, inimitable, and non-substitutable (VRIN) resources and organizational resilience, as well as between non-VRIN resources and organizational resilience (You et al., 2023).
Additionally, different types of dynamic capabilities, such as replicating, integrating, reconfiguring, creating, developing, assimilating, renewing, adaptive, innovative, and regenerative capabilities, have been identified as important for building and sustaining organizational resilience during crises like the COVID-19 pandemic (Prayag et al., 2023). Also, Sensing, seizing, and reconfiguring capabilities are key to increasing organizational resilience (Ozanne et al., 2022; Patrício et al., 2022; Wulandhari et al., 2023).

Moreover, The capabilities to anticipate, respond, and thrive in unprecedented situations have been recognized as strategic levers for business continuity and resilience (Buzzao & Rizzi, 2023). Also the finding of (Jiang et al., 2019) suggest that dynamic capabilities play a crucial role in promoting organizational resilience and enabling tourism firms to respond, and thrive in the face of challenges and disruptions by transforming existing operational routines into new ones. In another sector, (Martinelli et al., 2018) investigated the link between dynamic capabilities and organizational resilience in the context of retail entrepreneurs facing natural disasters, and concluded that Dynamic Capabilities and social capital are influential to enhancing organizational resilience according to the temporal phase of the natural disaster under analysis.

In summary, dynamic capabilities theory provides a comprehensive framework for understanding organizational resilience. By focusing on the abilities to sense, seize, and reconfigure, organizations can effectively adapt to disruptions, capitalize on opportunities, and maintain their competitive advantage in dynamic and uncertain business environments. Understanding and cultivating dynamic capabilities are essential for organizations to thrive and succeed in today's rapidly changing and unpredictable business landscape (Akpan et al., 2021).

## Strategic HRM as an Enabler of Dynamic Capabilities

SHRM has attracted growing interest and has been variously defined by researchers and practitioners, with no consensus on what it is in particular (Wright & Boswell, 2002). According to (Boxall, 1996), SHRM is a field of difficult definitions and controversial theory. However, certain common points and key elements emerge from the conceptualizations most widely cited in the literature in relation to SHRM. One of the first and most widely used definitions in the literature is that of (Wright & Mc Mahan, 1992), who define HRM as a pattern of planned human resource deployment and activities designed to enable an organization to achieve its objectives. According to these authors, SHRM involves vertically linking the strategic management process to HRM practices, and horizontally creating coordination, also known as congruence, between these HRM practices. They also noted that SHRM is ultimately the means by which human resources can serve as a competitive advantage.

SHRM focuses on aligning HR practices with strategic goals to enhance organizational performance and create value through human capital (Boon et al., 2018; Wright et al., 2001). SHRM recognizes that human capital is a valuable resource that can contribute to a firm's competitive advantage (Wright et al., 2001). A huge number of studies carried out to examine the link between HR practices and performance have produced an almost indisputable conclusion: there is a positive relationship between these two variables (Storey et al., 2019). However, the new challenges of the business environment, with its increasing turbulence, presents Strategic human resources management with new challenges, namely, to act as a lever for developing the capabilities needed to enable organizations to cope with these disruptions.

SHRM practices such as flexible organization, organizational learning, resources integration, and environmental perception can enhance the development of dynamic capabilities (Apascaritei & Elvira,
2022). Additionally, High involvement HRM practices have been found to foster the dimensions of dynamic capabilities. These practices have a positive impact on innovation capabilities, specifically exploitative and exploratory innovation, through the mediating role of knowledge sharing behaviours (Cao et al., 2022; Garmendia et al., 2021; Ha & Le, 2023; Le & Le, 2023). Additionally, high involvement HRM practices are associated with the development of dynamic capabilities, including sensing, seizing, and reconfiguration, through their effects on HR systems (Bornay-Barrachina et al., 2023; Lopez-Cabrales et al., 2017). In another side, High-performance work systems (HPWS) comprising elements like selective staffing, extensive training, developmental performance management, flexible job design, participative decision-making and incentive compensation can cultivate sensing, seizing and reconfiguring capacities underlying resilience (Patel et al., 2013). Selective staffing boosts sensing capabilities by bringing in employees with learning agility who can quickly perceive environmental changes (King et al., 2016). Extensive training enhances seizing skills by building employees' ability to rapidly acquire new knowledge for opportunity capture. And according to (Y. Wang et al., 2021) high-performance work system is positively correlated with organizational performance and such correlation is partially mediated by strategic flexibility.

**4. A proposed theoretical framework**

Creating a theoretical framework that connects dynamic capabilities, Strategic Human Resource Management (SHRM), and organizational resilience is a complex endeavour but highly valuable for understanding how these elements interact. The following framework illustrated in figure 2, outlines the relationships and components to consider in.

<figure><img src="image_4.png" /><figcaption>Figure 1: A proposed theoretical framework for Strategic HRM as an Enabler of Dynamic Capabilities that foster organizational resilience.</figcaption></figure>

Source: Authors

a. **SHRM and Dynamic Capabilities (DCs):**

The intersection of Strategic Human Resource Management (SHRM) and the development of dynamic capabilities within organizations represents a vital area of inquiry for understanding how firms adapt to rapidly changing environments. This first proposition argues that SHRM plays a crucial role in fostering the dynamic capabilities of sensing, seizing, and reconfiguring, which are essential for organizations seeking sustainable competitive advantage in volatile markets.

Sensing capabilities refer to the organization's ability to identify, assess, and respond to external opportunities and threats (Teece, 2007). SHRM contributes to this capability by ensuring that the firm's human capital is aligned with its strategic objectives, enabling a more proactive and anticipatory approach to environmental changes. Research indicates that HR practices focused on talent management, learning and development, and knowledge sharing are key in improving an organization's sensing capabilities (Apascaritei & Elvira, 2022; Zollo & Winter, 2002).
Seizing capabilities involve the firm's capacity to capture value from identified opportunities (Teece, 2007). SHRM facilitates seizing opportunities by aligning human resources practices with the strategic needs of the organization, ensuring that the workforce is prepared and motivated to act on identified opportunities. Performance management systems, incentive structures, and organizational culture shaped by SHRM practices play a critical role in encouraging innovation and risk-taking. It's in this sense that High Performance Work Systems are valuable to develop this dynamic capability (Gahan et al., 2021; Patel et al., 2013; Y. Wang et al., 2021).

Reconfiguring capabilities refer to the firm's ability to restructure and transform its asset base to address and adapt to internal and external changes (Teece, 2007). SHRM is instrumental in this process by facilitating organizational flexibility and agility. Practices such as cross-functional training, job rotation, and flexible work arrangements enhance the versatility of the workforce, making it easier for the organization to reconfigure its operations in response to strategic shifts. Moreover, SHRM can support strategic renewal through leadership development and succession planning, ensuring that the organization has the leadership capacity to guide and manage change effectively (Helfat & Peteraf, 2003).

In conclusion, Strategic Human Resource Management plays a pivotal role in developing the dynamic capabilities of sensing, seizing, and reconfiguring within organizations. By aligning human resource practices with strategic objectives, SHRM not only enhances the firm's ability to anticipate and respond to environmental changes but also empowers it to capture value from new opportunities and adapt its operations and strategies proactively. This alignment between SHRM and dynamic capabilities is critical for firms seeking to maintain and enhance their competitive advantage in an increasingly complex and unpredictable business landscape.

*Proposition 1:* Targeted SHRM practices support sensing, seizing, and reconfiguring capabilities.

## b. *Dynamic Capabilities (DCs) and Organizational Resilience (OR):*

OR, characterized by adaptability, renewal, and robustness, enables organizations to withstand shocks, adapt to change, and recover from setbacks. Our second proposition posits that the dynamic capabilities, specifically sensing, seizing, and reconfiguring capabilities, plays a foundational role in fostering organizational resilience. By enhancing these capabilities, organizations can better anticipate changes, respond effectively, and reconfigure resources to maintain continuity and growth in the face of adversity. Sensing capabilities allow firms to detect early signals of potential disruptions, market shifts, or emerging needs, facilitating timely and informed decision-making (Teece et al., 1997). By continuously scanning the environment, organizations can develop a more nuanced understanding of the landscape in which they operate, enhancing their adaptability and readiness to face unexpected challenges.

As for seizing capability, it enables firms to pivot quickly in response to sensed opportunities or threats, ensuring they remain relevant and competitive. By effectively leveraging and redeploying resources, organizations can transform challenges into growth opportunities, embodying the essence of renewal and resilience (Eisenhardt & Martin, 2000; Helfat & Peteraf, 2009). Reconfiguring capabilities, directly contribute to organizational robustness. Robustness is the capacity to maintain core functions and integrity under duress without significant degradation or loss of functionality. Through reconfiguring capabilities, organizations can reallocate resources, modify operations, and adapt strategies to navigate through and recover from adverse situations. This flexibility and agility are essential for resilience, as they allow firms
to withstand shocks and emerge stronger, often with enhanced capabilities and a better position in the market.

**Proposition 2:** DCs dimensions: sensing, seizing, and reconfiguring capabilities contribute directly to organizational resilience by enabling adaptability, renewal, and robustness.

Building on the discussion of the role of SHRM in developing dynamic capabilities—sensing, seizing, and reconfiguring—that contribute directly to foster organizational resilience, we will delve into the implications for research and practice within Strategic Human Resource Management (SHRM), the limitations of the proposed framework, and outlines potential directions for future research.

### Implications

For Research, this framework highlights the integral role of SHRM in not just operational efficiency but in shaping an organization's resilience. It invites further empirical examination into how specific SHRM practices contribute to the development and deployment of dynamic capabilities. Additionally, this model provides a basis for investigating the mediating or moderating effects of organizational context, industry, or external pressures on the relationship between SHRM, DCs, and resilience. For Practice, the framework offers a roadmap for HR professionals aiming to contribute strategically to their organizations. It suggests that SHRM should focus not only on aligning HR practices with current business strategy but also on developing capabilities that ensure long-term resilience and adaptability.

### Limitations

One major limitation of the proposed framework is the potential oversimplification of the relationships between SHRM, dynamic capabilities, and resilience. The framework assumes a linear and somewhat deterministic relationship between these elements, which may not fully capture the complexity and context-specific nature of these dynamics. The review may also overlook the role of external factors, such as industry dynamics or technological change, that could influence these relationships.

### Future Research Directions

Future research should aim to empirically test and refine the proposed framework, focusing on the following areas:

*   **Empirical Validation:** Conducting longitudinal studies and case research to empirically validate the framework and explore how SHRM practices influence the development of dynamic capabilities and organizational resilience over time.

*   **Contextual Variability:** Investigating how industry, size, and cultural context affect the relationship between SHRM, dynamic capabilities, and resilience, potentially leading to framework adaptations for different contexts.

*   **Mechanisms and Mediators:** Examining the mechanisms through which SHRM practices impact dynamic capabilities and resilience, including the role of technology, leadership, and organizational structure for example.

## 5. Conclusion

In an era marked by unprecedented disruption and constant change, organizations face a daunting challenge: how to not only survive but thrive in the face of turbulence. This article has explored the critical nexus between Strategic Human Resource Management (SHRM), Dynamic Capabilities, and Organizational
Resilience, trying to respond to our research question we proposed a theoretical framework that link SHRM that led to develop DCs that fostering organisation resilience.

Dynamic Capabilities, comprising the abilities to sense, seize, and reconfigure resources and competencies, form the core that enables organizations to adapt, renew, and remain robust in the face of disruptions. They act as the bridge between SHRM and Organizational Resilience. The framework provides a basis for empirical research, enabling scholars to test these relationships, expand the theoretical understanding, and inform the development of HRM strategies that enhance organizational resilience in various contexts.

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