R&D Dynamic Capabilities in a Changing Regulatory Context

An extension of the dynamic capabilities model is evaluated in a rapidly changing and complex context: the global automotive sector. This industry is undergoing significant change to improve sustainable performance (e.g., alternative power train technologies with less pollution and better energy performance) responding to more stringent regulations and changing locus of innovation (i.e., suppliers investing more in R&D). Using a comparative and validated sample of 104 R&D projects in the U.S. and China, five hypotheses are tested and supported: 1) dynamic capabilities are significantly related to R&D project success, mediated by strategic intent (H1); 2) dynamic capabilities and resources operate independently and significantly in a model to predict sustainable R&D project success (H2); 3) for the U.S. data (a mature economy), there is a significant relationship between technology novelty and dynamic capabilities (H3), but not for the Chinese data, as predicted (H4); and 4) the Chinese economy does not experience the slowdown encountered in the U.S. economy (H5), but Chinese R&D is dominated by incremental improvements of existing products. These results sustain and clarify the differences in the dynamic capabilities model in mature and emerging economies for the global automotive industry.