The effect of dynamic capabilities theory as strategic management paradigm on firm performance: The mediating role of competitive advantage

Gaining and sustaining the competitive advantage is one of the most important issues in the strategic management area. The industry oriented approach assets that the industrial structure determines the firm performance by focusing on the external environment. Resource-based approach, on the other hand, argues that valuable, rare, imperfectly imitable and non-substiutable resources of firms lead to competitive advantage. However, both approaches ignore changes over time. The dynamic capabilities approach explains how firms create and maintain competitive advantage in rapidly changing environments. This study aims to examine the mediating role of competitive advantage in the effect of dynamic capabilities on firm performance. To achieve this aim, by using the scales developed by Kump et al. (2016) and Agha et al. (2012) and using easy sampling method the data were collected from 214 white-collar employees of companies operating in Izmir and was subjected to regression analysis with HAYES's PROCESS plugin in SPSS. Findings show that dynamic capability dimensions of sensing, seizing and transforming have positive effects on firm performance profitability and growth dimensions. The flexibility and responsiveness dimensions of the competitive advantage were found to be mediator in these relations. Flexibility and responsiveness have full mediation role in the effect of dynamic capabilities sensing dimension on growth. Flexibility has a partial mediation role and responsiveness has a full mediation role in the effect of sensing dimension on profitability. Flexibility has partial mediation role in the effects of dynamic capabilities seizing dimension on growth and profitability dimensions and responsiveness has a full mediation on growth dimension and partial mediation on profitability dimension. Flexibility and responsiveness are both partial mediators in the effect of the dynamic capabilities transforming dimension of on growth, and the dimensions of flexibility has partial mediation and responsiveness has a full mediation role in the effect of the transforming dimension on profitability. Key words: Industry Oriented View, Resource Based View, Dynamic Capabilities, Competitive Advantage, Firm Performance.