The role of cocreation and dynamic capabilities in service provision and performance: A configurational study

The success of a professional service firm (PSF) relies on its capabilities for leveraging relationships with clients – i.e., cocreation capabilities (CCs) – and adapting to changing environments – i.e., dynamic capabilities (DCs). Previous research shows that the interaction of these two organizational capabilities and the multidimensional configuration of DCs. However, little is known about how CCs and DCs are jointly configured within PSFs and how trade-offs between these distinct capabilities relate to service provision and performance across different firms. This study explores the path dependent nature of higher- and lower- order capabilities and uses data from 279 marketing advisory firms to investigate how different configurations of higher-order CCs and DCs are associated with lower-order service provision capabilities (SPCs) and similar or different performance. We find that CCs can substitute for DCs, and that DCs and CCs can compensate for SPCs in achieving higher levels of customer-based performance. However, the same does not apply for financial performance in which CCs do not appear to overcome deficiencies in DCs and SPCs. Also, firms can have similar SPCs and experience similar financial performance while emphasizing the use of either DCs or CCs; suggesting DCs and CCs may substitute for each other.