Creating Organisational Capabilities: Learning by Doing

This study brings together insights from the research literatures on organisational capabilities and learning by doing to examine the response of Irish manufacturers to tightened environmental regulation in the 1990s. Using a fine-grained data set on firms’ technology and management practices, we test whether those practices over time resulted in the creation of learned ‘static’ capabilities, the ability to do certain kinds of things well in a given context. We also examine whether firms that were more successful in developing new static capabilities were distinguished by strong ‘dynamic’ capabilities: the capacity to change and adapt through integration of new information internally and from external sources.