The rise, fall and resurgence of BHP: dynamic capabilities in a leading resource company

George A Scott

doi:10.60867/00000109

Dynamic capabilities have remained a key area of study within strategic management for the past thirty years. Despite an expanding body of literature, the theory has faced ongoing criticism, and research findings continue to be varied and disconnected. A primary concern is the lack of construct clarity and persistent definitional issues that complicate debate and lead to ad hoc theorising in the field. As a result, this research seeks to advance the theoretical understanding by examining how dynamic capabilities enable strategic alignment between a firm's internal strengths and its external context during periods of major industry transformation, by investigating the role of dynamic capabilities within a large multinational corporation between 2010 and 2020. Despite the growing discourse in this field, it remains relatively nascent and has been criticised for the paucity of longitudinal empirical studies. To address this gap, an inductive approach is adopted, utilising a qualitative, retrospective, longitudinal, single-firm case study methodology. The case study, BHP, is deemed successful, unique, extreme, or revelatory, permitting the research to isolate sustained competitive advantages, which justifies the use of a single case study. Furthermore, the research traces significant transformational changes within the firm over a decade, incorporating interviews with 34 former senior manager BHP employees, who provide substantial firsthand accounts and offer exceptional examples and specific events, which provides detailed insights into the functioning of observable dynamic capabilities at BHP during this period. The research identified that BHP excels at reacting to environmental stimuli irrespective of market velocity. This proficiency is supported by the complex coordination of 13 dynamic capability microfoundations that operate in unison which in turn leads to heterogeneity and competitiveness. The research also found that heterogeneity and competitive advantage are emergent outcomes of certain microfoundations being more influential or dominant than others, particularly those associated with the top management team and other higher-order dynamic capabilities. Implicit in this finding is that dynamic capabilities are structurally layered into higher-order versus lower-order groups, with potential gains from each layer directly tied to the level of that dynamic capability. This structurally separation also provides flexible and an ability to exercise differing modes of adaptation to correspond to different environmental stimuli. This research does not aim to serve as a prescriptive manual for applying dynamic capabilities. Rather, it presents a practical, reflective pathway designed to inspire readers to form their own interpretations and insights. Through a process-narrative approach, largely composed of first-hand accounts from key individuals, it illustrates how BHP employed dynamic capabilities to adjust, acquire, or shed resources. While practitioners may find both parallels and distinctions between their own experiences and the BHP case study, they are encouraged to assess the relevance of these findings to their specific contexts, draw their own conclusions, and adopt only those elements that resonate with their needs and objectives. Finally, this case study advances the dynamic capabilities literature by applying its theoretical framework to generate new empirical insights. It demonstrates that dynamic capabilities are not confined to high-velocity environments but can also operate effectively in more stable contexts. Moreover, the research sheds light on the microfoundations underpinning dynamic capabilities, reinforcing their conceptual clarity. While some microfoundations may appear similar across firms, their distinctive value arises from how they interact, giving rise to a hierarchical structure of higherand lower-order dynamic capabilities. These findings help reduce definitional ambiguity and bridge divergent perspectives within the dynamic capabilities discourse, thereby enriching the theoretical understanding of the construct.

The rise, fall and resurgence of BHP: dynamic capabilities in a leading resource company

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