Abstract for: Characterizing the Capability Frontier: Key attributes determining the development of capabilities

The capability trap suggests that insufficient allocation of resources towards building capability may cause organizations to become stuck in an equilibrium characterized by low organizational capability and low performance. Seminal research in System Dynamics identified and modeled the dynamics inherent to capability traps over 20 years ago. Since then, follow up research has focused on applying a capability-traps perspective to different industries ranging from farming to maintenance and from humanitarian response to industrial setting. Still, research exploring how specific attributes of a particular capability may impact resource allocation decisions is lacking. This research contributes to the capability trap literature through the development of a formal theoretical model to examine the influence of specific capability attributes on performance, a proxy for managers' propensity to develop them. We find that three key attributes of capabilities influence managers’ decisions to develop them: development time, erosion time, and productivity. Furthermore, we introduce the notion of a “capability region”, an attractive region for capability development, determined by a “capability frontier” given by threshold values of the three key attributes. These findings not only enhance managers’ understanding of specific capability drivers but also support their capability building decisions.