Abstract for: Conceptualising Systems Thinking Capability in Organisations: A Dynamic Capability Perspective

Constant change and ever-present complexity present challenges for organisations that systems thinking promises to address. Systems thinking, however, is rarely found in organisational settings. Indeed, it is unclear what 'systems thinking' is, beyond individual skill, when considered within an organisational context. To remedy this, we propose the conceptual integration of systems thinking and dynamic capability theory, a strategic management concept explaining organisational performance. As both literatures are highly fragmented, we follow the system dynamics and Teecian dynamic capabilities stream respecively. We theoretically analyse the intersection of systems thinking and dynamic capabilities, looking at both private and public sector forms of dynamic capabilities, with emphasis on their respective microfoundations. Innovative on-the-ground applications of system dynamics further illustrate our findings that systems thinking aligns with the definition of dynamic capabilities. We demonstrate the value of conceptualising systems thinking as a dynamic capability, that it enhances other microfoundations and that it applies across a variety of organisational settings, including systems thinking as an external capability. Dynamic capabilities provide a valuable practical application area for systems thinking which in turn contributes to embedding systems thinking for innovative, real-world change within and by organisations.