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{{Paper
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|storemode=property
|title=A synthesis of diverse organizational capability typologies and
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|pdfUrl=https://ceur-ws.org/Vol-3645/facete3.pdf
|volume=Vol-3645
|authors=Georgios Koutsopoulos
|dblpUrl=https://dblp.org/rec/conf/ifip8-1/Koutsopoulos23
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==A synthesis of diverse organizational capability typologies and
classifications==
https://ceur-ws.org/Vol-3645/facete3.pdf
A synthesis of diverse organizational capability
typologies and classifications
Georgios Koutsopoulos
Department of Computer and Systems Sciences, Stockholm University, Stockholm, Sweden
Abstract
The concept of capability, despite the fact of having gradually been established as a valuable construct
for business analysis and design, remains vaguely defined and classified. A wide spectrum of diverse
definitions and perspectives exists in the literature, and this has led to an equally wide and diverse
spectrum of typologies based on different aspects and focal points. Synthesizing a variety of such
perspectives, which is the aim of this paper, has the potential to improve the understanding around the
concept of capability and enhance the means to communicate its value. A literature review has been
performed in order to identify a set of existing capability typologies and classifications, and the elicited
set has been synthesized and visualized in order to provide a basis for a capability ontology, derived from
the existing perspectives in the literature.
Keywords
Capability, Typology, Classification, Synthesis, Dynamic capabilities, Hierarchy, Domain-specificity
1. Introduction
Capability, as a conceptual construct, and capability thinking, as a practice, are gradually gaining
ground as enablers and facilitators for the documentation, planning, design, and analysis of
businesses [1].
A noteworthy fact about business capabilities is the lack of a consistent and unanimous
definition in the literature [2]. This situation is further amplified by the fact that the theory of
dynamic capabilities [3] provides a wider spectrum, of definitions that raise significantly the
degree of ambiguity regarding the definition of capability.
This situation has also led to a wide spectrum of typologies and classifications about capabili-
ties, derived both from academia and the industry. There are both generic and domain-specific
typologies, often focusing on hierarchical aspects that also include dynamic capabilities. While
the absence of an unanimously accepted definition can be recognized as a problem, in this paper,
it is treated as an opportunity to improve the comprehensibility of the concept of capability by
synthesizing diverse perspectives about it.
The existing classifications and typologies are derived from theoretical definitions following a
top-down approach. With this study, an initial attempt to redefine capabilities using a bottom-up
approach is performed. The types and categories are a result of applying theoretical frameworks
Companion Proceedings of the 16th IFIP WG 8.1 Working Conference on the Practice of Enterprise Modeling and the 13th
Enterprise Design and Engineering Working Conference, November 28 – December 1, 2023, Vienna, Austria
$ georgios@dsv.su.se (G. Koutsopoulos)
0000-0003-2511-9086 (G. Koutsopoulos)
© 2023 Copyright for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
CEUR
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Workshop ISSN 1613-0073
Proceedings
on practical situations, and in this way, these elicited categories can also be considered as
instances of the category. Thus, identifying a variety of aspects which are relevant to the
description of the concept of business capability can set the basis for an ontological analysis
and description of business capabilities on all levels, from operational to strategic.
Therefore, the goal of this paper is to provide an initial synthesis of capability perspectives, as
identified via typologies identified in the literature.
The rest of the paper is structured as follows. Section 2 provides a brief overview of the
relevant background and Section 3 explains the methodological decisions that have impacted
this study. Sections 4 and 5 describe an identified set of capability typologies in the literature
and their synthesis in the form of a conceptual model respectively. Section 6 presents a brief
discussion about the study and Section 7 provides concluding remarks.
2. Background
This section provides a brief overview of the main topics in capability research and practice.
Business capabilities are most often classified as operational or dynamic, with operational
capabilities referring to an organization’s potential to perform activities, on an ongoing basis
using the same techniques on the same scale, as a means to support product or service delivery
for the same customer population [4].
Capabilities have always been associated to dynamic business environments, and have been
used as a means to analyze all the aspects of an organization that changes what it is capable
of as a response to the environmental dynamism [5]. This fact led to the concept of dynamic
capability [6, 7]. Despite its high popularity, the concept of dynamic capability remains a source
of confusion, since it has been defined in so diverse ways that result in inconsistencies. For
example, dynamic capability has been defined as ability, orientation, process, capacity, design,
or mechanism [2]. The diversity in definitions is a probable effect of not only including the
term "capability" which has diverse definitions, but also the term "dynamic" which has a double
meaning, both as something that is "active or changing" and "something that causes change
or growth in something else" [8]. This is a potential point of confusion between something
that is being changed and something that is provoking change in something else. However, the
popularity of the term has resulted in diverse typologies that refer to dynamic capabilities, so
they cannot be ignored in a study such as the current one. As a means to avoid the potential
confusion, this study considers dynamic capability as a specialization of strategic capability,
meant to affect operational capabilities, which reflects on the majority of the relevant typologies.
There are various means to document, analyze, design and communicate the capabilities of
an organization. Common approaches are capability mapping [9, 10], capability modeling, as a
specialization of Conceptual and Enterprise Modeling with a focal point on capabilities [11, 12],
and more traditional high-level business analysis techniques, like canvas-based approaches [13].
The concept of capability has been used and applied in a variety of domains, regardless of
the practice, that is, capability mapping, modeling, or any other type of analysis.
A few examples of domains that have been combined with capability thinking are Enterprise
Modeling [1, 14], Enterprise Architecture [15, 16, 17], Requirements Engineering [18], Risk
Management [19], and Change management [20].
3. Methodology
The aim of this paper is to identify a variety of capability typologies and classifications that
exist in the literature and attempt an initial synthesis, as a step towards a unified ontology that
will facilitate an improved understanding of the concept of capability and its usage both in
academic research and practical application in businesses.
Regarding the data collection, in order to elicit an initial set of capability typologies and
classifications, a search has been performed on Google Scholar, using the keywords:
capability classification* OR typolog* AND business OR organizational OR enterprise capabilit*
The initial findings have been combined with a snowballing technique to complement the
initial collection. The combination of the two data collection techniques led to the identifica-
tion of the capability typologies and comprise the literature review performed in this study.
The identified typologies and classifications have been extracted and their types have been
documented.
Regarding the synthesis, the overlapping and compatible aspects in the analyzed typologies
have been identified, abstraction has been used wherever applicable and the results have been
visualized as a conceptual model. The page limitations of this paper do not allow a detailed
presentation of the semantic comparisons performed on the capability type and category
concepts using in the performed synthesis.
4. Capability typologies in the literature
As mentioned earlier, the literature on business capabilities includes a wide and diverse spectrum
of typologies and classifications. An equally diverse aspects have been employed as focal points
for the classification of capabilities. The majority of the identified typologies include the
hierarchy of capabilities as a classification aspect, and this is naturally involving the theoretical
comparison between capabilities and dynamic capabilities. Another popular aspect is the
domain-specificity [21] that determines domain-specific capability types.
4.1. Hierarchical typologies
Regarding the hierarchy of capabilities, the main idea behind it is that there are various different
capability levels, a viewpoint which suggests that higher-level capabilities affect the lower-level
capabilities. A few examples of hierarchical capability typologies follow:
• Collis [22]: The typology of Collis classifies business capabilities in five main types.
Initially, Collis identifies the (i) first category, which refers to an organization’s abil-
ity to perform basic business functions. The (ii) second category refers to capabilities
that concern dynamic improvements on the organization’s activities, and the (iii) third
category, which is a lot alike the second, refers to capabilities that help recognize the
intrinsic value of specific resources or develop innovative strategies ahead of competing
organizations. Collis’s fourth category, the (iv) meta-capabilities, which refers to the
capabilities to develop capabilities. However, this category leads to the conceptually
problematic existence of capabilities to develop capabilities to develop capabilities, which
also comprises the fifth category of Collis, the (v) ad infinitum capabilities [22].
• The typology suggested from Danneels [23] is another hierarchical typology that em-
phasizes at the operational level of the organization, naming this category (i) first-order
capabilities, and the dynamic aspects of the strategic capabilities that lead to the cate-
gory (ii) second-order capabilities. These two are the only categories that comprise this
typology.
• The typology introduced by Winter [24] consists of three categories for classifying
business capabilities. The focal point of the typology lies in dynamic capabilities, therefore,
operational capabilities are considered the first category, the (i) zero-level or ordinary
capabilities. The second category, (ii) first-order capabilities refer to the more traditional
perspective of dynamic capabilities, which enable an organization to change its ordinary
capabilities. Finally, (iii) higher-order capabilities, which is the third and last category
of this hierarchical typology, concerns more advanced dynamic capabilities that enable
strategic innovation that leads to competitive advantages to a higher degree that the one
provided by first-order capabilities. A noteworthy fact here is that the term "first-order"
has been used identically in the last two typologies, however, their semantics are referring
to entirely different categories.
• The next typology, introduced by Zahra et al. [25], classifies capabilities in a similar way
to the previous hierarchical typologies. Basically, the main classification aspect is between
operational and strategic capabilities. The difference is in the selected terminology. The
operational capabilities are named (i) substantive or ordinary capabilities, and the second
category is named (ii) dynamic capabilities.
• The next hierarchical typology comes from Ambrosini et al. [26]. The first type of the
typology (i) is called "Resource base" and refers to the operational, ordinary, zero-order
or first-order capabilities that have also been part of the previous typologies. The second
and third types in this typology are (ii) incremental and (iii) renewing capabilities, which
affect the resource base. Finally, the fourth category is the (iv) regenerative type, which
affects the previous two categories.
• One more hierarchical typology comes from [27]. The authors treat the operational or or-
dinary capabilities as their first category, namely (i) Classical capabilities, and distinguish
between the levels of dynamic capabilities according to three aspects derived from how
dynamic capabilities are managed. In practice, they distinguish among three categories
of dynamic capabilities, which are, (ii) radical, (iii) integrated, and (iv) routinized.
4.2. Other typologies
A variety of domain-specific typologies exists in the literature and it bears significance to overall
capability thinking. A few examples follow:
• When it comes to IT capabilities, a typology has been introduced by Lee et al. [28]. Two
main aspects have been used for the classification of organizational capabilities. The
first one is the Functional Technology level. According to this perspective, capabilities
can be classified as (i) IT capabilities for Process Redesign, (ii) Technological capabilities,
(iii) IT Infusion in New Product Development, and (iv) Capability-based IT classification.
The second applied perspective is the Information Systems Strategy level. Based on this
aspect, organizational capabilities can be classified as (i) Business Design, (ii) IT Business
Value, (iii) Digital options, and (iv) IT for Organizational Design.
• One domain-specific typology regarding multi-agent systems has been introduced and
reported by White et al. [29]. The two classification aspects used in the study are
Complexity and Locality. Applying the Complexity aspect results in two main capability
types, (i) primitive, and (ii) composite. The locality aspect results in two other types,
in particular, (i) internal, and (ii) external. The authors provide additional relationships
among the distinguished capability types, for example, every external capability must be
considered primitive, because it is only the viewpoint of the capability’s owner that can
enable treating it as composite. From a non-owning organization’s viewpoint, it can only
be treated as primitive.
• The typology of Arena et al. [19] is another domain-specific study in the combined field
of capabilities and risk management. The classification derived from this study consists of
the following capability types. Initially, there is the (i) Delivery type, which reflects on an
organization’s capabilities to execute tasks on an operational level. The second type (ii)
Integration and Coordination, reflects on the organization’s capabilities that support the
Delivery type, along with the coordination of resources for the delivery. The third type,
namely, (iii) Learning, concerns capabilities related to generation of new knowledge for
the organization, as a means to utilize existing resources more efficiently and effectively.
Finally, the last type in this typology is the (iv) Reconfiguration type, which refers to
capabilities that enable reconfiguration of existing resources.
• Another typology developed in [30] and reported in [31] concerns the aspects of unique-
ness and collectiveness. Uniqueness concerns the degree to which a capability is distinct
from the ones owned by competing organizations, and collectiveness reflects on the
degree to which a capability is integrated in the entire organization. Both aspects result
in classifying capabilities as high or low uniqueness and collectiveness and the combi-
nation of these labels results in a quadrant of four capability types. In particular, (i) low
collectiveness and uniqueness results in the Business Necessity capability type, (ii) low
collectiveness and high uniqueness results in Strategic Support Business capabilities, (iii)
high collectiveness and low uniqueness lead to Essential Business capabilities, and (iv)
high collectiveness and high uniqueness lead to the Core Business capabilities.
• Finally, a capability typology has been introduced in an earlier work of this paper’s author
[32, 12] and adjusted for this study. The typology is based on the aspects of purpose and
fulfillment status of the capability. That is, the type of organizational intention that is
mean to be fulfilled by the capability, and the actual fulfillment status, meaning if the
capability is successfully achieving the organization’s intentions or not. Based on these
two aspects, a quadrant of categories is also produced. A capability successfully achieving
a goal is (i) a positive capability, a capability that fails to do so is (ii) and incapability, (iii)
a capability that successfully mitigates a problem is referred to as (iii) sustainability, and
a capability that fails to mitigate a problem is a liability.
5. A synthesis towards a unified ontology for capability
classification
The identified set of typologies has been analyzed and the classification aspects and types have
been extracted and combined, as shown in the conceptual model of Fig. 1.
Figure 1: The various capability types that exist in the literature, along with the aspects used for their
classification.
The decisions on how the concepts derived from the typologies have been conceptually
linked lies basically in the semantic consistencies, as identified in the papers that introduced
the typologies. Figure 1 should not be treated with strict modeling rules as a domain model, but
it should be considered as an initial high-level ontological model that can be further expanded
in terms of content, semantics, and syntax.
6. Discussion
This paper does not claim to provide an exhaustive inclusion of the entire spectrum of typologies
that exist in the literature, yet, the aspiration is that it not only motivates, but also provides
a basis for a detailed and thorough elaboration of an ontological description and analysis for
business capabilities. In this way, the vague and currently ambiguous area of business capability
management, and all that it encompasses, can potentially benefit from a clearer view on the
concept based on how it is perceived.
The part of the synthesis that consists of hierarchical aspects includes a significant degree of
overlap. This enabled an easier interpretation and integration of the typologies, however, the
domain-specific typologies and classifications require additional effort and levels of abstraction
for identifying the proper integration points for a solid semantic integration. This is one of
the important focal points for future research based on the initial exploration that has been
reported in this study.
Defining the concept of capability via an ontological analysis may be perceived as a “reverse
engineering” approach, however, it may enable steps forward, towards a commonly acceptable
definition of the term. In other words, exploring how researchers and practitioners use and cat-
egorize the concept of business capability, has a strong potential to help identify the boundaries
of the concept, therefore, it may help establish boundaries that eventually may transform the
actual definition and how it is received.
7. Conclusions
The paper uses a wide spectrum of capability typologies and classifications existing in the
literature in order to synthesize a "big picture" of perspectives applied on the notion of business
capability. The aspiration is that this synthesis will provide a basis for the development of a
unified ontology for business capabilities that will improve the current vagueness and diversity
existing in the academic and industrial definitions of capability.
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