Advancing the software development process through the development of technology-enabled dynamic capabilities in a project-based firm: insights from action design research

Purpose This study aims to extend the dynamic capabilities (DCs) perspective to the project management context. The authors present supporting evidence for analyzing the creation process of DCs during the redesign of the software development process, and they examine the impact of those capabilities on organizational performance and transformation. Design/methodology/approach An action design research approach, combined with simulation and qualitative analysis, is adopted to examine the emergence of technology-enabled DCs supported by their microfoundations and the modernization of the software development process in the target firm. Findings Analyzing the successful internal transformation of a software development company that was facing a slow and inconsistent product development process reveals the effectiveness of extending the DC perspective to a project-based setting. The implementation of a new project methodology and the introduction of an innovative document-handling system facilitated the renewal of the company's software development process. This led to improvements in lead time and total costs, resulting in enhanced project performance as well as customer and employee satisfaction. Practical implications This study draws managerial attention to the microlevel activities of technology-enabled DC formation, such as precise calculations, external expert consultations and tool deployment. Originality/value By applying the sensing–seizing–transforming framework with concomitant microfoundations in a longitudinal way, this article explains the role that technology plays as the basis for DCs and analyzes the cost–benefit balance of DC development in project-based organizations.