Dynamic Capabilities, Internationalization Strategy, and Market Coverage: A Configurational Analysis of Chinese Engineering Enterprises

ABSTRACT While high market coverage is a paramount concern for engineering enterprises seeking to achieve their sustained international goals, the literature does not fully capture the complexity of high market coverage by these enterprises. In this study, we propose a holistic framework that demonstrates that high market coverage is contingent on the alignment of dynamic capabilities (DCs) with internationalization strategies. By employing a configurational approach, we link four types of DCs (i.e., resource acquisition, resource integration, resource utilization, and resource reconfiguration capabilities) in our conceptual framework to different internationalization strategies in terms of geographically incremental, regional leaders, casino, and project priority. Empirical data from 92 engineering enterprises in China show that the adoption of an internationalization strategy varies depending on the different dimensions of DCs to achieve high market coverage. Moreover, there are complex trade‐off effects among multiple dimensions of DCs. For instance, engineering enterprises adopt a project priority strategy when high resource integration and utilization capabilities are present, while a regional leader strategy is adopted when engineering enterprises possess high resource acquisition capability and low resource utilization capability. This study supplements extant strategic management knowledge by uncovering the interaction logic between different dimensions of DCs and internationalization strategy in explaining high market coverage. Our findings are also expected to assist in managerial practice by providing new insights into engineering enterprises launching foreign market entry.