Capabilities in Motion: New Organizational Forms and the Reshaping of the Hollywood Movie Industry*

Abstract

abstract This paper looks at the evolution of capabilities in the Hollywood movie industry in the aftermath of the transition from a studio era dominated by integrated hierarchies to a post‐studio era dominated by flexible hub organizations supplied by networks of resource providers. Adopting a dynamic capabilities perspective we argue that two industry capabilities – mobilizing and transforming capabilities – play a crucial role in assembling and transforming resource bundles into feature films. We further argue that the transition to new organizational forms shifts the co‐evolutionary process, with practices and routines that make up mobilizing capabilities changing faster and becoming more important to box office success than practices and routines that make up transforming capabilities. We test our hypotheses using a sample of 400 films split between the studio and post‐studio eras. The results support our hypotheses, pointing to the influence of centralized control versus dispersed access to resources. The strategy of integrated hierarchical organizations depends on ownership of resources that reduces incentives to develop mobilizing capabilities, and increases incentives to develop transforming capabilities. The advent of new organizational forms, by contrast, increases returns to new practices and routines that mobilize resources at the expense of returns on exploring practices and routines that make up transforming capabilities.