Leonardus Ricky Rengkung
Increasing attention to dynamic capabilities perspective has resulted in many researches with a number of methods, analyzes and approaches, but not followed by increase in simulations and models, like system dynamics model. Dynamic capabilities exhibit in the process of several elements as leverage elements for enabling process such as sensing, learning, integrating, coordinating and sub-elements as underlying elements for basic routines, whereas system dynamics is a systemic modelling that can be applied to exploit, explore and reconfigure organizational resources and capabilities in a system for analyzing and understanding how complex the environment changes over time. By considering that dynamic capabilities approach and system dynamics are closely intertwined in term of system, the purpose of this paper is to develop dynamic capabilities model based on system dynamics approach along with associated to business environment.The model shows that the reinforcing loop of leverage elements affected by underlying elements plays an important role in balancing to a changing business environment. The more increase in exploiting and exploring all leverage elements and underlying elements of dynamic capabilities, the more increase in organizational dynamic capabilities capabilities and it leads to the more organizational ability to maintain the existence of organizations in highly dynamic business environment.