Dynamic Capabilities, Human Capital Investment, and Long-Run Competitive Survival in the Nigerian Banking Sector: A Co-Evolutionary Analysis

This study develops and tests a co-evolutionary theory of dynamic capabilities, human capital investment, and long-run competitive survival in the Nigerian banking sector, drawing on a unique longitudinal dataset spanning two decades of banking evolution, including pre-and post-recapitalisation periods and multiple economic cycle episodes. The Nigerian banking sector has experienced dramatic competitive restructuring, with the number of licensed banks declining significantly since the 2006 consolidation exercise, creating a natural historical experiment in competitive survival. The study employs a co-evolutionary longitudinal design, combining archival HR investment data from 24 banks over twenty years with three waves of dynamic capabilities assessment from surviving institutions and retrospective qualitative data from 30 senior banking executives who navigated the competitive transitions. Panel Survival Analysis, Vector Autoregression modelling, and process tracing are combined methodologically. Dynamic Capabilities Framework, Co-Evolutionary Theory, and Human Capital Theory provide the multi-theoretic foundation. Findings reveal a co-evolutionary spiral in which early investments in specialised human capital generate dynamic sensing and seizing capabilities, which in turn enable adaptive HR investment reallocation during environmental disruptions, producing sustained competitive survival advantages. Banks that invested in talent during crisis periods outperform crisis-contraction investors over subsequent five-year windows. Human capital specificity is found to be a source of both competitive advantage and strategic rigidity, with optimal competitive survival requiring a portfolio of general and specific human capital. Original contributions include the Human Capital-Dynamic Capability Co-Evolution Model, a Banking Sector Capability Investment Typology, and a longitudinal HRM sustainability framework. Keywords: Dynamic Capabilities, Human Capital, Banking, Co-Evolutionary Theory, Competitive Survival.