Dynamic capabilities and strategic management

Citation: David J. Teece, Gary Pisano, Amy Shuen (1997) Dynamic capabilities and strategic management. Strategic Management Journal (RSS)
Internet Archive Scholar (search for fulltext): Dynamic capabilities and strategic management
Tagged: Business (RSS) strategy (RSS), dynamic capabilities (RSS), RBV (RSS)

Summary

In this article, Teece, Pisano and Shuen describe dynamic capabilities (DC) as a form of an extension on top of the resource-based view of the firm. Their describe DC as a new framework for considering issues of firm strategy specific modeled on dynamics and high velocity environments.

Wernerfelt and other components of the resource-based view suggests that firms gain strategic positions through particular resources and resource positions. Teece et al. suggest that this view is incompletely in that it gives us very little information on how firms can develop resources. They call the ability to generate new resources dynamic capabilities and explain that they can thought of as routines to make routines. Because it emphasizes the capability of making new combination, it is naturally very close to the literature on innovation. Because assets can be purchased "off the shelf" these cannot be the source of sustainable competitive advantage. Indeed, anything that can be bought and sold cannot, in the DC model, be the source of sustainable competitive advantage.

The authors define dynamic capabilities as:

The firm's ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments. Dynamic capabilities thus reflect an organization's ability to achieve new and innovative forms of competitive advantage given path dependencies and market positions.

The authors compare DC as a model to three other paradigms competitive forces (i.e. Porter), strategic conflict, and more pure resource-based perspectives.

Theoretical and Practical Relevance

DC have been hugely influential in the literature on strategy and have become perhaps the most dominant framework for talking about the construction of competitive advantage. That said, the paper was also criticized being tautological and vague. This was responded to in much more depth by Eisenhardt and Martin (2002) in Dynamic capabilities: What are they?.