Showing papers by "David J. Teece published in 2017"

Business models, value capture, and the digital enterprise

Abstract: Firms across all industries are embracing internet-based digitization strategies to expand or improve their business. In many cases, though, internet-based businesses pursue customer growth ahead of profits. The path to profitability, which is a core element of a business model, should not be an afterthought. A well-designed business model balances the provision of value to customers with the capture of value by the provider. The elements of a business model and the dynamic capabilities that help design, implement, and refine a model for an organization and its business ecosystem are reviewed. The article then translates these concepts with respect to key organizational design decisions such as that of licensing versus practicing an innovation, insourcing versus outsourcing, and building a business ecosystem.

Towards a capability theory of (innovating) firms: implications for management and policy

Abstract: Author(s): Teece, DJ | Abstract: Business enterprises lie at the core of ecosystems that drive economic development and growth in market economies; yet, until recently, mainstream economics has mostly treated firms like homogeneous black boxes run by opportunistic managers. The field of strategic management has developed a more nuanced approach to the understanding of how firms are created, organized and grow, how they innovate and compete and how managers manage. One of the leading paradigms in the field is the dynamic capabilities framework. In this paper, contrasts and complementarities are drawn between dynamic capabilities and economic theories of the firm, including transaction cost economics and agency theory. Connections to the Cambridge school are highlighted, including the duality between Keynes's 'animal spirits' and the dynamic capabilities entrepreneurial owner/manager. Leibenstein's x-inefficiency is juxtaposed here with d-ineffectiveness. Knowledge-based theories of the firm consistent with Cambridge conventions emerge. Intellectual exchange between strategic management and economics is encouraged to help improve the intuition behind models of firms and the economy.

Dynamic capabilities and (digital) platform lifecycles

Abstract: The dynamics of platforms, particularly the eventual need for renewal, are too often neglected. This chapter adopts a four-stage model – Birth, Expansion, Leadership, and Self-Renewal – to analyze the requirements at each stage of the platform lifecycle in terms of its dependence on the high-level dynamic capability categories of sensing, seizing, and transforming. The requirements evolve from a heavy emphasis on generative sensing and planning-stage seizing in the birth phase, through greater emphasis on “seizing” activities and minor transformations as the platform, ideally, grows and stabilizes. When platform renewal is called for, the emphasis returns to sensing future possibilities and generating new ideas for a platform and business model, developing them alongside the existing business, and eventually undertaking a major transformation to restart the platform lifecycle. An awareness of these lifecycle changes can help managers adopt a longer-term perspective on the competitive requirements of their platform-based business.

Dynamic Capabilities and the Multinational Enterprise

Abstract: Contemporary theories of the MNE have made limited progress in explaining interfirm heterogeneity. A fuller explanation should account for the uncertainties that firms face about market demand and about the costs of competing organizational alternatives. One approach is to allow a role for entrepreneurial managers who assess uncertainties on an ongoing basis and make non-routine decisions that create unique paths for the organizations they lead. This paper presents the dynamic capabilities framework, a multidisciplinary approach to analyzing the characteristics of individual firms and the sources of firm-level competitive advantage. Dynamic capabilities encompass the non-routine actions of entrepreneurial managers and the creative output of a firm’s expert talent. These capabilities are also embedded in “signature” organizational routines and processes rooted in an organization’s unique history. A dynamic capabilities approach supports a richer understanding of the distinctive characteristics of MNEs. A case study is presented that shows how the exploration division of a large multinational oil firm introduced capability awareness into the management of its global staff of geophysicists.

Dynamic capabilities: fostering an innovation-friendly environment in brazil

Abstract: Reflections on the advances of the dynamic capabilities concept and the innovation environment in Brazil

The New MNE: From ‘Internalisation’ to a Theory of Orchestration

Abstract: We critically assess varieties of internalisation theory of the MNE. We discuss their limitations and explain why the time has come to move to an orchestration theory of the MNE. Orchestration theory, rooted in and encompassing the dynamic capabilities framework, helps explain a number of MNE phenomena that challenge internalisation theory, including entrepreneurship, learning, and inter-firm cooperation. We also discuss prospects for further research using an orchestration approach.

On the “non-discrimination” aspect of FRAND licensing: A response to the Indian Competition Commission's recent orders

Abstract: The Indian Competition Commission has recently challenged Ericsson's practice of licensing its standards-essential patents (SEPs), relating to cellular standards, for percentage-based royalties based on the selling prices of the end-user licensed products. Ericsson had committed to the relevant standards-development organisation that it would license its SEPs on “fair, reasonable and non-discriminatory” (“FRAND”) terms. The Commission contends that such royalties are “prima facie discriminatory” in violation of the Competition Act, in the (novel) sense that different products selling for different prices pay different per-unit royalties. We analyse the broader implications of the Commission's reasoning, concerned that if adopted, the Commission's reasoning would disrupt common industry licensing practices.

Business on Globalization—A Panel

Abstract: This chapter is based on a transcription of the panel “Business on Globalization,” moderated by Bent Jesper Christensen, Aarhus University, on November 10, 2011, at the Aarhus University conference Globalization: Strategies and Effects, Hotel Koldingfjord, Denmark. Introductory remarks by Jorgen Vig Knudstorp are in Sect. 1, remarks on globalization, trade, power, culture, digitalization, demography, and planet issues in Sect. 2, on free trade, complexity, cycles, and inequality in Sect. 3, and on operating models, location decisions, and marketing in Sect. 4. Questions by panelists Keith Maskus and David Teece are in Sect. 5, along with replies by Jorgen Vig Knudstorp.