The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.

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Dynamic capabilities and strategic management

This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.

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Dynamic capabilities, what are they?

Marketing inherited a model of exchange from economics, which had a dominant logic based on the exchange of “goods,” which usually are manufactured output The dominant logic focused on tangible resources, embedded value, and transactions Over the past several decades, new perspectives have emerged that have a revised logic focused on intangible resources, the cocreation of value, and relationships The authors believe that the new perspectives are converging to form a new dominant logic for marketing, one in which service provision rather than goods is fundamental to economic exchange The authors explore this evolving logic and the corresponding shift in perspective for marketing scholars, marketing practitioners, and marketing educators

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Evolving to a New Dominant Logic for Marketing

Given assumptions about the characteristics of knowledge and the knowledge requirements of production, the firm is conceptualized as an institution for integrating knowledge. The primary contribution of the paper is in exploring the coordination mechanisms through which firms integrate the specialist knowledge of their members. In contrast to earlier literature, knowledge is viewed as residing within the individual, and the primary role of the organization is knowledge application rather than knowledge creation. The resulting theory has implications for the basis of organizational capability, the principles of organization design (in particular, the analysis of hierarchy and the distribution of decision-making authority), and the determinants of the horizontal and vertical boundaries of the firm. More generally, the knowledge-based approach sheds new light upon current organizational innovations and trends and has far-reaching implications for management practice.

https://memberfiles.freewebs.com/84/90/65819084/documents/TOWARD%20A%20KNOWLEDGE-BASED%20THEORY%20OF%20THE.pdf

Toward a Knowledge-Based Theory of the Firm

In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.

https://www.jstor.org/stable/pdfplus/259056.pdf

The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage

This study explores relationships between campus leadership and the organizational-level dynamic capabilities that underpin the management of research universities. Our observations suggest that the presence of leaders who marry strategic thinking and capabilities development enhance the likelihood of a university’s competitive fitness and long-term survival. We compare and contrast strategic decisions and leadership propensities of chancellors at UC Berkeley and presidents at Stanford University. Our findings help explain why Stanford has advanced in relation to Berkeley and hint at the challenges and opportunities facing Berkeley chancellors. We also suggest that it is timely for university presidents to begin to manage proactively the university and, to the extent possible, its innovation ecosystem to increase the chances that their institutions will continue to prosper in an increasingly competitive environment that is also exposed to uncertainty and change.

Campus Leadership and the Entrepreneurial University: A Dynamic Capabilities Perspective

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.

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Dynamic capabilities and (digital) platform lifecycles

Because of concerns for the textbook treatment of OPEC and its cartel properties, a conference was called in Houston on May 8, 1981, to discuss The Future of OPEC and the Long Run Price of Oil. This book had its genesis at that conference. The editors attempted to weave the proceedings into a unified monograph and found a large degree of commonality among the various views put forward. In a concluding chapter, the editors emphasize that the 1970s was a very unusual decade - the economic and social fabric of industrial countries being trained by a quantum leap in the relative price of energy. They expect the price uncertainty to continue in the 80s, but suggest that reductions in the real price are as likely as further increases. A separate abstract was prepared for each of the other 8 chapters.

Opec Behavior and World Oil Prices

This article examines foreign investment in high-technology industries in Silicon Valley. It describes the extent of this investment and then explores the implications for the future global role of the American economy. Significant foreign investment signals the inability of U.S. high-tech firms to grow to maturity without infusion of capital and other resources from elsewhere. The solution is not to impede the flow of foreign investment, but in building the infrastructure—education, skills, savings, employee commitment, and the like—needed to support the development of later-stage capacities in the innovation process. Failure to do so may enable firms outside the United States to disproportionately profit from the pioneering activity for which "the Valley" is so famous.

http://cmr.ucpress.edu/content/ucpcmr/34/2/88.full.pdf

Foreign Investment and Technological Development in Silicon Valley

In this Article, we examine the neglected tradeoff between innovation and mandatory unbundling of telecommunications networks. Our analysis is prompted by the Supreme Court's 1999 decision in AT&T Corp. v. Iowa Utilities Board and by the Federal Communications Commission's Second Further Notice of Proposed Rulemaking released later the same year, which address which network elements in the local telecommunications network shall be subject to compulsory sharing among competitors at regulated cost-based rates. Economic analysis indicates that mandatory unbundling at prices computed on the basis of the total element long-run incremental cost of the various network elements belonging to an incumbent local exchange carrier will adversely affect the ILEC's incentives not only to upgrade or maintain existing facilities, but also to invest in new facilities. Mandatory unbundling at TELRIC prices will also encourage competitive local exchange carriers to deviate from the socially optimal level of investment and entry. Finally, the confluence of mandatory unbundling and other FCC policies aggravates the distortion of investment decisions.

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David J. Teece

Papers

Campus Leadership and the Entrepreneurial University: A Dynamic Capabilities Perspective

Dynamic capabilities and (digital) platform lifecycles

Opec Behavior and World Oil Prices

Foreign Investment and Technological Development in Silicon Valley

Innovation, Investment and Unbundling