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

The following sections are included:INTRODUCTIONMODELS OF THE INNOVATION PROCESSThe ‘Serial’ ModelSerial Model with Links and FeedbackParallel (Simultaneous) ModelLINKAGES TO EXTERNAL INSTITUTIONSUniversity-industry InteractionVertical LinkagesHorizontal LinkagesORGANIZATIONAL IMPLICATIONS: CO-OPERATION VERSUS INTEGRATIONCONCLUSIONSAcknowledgementsNOTESREFERENCES

Inter-organizational Requirements of the Innovation Process

This book examines transaction cost economics, the influential theoretical perspective on organizations and industry that was the subject of Oliver Williamson's seminal book,Markets and Hierarchies (1975). Written by leading economists, sociologists, and political scientists, the essays collected here reflect the fruitful intellectual exchange that is occurring across the major social science disciplines. They examine transaction cost economics' general conceptual orientation, its specific theoretical propositions, its applications to policy, and its use in systematic empirical research. The chapters include classic texts, broad review essays, reflective commentaries, and several new contributions to a wide range of topics, including organizations, regulations and law, institutions, strategic management, game theory, entrepreneurship, innovation, finance, and technical information.

Firms, Markets, and Hierarchies: The Transaction Cost Economics Perspective

Innovation, Cooperation and Antitrust

Open innovation involves some of the most strategic functions of the enterprise, and yet relatively little has been written about how it fits into a larger strategic management framework This article fills that gap by relating open innovation to the dynamic capabilities framework and begins by briefly summarizing the two perspectives It then reviews the modest theoretical and empirical literature that looks at open innovation from a capabilities perspective It identifies where open innovation fits into the dynamic capabilities framework and explores how treating open innovation as a separate construct can enrich a dynamic capabilities approach to the management of the enterprise A case study of China's Haier then provides an example of these principles in practice

Hand in Glove: Open Innovation and the Dynamic Capabilities Framework

Work on dynamic capabilities is proving to be a fruitful direction in understanding the nature of the firm. Despite its popularity, some scholars have attacked the dynamic capability theory as lacking theoretical underpinnings. In this study, we clarify the origins of the dynamics of the dynamic capabilities framework. Standard operating procedures, routines and the concept of routinization are important elements of understanding the contribution of ordinary capabilities and dynamic capabilities within this stream of literature. Based on the insights of the non-strategic model of Cyert and March, through the dynamic evolutionary theory of the firm in Nelson and Winter, then through the efforts by Teece, Pisano and Shuen (1997) and Teece (2007, 2014), dynamic capabilities have evolved into a dominant theory of the field of strategic management. We provide a brief overview of key topics and empirical research, along with some ideas for future research.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID3009295_code1064580.pdf?abstractid=1161171&mirid=1

David J. Teece

Papers

Inter-organizational Requirements of the Innovation Process

Firms, Markets, and Hierarchies: The Transaction Cost Economics Perspective

Innovation, Cooperation and Antitrust

Hand in Glove: Open Innovation and the Dynamic Capabilities Framework

The Behavioral and Evolutionary Roots of Dynamic Capabilities