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

Natural resource cartels

We investigate the implications for patent-related public policy arising out of products that incorporate large numbers of inventions. Inventions may be combined in such multi-invention products using three alternative organizational modes - viz., licensing of inventions, trade in components that embody inventions, or by integrated production. An analytical framework is presented wherein the organizational tradeoffs between these modes are evaluated using a transaction cost approach. We demonstrate that patent policy not only affects incentives for innovation, but also influences these transaction costs, which in turn determine the preferred organizational mode(s) in the industry. Therefore, appropriate patent policy for multi-invention products is determined not only by tradeoffs between incentives for innovation and the ill-effects of monopoly, but also by organizational considerations in commercialization. The framework operationalizes the concerns voiced in many industries that current patent policy gives rise to dysfunctional transaction costs in multi-invention contexts. Implications are drawn for patent policy based on the framework and transaction cost analyses.

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Combining Inventions in Multi-invention Products: Organizational Choices, Patents, and Public Policy

Preface: Dynamic Capabilities

The Palgrave Encyclopedia of Strategic Management

1. Introduction PART I: ECONOMIC BEHAVIORS AND ORGANIZATIONAL FORMS 2. Costly and Bounded Rationality in Individual and Team Decision-Making 3. Incentives, Routines, and Self-Command 4. Routines and Other Recurring Action Patterns of Organizations: Contemporary Research Issues 5. Hierarchies, Markets, and Power in the Economy: An Economic Perspective 6. The Evolution of Organizational Conventions and Gains from Diversity 7. Information, Finance, and Markets PART II: KNOWLEDGE, ORGANIZATIONS, AND TECHNOLOGICAL EVOLUTION 8. The Explicit Economics of Knowledge Codification and Tacitness 9. The Slow Pace of Rapid Technological Change: Gradualism and Punctuation in Technological Change 10. Incentives, Routines, and Self-Command 11. Technologies, Products, and Organization in the Innovating Firm: What Adam Smith Tells Us and Joseph Schumpeter Doesn't 12. Economic Experiments 13. Heroes, Herds, and Hysteresis in Technological History: Thomas Edison and 'The Battle of the Systems' Reconsidered 14. Patents and Welfare in an Evolutionary Model 15. Corporate Strategy, Structure, and Control Methods in the United States During the 20th Century

David J. Teece

Papers

Natural resource cartels

Combining Inventions in Multi-invention Products: Organizational Choices, Patents, and Public Policy

Preface: Dynamic Capabilities

The Palgrave Encyclopedia of Strategic Management

Understanding industrial and corporate change