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?

This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long- run business performance. The microfoundations of dynamic capabilities—the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines—which undergird enterprise-level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long-run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition. Copyright  2007 John Wiley & Sons, Ltd.

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Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance

Co-Planar Stereotaxic Atlas of the Human Brain—3-Dimensional Proportional System: An Approach to Cerebral Imaging, J. Talairach, P. Tournoux. Georg Thieme Verlag, New York (1988), 122 pp., 130 figs. DM 268

Defining ordinary or ‘zero-level’ capabilities as those that permit a firm to ‘make a living’ in the short term, one can define dynamic capabilities as those that operate to extend, modify or create ordinary capabilities. Logically, one can then proceed to elaborate a hierarchy of higher-order capabilities. However, it is argued here that the strategic substance of capabilities involves patterning of activity, and that costly investments are typically required to create and sustain such patterning—for example, in product development. Firms can accomplish change without reliance on dynamic capability, by means here termed ‘ad hoc problem solving.’ Whether higher-order capabilities are created or not depends on the costs and benefits of the investments relative to ad hoc problem solving, and so does the ‘level of the game’ at which strategic competition effectively occurs. Copyright © 2003 John Wiley & Sons, Ltd.

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Understanding dynamic capabilities

Emotion and Adaptation

The aim of this Special Issue is to celebrate the 50 anniversary of Edith Penrose’s classic book The Theory of the Growth of the Firm (Penrose, 1959), by also publishing for the first time, and drawing upon, her last paper on ‘Strategy/Organization and the Metamorphosis of the Large Firm’ (Penrose, 2008). ‘In the beginning was the firm and the firm was good.’ This is how Edith Penrose opens her last paper, unpublished until now, which she titled ‘Strategy/ Organization and the Metamorphosis of the Large Firm’. Penrose wrote this paper in February 1994 and presented it later that year at the Queens’ Seminar in Economics at Cambridge, at the invitation of Christos Pitelis. The paper was prepared for the Prince Bertyl Symposium 1994 in Stockholm, June 12–14. Although Penrose did mention that she was invited by the conference organizers to provide ‘an original paper fit for publication’, her paper did not eventually appear in the volume of conference papers, edited by Chandler et al. (1998). It should be mentioned that, at that time, Penrose was 80 years old and tended to rely on readings that were sent on to her by academics at Waterbeach, where she was living. Still, this was a powerful and inspiring statement of her thinking at the time, which you will have the opportunity to enjoy and meditate upon as you proceed to read this Special Issue. (It is reproduced for your convenience on p. 1117). Penrose’s final paper is important also because it makes a fundamental point, which is at the heart of this Special Issue. The so-called ‘theory of the firm’ cannot be viewed as a quest for the discovery of one static reality; it is not about uncovering the ‘truth’ about why firms exist, what they do, what they are about. The firm, as a concept and as an institution, is in constant evolution — a moving target which needs to be studied and understood as such. Hence this Special Issue on the metamorphosis of the firm and the metamorphosis of the theory of the firm, to focus our collective attention on how the study of those foundational questions for our field has changed over time, not only because we have improved our ability to tackle them, but for the more fundamental reason that the object of the study itself has evolved over the decades, and thus requires a continual updating and refinement of our own theoretical machinery to comprehend it. Penrose showed the way, in her piece, by essentially bringing into question her own contribution, in light of the appearance and increasing relevance of new organizational forms, of new ways to handle activities that were commonly thought to belong to ‘the firm’. She talked about the ‘relationship enterprise’, organizations operating not on principles of control (at least not just), but on principles of consensus among participants. She sketched alternative views to article title

Maurizio Zollo

Papers

On `The Metamorphosis of (the Theory of) the Firm': An Introduction:

Successful mergers start at the top

The neuroscientific evidence

Stakeholder Orientation and Experiential Learning: Evidence from Corporate Acquisitions

The Evolutionary Leap : To Flourishing Individuals And Organizations