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 article discusses the research strategy of theory building from cases, particularly multiple cases. Such a strategy involves using one or more cases to create theoretical constructs, propositions, and/or midrange theory from case-based, empirical evidence. Replication logic means that each case serves as a distinct experiment that stands on its own merits as an analytic unit. The frequent use of case studies as a research strategy has given rise to some challenges that can be mitigated by the use of very precise wording and thoughtful research design.

Theory Building From Cases: Opportunities And Challenges

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

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

An expanded paradigm is needed to explain how competitive advantage is gained and held. Firms resorting to 'resource-bas ed strategy' attempt to accumulate valuable technology assets and employ an aggressive intellectual property stance. However, winners in the global marketplace have been firms demonstrating timely responsiveness and rapid and flexible product innovation, along with the management capability to effectively coordinate and redeploy internal and external competences. This source of competitive advantage, 'dynamic capabilities', emphasizes two aspects. First, it refers to the shifting character of the environment; second, it emphasizes the key role of strategic management in appropriately adapting, integrating, and re-configuring internal and external organizational skills, resources, and functional competences toward changing environment.3 Only recently have researchers begun to focus on the specifics of developing firm-specific capabilities and the manner in which competences are renewed to respond to shifts in the business environment. The dynamic capabilities \ approach provides a coherent framework to integrate existing conceptual and empirical ^ knowledge, and facilitate prescription. This paper argues that the competitive advanis tage of firms stems from dynamic capabilities rooted in high performance routines z operating inside the firm, embedded in the firm's processes, and conditioned by its •*> history. It offers dynamic capabilities as an emerging paradigm of the modern business J firm that draws on multiple disciplines and advances, with the help of industry studies > in the USA and elsewhere.

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The Dynamic Capabilities of Firms: an Introduction

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 difficult-to-trade knowledge assets and complementary assets), and the evolution path(s) it has adopted or inherited. The importance of path dependencies is amplified where conditions of increasing returns exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding internally) 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 internal 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.

Dynamic Capabilities and Strategic Management

This paper reports on a qualitative field study of 16 hospitals implementing an innovative technology for cardiac surgery. We examine how new routines are developed in organizations in which existing routines are reinforced by the technological and organizational context All hospitals studied had top-tier cardiac surgery departments with excellent reputations and patient outcomes yet exhibited striking differences in the extent to which they were able to implement a new technology that required substantial changes in the operating-room-team work routine. Successful implementers underwent a qualitatively different team learning process than those who were unsuccessful. Analysis of qualitative data suggests that implementation involved four process steps: enrollment, preparation, trials, and reflection. Successful implementers used enrollment to motivate the team, designed preparatory practice sessions and early trials to create psychological safety and encourage new behaviors, and promoted shared meaning a...

Disrupted Routines: Team Learning and New Technology Implementation in Hospitals:

Gary P. Pisano Harvard University This paper examines how two sources of transaction costs, small-numbers-bargaining hazards and appropriability concerns, may affect established firms' choices between in-house and external sources of R&D when technological change shifts the locus of R&D expertise from established enterprises to new entrants, and established firms face a make-or-buy decision for R&D projects. The relationships of other organizational characteristics to the R&D procurement decision are also considered. Hypotheses are tested with data on 92 biotechnology R&D projects that major pharmaceutical companies have sponsored either in-house or through external contractual arrangements. The results suggest that small-numbersbargaining problems motivate firms to internalize R&D. Evidence is also found that a firm's R&D experience, its dependence on the pharmaceutical business, and its national origin affect R&D procurement decisions.'

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Gary P. Pisano

Papers

Dynamic capabilities and strategic management

The Dynamic Capabilities of Firms: an Introduction

Dynamic Capabilities and Strategic Management

Disrupted Routines: Team Learning and New Technology Implementation in Hospitals:

The R&D Boundaries of the Firm: An Empirical Analysis