Dynamic Capabilities

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Summary

According to Porter (1985), there are 3 viable competitive strategies to achieve a Sustainable Competitive Advantage: Cost Leadership, Differentiation and Focus.

In 1993, John Kay argued that there are  three "Distinctive Capabilities" through which a firm may achieve a sustainable competitive advantage through relationships.

Because Competitive Environments, Industries and Technologies are changing fast and significantly, another potential source of competitive advantage may be the ability of firms to develop capabilities or Competencies to strategically adapt accordingly.


Definitions Dynamic Capabilities? Meaning.

In 1997, the term Dynamic Capabilities was coined by David Teece, Gary Pisano and Amy Shuen as "the firm's ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments" (D.J. Teece, G. Pisano, and A. Shuen - Dynamic Capabilities and Strategic Management, Strategic Management Journal, 24(10), 991-995).

In 2000, Kathleen Eisenhardt and Jeffrey Martin emphasize the unstructured, experiential and improvisational nature of these types of competencies in highly turbulent environments (K.M. Eisenhardt and J.A. Martin - Dynamic Capabilities: What are They? Strategic Management Journal, 21, 1105-1121).

In 2002, Maurizio Zollo and Sidney Winter suggest to redefine dynamic capability as "a learned and stable pattern of collective activity through which the organization systematically generates and modifies its operating routines in pursuit of improved effectiveness" (M. Zollo and S.G. Winter - Deliberate Learning and the Evolution of Dynamic Capabilities, Organizationm Science 13(3), 339-351)


Examples of Dynamic Capabilities

Typical examples of dynamic capabilities include capabilities or routines for:

The Need for Dynamic Capabilities. Role

Dynamic capabilities can be a:

How do Dynamic Capabilities develop? process

There is debate on the required intentionality of dynamic capabilities. Maybe they could arise simply by unconscious emergence out of external influences on the firm. Zollo and Winter distinguish 3 mechanisms (with increasing level of intentionality):

  1. Experience Accumulation

  2. Knowledge Articulation

  3. Knowledge Codification


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Compare with: Resource-Based View  |  Porter  |  Organizational Agility  |  Operational Agility  |  Portfolio Agility  |  Strategic Agility  |  Agile Absorption  |  Strategic Types  |  Four Trajectories of Industry Change  |  Distinctive Capabilities  |  Acquisition Integration Approaches

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