Dynamic Capabilities & Strategic Management

By David J. Teece, Gray Pisano and Amy Shune

Eunjung Ma

(Graduate School of Management of Technology, Ph. D student)

■ Summary

As in Teece et al. (1997), dynamic capabilities theory is described in terms of an expansion on the resource base view of organizations (RBV). Both attempt to use an analysis of processes and routines to offer a description of organizational activity with clear high-level implications for strategies that, implemented by managers, can result in higher firm performance and help explain the difference in performance among firms.

Wernerfelt and other components of the resource-based view(RBV) suggests that firms gain strategic positions t hrough particular resources and resource positions. Teece et al. suggest that this view is incompletely in that it gives us very little information on how firms can develop resources. They call the ability to generate new resources as dynamic capabilities and explain that they can think of as routines to make routines. Because it emphasizes the capability of making new combination, it is naturally very close to the literature on innovation. Because assets can be purchased "off the shelf" these cannot be the source of sustainable competitive advantage. Indeed, anything that can be bought and sold cannot, in the DC model, be the source of sustainable competitive advantage.

The authors define dynamic capabilities as:

The firm's ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments. Dynamic capabilities thus reflect an organization's ability to achieve new and innovative forms of competitive advantage given path dependencies and market positions.

The authors compare DC as a model to three other paradigms competitive forces (i.e. Porter), strategic conflict, and more pure resource-based perspectives.

As a result, the authors suggest that the integration, construction and reconfiguration (transformation) of the organization's internal and external capabilities. It's process formation of competitiveness are explained through the dynamic capabilities framework (processes, positions and paths.)

■ Main contribution

This paper was motivated by RBV theory. The resource based view is focused the selection of the resources and the location of appropriate resource position. But RBV theory cannot explained the boundary of resource, the definition of successive resource. Questions are rising that the resource in RBV is the independent to explain firm performance and competency.

This study described how external variables and changes of firm operate performance (competency). Authors suggest the dynamic capabilities framework and it’s dominants (processes, positions, paths). And they described the course that firms form the competitive advantage by external, internal capacities. Also, this study compensates the resource based framework that did not previously explain the formation and constellation process of resource application.

■ Critiques

Authors explained that the dynamic capacity is constellation, reconfiguration and transformation of such organization's routine. But shortcoming is existed. The character of asset forming the dynamic capacity, the process of constellation, reconfiguration and the measuring of the dynamic capacity are not researched. It is necessary to research characters of the dynamic capacity in detail.

We can discuss about the level of competences which is produced by firm-specific assets. This study used the terms of the dynamic capacity and organization's routine and process, competence. These are doubted of a specific meaning and a level degree of these terms.

We need to empirical study in detailed framework.