Dynamic capabilities and strategic management

Article Abstract:

A dynamic-capabilities model is developed as a tool for analyzing the manner by which firms obtain and retain their competitive advantage. This framework focuses on the sources of wealth creation and capture by firms, and aims to clarify firm-level success and failure. This approach is uniquely pertinent in a Schumpeterian world, characterized by innovation-based competition, price/performance rivalry, escalating returns, and 'creative destruction' of current competences. Under this framework, competitive advantage depends on distinctive processes that are molded by the asset positions of the firm and the evolution paths it has taken. Path dependencies become more relevant when returns increase. The stability of competitive advantage is influenced by the stability of market demand and the ease of replicability and imitability. Thus, private wealth creation occurs when a firm looks for new opportunities and organizes to adopt them instead of merely strategizing.

Management, Profits, Corporate profits

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Towards a dynamic theory of strategy

Article Abstract:

The theory of strategy seeks to explain two principal problems that define why firms succeed or fail. One is the cross-sectional problem, which explores the reasons for the superior long-term performance of firms, and the other is the longitudinal problem, which explores the process by which firms create competitive positions. The cross-sectional problem has been widely researched and is thus better understood. The longitudinal problem, however, remains largely unresolved. Three general areas of research that explore the dynamics of competitive success are examined, while their implications for strategic theory are also discussed. Of these three areas, the study of the influence of the local environment on a firm seems to be the most promising.

Research

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