Where does dynamic capabilities collide?

The firm's ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments, Teece, Pisano, and Shuen's 1997 definition, which added change to the resource-based view by locating advantage in processes, positions, and paths rather than in resources. Teece's 2007 restatement decomposed the capability into sensing opportunities, seizing them, and reconfiguring assets, and named the microfoundations of each. The capability is idiosyncratic, hard to imitate, and the source of advantage in its own right; that last claim is what the next field denies. This is the majority definition and the one a citation without qualification usually means.[1][2]

Unit

A firm's processes, positions, and paths

Recovery means

Reconfiguration, recombining assets after the environment moves

Measured by

Case evidence of sensing, seizing, and reconfiguring; rarely a survey until the IS field built one

Specific, identifiable processes (product development, alliancing, strategic decision making) by which firms alter their resource base, which Eisenhardt and Martin argued in 2000 are neither vague nor idiosyncratic. They show commonalities across firms, are equifinal, and in high-velocity markets collapse into simple experiential rules that are unstable and easily learned. Because they are substitutable, they cannot themselves be a source of sustained advantage; the advantage lies in the resource configurations they create, earlier and more astutely than rivals. The construct shares a name and a purpose with Teece's and contradicts it on the two points that matter: whether it is unique and whether it explains performance.[3][4]

Unit

An identifiable organizational process

Recovery means

Not applicable, in high-velocity markets the routine itself is provisional

Measured by

Observable processes with best-practice content; speed and timing of resource reconfiguration

A capability that operates to extend, modify, or create the ordinary capabilities, Winter's 2003 hierarchy, in which zero-level capabilities are how a firm earns its living now, first-order dynamic capabilities change them, and higher orders change the changers. Winter added the corrective the field needed: dynamic capabilities are patterned, repeatable, and costly to maintain, so a firm may sensibly do without them and change by ad hoc problem solving instead. Having one is a choice with a price, not a virtue. The construct is defined by its position in the hierarchy, not by its content, and it implies ordinary capabilities as a contrast class that Teece later adopted.[5]

Unit

A routine, located by the order of routine it acts on

Recovery means

Not applicable

Measured by

Whether change is patterned and repeated (a capability) or improvised (ad hoc problem solving)

Any capability (ordinary or dynamic) passes through founding, development, and maturity, and then branches into retirement, retrenchment, renewal, replication, redeployment, or recombination. Helfat and Peteraf's 2003 framework made capability change the object rather than a special class of capability that produces it, and Helfat and colleagues' 2007 book restated the definition as the capacity of an organization to purposefully create, extend, or modify its resource base, with evolutionary fitness as the criterion. What differs is that the lifecycle applies to every capability and does not require a distinct dynamic one to exist; heterogeneity comes from history.[6][7]

Unit

A capability across its own history

Recovery means

Renewal, a mature capability re-entering development after a selection event

Measured by

Stage of the lifecycle; technical fitness (how well it works) and evolutionary fitness (whether it lets the firm survive)

A measured, second-order latent variable built from four first-order capabilities (sensing, learning, coordinating, and integrating) through which a unit reconfigures its operational capabilities. Pavlou and El Sawy showed in 2006 that IT leveraging competence in new product development works through such capabilities rather than directly, and in 2011 published the scale, validated on 180 product-development managers. The construct has items, reliabilities, and factor loadings, which nothing on the rest of this map does; it is also a unit-level self-report, and it makes IT the antecedent the strategy field left out. What differs is that the capability is operationalized and its effect on performance is tested rather than argued.[8][9]

Unit

A functional unit as reported by its manager

Recovery means

Reconfiguration of operational capabilities, measured as performance in turbulent conditions

Measured by

Likert items on sensing, learning, coordinating, and integrating; competitive advantage as the criterion