This paper discusses some developments in the theory of the organizational capabilities of the business enterprise. Antecedents are recognized, and some promising new developments and areas for future research are identified. The role of managers in the economic system is highlighted and discussed within the context of economic and organizational research. Suggestions for future developments of dynamic capability research involve employment of evolutionary and behavioral theories.

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This paper discusses the intellectual roots of the dynamic capabilities framework. We draw on insights from Edith Penrose as well as others in order to help explain the essence of the business enterprise, and how it can escape the zero profit trap. We see the business enterprise as being in part a product of its own history, but not completely so. Managers can shape outcomes and are not completely trapped by prior decisions and investments. We call this `evolution with design', leaving room for both evolutionary processes as well as intentional design. This conclusion is consistent with Penrose's contributions to the theory of the firm.

S ince the Second World War, the field of organizations studies has grown substantially in the number of researchers, number of publications, and amount of research produced. It has moved from being a combination of established disciplines to becoming a quasi-discipline of its own, with its own journals and professional associations. It has established a standardized set of ancestors, a stylized history. It has solidified an academic home in business schools. This history has implications for understanding both the future of organizations research and the social dynamics of the development of scholarly communities. Despite this long heritage, the contemporary field of organization studies is primarily a creation of a shorter and more parochial history created in the last half of the twentieth century in Anglophone North America. 1 The focus on North American scholarship is not to overlook the substantial twentieth century contributions from other parts of the world. European scholars such as Tom Burns, Ronald Coase, Michel Crozier, David Hickson, Edith Penrose, Derek Pugh, Claude Riveline, George Stalker, and Joan Woodward were major figures in the middle of the century, as were scholars such as Nils Brunsson, Lex Donaldson, Giovanni Dosi, Alfred Kieser, Bruno Latour, Johan Olsen, Andrew Pettigrew, and Jean-Claude Theonig in the latter part. Scholarly fields often bury their early and geographically distant contributors through some combination of ignorance, localized ambitions for recognition, and convenient conceptions of progress; and the field of organization studies in North America clearly exhibits such myopia. However, there are special features of twentieth century history that shaped the development of the organizations research community after 1945 in such a way as to lead to a relatively autonomous genealogy.