Assessing the dynamic capabilities view: spare change, everyone?

Abstract

It is important to bear in mind, however, that capability building and change do not require dynamic capabilities…(Helfat and Peteraf, 2003: 1004) Why do some firms succeed in a dynamic competitive environment when others fail? Recently, concepts and models addressing this question have increasingly clustered around the dynamic capabilities view (DCV). Citation counts suggest that the DCV is the new touchstone firm-based performance-focused theory (Teece et al. [1997], for example, had received 1180 citations in the ISI Web of Knowledge as of June 2008), and case studies of innovative firms such as IDEO (Hargadon and Sutton, 1997) have fueled interest. We take a step back to assess the ability of the DCV to explain successful change with logical consistency, conceptual clarity and empirical rigor, criteria suggested by Laudan (1977). Such an assessment is important not only because of the DCV's popularity, but also because of the theoretical and practical significance of the issues it addresses. While the arguably static resource-based view (RBV) emphasizes the value of resources, the DCV addresses the need to explain changes in valuable resources, e.g. the erosion of asset stocks (Dierickx and Cool, 1989) and the changes in asset values (Miller and Shamsie, 1996). The DCV also addresses a practical need to understand how firms can change effectively, given perceptions that many competitive environments now change at increasing rates, and that firms have difficulty changing successfully (Beer and Nohria, 2000; Strebel, 1996). Our assessment identifies four major problems that limit the potential contribution of the DCV: (1) unclear value-added relative to existing concepts; (2) lack of a coherent theoretical foundation; (3) weak empirical support; and (4) unclear practical implications. Although potentially interrelated, each problem presents different difficulties and raises different questions. DCV's characteristics and cousins-a question of added value With an intellectual ancestry that includes the resource-and knowledge-based views, evolutionary economics, hypercompetition, real options and the innovation

Modern Resource-Based Theory(ies)

“…organizational capability). In a recent critique, Arend and Bromiley (2009) argue that the current DC approach offers unclear additional insights relative to existing concepts in the management literature, lacks a coherent theoretical foundation, receives only weak empirical support, and offers diffuse practical implications. Helfat and Peteraf (2009) respond to these criticisms by pointing to the complexity of the research questions which is matched by the complexity of the theoretical underpinnings.…”

How do dynamic capabilities transform external technologies into firms’ renewed technological resources? – A mediation model

“…In these studies, researchers often adopt a static RBV and primarily treat the technology-acquiring firm as a "black box", in which enhanced performance is assumed to be a direct result of acquiring external technological resources. This shows a clear discrepancy between the RBV and DCV (Ambrosini & Bowman, 2009;Arend & Bromiley, 2009). Few empirical studies have integrated the RBV and DCV to investigate how external sourcing of resources, which are not necessarily VRIN for a firm, can be transformed into VRIN resource bundles through accordingly developed dynamic capabilities.…”

Dynamic capabilities from an institutionalist viewpoint

“…Organizations need conditions that enable them to sustain a competitive position over time, requiring more consolidated bases of legitimacy. Integration of concepts may mean that criticisms of polysemy of dynamic capabilities can be avoided, as stated by Arend and Bromiley (2009).…”

“…The current institutional vision of organizations is very close to the original institutionalists of Economics which, in turn, are part of the fundamental principles of Evolutionary Economics, the economic branch of dynamic capabilities. Following the specification of these converging points, Arend and Bromiley (2009) point out that dynamic capabilities require more underlying theory because it was developed in isolation from organizational theory. This leads to the assumption that, epistemologically, concepts of the theory of dynamic capabilities may be related to concepts developed within the institutional theory.…”