Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy

By David J. Teece, Margaret A. Peteraf, Sohvi Leih. 2016

1,897 citations recorded by the source corpus.

“Organizational agility” is often treated as an immutable quality, implying that firms need to be in a constant state of transformation. However, this ignores that such transformations, while often essential, come at a cost. They are not always necessary, and may not even be possible. This article explores agility at a more fundamental level and relates it more specifically to dynamic capabilities. It demonstrates that it is first essential to understand deep uncertainty, which is ubiquitous in the innovation economy. Uncertainty is very different from risk, which can be managed using traditional tools and approaches. Strong dynamic capabilities are necessary for fostering the organizational agility necessary to address deep uncertainty, such as that generated by innovation and the associated dynamic competition. This article explores the mechanisms by which managers may calibrate the required level of organizational agility, deliver it cost effectively, and relate it to strategy.

Subfields: Management of Technology and Innovation

View Paper: https://www.semanticscholar.org/paper/87fb079288d1c284a9351cf17169663de95c6196

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In Management of Technology and Innovation

Citations in the corpus

Information technology and the search for organizational agility: A systematic review with future research possibilities (2019, background): “The quote cited previously by Teece et al. (2016) that firms should be agile at all times regardless of cost ignores the reality that the digital options that confer agility are risky and expensive.”
Agility in responding to disruptive digital innovation: Case study of an SME (2018, background): “At the same time, businesses across all industry sectors are severely impacted by the waves of different DDI that require firms to be on their feet and remain agile (Kane et al., 2015; Teece et al., 2016; Weill & Woerner, 2015a, 2015b).”
Identifying Digital Transformation Paths in the Business Model of SMEs during the COVID-19 Pandemic (2020, background): “However, this agile implementation is perceived as being costly and the firms’ survival is at risk if it is not agile [51].”
Impact of Organizational Culture Values on Organizational Agility (2017, background): “” Indeed, change is the foundation of OA, which is defined as the capability that enables the firm to continuously reconfigure its resources to create responses to emerging futures, in the form of new products, services or business models [33].”
The structural reshaping of globalization: Implications for strategic sectors, profiting from innovation, and the multinational enterprise (2019, background): “(Teece 2016: 213) The main goal of the DC framework is not cost efficiency or profit maximization per se, but evolutionary fitness, which is precisely what the reshaping of the global economic order, with its three levels of cascading, as shown in Figure 1, requires from MNEs.”
How can SMEs successfully navigate VUCA environment: The role of agility in the digital transformation era (2022, background): “…VUCA world ’ requires the ability to anticipate or respond quickly and effectively to external changes (Lu and Ramamurthy, 2011; Ravichandran, 2018; Teece et al., 2016) especially in today's competitive landscape characterized by technological advancements and digitalization (Bresciani et al.,…”
Mastering digital transformation: The nexus between leadership, agility, and digital strategy (2022, background): “The role of managers is limited without having a strategy and adjusting it when needed (Teece et al., 2016).”