The Foundations of Enterprise Performance: Dynamic and Ordinary Capabilities in an (Economic) Theory of Firms

By David J. Teece. 2014

1,759 citations recorded by the source corpus.

The dynamic capabilities framework has had a significant impact on strategic management theory and practice, but the sizable literature on the topic has not always been unified. This paper begins with a restatement of the framework encompassing clarifications and extensions that have occurred since it was introduced. The paper highlights key elements that have been omitted or poorly integrated into the dynamic capabilities literature: the role of individual action by entrepreneurial managers, the role of resources, strategy, and the distinction between ordinary and dynamic capabilities. Dynamic capabilities is advanced as a multidisciplinary framework to explain long-run enterprise performance. Ambidexterity and other related frameworks are tailored versions of dynamic capabilities. Linkages between (strategic) management theory and (Austrian) economic theory are explored. The concepts of x-inefficiency and d-ineffectiveness are compared.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/da7e5972586268a768de042f6f0f2b58621a96c4

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

In Strategy and Management

Citations in the corpus

Rethinking ‘Top-Down’ and ‘Bottom-Up’ Roles of Top and Middle Managers in Organizational Change: Implications for Employee Support (2017, neutral): “Our cross-echelon insights into organizational change are valuable for contemporary organizations given the increasing pressure for change and need for involvement of the whole workforce (Kotter, 2014) amid rising uncertainty and accelerated pace of development in many industries (Teece, 2014).”
The Resource-Based View of the Firm, Human Resources, and Human Capital: Progress and Prospects (2021, background): “Teece (2014) cites Bloom et al. (2013) to support his conclusion (see above) that “ordinary capabilities” (aka best practices) “can be bought through consultants for . . . a modest investment. . . .” Bloom et al. (2013) conducted an intervention to raise management quality in a single industry…”
Zoom in, zoom out: Geographic scale and multinational activity (2018, background): “Finally, as pace of technological advance increases, one of the most important attributes of survival and success is organizational flexibility (Teece, 2014).”
A capability theory of the firm: an economics and (Strategic) management perspective (2019, background): “…as oil and gas are not immune from technology and other shocks, as the industry experiences policy uncertainty around environmental concerns, the emergence of new technologies such as hydraulic fracturing, and new assertiveness among state-run oil and gas companies (Shuen, Feiler, & Teece, 2014).”
Customer information resources advantage, marketing strategy and business performance: A market resources based view (2020, background): “In reference to the distinction between “ordinary capabilities” and “dynamic capabilities,” Teece (2014) notes that latter enable firms to transform themselves through continuous renewal.”
Embracing Digital Innovation in Incumbent Firms: How Volvo Cars Managed Competing Concerns (2017, background): “The sought-after institutional entrepreneurship (Henfridsson and Yoo 2014) would establish new organizational routines by leveraging “the organization’s ability to effectuate discovery, co-creation, and change” (Teece 2014, p. 339).”
Uncertainty, Innovation, and Dynamic Capabilities: An Introduction (2016, background): “It presents a theory of the firm and of firm-level competitive advantage in environments characterized by deep uncertainty.(4)”
Linkages between big data analytics, circular economy, sustainable supply chain flexibility, and sustainable performance in manufacturing firms (2021, background): “The most widespread is that introduced by Teece (2014) with three principal aspects, i.e. ‘sensing,’ ‘seizing,’ and ‘transforming.’”
Impact of supply chain digitalization on supply chain resilience and performance: A multi-mediation model (2023, background): “Compared to operational capabilities, dynamic capabilities enhance the firm’s adaptability and are more difficult to replicate (Teece, 2014).”