Dynamic Capabilities

Overview

Dynamic capabilities are the firm's capacity to purposefully create, extend, or modify its resource base (Teece et al., 1997; Helfat et al., 2007). They explain HOW firms achieve and sustain competitive advantage in environments of rapid change — where RBV's static view is insufficient.

When to Use

• Analyzing firm adaptation in fast-changing industries
• Evaluating why incumbents fail despite strong resource bases
• Designing organizational transformation or pivots
• Distinguishing routine operations from strategic renewal

Assumptions