Making Sense of Industry Characteristics as Drivers of Dynamic Capabilites

Type Working Paper - DFID Working Paper
Title Making Sense of Industry Characteristics as Drivers of Dynamic Capabilites
Author(s)
Publication (Day/Month/Year) 2015
Abstract
Since the seminal work of Teece and Pisano (1994) the dynamic capabilities (hereafter DCs) approach
has emerged as one of the most important approaches to explain competitive advantages of firms (Di
Stefano, Peteraf, & Verona, 2014; Easterby-Smith, Lyles, & Peteraf, 2009). DCs have been defined as
“the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly
changing environments” (Teece, Pisano and Shuen, 1997: 517). These DCs cannot be bought, but must be
build and developed within a firm (Katkalo, Pitelis, & Teece, 2010). Several explanations have been
given why some firms are better equipped with DCs than others. These explanations consider mainly the
internal factors that are conducive for the development of DCs, also called second-order dynamic
capabilities (Collis, 1994; Danneels, 2008; Schilke, 2014a). Important elements of second-order dynamic
capabilities are internal learning mechanisms, experience and routines (Schilke, 2014a; Zahra, Sapienza,
& Davidsson, 2006; Zollo & Winter, 2002). Yet, these explanations do not take into account how the
environment in which the firm is active spurs the development of DCs. It seems likely, however, that
environmental characteristics matter for the development of DCs as well, as it gives an incentive to firms
to develop DCs.

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