Academic journal article Academy of Accounting and Financial Studies Journal

Dynamic Capabilities Theory: Pinning Down a Shifting Concept

Academic journal article Academy of Accounting and Financial Studies Journal

Dynamic Capabilities Theory: Pinning Down a Shifting Concept

Article excerpt

INTRODUCTION

Dynamic capabilities (DC) theory emerged as both an extension to and a reaction against the inability of the resource-based view (RBV) to interpret the development and redevelopment of resources and capabilities to address rapidly changing environments. DC may be considered as a source of competitive advantage (Teece, Pisano & Shuen, 1997). DC theory goes beyond the idea that sustainable competitive advantage is based on a firm's acquisition of valuable, rare, inimitable and non-substitutable (VRIN) resources. Dynamic capabilities are responsible for enabling organizations to integrate, marshal and reconfigure their resources and capabilities to adapt to rapidly changing environments. Thus, DCs are processes that enable an organization to reconfigure its strategy and resources to achieve sustainable competitive advantages and superior performance in rapidly changing environments. Despite the wealth of studies discussing the idea of DC, to advance the theory further requires a collective effort on the part of researchers both to illustrate concepts related to the theory and how to link them with empirical practices within organizations.

With that last statement in mind, the current paper aims to investigate two fundamental questions: first, whether there is a commonly agreed-upon empirically based definition of DC; and second, which are the most influential conceptual definitions that have affected previous empirical research in the field of DC over the period 1997 to 2015. The starting year was chosen because it saw the publication of Teece, Pisano & Shuen's paper (1997), which is considered a key reference in the field of business economics and has generated major debate among researchers in the business strategy field when presenting their conceptual definition of DC. The paper is structured as follows: the first section provides the introduction; the second section sets out the theoretical background and a literature review; the third section discusses the methodology used, while the fourth describes the data analysis; the fifth section presents the findings of our study and the sixth section presents conclusion and limitations of the study.

DCS: THEORETICAL BACKGROUND AND LITERATURE SURVEY

Dynamic capabilities (DC) theory appeared as an alternative approach to solve some of the weaknesses of RBV theory (Galvin, Rice & Liao, 2014). DC theory presents path-dependent processes that allow firms to adapt to rapidly changing environments by building, integrating and reconfiguring their resource and capabilities portfolio (Teece, Pisano & Shuen, 1997). However, until the 1980s there had been little interest in the subject of strategic management. Particularly in the 1980s, Porter's industry-based theory (Porter, 1979, 1980 and 1985) attracted the greatest attention (Barney & Ouchi, 1986). During that period, the RBV theory was the major subject of discussion. It viewed a firm as a portfolio of tangible and intangible resources and human resources and capabilities: the ability to combine resources in an innovative and efficient manner constituted "the firm's capabilities" (Wernerfelt, 1984, Grant, 1991; Helfat et al., 2007; Barney, 1991). In this view, competitive advantage is: "when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors" (Barney, 1991, p. 102) and sustainable competitive advantage is: "when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy" (Barney, 1991, p. 102). These ideas emerged from VRIN resources (Barney, 1991; Tondolo & Bitencourt, 2014).

DC theory was derived from RBV theory and compensated for that theory's shortcomings when it came to explaining sustainable competitive advantage and superior performance in a dynamic environment. …

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