Dynamic Capability as a Source of Change
Dynamic Capability as a Source of Change
This chapter examines the concept of dynamic capability as it has developed in the strategic management field, taking primarily the ‘learned competence’ perspective and emphasizing the proactive uses of dynamic capabilities by business firms. It seeks to clarify how apparent opposites — novelty and familiarity, creativity, and learned routine — come into a pragmatic synthesis in the context of dynamic capability. It also places the discussion in a broader frame than the usual profit-oriented one of strategic management, giving more emphasis to both causes and consequences at levels of analysis above that of the individual firm. The chapter begins by reviewing the intellectual background, linking the dynamic capability idea to Schumpeter's ‘routinization of innovation’ and to the analysis of routines in evolutionary economics. It then sketches two examples of dynamic capabilities: product development in semiconductors and retail outlet replication. Only after the dynamic capability concept is thus motivated and illustrated does the focus shift to more careful definitions and economic analysis of the hierarchy of change.
Keywords: strategic management, learned competence, Schumpeter, routinization of innovation, evolutionary economics, dynamic capabilities
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