Dynamic capabilities provide a framework for understanding how firms can sustain competitive advantage in rapidly changing business environments through their ability to reconfigure resources and competencies.
Key characteristics: Enable firms to adapt to rapidly changing environments: It involves modifying and reconfiguring resources and capabilities. Dynamic capabilities are distinct from ordinary operational capabilities, they are idiosyncratic and are unique to each company's culture and history. It is difficult to imitate, providing a sustainable competitive advantage.
Components: Sensing: Identifying and assessing opportunities in the external environment. Seizing: Mobilizing resources to take advantage of new opportunities
Transforming: Renewing company processes and maintaining relevance; integrating resources (product development processes); reconfiguring resources (knowledge transfer) Gaining/releasing resources (acquisitions, alliances). The transformation enables firms to create, renew, and orchestrate resources to create new value. Allow companies to compete and evolve in changing environments
Key for developing innovative offerings and new business models: Contrast with ordinary capabilities: Ordinary capabilities are routine operations that can be easily imitated. Dynamic capabilities change products, processes, scale or customers served.
Dynamic capabilities provide a framework for understanding how firms can sustain competitive advantage in rapidly changing business environments through their ability to reconfigure resources and competencies. They enable dynamic strategy management, enforce innovation and entrepreneurship, and harness organizational change, with the goal of producing high-performance results and renewing organizational competency.
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