Building Dynamic Capabilities in Rapid Innovation-based Industries
Edited by Stuart Wall, Carsten Zimmermann, Ronald Klingebiel and Dieter Lange
Chapter 9: A Dynamic Capability Framework: Generic Types of Dynamic Capabilities and their Relationship to Entrepreneurship
Einar Lier Madsen ABSTRACT This chapter deals with the categorisation of dynamic capabilities, especially generic types of dynamic capabilities are proposed along existing theory of entrepreneurship, exploration and exploitation. Examples of actual and proposed types of dynamic capabilities are then introduced and prioritised along the framework. Finally, the relation to entrepreneurship research is discussed. INTRODUCTION The discussion of dynamic capabilities can be said to have its background in the evolutionary theory of the firm (Nelson and Winter 1982). A basic assumption in evolutionary theory is that the world is too complicated for a firm to be fully understood.1 According to evolutionary theory, it is consequently unavoidable for firms to react differently and, for example, select different strategic adaptations (Nelson 1991). According to Zahra et al. (2006), the intellectual basis of the theory can be traced back to Alchian (1950), and March and Simon (1958), who assumed that because firm leaders make decisions under conditions of uncertainty and limited rationality, they make decisions which are ‘good enough’ rather than making these optimal through investigation and a choice of problem solution. With this line of reasoning, a leader will not make a once-and-for-all decision, but will have a constant need to adjust and change operational routines and capabilities which have been previously developed. Teece et al. (1997) build upon Nelson and Winters’ (1982) view of the organisation 223 224 Strategic reconfigurations as an assembly of independent operational and administrative routines which are developed on the basis of feedback from the results achieved...
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