Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance

TLDR

Dynamic capabilities enable enterprises to create, deploy, and protect intangible assets that support superior long‑run performance, and their microfoundations—skills, processes, structures, decision rules, and disciplines—are difficult to develop but essential for sensing, seizing, and reconfiguring, making strong dynamic‑capability firms intensely entrepreneurial, adaptive, and ecosystem‑shaping through innovation and collaboration. This paper draws on the social and behavioral sciences to specify the nature and microfoundations of the capabilities required to sustain superior enterprise performance in an open economy marked by rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. The proposed framework helps scholars understand the foundations of long‑run enterprise success and assists managers in identifying strategic considerations and priorities to enhance performance and avoid the zero‑profit trap in globally competitive markets. Copyright © 2007 John Wiley & Sons, Ltd.

Abstract

Abstract This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long‐ run business performance. The microfoundations of dynamic capabilities—the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines—which undergird enterprise‐level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long‐run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition. Copyright © 2007 John Wiley & Sons, Ltd.