What are dynamic capabilities and are they a useful construct in strategic management?

TLDR

Dynamic capabilities extend the resource‑based view by explaining how valuable, rare, hard‑to‑imitate resources can be created and refreshed in changing environments, a concept that emerged in the 1990s and has since advanced considerably. The paper reviews and synthesizes existing literature on dynamic capabilities, while also clarifying areas of confusion and contradiction that hinder the field’s development. The synthesis identifies that dynamic capabilities are shaped by internal and external enabling and inhibiting variables, outlines the processes that generate them, and notes that they do not automatically translate into performance gains.

Abstract

The dynamic capability perspective extends the resource‐based view argument by addressing how valuable, rare, difficult to imitate and imperfectly substitutable resources can be created and how the current stock of valuable resources can be refreshed in changing environments. The concept of dynamic capabilities emerged in the 1990s, and the field has advanced considerably since. This paper presents a review as well as a synthesis of the extant literature. This synthesis first highlights, that dynamic capabilities are shaped by enabling and inhibiting variables within and outside the firm, including the perceptions and motivations of managers; secondly, it identifies processes that create dynamic capabilities; and thirdly, it explains that dynamic capabilities do not automatically lead to performance improvements. Finally, the paper addresses some areas of confusion and contradiction that hamper the development of the literature.