Pursuant to the Committee's request for information to aid its inquiry concerning the state of ex... more Pursuant to the Committee's request for information to aid its inquiry concerning the state of existing antitrust laws, we offer the following joint submission: We are economists, legal scholars, and practitioners-focused on antitrust law, economics, and policy-who believe in maintaining healthy markets and well-functioning antitrust institutions. We value the important role of antitrust as the "Magna Carta of free enterprise," which sets the rules that govern how firms compete against one another in our modern economy. Many of us have served in antitrust enforcement agencies. Each of us believes it is vital that the antitrust laws promote competitive markets, innovation, and productivity by deterring anticompetitive conduct throughout our economy, including in digital markets. We write because the modern antitrust debate has become characterized by sustained attacks on the integrity of antitrust institutions and by unsubstantiated dismissals of debate. This atmosphere has led to a variety of proposals for radical changes to the antitrust laws and their enforcement that we believe are unsupported by the evidence, counterproductive to promoting competition and consumer welfare, and offered with an unwarranted degree of certainty. Vigorous debate and disagreement have long been a hallmark of antitrust scholarship and policy. Competition policy has been formed through an iterative process echoed in the courts' evolving doctrine over more than a century. 1 Today, however, efforts to sidestep the discussion, or to declare it over, and to force hasty and far-reaching changes have come to the fore. These proposals are numerous and include: (1) abandoning the consumer welfare standard; 2 (2) overturning unanimous and supermajority judicial precedents, which are foundational to modern antitrust law; 3 (3) imposing obsolete and arbitrary market share tests to determine the legality of mergers; 4 (4) shifting the burden of proof from plaintiffs to defendants to render large swaths of business behavior 1
The Palgrave Encyclopedia of Strategic Management, 2016
Academic approaches to the activities of the MNE have been dominated by the internalization theor... more Academic approaches to the activities of the MNE have been dominated by the internalization theories developed in the field of ▶ international business (IB), including the envelope approach known as the ▶ eclectic paradigm. These theories are helpful but have several shortcomings, including an emphasis on the cost of investment decisions rather than on the opportunities they can create, a limited focus on managerial decision-making, and no model of the creation and maintenance of firmlevel advantage. These problems can be addressed by a capability-based approach, such as the dynamic capabilities framework. Definition The activities of the multinational enterprise (MNE) frequently involve the extension, leveraging, and creation of capabilities across borders. However, the literature on crossborder investment is dominated by theories based on concepts that ignore capabilities, such as transaction costs. Non-capabilities-based theories reveal little about the use of strategy to build competitive advantage. Capability-based explanations for MNE activities received relatively little attention until the 2000s.
How to profit from innovation has been an important question for both innovation scholars and pra... more How to profit from innovation has been an important question for both innovation scholars and practitioners over the years. It is certainly a relevant question for all types of technological innovation, including emerging ones. David J. Teece’s profiting from innovation (PFI) framework [Teece DJ (1986) Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Res. Policy 15(6):285–305.] sets forth a theory of the relevant contingencies. However, Teece’s framework focuses on technologies with applications in specific domains. We focus on the question of how to profit from enabling technologies: technologies that are applicable across multiple domains. We argue that capturing value in such circumstances is fundamentally different from profiting from less-enabling technologies and raises new issues with respect to the relevant business models and public policies. This paper’s contribution is threefold. It formally revises and ext...
This paper gives a fresh account of competition in the digital economy. Economic analysis in the ... more This paper gives a fresh account of competition in the digital economy. Economic analysis in the field of industrial organization remains largely focused on a sophisticated version of the Schumpeter–Arrow debate, which is unresolved and largely irrelevant. We posit the need to look at competition anew. Static models of monopoly firms and markets in equilibrium are often used to characterize Big Tech firms’ size and scope. We suggest that this characterization is inappropriate because the growth and diversification of many digital firms lead to a situation of broad-spectrum competition that cuts across markets. Current market positions do not reflect entrenched monopoly power but are vulnerable to competitive pressure of disequilibrating forces arising from the use of data-driven operating models, astute resource orchestration, and the exercise of dynamic capabilities. A few strategic errors by management in the handling of internal transitions and/or external challenges and they cou...
Oliver Williamson’s contributions to many subfields of economics are salutary. However, he was re... more Oliver Williamson’s contributions to many subfields of economics are salutary. However, he was recognized by the Nobel Laureate Committee primarily for his work on the boundaries (scale and scope) of the firm. This tribute endeavors to marry Williamson’s transaction cost economics with a capabilities framework to obtain new insights into how the scope and scale of technology companies influence their competitive performance in today’s digital economy. The role of big data and learning are highlighted. Strong implications for competition policy, and for management, emerge from the fusion of the two frameworks. Such fusion yields a more granular view of management and policy issues but requires the policy analyst to understand not just industrial economics but also the technology management literature which also has useful insights for competition policy and regulatory professionals.
Open innovation has become well established as a new imperative for organizing innovation. In lin... more Open innovation has become well established as a new imperative for organizing innovation. In line with the increased use in industry, it has also attracted a lot of attention in academia. However, understanding the full benefits and possible limits of open innovation still remains a challenge. We draw on strategic management theory to describe some of these benefits and limits. More specifically, we develop a dynamic capabilities framework as a way to better understand the strategic management of open innovation, which can then help to better explain both success and failure in open innovation. With this background, as guest editors we introduce select papers published in this Special Section of California Management Review that were originally presented at the fifth annual World Open Innovation Conference, held in San Francisco, California, in December of 2018.
The world in which today’s businesses operate has become not only riskier but also more volatile,... more The world in which today’s businesses operate has become not only riskier but also more volatile, uncertain, complex, and ambiguous (VUCA). Organizations that hew too closely to traditional ways of operating will be hampered in their ability to succeed. In contrast, those that focus on new product and process developments coupled with business model innovation will leverage their dynamic capabilities. An essential overlay is entrepreneurial leadership from top management teams. Strong dynamic capabilities are impossible without it. This article examines how business model innovations, dynamic capabilities, and strategic leadership intertwine to help organizations thrive in VUCA worlds.
Dynamic capabilities has been mischaracterized by derivative interpretations of the original conc... more Dynamic capabilities has been mischaracterized by derivative interpretations of the original concept, with variation in terms, core assumptions, and methodologies. However, in its original formulation dynamic capabilities was a framework rooted in organizational economics. We take the original formulation as a starting point to explore the relevance of the concept of emergence to the framework today. This perspective leads to a reinterpretation of the role of complementarities, co-specialization, rules, co-evolution and the ecosystem in the dynamic capabilities framework. The paper concludes with directions for research that this new frame of reference helps identify.
The business enterprise is the prime institution in economic development and growth; yet, until r... more The business enterprise is the prime institution in economic development and growth; yet, until recently, mainstream economics has mostly treated firms as homogeneous black boxes managed by untrustworthy agents. Using economic principles, the field of strategic management has developed a nuanced approach to understanding how firms are created, organized, and grow; how they innovate and compete; and how managers manage. That approach has yielded a theoretical framework known as 'dynamic capabilities'. Contrasts are drawn between dynamic capabilities and other approaches to the theory of the firm, including transaction cost economics and agency theory. The application of capability theory allows intellectual blinders to be removed and an understanding of differential firm-level resource allocation and performance to emerge. This brings a richer conceptual understanding of the nature of the business enterprise and its management consistent with evolutionary and behavioural economics. Policy insights into governance, inequality, economic development, and the wealth of nations follow.
Organizational agility" is often treated as an immutable quality, where it is implied that firms ... more Organizational agility" is often treated as an immutable quality, where it is implied that firms need to be in a constant state of transformation. But such advice ignores that changes and transformations, while often essential, come with a cost, are not always necessary, and may not even be possible. Our approach is to explore agility at a more fundamental level and relate it more specifically to dynamic capabilities. We find it essential to first understand deep uncertainty, which is ubiquitous in the innovation economy. It is very different from risk, which can be managed using traditional tools and approaches. Strong dynamic capabilities are necessary for fostering the organizational agility necessary to address deep uncertainty, such as that generated by innovation and the associated dynamic competition. 2 We explore the mechanisms by which managers may calibrate the required level of organizational agility, deliver it cost effectively, and relate it to strategy. We provide a set of principles and practices that differ according to whether a firm is managing regular risk or deep uncertainty. These distinctions are critical, as the mistaken use of risk management tools in an environment of deep uncertainty can bring false comfort. Our approach embraces concepts from both financial economics (e.g., hedging and real options) and strategic management theory (e.g., managerial/entrepreneurial asset orchestration). We conclude that strong dynamic capabilities are essential when firms face deep uncertainty, which they frequently do in interdependent economies experiencing rapid technological change and financial disruption.
The Transfer and Licensing of Know-How and Intellectual Property, 2008
This book focuses on technology and seeks to analyze its causes and consequences on productivity ... more This book focuses on technology and seeks to analyze its causes and consequences on productivity and competitiveness and to examine the dynamic relationships between the different factors in various contexts. Building on state-of-the-art research, the book illustrates the global, institutional and technological factors that shape the performance of business and countries. Unlike most existing books in the field, This book is a self-contained case book ideal for classroom use. The cases in the book are brand new. All of them are written in the context of the global financial crisis, providing a new perspective on the crisis that sheds light on its effect on competitiveness and on the diversity of responses by companies and countries. The cases and the analytical framework that emerges from the book constitute an essential kit for current and future managers, policy-makers and observers of global dynamics.
Work on dynamic capabilities is proving to be a fruitful direction in understanding the nature of... more Work on dynamic capabilities is proving to be a fruitful direction in understanding the nature of the firm. An evaluation of this literature makes the foundational contributions of Cyert and March (1963) and Nelson and Winter (1982) abundantly clear. Cyert and March redefined firms as heterogeneous organizations possessing standard operating procedures that are difficult to codify, arguing that they are therefore not easily imitated by others or even replicated by the firm itself. Nelson and Winter redefined standard operating procedures as routines, and showed how these routines, the genetic material of the firm, influenced the firm's adaptation in its environment. These developments allowed subsequent scholars to couch firm strategy in a dynamic setting. In this paper we trace the lineage of dynamic capabilities from the revolutionary, but generally non-strategic behavioral model of Cyert and March, through the dynamic evolutionary theory of the firm found in Nelson and Winter, then through to the more recent efforts of
Dynamic competitive forces are dramatically altering mobile markets in the U.S. and around the wo... more Dynamic competitive forces are dramatically altering mobile markets in the U.S. and around the world. Wireless networks, having sunk considerable capital in the creation of phone systems, must not only compete among themselves for subscribers, but also need to form strategic alliances with emerging handset application platforms (HAPs) created by such firms as Research in Motion (Blackberry), Apple (iPhone), and Google (Android). Current developments illustrate two fundamental aspects of innovation. First, that innovations created by one set of investors may generate returns for complementary suppliers, either via coordinated activity (strategic platforms) or competitive rivalry (appropriation). Second, that the efficiency of such ecosystems may be enhanced by market structure innovations that either extend vertical control or delimit it. This runs counter to the prevailing popular and regulatory sentiment that "open" platforms offer categorically superior welfare outcomes than do "closed" systems-aka "walled gardens."
This paper empirically investigates the proposition that the organization and operation of the la... more This paper empirically investigates the proposition that the organization and operation of the large enterprise along "M-form" multidivisional lines favors goal pursuit and least-cost behavior more nearly associated with the neoclassical profit maximization hypothesis than a number of alternative organizational forms. Using a sample of petroleum firms during the period 1955-1973, a positive relationship between M-form structure and profitability is observed during the period in which the M-form innovation was being diffused. This relationship is no longer observed once an organizational form equilibrium is achieved. The results provide support for the "Markets and Hierarchies" paradigm, but additional studies are needed to affirm the generality of the finding.
Dynamic capabilities are deeply enmeshed with business model innovation and implementation. They ... more Dynamic capabilities are deeply enmeshed with business model innovation and implementation. They reside partly in the collective learning and culture of the organization as well as in the entrepreneurial skill of the top management team. Entrepreneurial managers bear the primary responsibility for recognizing the need for business model change, for adjusting or inventing business models, for orchestrating the necessary assets, and, more generally, for (re)structuring the organization when,needed. The top management team is also responsible for strategy formulation, which is separate from, but related to, dynamic capabilities. The organization's structure, incentives, and culture can, in turn, be more or less well suited to the recognition of new opportunities and the implementation of new structures that are integral to the dynamic capabilities of the firm. The design of new business models requires attention to balancing customer needs and technological possibilities consistent with an overarching logic of organization.
This paper examines the roles played by middle-and top-level managers in the dynamic capabilities... more This paper examines the roles played by middle-and top-level managers in the dynamic capabilities framework. The key entrepreneurial capabilities needed for asset orchestration and realignment of the enterprise often reside in the skills and knowledge of top managers. Although dynamic capabilities favor shallow hierarchies, middle managers will always fulfill vital functions that complement those of top management within the framework. They play a variety of roles, including oversight of the "ordinary capabilities" that underpin the firm's technical fitness, leadership of product development teams, and direct (or indirect) involvement with the development of routine-based dynamic capabilities. Empirical research on the interaction between levels of management will most likely need to be based on in-depth case studies because of the context-dependent nature of the relationship between management and performance.
Pursuant to the Committee's request for information to aid its inquiry concerning the state of ex... more Pursuant to the Committee's request for information to aid its inquiry concerning the state of existing antitrust laws, we offer the following joint submission: We are economists, legal scholars, and practitioners-focused on antitrust law, economics, and policy-who believe in maintaining healthy markets and well-functioning antitrust institutions. We value the important role of antitrust as the "Magna Carta of free enterprise," which sets the rules that govern how firms compete against one another in our modern economy. Many of us have served in antitrust enforcement agencies. Each of us believes it is vital that the antitrust laws promote competitive markets, innovation, and productivity by deterring anticompetitive conduct throughout our economy, including in digital markets. We write because the modern antitrust debate has become characterized by sustained attacks on the integrity of antitrust institutions and by unsubstantiated dismissals of debate. This atmosphere has led to a variety of proposals for radical changes to the antitrust laws and their enforcement that we believe are unsupported by the evidence, counterproductive to promoting competition and consumer welfare, and offered with an unwarranted degree of certainty. Vigorous debate and disagreement have long been a hallmark of antitrust scholarship and policy. Competition policy has been formed through an iterative process echoed in the courts' evolving doctrine over more than a century. 1 Today, however, efforts to sidestep the discussion, or to declare it over, and to force hasty and far-reaching changes have come to the fore. These proposals are numerous and include: (1) abandoning the consumer welfare standard; 2 (2) overturning unanimous and supermajority judicial precedents, which are foundational to modern antitrust law; 3 (3) imposing obsolete and arbitrary market share tests to determine the legality of mergers; 4 (4) shifting the burden of proof from plaintiffs to defendants to render large swaths of business behavior 1
The Palgrave Encyclopedia of Strategic Management, 2016
Academic approaches to the activities of the MNE have been dominated by the internalization theor... more Academic approaches to the activities of the MNE have been dominated by the internalization theories developed in the field of ▶ international business (IB), including the envelope approach known as the ▶ eclectic paradigm. These theories are helpful but have several shortcomings, including an emphasis on the cost of investment decisions rather than on the opportunities they can create, a limited focus on managerial decision-making, and no model of the creation and maintenance of firmlevel advantage. These problems can be addressed by a capability-based approach, such as the dynamic capabilities framework. Definition The activities of the multinational enterprise (MNE) frequently involve the extension, leveraging, and creation of capabilities across borders. However, the literature on crossborder investment is dominated by theories based on concepts that ignore capabilities, such as transaction costs. Non-capabilities-based theories reveal little about the use of strategy to build competitive advantage. Capability-based explanations for MNE activities received relatively little attention until the 2000s.
How to profit from innovation has been an important question for both innovation scholars and pra... more How to profit from innovation has been an important question for both innovation scholars and practitioners over the years. It is certainly a relevant question for all types of technological innovation, including emerging ones. David J. Teece’s profiting from innovation (PFI) framework [Teece DJ (1986) Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Res. Policy 15(6):285–305.] sets forth a theory of the relevant contingencies. However, Teece’s framework focuses on technologies with applications in specific domains. We focus on the question of how to profit from enabling technologies: technologies that are applicable across multiple domains. We argue that capturing value in such circumstances is fundamentally different from profiting from less-enabling technologies and raises new issues with respect to the relevant business models and public policies. This paper’s contribution is threefold. It formally revises and ext...
This paper gives a fresh account of competition in the digital economy. Economic analysis in the ... more This paper gives a fresh account of competition in the digital economy. Economic analysis in the field of industrial organization remains largely focused on a sophisticated version of the Schumpeter–Arrow debate, which is unresolved and largely irrelevant. We posit the need to look at competition anew. Static models of monopoly firms and markets in equilibrium are often used to characterize Big Tech firms’ size and scope. We suggest that this characterization is inappropriate because the growth and diversification of many digital firms lead to a situation of broad-spectrum competition that cuts across markets. Current market positions do not reflect entrenched monopoly power but are vulnerable to competitive pressure of disequilibrating forces arising from the use of data-driven operating models, astute resource orchestration, and the exercise of dynamic capabilities. A few strategic errors by management in the handling of internal transitions and/or external challenges and they cou...
Oliver Williamson’s contributions to many subfields of economics are salutary. However, he was re... more Oliver Williamson’s contributions to many subfields of economics are salutary. However, he was recognized by the Nobel Laureate Committee primarily for his work on the boundaries (scale and scope) of the firm. This tribute endeavors to marry Williamson’s transaction cost economics with a capabilities framework to obtain new insights into how the scope and scale of technology companies influence their competitive performance in today’s digital economy. The role of big data and learning are highlighted. Strong implications for competition policy, and for management, emerge from the fusion of the two frameworks. Such fusion yields a more granular view of management and policy issues but requires the policy analyst to understand not just industrial economics but also the technology management literature which also has useful insights for competition policy and regulatory professionals.
Open innovation has become well established as a new imperative for organizing innovation. In lin... more Open innovation has become well established as a new imperative for organizing innovation. In line with the increased use in industry, it has also attracted a lot of attention in academia. However, understanding the full benefits and possible limits of open innovation still remains a challenge. We draw on strategic management theory to describe some of these benefits and limits. More specifically, we develop a dynamic capabilities framework as a way to better understand the strategic management of open innovation, which can then help to better explain both success and failure in open innovation. With this background, as guest editors we introduce select papers published in this Special Section of California Management Review that were originally presented at the fifth annual World Open Innovation Conference, held in San Francisco, California, in December of 2018.
The world in which today’s businesses operate has become not only riskier but also more volatile,... more The world in which today’s businesses operate has become not only riskier but also more volatile, uncertain, complex, and ambiguous (VUCA). Organizations that hew too closely to traditional ways of operating will be hampered in their ability to succeed. In contrast, those that focus on new product and process developments coupled with business model innovation will leverage their dynamic capabilities. An essential overlay is entrepreneurial leadership from top management teams. Strong dynamic capabilities are impossible without it. This article examines how business model innovations, dynamic capabilities, and strategic leadership intertwine to help organizations thrive in VUCA worlds.
Dynamic capabilities has been mischaracterized by derivative interpretations of the original conc... more Dynamic capabilities has been mischaracterized by derivative interpretations of the original concept, with variation in terms, core assumptions, and methodologies. However, in its original formulation dynamic capabilities was a framework rooted in organizational economics. We take the original formulation as a starting point to explore the relevance of the concept of emergence to the framework today. This perspective leads to a reinterpretation of the role of complementarities, co-specialization, rules, co-evolution and the ecosystem in the dynamic capabilities framework. The paper concludes with directions for research that this new frame of reference helps identify.
The business enterprise is the prime institution in economic development and growth; yet, until r... more The business enterprise is the prime institution in economic development and growth; yet, until recently, mainstream economics has mostly treated firms as homogeneous black boxes managed by untrustworthy agents. Using economic principles, the field of strategic management has developed a nuanced approach to understanding how firms are created, organized, and grow; how they innovate and compete; and how managers manage. That approach has yielded a theoretical framework known as 'dynamic capabilities'. Contrasts are drawn between dynamic capabilities and other approaches to the theory of the firm, including transaction cost economics and agency theory. The application of capability theory allows intellectual blinders to be removed and an understanding of differential firm-level resource allocation and performance to emerge. This brings a richer conceptual understanding of the nature of the business enterprise and its management consistent with evolutionary and behavioural economics. Policy insights into governance, inequality, economic development, and the wealth of nations follow.
Organizational agility" is often treated as an immutable quality, where it is implied that firms ... more Organizational agility" is often treated as an immutable quality, where it is implied that firms need to be in a constant state of transformation. But such advice ignores that changes and transformations, while often essential, come with a cost, are not always necessary, and may not even be possible. Our approach is to explore agility at a more fundamental level and relate it more specifically to dynamic capabilities. We find it essential to first understand deep uncertainty, which is ubiquitous in the innovation economy. It is very different from risk, which can be managed using traditional tools and approaches. Strong dynamic capabilities are necessary for fostering the organizational agility necessary to address deep uncertainty, such as that generated by innovation and the associated dynamic competition. 2 We explore the mechanisms by which managers may calibrate the required level of organizational agility, deliver it cost effectively, and relate it to strategy. We provide a set of principles and practices that differ according to whether a firm is managing regular risk or deep uncertainty. These distinctions are critical, as the mistaken use of risk management tools in an environment of deep uncertainty can bring false comfort. Our approach embraces concepts from both financial economics (e.g., hedging and real options) and strategic management theory (e.g., managerial/entrepreneurial asset orchestration). We conclude that strong dynamic capabilities are essential when firms face deep uncertainty, which they frequently do in interdependent economies experiencing rapid technological change and financial disruption.
The Transfer and Licensing of Know-How and Intellectual Property, 2008
This book focuses on technology and seeks to analyze its causes and consequences on productivity ... more This book focuses on technology and seeks to analyze its causes and consequences on productivity and competitiveness and to examine the dynamic relationships between the different factors in various contexts. Building on state-of-the-art research, the book illustrates the global, institutional and technological factors that shape the performance of business and countries. Unlike most existing books in the field, This book is a self-contained case book ideal for classroom use. The cases in the book are brand new. All of them are written in the context of the global financial crisis, providing a new perspective on the crisis that sheds light on its effect on competitiveness and on the diversity of responses by companies and countries. The cases and the analytical framework that emerges from the book constitute an essential kit for current and future managers, policy-makers and observers of global dynamics.
Work on dynamic capabilities is proving to be a fruitful direction in understanding the nature of... more Work on dynamic capabilities is proving to be a fruitful direction in understanding the nature of the firm. An evaluation of this literature makes the foundational contributions of Cyert and March (1963) and Nelson and Winter (1982) abundantly clear. Cyert and March redefined firms as heterogeneous organizations possessing standard operating procedures that are difficult to codify, arguing that they are therefore not easily imitated by others or even replicated by the firm itself. Nelson and Winter redefined standard operating procedures as routines, and showed how these routines, the genetic material of the firm, influenced the firm's adaptation in its environment. These developments allowed subsequent scholars to couch firm strategy in a dynamic setting. In this paper we trace the lineage of dynamic capabilities from the revolutionary, but generally non-strategic behavioral model of Cyert and March, through the dynamic evolutionary theory of the firm found in Nelson and Winter, then through to the more recent efforts of
Dynamic competitive forces are dramatically altering mobile markets in the U.S. and around the wo... more Dynamic competitive forces are dramatically altering mobile markets in the U.S. and around the world. Wireless networks, having sunk considerable capital in the creation of phone systems, must not only compete among themselves for subscribers, but also need to form strategic alliances with emerging handset application platforms (HAPs) created by such firms as Research in Motion (Blackberry), Apple (iPhone), and Google (Android). Current developments illustrate two fundamental aspects of innovation. First, that innovations created by one set of investors may generate returns for complementary suppliers, either via coordinated activity (strategic platforms) or competitive rivalry (appropriation). Second, that the efficiency of such ecosystems may be enhanced by market structure innovations that either extend vertical control or delimit it. This runs counter to the prevailing popular and regulatory sentiment that "open" platforms offer categorically superior welfare outcomes than do "closed" systems-aka "walled gardens."
This paper empirically investigates the proposition that the organization and operation of the la... more This paper empirically investigates the proposition that the organization and operation of the large enterprise along "M-form" multidivisional lines favors goal pursuit and least-cost behavior more nearly associated with the neoclassical profit maximization hypothesis than a number of alternative organizational forms. Using a sample of petroleum firms during the period 1955-1973, a positive relationship between M-form structure and profitability is observed during the period in which the M-form innovation was being diffused. This relationship is no longer observed once an organizational form equilibrium is achieved. The results provide support for the "Markets and Hierarchies" paradigm, but additional studies are needed to affirm the generality of the finding.
Dynamic capabilities are deeply enmeshed with business model innovation and implementation. They ... more Dynamic capabilities are deeply enmeshed with business model innovation and implementation. They reside partly in the collective learning and culture of the organization as well as in the entrepreneurial skill of the top management team. Entrepreneurial managers bear the primary responsibility for recognizing the need for business model change, for adjusting or inventing business models, for orchestrating the necessary assets, and, more generally, for (re)structuring the organization when,needed. The top management team is also responsible for strategy formulation, which is separate from, but related to, dynamic capabilities. The organization's structure, incentives, and culture can, in turn, be more or less well suited to the recognition of new opportunities and the implementation of new structures that are integral to the dynamic capabilities of the firm. The design of new business models requires attention to balancing customer needs and technological possibilities consistent with an overarching logic of organization.
This paper examines the roles played by middle-and top-level managers in the dynamic capabilities... more This paper examines the roles played by middle-and top-level managers in the dynamic capabilities framework. The key entrepreneurial capabilities needed for asset orchestration and realignment of the enterprise often reside in the skills and knowledge of top managers. Although dynamic capabilities favor shallow hierarchies, middle managers will always fulfill vital functions that complement those of top management within the framework. They play a variety of roles, including oversight of the "ordinary capabilities" that underpin the firm's technical fitness, leadership of product development teams, and direct (or indirect) involvement with the development of routine-based dynamic capabilities. Empirical research on the interaction between levels of management will most likely need to be based on in-depth case studies because of the context-dependent nature of the relationship between management and performance.
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Papers by David Teece