In changing environments advantage depends on the capacity to reconfigure resources rather than on holding any particular resource.
The framework answers an objection to the resource-based view: if advantage comes from resources, firms in fast-moving industries should be unable to sustain it, and some do. The proposed answer is a higher-order capability for reconfiguration. Whether that is a distinct construct or a redescription of adapting successfully is the standing complaint.
In practice
- A firm that has reinvented its product three times has either a dynamic capability or a run of good decisions.
- A capability defined as whatever lets firms adapt cannot be used to predict which firms will.
- Possible explanations
- The explanation is that advantage in changing markets comes from the routines by which a firm senses change, seizes opportunities and reconfigures what it owns, rather than from any asset, which can be copied or made obsolete.
- In its favour
- It answers a real objection to the resource-based view, and it names something firms visibly do, as the histories of firms that survived technological change show.
- Against it
- Persistently criticised for definitional vagueness and for being measured by the performance it is invoked to explain, which makes the claim hard to falsify.
- Standing
- Persistently criticised for definitional vagueness and for being hard to measure independently of the performance it explains.
- Further reading
- Wikipedia
- Subject
- Organizations & Bureaucracy
- Essay
- Why organisations learn, harden and decline