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Publications
  • 2018
  • Working Paper
  • HBS Working Paper Series

The Limitations of Dynamic Capabilities

By: David J. Collis and Bharat Anand
  • Format:Print
  • | Language:English
  • | Pages:28
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Abstract

The concept of dynamic capabilities draws its theoretical basis from two classic traditions within the strategy field—the resource-based view of the firm (RBV) (Wernerfelt, 1984) and market positioning (Porter, 1996). A dynamic capability qualifies as a source of sustained heterogeneous firm performance within the RBV framework because it arises from embedded organizational routines that accumulate in a path dependent process—the “stock” explanation of durable advantage (Barney, 1991). Because such a dynamic capability allows a firm to continually reposition itself in product market space, it satisfies the “flow” explanation of current competitive advantage by ensuring that the firm always maintains a wider gap between willingness to pay and cost than competitors (Brandenburger and Stuart, 1996). Indeed, dynamic capabilities seem to give rise to the enviable ability to “always have a competitive advantage in an attractive industry” and so continually deliver superior financial performance regardless of external circumstances.

Keywords

Dynamic Capabilities; Business Ventures; Performance; Competitive Advantage

Citation

Collis, David J., and Bharat Anand. "The Limitations of Dynamic Capabilities." Harvard Business School Working Paper, No. 20-029, September 2019.
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About The Authors

David J. Collis

Strategy
→More Publications

Bharat N. Anand

Strategy
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  • GE: A New Way Forward? By: David J. Collis and Haisley Wert
  • Group Functions at the Maersk Group By: David J. Collis
  • SimpliSafe—Safe From Disruption? By: David Collis, Felix Oberholzer-Gee and Terrence Shu
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