Dynamic capabilities: what are they?
Version of Record online: 18 OCT 2000
Copyright © 2000 John Wiley & Sons, Ltd.
Strategic Management Journal
Special Issue: The Evolution of Firm Capabilities
Volume 21, Issue 10-11, pages 1105–1121, October - November 2000
How to Cite
Eisenhardt, K. M. and Martin, J. A. (2000), Dynamic capabilities: what are they?. Strat. Mgmt. J., 21: 1105–1121. doi: 10.1002/1097-0266(200010/11)21:10/11<1105::AID-SMJ133>3.0.CO;2-E
- Issue online: 18 OCT 2000
- Version of Record online: 18 OCT 2000
- dynamic capabilities;
- competitive advantage;
- resource-based view;
- dynamic markets;
- high-velocity markets;
- organization theory;
- organizational change
This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.