1. Dynamic Capabilities and Strategic Management
David Teece, Gary Pisano, and Amy Shuen (1997)
Strategic Management Journal
Presented by Der-Ting Huang

2. Model—Exploitation of Market Power
Competitive Forces
Porter (1980)
Economic rents in competitive framework are monopoly rents. (Teece, 1984)

3. Model—Exploitation of Market Power
Strategic Conflicts
Game theory analyzes the nature of competitive interaction between rival firms (Shapiro, 1989)
* Game Theory
Behaviors: predatory pricing and limit pricing
Believes: price competition (e.g. Bertrand, Cournot), strategic asymmetries (e.g. first-mover advantages)
Ignores how significant new rent streams are created and protected
Rents are a result of mangers’ intellectual ability to play the game
Build a dynamic view

4. Model—Efficiency sticky Resource-based View
Rents accruing to the owners of scarce firm-specific resources
Competitive Advantage: firm’s difficult-to-imitate resources
Firms are heterogeneous wrt their resources/capabilities/endowments
Business development is viewed as an extremely complex process
Some assets are not readily tradable (e.g. tacit know-how, reputation)
Even when an asset can be purchased, firms may stand to gain little by doing so
sticky

5. Model—Efficiency Dynamic Capabilities Approach
Dynamic: the capacity to renew competences so as to achieve congruence with the changing business environment
Capabilities: emphasizes the key role of strategic management in appropriately adapting, integrating, and reconfiguring external and internal resources, and functional competence to match the requirements of a changing environment

6. Dynamic Capabilities Framework
Factors of production
Resources
Organizational routines/competences
Core competences
Dynamic capabilities
Products

7. Dynamic Capabilities Framework
Markets and Strategic Capabilities
What is not strategic?
Homogeneous assets
What is it about firms which undergirds competitive advantage?
What is distinctive about firms?
Competences/capabilities which are ways of organizing and getting things done which cannot be accomplished merely by using the price system to coordinate activity
Properties of internal organization cannot be replicated by a portfolio of business units amalgamated just through formal contracts

8. Dynamic Capabilities Framework
Processes, Positions, and Paths
Processes: the way things are done in the firm
Positions: current specific endowments of technology, intellectual property, complementary assets, customer base, and its external relations with suppliers and complementors
Paths: strategic alternatives available to the firm, and the presence or absence of increasing returns and attendant path dependencies

9. Dynamic Capabilities Framework
Processes
Coordination/
integration
Learning
Reconfiguration and transformation

10. Dynamic Capabilities Framework
Positions
Structural assets
Institutional assets
Organizational boundaries
Market assets
Positions
Technological assets
Complementary assets
Reputational assets
Financial assets

11. Dynamic Capabilities Framework
Paths
Path dependencies
Technological opportunities
Assessment

12. Dynamic Capabilities Framework
Replicability and Imitability of Organizational Processes and Positions
Replication: competences and capabilities, and routines are difficult to replicate
geographic and product line expansion
learning and improvement
Imitation: replication performed by a competitor
high tacit component hard to imitate
Intellectual property rights

13. Conclusion Market Power vs Efficiency Profits stem from strategizing
Market positions shielded behind entry barriers
Competitive advantages lie at the level of industry
Success stem from both experience and efficiency obtained in early periods
Path dependencies and technological opportunities
Competitive advantages come from high-performance routines operating inside the firm