Understanding dynamic capabilities
Open accessAbstract
Defining ordinary or ‘zero‐level’ capabilities as those that permit a firm to ‘make a living’ in the short term, one can define dynamic capabilities as those that operate to extend, modify or create ordinary capabilities. Logically, one can then proceed to elaborate a hierarchy of higher‐order capabilities. However, it is argued here that the strategic substance of capabilities involves patterning of activity, and that costly investments are typically required to create and sustain such patterning—for example, in product development. Firms can accomplish change without reliance on dynamic capability, by means here termed ‘ad hoc problem solving.’ Whether higher‐order capabilities are created or not depends on the costs and benefits of the investments relative to ad hoc problem solving, and so does the ‘level of the game’ at which strategic competition effectively occurs. Copyright © 2003 John Wiley & Sons, Ltd.
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Wrongly estimating the need for resource alterations, such as using dynamic capabilities when there is no compelling need for change, can create significant costs.
“Other significant costs may result from wrongly estimating the need for resource alterations, which happens when firms use their dynamic capabilities when there is no compelling need for change (Winter, 2003).”
From On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism (2014) · cites this paper as Winter, 2003
Stable environments may not provide sufficient opportunities to cover the costs of developing dynamic capabilities.
“I acknowledge both the cost argument (Winter, 2003;Zahra et al., 2006;Zollo and Winter, 2002), which suggests that stable environments may not provide sufficient opportunities to cover the costs of developing dynamic capabilities”
From On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism (2014) · cites this paper as Winter, 2003
The study adopted a narrow definition of dynamic capabilities focusing on experience-based, rather static routines and excluding more flexible forms of organizational change.
“Moreover, this study has adopted a rather narrow definition of dynamic capabilities that focuses on experience-based, rather static routines and excludes more flexible forms of organizational change (consistent with, for example, Pierce et al., 2002;Winter, 2003;Zollo and Winter, 2002).”
From On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism (2014) · cites this paper as Winter, 2003
One position suggests that dynamic capabilities have a comparatively smaller effect on competitive advantage at low levels of environmental dynamism.
“One suggests that their effect on competitive advantage is comparatively smaller at low levels of dynamism (Drnevich and Kriauciunas, 2011;Helfat et al., 2007;Winter, 2003;Zahra et al., 2006;Zollo and Winter, 2002)”
From On the contingent value of dynamic capabilities for competitive advantage: The nonlinear moderating effect of environmental dynamism (2014) · cites this paper as Winter, 2003
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- Authors
- Winter, S. G.
- Affiliations
- University of Pennsylvania (US)
- Corresponding author
- Winter, Sidney G.
- Venue
- Strategic Management Journal
- Publisher
- Wiley
- Published
- 2003-09-12
- Volume
- 24
- Issue
- 10
- Pages
- 991-995
- ISSN
- 0143-2095 (ISSN-L)
- 1097-0266
- OpenAlex
- W2059813301
- Cited by
- 5,315
- References
- 13
- Citations by year
- 2026: 310 · 2025: 278 · 2024: 301 · 2023: 332 · 2022: 344 · 2021: 331 · 2020: 299 · 2019: 270 · 2018: 311 · 2017: 278 · 2016: 252 · 2015: 294 · 2014: 257 · 2013: 254 · 2012: 218
- FWCI
- 203.07
- Type
- journal article
- Language
- en
- Open access
- green
- repository.upenn.edu
- Locations
- Strategic Management Journal (publishedVersion)
- ScholarlyCommons (University of Pennsylvania) (submittedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Innovation and Knowledge Management
- Social Sciences › Business, Management and Accounting › Strategy and Management › Business Strategies and Innovation
- Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Management and Organizational Studies
- Keywords
- dynamic capabilities, ordinary capabilities, higher-order capabilities, strategic change, product development, investment costs, strategic competition
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