DCT Teece (2014)

Question 1

Teece (2014)

Answer 1

The foundations of enterprise performance: dynamic and ordinary capabilities in an (economic) theory of firms
DCT: How you can get to the top of the market and stay there.

Question 2

Ordinary capabilities

Answer 2

(static, zero-level, first-order, and substantive) Emphasizes the key role of management in appropriately adapting, integrating and reconfiguring internal and external skills, resources and functional competences towards a changing environment.

Question 3

Dynamic capabilities

Answer 3

involve higher-level activities that can enable an enterprise to direct its ordinary activities toward high-payoff endeavors

Question 4

3 categories of ordinary cap

Answer 4

administration, operations, governance

Question 5

Categories of OC imbedded

Answer 5

1. Skilled personnel (incl. under certain circumstances, independent contractors) 2. Facilities and equipment
2. Processes and routines
3. The administrative coordination needed to get the job done

Question 6

Strong dynamic capabilities…

Answer 6

help enable an enterprise to profitably build and renew resources and assets that lie both within and beyond its boundaries, reconfiguring them as needed to innovate and respond to (or bring about) changes in the market and in the business environment more generally

Question 7

3 clusters of Dynamic capabilities

Answer 7

1. Sensing = identification, development, co-development, and assessment of technological
   opportunities in relationship customer needs
2. Seizing = mobilization of resources to address needs and opportunities, and to capture value
   from doing so
3. Transforming = continued renewal

Question 8

WHY are DCs important?

Answer 8

Engagement in continuous or semi continuous sensing, seizing, and transforming is essential if the firm is to sustain itself as customers, competitors, and technologies change

Question 9

Continued renewal

Answer 9

In Nonaka’s theory of knowledge creation, individual tacit knowledge is shared (socialization), then made explicit (externalization) and synthesized with newly explicit knowledge from others (combination).

Question 10

Strong DCS help:

Answer 10

• Enable an enterprise to profitably build and renew resources and assets that lie both within and beyond its boundaries,
• Reconfiguring them as needed to innovate and respond to (or bring about) changes in the market and in the business environment more generally

Question 11

Strong DCS allow the enterprise and its top management:

Answer 11

• To develop conjectures about market demands, business threats, and technology;
• Validate and fine-tune them;
• To act on them by realigning assets and activities (transform) to enable continuous innovation
  and change

Question 12

3 sets of organizational processes:

Answer 12

1. Coordination/integration = combining various resources in an entrepreneurial fashion
   (development of new products)
2. Learning = An outcome of practice and experimentation and allows tasks to be performed more
   effectively
3. Reconfiguration/transformation = Entails recombining and modifying existing resources

Question 13

transforming

Answer 13

most obviously when radical new opportunities are to be addressed Depend on top management
- Productive transformation, the kind that leads to enterprise growth, ultimately requires routines
and entrepreneurial actions for the introduction of new activities alongside existing business
lines.

Question 14

VRIN resources

Answer 14

• Valuable: reduce costs or increase value to customers, which allows firms to ask premium prices, which leads to superior firm performance
• Rare/Scarce: so that competitors do not use the same resource to compete away the value
• Inimitable: resources are isolated/buffered from imitation as they hard to imitate, which keeps
  competitors from gain parity
• Non-substitutable: without close substitutes. Resources are strategic substitutes to the extent that they address the same environmental threats and opportunities.

Question 15

Conclusion Teece 2014

Answer 15

The joint presence of strong dynamic capabilities, VRIN resources, and a good strategy is necessary and sufficient for long-run enterprise financial success
* Strong ordinary capabilities must be accessed by the enterprise, but they need not necessarily be owned
* Good performance requires strong dynamic capabilities to sense, seize and transform in conjunction with a good strategy
* The greater the diversity and rate of change in business environments, and the greater the importance of intangible (including relationship) assets

Question 16

Deffective firms

Answer 16

• In the dynamic capabilities framework, it is only what Teece called d-effective firms that are built to last. Ordinary capabilities are less salient and can often be outsourced. Efficiency alone is not enough for survival and growth. Capability theory provides the tools to allow (strategic) management theory to inform a deeper understanding of durable firm-level competitiveness, economic development, and the proper functioning of the economic system