The Theory Of Dynamic Capability

1261 Words6 Pages
Helfat’s (1997) article is written to examine the theory of dynamic capability. Helfat cites Teece and Pisano’s (1994: 541) definition as “the subset of the competences/capabilities which allow the firm to create new products and processes and respond to changing market circumstances” (Helfat, 1997 : 339). Helfat examines how complimentary assets in a firm can influence their dynamic capabilities. Specifically, how a firm is able to use current assets, such as economies of scope, to respond to a dynamic market. Helfat examines the oil industry, which is often filled with high-levels of complimentary assets such as R&D and economies of scope, in order to gain a better understanding of how the theory of dynamic capability actualizes itself. Helfat uses data from the energy industry because its availability, the nature of the industry itself (highly diversified firms), and the unique opportunity to examine historical data of the dynamic environment (specifically the years which the OPEC oil embargo created oil shortages, and prices sky-rocketed). Theoretical Argument Helfat’s theoretical argument is that companies engaged in a dynamic environment, who are diversified in complimentary assets, will hold a strategic advantage over competitors because of the economies of scope presented to them by their asset structure. I believe that Helfat’s argument can be seen to intertwine with other theoretical constructs such as process strategy, which examines how firms’ strategic
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