This study uncovers hidden dynamics and policies in the development of what is referred to as the dynamic capabilities of the firm. In a quasi-experimental setting, i.e., on the basis of a model using differential equations various relationships and dynamics of knowledge accumulations in so-called search and renewal capabilities are studied, how they influence different levels of organizational capabilities and core competencies, which in turn determine the firm's value-adding potential under various scenarios via computer simulation. The study focuses on firm endogenous dynamics and demonstrates the interdependency of various likely influences leading to firm survival or failure. Interestingly, exogenous influences such as competitive pressures, the business cycle, and other external influences are not necessarily the main causes for early firm decay. Rather endogenous influences by themselves can be powerful inhibitors of a firm's long-term survival
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