Evolutionary Economics, Routines, and Dynamic Capabilities

Evolutionary economics has been a key influence on strategic management and especially on the dynamic capabilities framework, where it is a foundational pillar. However, the emphasis by evolutionists is on fleshing out a theory of routines while downplaying the bold entrepreneurial moves that drive the business enterprise — and the economic system — forward. The dynamic capabilities framework, by embracing the role of entrepreneurial managers, including the development of a change-oriented organisational culture, the achievement of asset alignment and the placing of bold (but smart) bets, provides the basis for a more realistic model of firms as they compete in fast-changing and uncertain business environments

Telecommunications in Transition: Unbundling, Reintegration, and Competition

The world economy is experiencing a technological revolution, fueled by rapid advances in microelectronics, optics, and computer science, that in the 1990s and beyond will dramatically change the way people everywhere communicate, learn, and access information and entertainment. This technological revolution has been underway for about a decade. The emergence of a fully-interactive communications network, sometimes referred to as the Information Superhighway, is now upon us. This highway, made possible by fiber optics and the convergence of several different technologies, is capable of delivering a plethora of new interactive entertainment, informational, and instructional services that are powerful and user-friendly. The transition from analog to digital technologies, the expanding bandwidth of the enabling platform, and the shift from regulated to competitive environments have all served to make the 1990s the decade in which the Information Superhighway will be built and used. A true revolution in the delivery of entertainment, information, transactions, and telecommunications services is at hand. This paper outlines these technological changes and explores their implications for competition policy, industry structure, and business organization. Part I introduces competition as an organizational model and discusses the existing structure of the telecommunications industry in the United States. Part II describes recent technological advances that change the conditions underlying the current regulatory structure of the telecommunications industry and challenges the effectiveness and validity of the current regulatory scheme. Part III discusses how innovation impacts what has been considered the natural monopoly of local exchange. Part IV advances five principles that should guide policy modification. Part V explores how eliminating the line-of-business restrictions created by the Modification of the Final Judgment1 between the government and American Telephone and Telegraph Co. will accelerate competition and stimulate the development of the Information Superhighway. Ameritech\u27s Customer First Plan is presented as a viable means to enhance competition, avoid redundant investment, and increase service innovations and technological advances. Part VI discusses the impact of removing interLATA restrictions

Market Sensing, Dynamic Capability, and Competitive Dynamics

This is a research commentary to the following article: Hunt, S. D., & Madhavaram, S. (2019). Adaptive marketing capabilities, dynamic capabilities, and renewal competences: The “outside vs. inside” and “static vs. dynamic” controversies in strategy, Industrial Marketing Management, in press. https://doi.org/10.1016/j.indmarman.2019.07.004

Dynamic capabilities in the upstream oil and gas sector: Managing next generation competition

AbstractThe Dynamic Capabilities Framework, originally developed to enhance understanding of strategic agility in high-tech firms operating in high-velocity markets, is shown to be relevant for the Upstream Oil and Gas sector, in the context of five industry game-changers. Here operational and general managers with key strategic decision-making responsibilities significant challenges created by increased demand for energy resources, new technologies that have opened unconventional plays, increased competition, shrinking global geoscience and engineering talent pools, and the reality and perception of environmental risks. The Dynamic Capabilities Framework is distinguished from other “textbook” strategic methodologies and is applied to today’s upstream strategic context and inflection point. Dynamic capabilities join with strategy to empower an organization’s ability to integrate, build and reconfigure internal and external competencies to address rapidly changing markets. Dynamic capabilities differ from ordinary capabilities in that they orchestrate clusters of ordinary capabilities, best practices and competencies to gain competitive and performance advantages – capturing opportunities and managing strategic risks. Three dynamic capabilities are described that have particular importance for upstream oil and gas companies in the new business environment: (1) ambidexterity across mature and emerging domains; (2) the ability to manage the upstream business ecosystem; and (3) the ability to manage Health, Safety, Security and Environmental (HSSE) considerations in the multinational corporation and throughout the business ecosystem

Competencies, Capabilities and the Neoschumpeterian Tradition

In this paper, Mie Augier and David Teece outline the history and development of the ideas underlying an emerging approach within strategic management research: the dynamic capabili-ties framework. The framework was first outlined by Teece and Pisano (1994), and in the pre-sent paper elaborated further so the reader will be able to appreciate some of the most impor-tant intellectual resources underpinning it, such as the work of Schumpeter, Penrose, William-son, Cyert and March, Rummelt, Nelson and Winter. Although listed as intellectual resources by the authors, they also turn (some of) them into a topic for further discussion. For example, Augier and Teece identify not only the merits but also the limitations of transaction costs eco-nomics. In this way, the authors pave the way for a more dynamic framework while drawing upon organization theory and scholars like Cyert and March (a behavioral theory of the firm) and Nelson and Winter (an evolutionary theory of economic change). In the dynamic capability framework firms and markets co-evolve. Managers are now allowed to perform distinct strate-gic roles in shaping both firms and their markets, e.g. through asset- selection and orchestra-tion, including also the task of allocating resources between exploitation and exploration

Taking ecosystems competition seriously in the digital economy : a (preliminary) dynamic competition/capabilities perspective

This paper discusses digital ecosystems. It first describes the common properties of business ecosystems and the idiosyncrasies of digital ecosystems. It then explains how dynamic capabilities provide a good understanding of ecosystem competition. It closes by exploring how a dynamic capabilities/competition-minded antitrust policy would look like. The paper was prepared for for the OECD hearing on Competition Economics of Digital Ecosystems (3 December 2020)

Innovating big tech firms and competition policy : favoring dynamic over static competition

Published: 03 September 2021This paper gives a fresh account of competition in the digital economy. Economic analysis in the field of industrial organization remains largely focused on a sophisticated version of the Schumpeter–Arrow debate, which is unresolved and largely irrelevant. We posit the need to look at competition anew. Static models of monopoly firms and markets in equilibrium are often used to characterize Big Tech firms’ size and scope. We suggest that this characterization is inappropriate because the growth and diversification of many digital firms lead to a situation of broad-spectrum competition that cuts across markets. Current market positions do not reflect entrenched monopoly power but are vulnerable to competitive pressure of disequilibrating forces arising from the use of data-driven operating models, astute resource orchestration, and the exercise of dynamic capabilities. A few strategic errors by management in the handling of internal transitions and/or external challenges and they could be competitively impaired. The implications of a more dynamic understanding of the competition process in the tech sector are explored. We consider how big data and entrepreneurial management impacts firm performance. We also explore the nature of different types of rents (Schumpeterian, Ricardian, and monopoly rents) and suggest a modified long-term consumer welfare standard for competition policy. We formulate preliminary tests and predictors to assess dynamic competition. Our perspective advances a policy stance that favors innovation