Dynamic Capabilities and Strategic Management: Organizing for Innovation and Growth

Innovation and Economic Growth

Article Snapshot


David Teece


New York: Oxford University Press, 2009


This book considers how a firm can exploit its intangible assets to create value in a dynamic environment.

Policy Relevance

Firms frequently generate value by developing and exploiting intangible, firm-specific assets like cutting-edge management practices and employee culture, and this contributes to economic development and growth. Firms that compete by developing these assets are not good targets for traditional antitrust regulations.

Main Points

  • When firms compete in global markets, their ability to evolve quickly and effectively in a fluid marketplace is particularly important to creating and maintaining a competitive advantage. Software developers for smart phones exist in a business environment that changes far more rapidly than a local utility company’s market.
  • Managers play a special role in acquiring or developing assets to shape, or respond to, market dynamics.
  • Traditional analysis of the firm focuses on tangible assets like workers and equipment rather than organization traits and entrepreneurial ethics that may be developed and maintained by firm managers.
  • Multinational firms can bring their firm-specific, intangible assets to bear to foreign markets and use them as the foundation of a competitive advantage.
  • Effective business enterprise management, as a means of efficiently exploiting tangible and intangible resources, is an important contributor to economic growth.
  • Highly-talented individuals are more important in firms competing with intangible assets, and management in these firms must focus on developing and exploiting the capabilities of these workers.
  • Traditional methods of antitrust regulatory analysis are inappropriate when competition between firms is driven by innovation.

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