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INTRODUCTION
Much has been written about the dynamic capabilities framework. A title search in Google Scholar returns nearly 3,000 articles, and an ‘anywhere’ search yields tens of thousands more. Yet relatively little has been written about the framework’s relationship to one of its antecedents, systems theory. This essay will address that lacuna.
I arrived at U.C. Berkeley’s business school in 1982, a year after the official retirement of C. West Churchman, one of the pioneers of system science. Churchman was still a presence on campus, teaching classes in conflict studies, and his influence remained strong in the business school, not least in the field of management science, which he did so much to establish.
While the application of systems theory to management had largely run its course by the 1980s, I remained intrigued by its potential for providing a holistic view of the business enterprise. The basic idea is that a complex system is ‘made up of a large number of parts that interact in a nonsimple way. In such systems, … it is not a trivial matter to infer the properties of the whole’ (Simon, 1962: 468). While a systems approach was a helpful reminder not to get lost in the details, it lacked an ability to account for critical aspects of what made some firms so much more nimble and successful longer term than their rivals. Nor did it provide much guidance for managers such as identifying cause and effect relationships and pinpointing the most critical linkages.
Systems theory was one of the influences in the back of my mind when I began working on the dynamic capabilities framework, the earliest version of which was initially released as a working paper with two doctoral students in 1990 (Teece, Pisano, & Shuen, 1990). I did not cite Simon then, but I was very much (and remain) influenced by the Carnegie School tradition and accepted the importance of multidisciplinary and interdisciplinary research.
Dynamic capabilities were defined as ‘the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments’ (Teece, Pisano, & Shuen, 1997: 516), a definition which still more or less applies, although the speed of change in the environment may be less relevant than the...