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  • 2021
  • Article
  • Strategic Management Review

The Virtues and Limitations of Dynamic Capabilities

By: Bharat Anand and David J. Collis
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Abstract

Dynamic capabilities have been identified as a key determinant of competitive advantage. This paper explores the foundations of dynamic capabilities, and the limits to their effectiveness, first theoretically and then through the case of Danaher, the most successful U.S. conglomerate for over three decades. Limitations of dynamic capabilities include that they (a) can be substitutable and (b) embody strategic choices themselves. The Danaher case, an exemplar of dynamic capabilities, illustrates how dynamic capabilities require long-term commitments in order to be effective, involve a set of choices that are closely tied to others made by the firm, and embody tradeoffs that imply that investments in any particular dynamic capability may be inconsistent with acquiring new ones

Keywords

Dynamic Capabilities; Danaher; Resources; Theory Of The Firm; Value-based Strategy; Organizations; Performance Effectiveness; Competitive Advantage; Strategy

Citation

Anand, Bharat, and David J. Collis. "The Virtues and Limitations of Dynamic Capabilities." Strategic Management Review 2, no. 1 (2021): 47–78.
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About The Authors

Bharat N. Anand

Strategy
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David J. Collis

Strategy
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More from the Authors
  • Group Functions at the Maersk Group By: David J. Collis
  • SimpliSafe—Safe From Disruption? By: David Collis, Felix Oberholzer-Gee and Terrence Shu
  • Corporate Divestitures and Spinoffs By: David J. Collis, Ashley Hartman and Terrence Shu
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