Abstract:

In the couple past decades, work on dynamic capabilities was a fruitful direction in understanding the nature of the firm. In this article we trace the lineage of dynamic capabilities from the revolutionary, but generally non-strategic behavioral model of Cyert and March, through the dynamic evolutionary theory of the firm found in Nelson and Winter, then through to the more recent efforts of Teece et al (1990, 1997), Zollo and Winter (2002), and Teece (2006). The paper traces the lineage from Cyert and March’s view of firms as heterogeneous organizations comprised of standard operating procedures to the development of a dynamic theory of firm capabilities through the contribution of Nelson and Winter’s model of routine-based firms evolving in a changing environment.