Why Firms Win

1. BY SAMUEL PHINEAS UPHAM
Why Firms Win

2. The Dynamic Capabilities View
Might explain why some firms have sustainable
competitive advantage
Powerful group of ideas that:
 Explains successes, failures, and sources of struggle
 Valuable in times of uncertainty to change
 Added value overstated

3. Organizational Capabilities and Behavior
Nelson and Winter’s point of view:
 Individuals: skilled behavior is a product of routine, tacit knowledge
and past behavior/learning.
Author’s argument:
 decisions in organizations may not be optimal
 where organizational memory exists
Authors generalize from individual view to apply
“evolutionary economics” to organizational level.
Theory builds up from the micro to the macro level:
 conceptual parallel between micro and macro
 causal link between behavior of individuals and nature and behavior
of capabilities

4. Truce Between Motivations
Organizational routines allow for organizational
capabilities.
This view provides the foundation of the capabilities view
and also generates some interesting consequences.
 organizational routines resist changes
 organizational capabilities are very hard to imitate
This resistance to change: can be seen as a competitive
advantage.
Path dependency and lack of simplicity of capabilities
lends the power as sources of durable competitive
advantage.

5. Not of the Common Garden Variety
Capabilities cannot be of the common garden variety if they
are to be valuable.
Jay Barney (1991)
 If capabilities are to confer strategic advantage, they must be of a special
type.
Dericks and Cool (1989)
 Describe strategic asset stocks seen as flowing over time – either rising or
falling.
 Many capabilities grow over time, they cannot be acquired immediately.
Jan Rivkin (2001)
 describes how capabilities must not be too complex
 nor to simple
Capabilities must be of a certain sort to be durable
competitive advantages

6. Not of the Common Garden Variety
Capabilities cannot be of the common garden variety if they
are to be valuable.
Jay Barney (1991)
 If capabilities are to confer strategic advantage, they must be of a special
type.
Dericks and Cool (1989)
 Describe strategic asset stocks seen as flowing over time – either rising or
falling.
 Many capabilities grow over time, they cannot be acquired immediately.
Jan Rivkin (2001)
 describes how capabilities must not be too complex
 nor to simple
Capabilities must be of a certain sort to be durable
competitive advantages