Strategic Management Journal, vol. 24, issue 10 (2003) pp. 991-995
Defining ordinary or lsquozero-levelrsquo capabilities as those that permit a firm to lsquomake a livingrsquo in the short term, one can define dynamic capabilities as those that operate to extend, modify or create ordinary capabilities. Logically, one can then proceed to elaborate a hierarchy of higher-order capabilities. However, it is argued here that the strategic substance of capabilities involves patterning of activity, and that costly investments are typically required to create and sustain such patterning?爁or example, in product development. Firms can accomplish change without reliance on dynamic capability, by means here termed lsquoad hoc problem solving.rsquo Whether higher-order capabilities are created or not depends on the costs and benefits of the investments relative to ad hoc problem solving, and so does the lsquolevel of the gamersquo at which strategic competition effectively occurs. Copyright ?2003 John Wiley & Sons, Ltd.
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