Dynamic Capabilities: What Are They?

The resource-based view of the firm (RBV) is an influential theoretical framework for understanding how competitive advantage within firms is achieved and how that advantage might be sustained over time. This perspective focuses on the internal organization of firms, and so is a complement to the traditional emphasis of strategy on industry structure and strategic positioning within that structure as the determinants of competitive advantage. In particular, RBV assumes that firms can be conceptualized as bundles of resources, that those resources are heterogeneously distributed across firms, and that resource differences persist over time. Based on these assumptions, researchers have theorized that when firms have resources that are valuable, rare, inimitable, and nonsubstitutable (i.e., so-called VRIN attributes), they can achieve sustainable competitive advantage by implementing fresh value-creating strategies that cannot be easily duplicated by competing firms. Finally, when these resources and their related activity systems have complementarities, their potential to create sustained competitive advantage is enhanced.