Research seminar by David Teece

Abstract: This paper asks two questions that are often run together. Is there an emerging capability theory of the firm, and is there an emerging theory of capabilities economics. While modern economic theories of the firm have reduced the firm to little more than a bundle of incentive contracts and/or a nexus of contracts, a capabilities perspective involves bringing “production” and organization back. I borrow Elinor Ostrom’s distinction between frameworks, theories and models, and show that the field of strategic management has produced theories/frameworks which endeavour to put capabilities centre stage. The emerging capability theory of the firm that has resulted has distinct primitives: tacit and distributed productive knowledge, non-priced co-specialised assets, deep uncertainty, managerial orchestration, and limited appropriability of the rents from innovation. It has distinct mechanisms, and it answers the canonical questions of existence, boundaries, internal organisation, heterogeneity, change and governance. Its answers are strongest on boundaries and heterogeneity. They are weakest where a theory needs strength: in measurement, in formal statement and in corroborated novel predictions. I conclude that capabilities economics is not yet a theory. It is a research programme with a framework, some theoretical pieces, and a policy voice. It lacks agreed methods and has limited corroborated findings of its own. But it is much neededand tantalizingly close. 

 

 

About David Teece

 

David J. Teece is Professor of the Graduate School at the University of California, Berkeley, Distinguished Scholar of Strategy and Innovation at the University of South Florida’s Muma College of Business, Chairman Emeritus of the Berkeley Research Group, and co-founder of Dynamic Experts. A scholar-entrepreneur, he advises governments and corporations worldwide on strategy, innovation, competition policy, and technological change. Professor Teece is best known for developing the dynamic capabilities framework, which explains how firms create, sustain, and renew competitive advantage in environments characterized by deep technological and geopolitical uncertainty. His research spans innovation, entrepreneurship, competition policy, corporate strategy, and value capture. In 2020, Clarivate ranked him the world’s most influential scholar in management and named him a Clarivate Laureate in Economics for his contributions to innovation, entrepreneurship, and competition. In 2021, Thinkers50 recognized him as a Distinguished Management Thinker. Beyond academia, he has founded and scaled multiple successful ventures and remains active as a venture capitalist and investor focused on innovation-driven growth.