Eisenhardt and Martin’s Paper on Dynamic Capabilities Essay (Critical Writing)

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Eisenhardt and Martin’s paper on Dynamic Capabilities (DC) were trying to respond to the critiques of Teece et als definition of DC, as it is might be tautological and vague by applied on different examples. In the year 1997, Teece et al. believed that dynamic capability could be understood as the extension of the Resource-based View (RBV) within the firms. Based on RBV, firms are the collections of ‘ Resource-example of Resources that may include assets, knowledge, or relationships to other firms, however, in details of those how those resources been created, won, or released. And previously, the consequence of strategy built on RBC is a strong focus on the choice of resources and not enough emphasis on they are created and built.

Eisenhardt and Martin suggest that DC could be explained as a reaction and challenge (1106). Within the concept of DC, most strategies are built or created (integrated), and eventually released or canceled during the processes or routines within firms, and not fixed solutions. To a certain extent, DC is more focusing on securing and maintaining resources instead of choice and management. It is not about resources choice but more on its development, acquisition, reconfiguration, and renewal. Eisenhardt and Martin believe that DC can ‘enhance RBV’ and it is ‘at the heart of the RBV’, thus, DC is built on the RBV. According to the authors, Firm performance is based on the use of its resources, and DC is more focusing on the use of processes that help manage and adapt those resources.

Eisenhardt and Martin offer a definition of DCs, which is: ‘The firm’s process that use resources – specifically the processes to integrate reconfigure, gain and release resources – to match and even create market change. Dynamic Capabilities thus are the organizational and strategic routines by which firms achieve new resource configurations as markets emerge collide, split, evolve and die’ (1107). This definition is quite similar to other authors ‘Traditional View of Dynamic capabilities and Teece et als ‘Re-conceptualization’.

Eisenhardt and Martin’s concept is trying to tie the conceptualization to a certain set of specific, identifiable, organizational, and strategic processes that include: innovation, strategic decision-making, alliancing, and others which managers use to build, create and alter the set of resources available to them. This, of course, implies the and idiosyncratic nature of the issue at stake (1108).

Eisenhardt and Martin proposed that the nature of the market is the key factor to influence the DC. They divided markets into ‘high-velocity’ and normal markets to explain their point. They believe that successful models are unclear and market players are ambiguous and shifting in high-velocity markets (it is very dynamic). These High-velocity markets are defined as markets in which existing knowledge and firm resources are less useful than the ability to quickly create new knowledge. They raise challenges for the Traditional view of DC, due to the different velocities of the market, the outcomes and pattern of DCs would be different. They believe that not those particular resources are strategic assets, but those able to adapt and reconfigure those resources.

However, this paper, didn’t answer the most important question which is: Are there any internal factors that create effects on DCs in High-Velocity Markets? In a high-velocity market, to a certain extent, it refers to the outside environment which is intense, however, the internal environment of a firm would also be critical and changeable when the outside environment is changing. The DCS ability is about to adapt and reconfigure those resources, in a sense, what if the resources themselves are changeable?

Works Cited

Eisenhardt, Kathleen, and Jeffrey Martin. “Dynamic Capabilities: What Are They?” Strategic Management Journal (2000): 1105-1121. Print.

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