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Tracing the economics behind dynamic capabilities theory

Madhavi Kapoor (University School of Management Studies (USMS), Guru Gobind Singh Indraprastha University, New Delhi, India)
Vijita Aggarwal (University School of Management Studies (USMS), Guru Gobind Singh Indraprastha University, New Delhi, India)

International Journal of Innovation Science

ISSN: 1757-2223

Article publication date: 6 May 2020

Issue publication date: 18 May 2020




The purpose of this paper is to trace the evolution of dynamic capabilities theory in the primal theories of economics and strategic management. Then a comprehensive research framework is proposed to grapple with the dynamics of the contemporary global markets, incorporating the quintessential elements of the theory, i.e. absorptive capability, innovation capability and adoptive capability.


The paper is conceptual in nature. It tries to review various economic systems of the world since 1770s till the present era. It also evaluates various theories of international business against dynamic capabilities theory and thus proposes various propositions for future empirical testing.


The study has delineated various theories tracing in them the roots of dynamic capabilities. Capitalism, communism and socialism is explained to reach the present state of world economy. Various theories such as the theory of creative destruction, transaction-cost approach, resource-based view and knowledge-based view of the firm have been elaborated to identify their features and shortcomings. Finally, the contemporary theory of dynamic capabilities has been elucidated to integrate the shortcomings of the previous theories. A research framework has also been proposed to overcome the recent criticism of the dynamic capabilities theory of having under-specified constructs.


Very few studies have elaborated various economic systems and theories to trace the evolution of dynamic capabilities theory. Thus, this study is original in nature and the proposed research model is also novel which induces further empirical evidence as proposed by the authors.



Kapoor, M. and Aggarwal, V. (2020), "Tracing the economics behind dynamic capabilities theory", International Journal of Innovation Science, Vol. 12 No. 2, pp. 187-201.



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