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Resource cognition – identifying valuable resources and capabilities and assessing their potential for redeployment – is a pivotal management capability for strategic renewal. This study explores how managerial cognition in this activity may be biased, leading to erroneous results.

This study employs an action research approach: A full resource cognition project was conducted together with the top management of a case firm, including the CEO and members of the supervisory board.

Resource cognition may be distorted by four cognitive biases: The insulation bias – tending to keep one's perspective insularly to the current business; the novelty bias – tending to exclusively focus on innovation and recent achievements; the status quo bias – tending to view opportunities from the current situation and structural set-up; and the scaffolding bias – tending to adopt concepts and examples indiscriminately to the firm.

Active participation in a resource cognition project provided first-hand and insightful practice-based evidence on resource cognition. Aware practitioners can take preventive steps to avoid cognitive biases. This study sheds light on the under researched issue of resource cognition.

This paper aims to categorize and organize dynamic capabilities that have been inductively identified in empirical research into a comprehensive taxonomy. Thus, it addresses calls in the literature for a better understanding of dynamic capabilities and integration of scattered empirical findings into theory.

A systematic literature review approach was adopted, with a total of 34 articles published between August 2007 and April 2020, from which 240 idiosyncratic dynamic capabilities were identified. The taxonomy was constructed using the Gioia-method.

The main finding is a three-level taxonomy of dynamic capabilities (DC). Level DC-1 is based on the existing triad of sensing, seizing and transforming. Level DC-2 is newly introduced to the literature by this study, consisting of 19 dynamic sub-capabilities that categorize and organize all 240 idiosyncratic dynamic capabilities in the sample (level DC-3). The taxonomy supports the existing claim that dynamic capabilities are common in key features and idiosyncratic in details. Moreover, theoretical connections to business model innovation and ambidexterity are indicated.

This study integrates scattered empirical findings of specific dynamic capabilities and translates them to a practitioner audience. The taxonomy allows the strategic manager to understand what they specifically are and, thus, assess the dynamic capability endowment of the firm which allows deploying, developing and fostering them.

The taxonomy provides a comprehensive and tangible picture of what dynamic capabilities look like in practice. It improves existing knowledge and understanding by bridging the rigor-relevance gap between rather rigorous conceptual literature and rather relevant empirical research as it integrates them. As such, it can serve as a “map” of dynamic capabilities for scholars and practitioners.