Strategic Management Review > Vol 2 > Issue 1

The Virtues and Limitations of Dynamic Capabilities

David J. Collis, Harvard Graduate School of Business Administration, USA, , Bharat N. Anand, Harvard Graduate School of Business Administration, USA,
Suggested Citation
David J. Collis and Bharat N. Anand (2021), "The Virtues and Limitations of Dynamic Capabilities", Strategic Management Review: Vol. 2: No. 1, pp 47-78.

Publication Date: 15 Feb 2021
© 2021 now Publishers, Inc.
Competitive strategy,  Corporate strategy,  Micro-foundations of strategy,  Organization and strategy,  Strategy process and practice,  Strategic decision-making
Dynamic capabilitiesresource based viewconglomeratetheory of the firmvalue based strategy


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In this article:
Limitations of TPS Dynamic Capabilities 
The Example of Danaher Corporation 
History of DBS 
Dynamic Capabilities at Danaher 
Discussion and Implications 
Future Research 


Dynamic capabilities have been identified as a key determinant of competitive advantage. This paper explores the foundations of dynamic capabilities and the limits to their effectiveness, first theoretically and then through the case of Danaher, the most successful US conglomerate for over three decades. Limitations of dynamic capabilities include that they (a) can be substitutable and (b) embody strategic choices themselves. The case of Danaher, an exemplar of dynamic capabilities, illustrates how dynamic capabilities require long-term commitments in order to be effective, involve a set of choices that are closely tied to others made by the firm, and embody tradeoffs that imply that investments in any particular dynamic capability may be inconsistent with acquiring new ones.