Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy
2016/08/01 by David Teece, David J. Teece, Margaret Peteraf +2 · 2,150 citations
Business, Management and Accounting · #Adaptation (eye) #Business #Collaboration in agile enterprises #Competition (biology) #Computer science #Constant (computer programming) #Dynamic capabilities #Industrial organization #Process management #Quality (philosophy) #Risk analysis (engineering) #Transformation (genetics)
paper · open access · doi:10.1525/cmr.2016.58.4.13
published in California Management Review 58(4), 13-35 (SAGE Publishing)
openalex publication_date 2016/08/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/05
Abstract
“Organizational agility” is often treated as an immutable quality, implying that firms need to be in a constant state of transformation. However, this ignores that such transformations, while often essential, come at a cost. They are not always necessary, and may not even be possible. This article explores agility at a more fundamental level and relates it more specifically to dynamic capabilities. It demonstrates that it is first essential to understand deep uncertainty, which is ubiquitous in the innovation economy. Uncertainty is very different from risk, which can be managed using traditional tools and approaches. Strong dynamic capabilities are necessary for fostering the organizational agility necessary to address deep uncertainty, such as that generated by innovation and the associated dynamic competition. This article explores the mechanisms by which managers may calibrate the required level of organizational agility, deliver it cost effectively, and relate it to strategy.
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