Strategic organization, dynamic capabilities, and the external environment

A large stream of theoretical and empirical research has developed on the topic of dynamic capabilities. However, research on the mechanisms through which dynamic capabilities affect outcomes for firms has often focused on alterations to firms’ resource bases (their resources and capabilities), with less attention to the effects of dynamic capabilities on the external environment. I introduce the concept of external-facing dynamic capabilities and explain how these capabilities may have direct effects on the external environment, in addition to helping firms alter their resource bases. These effects in turn can help firms adapt to and even shape their external environments.