The Concept of Theory of Dynamic Capabilities in Changing Environment

The theory of resource-based view (RBV) explain the firm competitive advantage through the uniqueness, rare and imitable resources that the firm created which lead to firm growth. Apart from that, the RBV only explain the firm competitive advantage in the static environment and this has become a limitation especially when the firm is dealing in the fast and changing market environment. On the other hand, theory of dynamic capability explain the firm competitive advantage from the perspective of dynamic and fast-moving environment and has received much attention from the international business scholar since 1990s. Dealing in international business market has involve different environmental background, and in order for the firm to cope with this differences, the firm need to develop specific capabilities and continuous learning. It is important for the firm to remain relevant and competitive in the market especially when doing the business outside the home country.