Upgrading Organizational Capabilities through Dynamic Capabilities

Under dynamic circumstances, it is hard for firms barely in possession of resources and capabilities with "VRIN" properties to maintain their competitive advantages. So the only way out to thriving forever is to upgrade organizational capabilities which are divided into operational ones and dynamic ones. Operational capabilities refer to the capabilities that help firms to achieve short-term existence, while dynamic capabilities indicate those can help firms to adjust their operational capabilities according to external environmental changes. This paper figures out that firms' top managers play active roles during the process of adjusting operational capabilities, and furthermore, the process of upgrading firms' organizational capabilities is an eternal periodic process with each period composed of 5 stages.