Teece vs. Porter: Perspective of Innovation Studies

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Teece vs. Porter: Perspective of Innovation Studies

When a company enters a market, it wants to be successful. Unfortunately most firms fail unless they have an advantage over there competitors. Yet, one question arises; how does one obtain this competitive advantage? One issue made clear by two major authors Teece and Porter suggests that “competitive advantage is at the core of a companies success. Yet how this advantage is achieve or maintained is where these two authors differ. We focus on the theories of Porter and Teece as the premise of the argument. It is clear that Porter claims that a company’s actions combined with their environment determines their success. On the other hand, Teece argues for the importance of dynamic capabilities (sensing, seizing and managing threats/reconfigurations) as central to attaining and sustaining competitive advantage. This essay evaluates these theories from an innovation studies perspective. Although innovation studies may not be a subscribed field, innovation is critical to the study of business. Seeing how changes in technology have caused small endeavours to become industry empires, the study of innovation is critical in understanding successes and failures. How does one know if a framework can incorporate innovation or could be applied to innovative/dynamic contexts? This paper argues that there is an inextricable link between innovation and learning. A theoretical framework that does not account for either learning nor change, but lacks a necessary theoretical foundation to incorporate or analyze innovation. Learning is important yet, overlooked by many within the business sector. Thus, the argument presented within the context of this paper outlines how Teece’s paradigm of dynamic capabilities has space within its theoretical framework to account for innovation. (in its many forms and contexts) On the other hand, Porter’s paradigm of competitive advantage does not emphasize learning or change in a way that shows its true meaning to innovation thus hinders its ability to be sustainable overtime. Porter’s paradigm of competitive advantage and Teece’s dynamic capabilities address the same core question: how do firms achieve and sustain competitive advantage. One can look at Porter who suggests that a firms’ actions when strung together can form part of a value chain. A value chain linearly organizes those actions that create value and result in competitive advantage (through differentiation, whether it be lower prices, or unique features). Alternately, when looking at Teece, it is suggested that firms have dynamic capabilities which enable them to achieve and maintain a competitive advantage. In Dynamic Capabilities and Strategic Management, Teece outlines the three pillars of his theory: sensing, seizing and managing threats/reconfiguration. Sensing opportunities, seizing them and managing threats/reconfiguration imply that learning is an essential part of each competency that enables a firm to achieve and sustain competitive advantage. Porter, contrastingly, does not place an emphasis on learning or those intangible competencies that allow Teece’s dynamic capability paradigm to incorporate the necessary tools to allow innovation to occur. Learning and innovation are inexplicably linked. A good example comes from both Biology and Anthropology whereby a particular theory claims that a base degree of knowledge can induce exponentially increasing degrees of cultural evolution.. This can explain the upbringings of early human history which saw the creation of agriculture, cultural learning, etc… Learning becomes even more important when we realize that innovation like anything else occurs within an environment of limited resources. Innovation is not making something appear out of thin air but building upon existing knowledge or a different perspective on what already exists. Therefore a theory without learning has little to no space for innovation or change. Both...
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