1.1 Dynamic Capabilities and Entrepreneurial Management

Although the lack of flexibility of incumbents facing technological, market, or industry disruption is always an impediment for the adoption of the type of entrepreneurial management advocated by the Teecean dynamic capabilities framework (Teece, Reference Teece2007), the problem of radically transforming a still successful business model arises for incumbents much earlier. Consider, for example, the sensing, seizing, and transforming dynamic capabilities proposed by the Teecean framework. While the sensing capabilities proposed by this framework are generally more readily available, the seizing and transforming capabilities proposed are more rare and difficult to implement. This is especially the case for incumbents, which often fail to execute radical business model transformations due to the dilemma of creative destruction such transformations entail (Christensen, Reference Christensen1997).

The lack of flexibility in the face of radical uncertainty is one of the main problems precluding incumbents from successfully deploying the seizing and transforming capabilities needed to deal with this dilemma (Kay & King, Reference Kay and King2020; Teece, Reference Teece2007). Unlike new business ventures that are more open to exploring, discovering, and implementing radical business model transformations, incumbents face complex trade-offs and usually opt for strategies with much lower levels of strategic uncertainty and organizational misalignment. However, seizing and transforming capabilities in highly dynamic markets often require that incumbents drive radical transformations in spite of the deep strategic uncertainty and organizational misalignment and the high opportunity costs these transformations entail (Kay & King, Reference Kay and King2020). Such decisions are often delayed due to the high opportunity costs associated with transforming business models that still deliver value not only to the incumbents but also to key stakeholders in their innovation ecosystems, many of which are strategic allies in complex value chains that took these incumbents decades to form (Teece, Reference Teece2007). This procrastinating behavior is observed even in cases of incumbents that successfully deployed the sensing capabilities needed to uncover the impending threats of technological, market, and industry disruption, which are characteristic of the entrepreneurial management proposed in connection with the dynamic capabilities framework in the strategic management literature (Helfat et al., Reference Helfat, Finkelstein and Mitchell2007; Teece, Reference Teece2016; Teece & Pisano, Reference Teece and Pisano1994; Teece, Pisano, & Shuen, Reference Teece, Pisano and Shuen1990; Teece, Pisano, & Shuen Reference Teece, Pisano and Shuen1997).

1.2 Overcoming the Pitfalls of Radical Business Model Transformations

In environments characterized by the type of radical uncertainty described by Kay & King (Reference Kay and King2020), incumbents often show a great deal of aversion to deploying seizing and transforming capabilities that radically change or even destroy their current business models. Incumbents often end up redoubling their efforts to perfect their current business models through incremental business model innovations instead of substantially or radically transforming them (Johnson, Christensen, & Kagermann, Reference Johnson, Christensen and Kagermann2008). Such behavior often constitutes a strategic folly on the part of incumbents that results not in the intended preservation of their current business models but rather in delaying their demise while they still operate in the domain of gains. In such cases, the deployment of seizing and transforming capabilities comes often too late, as exemplified by Kodak and many other incumbents that failed to transform their business models in the face of technological, market, and industry disruption (Christensen, Reference Christensen1997).

While the high opportunity costs and the lack of flexibility contribute to explaining why incumbents fail to deploy the seizing and transforming capabilities needed to transform their business models under radical strategic uncertainty (Kay & King, Reference Kay and King2020), empirical evidence suggests that incumbents also show anticannibalization proclivities that preclude them from transforming their business models while they still deliver gains. These anticannibalization proclivities of incumbents have been described by strategic management scholars and are connected with the dilemma of creative destruction (Teece, Reference Teece2007). We conjecture that such a bias is governed by loss aversion as one of the main psychological effects rooted in the psychophysics of human decision-making under risk (Camerer, Reference Camerer2003, Reference Camerer2005; Frydman & Camerer, Reference Frydman and Camerer2016). Indeed, the behavior shown by incumbents facing the dilemma of having to radically transform a still profitable business model is consistent with prospect theory, which would predict that the decisions of incumbents in environments ridden with deep strategic uncertainty are driven by a great deal of risk aversion while their business models still operate in the domain of gains (Kahneman & Tversky, Reference Kahneman and Tversky1979). According to this theory, incumbents would show the higher propensity to risk needed to radically transform their business models only after they have entered the domain of losses. From an evolutionary economics perspective, this change in decision-making behavior comes often too late (Christensen, Reference Christensen1997; Johnson, Christensen, & Kagermann, Reference Johnson, Christensen and Kagermann2008).

The lack of strategies and decision-aiding tools allowing managers to deal with this bias against transforming a still successful business model is often the reason why incumbents resist radical business model transformations while their business models still operate in the domain of gains (Helfat et al., Reference Helfat, Finkelstein and Mitchell2007; Teece, Reference Teece2010, Reference Teece2016). Given their potential to help managers make the complex decisions that are needed to seize and transform a successful business model under deep strategic uncertainty (Kay & King, Reference Kay and King2020), the development of strategies, methodologies, and decision-aiding tools allowing incumbents to deal with this bias and avoid anticannibalization proclivities should be one of the main objectives of any dynamic capabilities framework (Teece, Reference Teece2007, p. 1334). Such an undertaking would contribute not only to operationalizing dynamic capabilities frameworks (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Teece, Reference Teece2007) but also to developing general theory of the entrepreneurial firm (Teece, Reference Teece2016).

1.3 Competitive Advantage and the Value of Cooperation

While the deployment of decision-aiding methodologies inspired in the psychology of decision-making under risk (Kahneman & Tversky, Reference Kahneman and Tversky1979; Tversky & Kahneman, Reference Tversky and Kahneman1992) is needed to avoid the pitfalls associated with radical business model transformations on the part of incumbents, the deployment of “coopeting” strategies is essential for the operationalization of the type of capabilities needed to deal with radical business model transformations. Such strategies are particularly important when dealing with radical business model transformations in knowledge-intensive industries dominated by rapid market, industry, and technological change. In such industries, competing firms often deploy coopeting strategies to reduce the potential negative outcomes of investment decisions made under radical uncertainty and these coopeting strategies often follow oblique, as opposed to direct, innovation pathways (Kay & King, Reference Kay and King2020).

If we assume that the competitive advantage is the essence of any business model and that any competitive advantage is predicated upon a unique and compelling value proposition, it follows that the way value is transferred, that is, delivered, in a complex value chain will characterize the different business models of the participants in that value chain (Teece, Reference Teece1976, Reference Teece2010). While firms embedded in knowledge-intensive industries tend to adopt competitive strategies in complex industry value chains during periods of continuity and low strategic uncertainty, in periods of high discontinuity there seems to be the need to embrace a different array of coopeting strategies to deploy seizing and transforming capabilities under deep uncertainty (Foster, Reference Foster1986b). During such periods of high disruption, the ability to redefine entire value chains by transferring value among otherwise competing firms gains unprecedented importance (Pisano, Shan, & Teece, Reference Pisano, Shan, Teece and Mowery1988).Footnote ¹

The venture capital industry provides one of the most relevant cases of deploying such coopeting strategies. In that industry, deals are syndicated among otherwise competing venture capital firms to deal with deep strategic uncertainty. In order to be effective, deal syndication requires that a critical mass of competing venture capital firms be available in complex innovation networks (Ahrweiler, Reference Ahrweiler2010). As a coopeting strategy, deal syndication is of the essence to sustain the otherwise unviable business model of the venture capital industry (Sorenson & Stuart, Reference Sorenson and Stuart2001, Reference Sorenson and Stuart2008). The radical business model innovations driven by venture capitalists tend to create situations that prompt them to deploy coopeting strategies in order to gain the flexibility required to deal with deep strategic uncertainty (Pisano, Shan, & Teece, Reference Pisano, Shan, Teece and Mowery1988). The case of the venture capital industry highlights the need to add coopeting strategies as a key microfoundation of the dynamic capabilities framework (Teece, Reference Teece2007).

1.4 Quantum Management and Dynamic Metacapabilities

In this contribution, we set out the dynamic metacapabilities framework and operationalize it using a novel management paradigm that we call “quantum management.” Inspired by quantum mechanics and based on a lifecycle of “dynamic metacapabilities,” quantum management is operationalized through three classes of real options that mimic quantum-mechanical effects to deal with radical uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020). Operationalized by this new quantum management paradigm, the dynamic metacapabilities framework proposed departs from the standard resource-based view of the firm by dropping its implicit assumption that resources and capabilities are created ex nihilo (Barney, Reference Barney1991; Penrose, Reference Penrose1995; Wernerfelt, Reference Wernerfelt1984) and enables an informational, as opposed to a resource-based, view of the firm (Wernerfelt, Reference Wernerfelt1984).

Following such an innovation lifecycle approach, quantum management allows firms to deploy strategies to cope with varying degrees of strategic uncertainty and organizational misalignment as their business models transition throughout the lifecycle of dynamic metacapabilities. As the strategic uncertainty and organizational misalignment in the internal and external environment of the firm decrease, dynamic metacapabilities “decohere”Footnote ² to lower-order dynamic capabilities (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Teece, Reference Teece2007) and eventually to ordinary capabilities (Barney, Reference Barney1991; Mahoney & Pandian, Reference Mahoney and Pandian1992). Such a lifecycle approach allows the dynamic metacapabilities framework to integrate the higher-order dynamic metacapabilities needed by firms to drive strategy under radical strategic uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020) with the lower-order dynamic capabilities (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Teece, Reference Teece2007) and the ordinary capabilities (Barney, Reference Barney1991; Penrose, Reference Penrose1995; Wernerfelt Reference Wernerfelt1984) needed by firms to operate in high-velocity and moderately dynamic markets, respectively.

1.5 Toward an Informational Theory of the Firm

An important goal of the dynamic metacapabilities framework proposed, and the new quantum management paradigm used to implement it, is to propose an informational theory of the firm. Quantum management operationalizes dynamic metacapabilities following a real options approach that mimics quantum-mechanical effects to deal with radical uncertainty and organizational misalignment. Quantum management implements the kind of entrepreneurial management envisioned by the Teecean dynamic capabilities framework (Teece, Reference Teece2007) and represents not only a theoretical contribution. Quantum management also represents a practical contribution in that it can endow entrepreneurial managers with dynamic metacapabilities that mimic quantum-mechanical effects in order to deal with radical strategic uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020), allowing them to execute corporate and business strategies during periods of high market, technological, and industry disruption.

1.6 Dynamic Capabilities and Evolutionary Economics

As noted by Teece (Reference Teece, Dopfer, Nelson, Potts and Pyka2023), evolutionary models of the firm generally assume that dynamic capabilities are merely routines (Nelson & Winter, Reference Nelson and Winter1982, p. 17). These models focus on continuity (Nelson, Reference Nelson1991; Winter, Reference Winter2003, Reference Winter2006) and highlight the bounded rationality of managers (Nelson & Winter, Reference Nelson and Winter1982, p. 32), as opposed to focusing on their entrepreneurial management skills (Teece, Reference Teece2018c). More importantly, evolutionary models of the firm regard technology as the driver of primarily incremental innovations aimed not at shaping the environment but rather at responding to it (Nelson, Reference Nelson, Nelson, Dosi and Helfat2018, p. 24).

Dynamic capabilities, as conceptualized by Teece (Reference Teece2007) almost two decades after this framework was originally introduced (Teece, Pisano, & Shuen, Reference Teece, Pisano and Shuen1990), depart from the general view of evolutionary economists who construe firm evolution as a process of implementing incremental changes based on dynamic capabilities to adapt to a changing environment. According to this view, dynamic capabilities comprise new routines, or combinations of existing routines, that are eminently “local.” As opposed to this generally accepted view of dynamic capabilities among evolutionists, the characterization of dynamic capabilities proposed by the Teecean framework highlights their “non-locality” and their focus on a more radical, intentional, and directed form of evolution not aimed at responding to changes in the environment but rather at shaping it.Footnote ³

Rather than assuming that technology is the main driver of innovation, the Teecean framework of dynamic capabilities considers that entrepreneurial management takes center stage as a catalyst of radical innovations aimed at shaping the environment. According to this framework, dynamic capabilities along three distinct categories, namely, “sensing,” “seizing,” and “transforming,” enable a type of entrepreneurial management predicated on a multidimensional construct comprising not just the technological but also the market and business models dimensions, to which the temporal dimension should also be added (Teece, Reference Teece, Dopfer, Nelson, Potts and Pyka2023, p. 210). The Teecean framework thus assumes that dynamic capabilities, as opposed to ordinary capabilities, comprise entrepreneurial and leadership skills that are deployed following a top-down approach. Such top-down approach “lies outside the purview of evolutionary economics” (Teece, Reference Teece, Dopfer, Nelson, Potts and Pyka2023, p. 215), which assumes that dynamic capabilities are rather deployed in a bottom-up and undirected manner.Footnote ⁴

1.7 Filling the Gap

There is today no consensus about what dynamic capabilities are among strategic management scholars, on the one hand, and evolutionary economists, on the other. This lack of consensus becomes evident in the concluding remarks of David Teece’s recent essay about dynamic capabilities and evolutionary economics (Teece, Reference Teece, Dopfer, Nelson, Potts and Pyka2023, p. 215), in which he states: “I hope by viewing evolutionary economics within the broader context of the dynamic capabilities framework, evolutionary economists will be better able to handle a fuller range of innovations and non-routine entrepreneurial decisions.”

As noted by strategic management scholars endorsing competing views on what dynamic capabilities are (Eisenhardt & Martin, Reference Eisenhardt and Martin2000), the level of underspecification and lack of operationalization of the Teecean dynamic capabilities framework has so far rendered it rather “tautological and vague” (Eisenhardt & Martin, Reference Eisenhardt and Martin2000, p. 1106). This lack of operationalization is also a major impediment to fulfilling Teece’s hope of bringing the full potential of dynamic capabilities to fruition in the field of evolutionary economics.

Our aim is to contribute to filling this gap by introducing the dynamic metacapabilities framework. Operationalized through “quantum management” as a new management paradigm inspired by quantum mechanics, dynamic metacapabilities shall contribute to reconciling not only the diverging views on what dynamic capabilities are held today by evolutionary economists and strategic management scholars but also the two most influential and competing views on dynamic capabilities among strategic management scholars.

1.8 Organization of Our Contribution

Our contribution starts with a review of the relevant literature in business model innovation and dynamic capabilities our dynamic metacapabilities framework draws upon. Our review includes diverging views on what dynamic capabilities are held by evolutionary economists and strategic management scholars.

We then introduce the dynamic metacapabilities framework. Inspired by quantum mechanics, we describe the lifecycle of dynamic metacapabilities governing the transition from dynamic metacapabilities to dynamic and ultimately to ordinary capabilities. We analyze the difference between ordinary and dynamic capabilities, the difference between the two main competing views on dynamic capabilities in the strategic management research community, and the difference between the dynamic capabilities and dynamic metacapabilities frameworks. We also explain how the dynamic metacapabilities framework, and its operationalization through quantum management, contributes to reconciling the competing views on what dynamic capabilities are in the evolutionary economics and strategic management research communities.

We then introduce quantum management, a novel management paradigm that operationalizes the dynamic metacapabilities framework following a real options approach. Based on three classes of real options that mimic quantum-mechanical effects such as superpositioning, entanglement, and tunneling, quantum management allows firms to deal with the type of radical strategic uncertainty and organizational misalignment that is pervasive in rapidly changing environments. Quantum management mimics processes of quantum decoherence and proposes that dynamic metacapabilities decohere to actual dynamic capabilities, and ultimately to ordinary capabilities, as new information reducing the radical uncertainty and organizational misalignment in the environment of the firm becomes available (Kay & King, Reference Kay and King2020).

Next, we discuss the main contributions of the dynamic metacapabilities framework and its operationalization through quantum management and describe how they lead to an informational, as opposed to a resource-based, view of the firm. We show how dynamic and ordinary capabilities are not created ex nihilo but are rather the result of dynamic metacapabilities decohering from the pure informational realm of metacapabilities, construed as potential bundles of information aimed at achieving evolutionary fitness, to the realm of actual dynamic capabilities and ultimately ordinary capabilities aimed at achieving technical fitness. We also present a real-life example that describes quantum management and dynamic metacapabilities at work in environments ridden with radical uncertainty and organizational misalignment.

We conclude that the informational view of the firm underlying the dynamic metacapabilities framework not only constitutes a departure from mainstream approaches in strategic management and evolutionary economics rooted in the resource-based view of the firm but is also better equipped to capture the dynamics of the kind of business model transformations that are of the essence for firms seeking evolutionary fitness in rapidly changing environments subject to radical strategic uncertainty and organizational misalignment.

2.1 Business Models

In their review of extant literature on business models, Massa, Tucci, and Afuah (Reference Massa, Tucci and Afuah2017, pp. 77–78) identified a first category of contributions whose focus is on the components of business models and how they map different attributes of firms, including the revenue model (Birkinshaw & Goddard, Reference Birkinshaw and Goddard2009, Gambardella & McGahan, Reference Gambardella and McGahan2010), the value proposition and the process of value capture (Bocken, Rana, & Short, Reference Bocken, Rana and Short2015; Roome & Louche, Reference Roome and Louche2016), the delivery model (San Román et al., Reference San Román, Momber, Abbad and Miralles2011, Sinfield et al., Reference Sinfield, Calder, McConnell and Colson2012; Weill, Malone, & Apel, Reference Weill, Malone and Apel2011), the competitive strategy (Casadesus-Masanell & Zhu, Reference Casadesus-Masanell and Zhu2013), the firm strategy (Dahan et al., Reference Dahan, Doh, Oetzel and Yaziji2010; Hienerth, Keinz, & Lettl, Reference Hienerth, Keinz and Lettl2011; Smith, Binns, & Tushman, Reference Smith, Binns and Tushman2010), and other components of the business model (Chesbrough, Reference Chesbrough2010; Nielsen & Lund, Reference Nielsen, Lund, Nielsen and Lund2014). Yet few contributions focus on designing business models (Zott & Amit, Reference Zott and Amit2010) or on how incumbents can adopt new business models (Markides & Oyon, Reference Markides and Oyon2010).

Another stream of research in the business model literature focuses on the study of business models as cognitive structures and involve scholarly work that construes business models not as real objects but as models (Aspara et al., Reference Aspara, Lamberg, Laukia and Tikkanen2013; Baden-Fuller & Morgan, Reference Baden-Fuller and Morgan2010), including models conveying the logic of the firm (Chesbrough & Rosensbloom, Reference Chesbrough and Rosensbloom2002; Doganova & Eyquem-Renault, Reference Doganova and Eyquem-Renault2009) and models of the interface of the firm with its environment (Doz & Kosonen, Reference Doz and Kosonen2010), or as narratives (Magretta, Reference Magretta2002), or as mental models (Martins, Rindova, & Greenbaum, Reference Martins, Rindova and Greenbaum2015), or as aids for decision-making (Velu & Stiles, Reference Velu and Stiles2013).

A third stream of literature focuses on the study formal representations of business models. This third stream is relevant because it lends itself to an operationalization of business models and to the definition of methodologies and tools for managerial decision-making. This stream of research includes work on formal representations of some of the components of business models such as the revenue model (Abdelkafi & Täuscher, Reference Abdelkafi and Täuscher2016; Itami & Nishino, Reference Itami and Nishino2010), the logic of the firm (Casadesus-Masanell & Ricart, Reference Casadesus-Masanell and Ricart2010; Upward & Jones, Reference Upward and Jones2015), the value proposition and the process of creation, delivery, and capture of value (Demil & Lecocq, Reference Demil and Lecocq2010; Reim, Parida, & Örtqvist, Reference Reim, Parida and Örtqvist2015; Yunus, Moingeon, & Lehmann-Ortega, Reference Yunus, Moingeon and Lehmann-Ortega2010; Wirtz, Schilke, & Ullrich, Reference Wirtz, Schilke and Ullrich2010; Schaltegger, Hansen, & Lüdecke-Freund Reference Schaltegger, Hansen and Lüdecke-Freund2016), the competitive advantage (McGrath, Reference McGrath2010), the ecosystem of the firm (Wells, Reference Wells2016), as well as formal representations of other components of business models (Baden-Fuller & Haefliger, Reference Baden-Fuller and Haefliger2013; Boons & Lüdecke-Freund Reference Boons and Lüdecke-Freund2013; Osterwalder, Pigneur, & Tucci, Reference Osterwalder, Pigneur and Tucci2005; Provance, Donnely, & Carayannis, Reference Provance, Donnely and Carayannis2011).

None of these three approaches to business model research has addressed the dynamics of business model creation. Whether this scholarly research is based on the attributes, cognitive structures, or formal representations approaches to business models, its aim has been to describe business models as static objects. This body of scholarly research has not yet described the different phases and stages in the process that leads to their creation. Although some of the scholarly work cited previously has addressed the interface between strategy and business models (Casadesus-Masanell & Ricart, Reference Casadesus-Masanell and Ricart2010), the integration of modern strategic management frameworks such as dynamic capabilities with business model formation has been discussed by few authors rather sketchily (Teece, Reference Teece2010). By and large, the needed operationalization of dynamic capabilities and their integration with business model research is still missing in the strategic management literature.

2.2 Business Model Innovation

Radical business model innovation involves singular events causing firms to develop the kind of capabilities proposed by the dynamic capabilities framework (Teece, Reference Teece2007). Empirical evidence suggests that leading firms that are generally good at sensing opportunities and threats also generally fail to seize opportunities or neutralize threats when they involve introducing radical innovations to a hitherto successful business model (Christensen, Reference Christensen1997). The failure to do so is due to the inability of incumbents to transform complementary and cospecialized tangible and intangible assets that took them decades to build, configure, and reconfigure in open innovation systems (Teece, Reference Teece2007).

From the perspective of conventional strategic management frameworks rooted not only in the resource-based view of the firm (Wernerfelt, Reference Wernerfelt1984; Barney, Reference Barney1991; Penrose, Reference Penrose1995) but also in the positioning framework (Porter, Reference Porter2008), such incumbents cannot be regarded as firms that failed to execute the strategies indicated by these frameworks, which would have indeed consisted of strategies aiming to protect VRINFootnote ⁵ resources and capabilities, instead of radically transforming them. Work on vertical integration (Macher & Mowery, Reference Macher and Mowery2005; Pisano, Shan, & Teece, Reference Pisano, Shan, Teece and Mowery1988; Teece, Reference Teece1976; Winter, Reference Winter2003) and business models, business strategy, and innovation (Teece, Reference Teece2010) seem to corroborate how difficult it is to deal with the dilemma of having to transform complementary and cospecialized tangible and intangible assets tightly integrated in complex industry value chains to neutralize a threat or seize an opportunity. The analysis of cases of radical business model innovation reveals that incumbents, unlike new business ventures (Foster, Reference Foster1986a), often fail to adopt the kind of entrepreneurial management needed to avoid falling into this trap (Christensen, Reference Christensen1997; Teece, Reference Teece2016).

The innovation economics and management literature provides us with plenty of cases of incumbent firms that were unable to seize opportunities and manage threats when facing major market disruption due to their failure to redefine their business models (Christensen, Reference Christensen1997; Pisano, Shan, & Teece, Reference Pisano, Shan, Teece and Mowery1988; Teece, Reference Teece1976; Winter, Reference Winter2003). From a dynamic capabilities framework perspective, the failure to do so is ultimately due to the inability of incumbents to reconfigure the components of a hitherto successful business model (Amit & Zott, Reference Amit and Zott2001; Johnson, Christensen, & Kagermann, Reference Johnson, Christensen and Kagermann2008; Osterwalder & Pigneur, Reference Osterwalder and Pigneur2010; Ritter, Reference Ritter2014). These cases are all related to the dilemma of creative destruction (Schumpeter, Reference Schumpeter1942) and confirm that global market leaders often fail to keep their dominance when challenged by the disruptive technology of smaller competitors (Foster, Reference Foster1986a).

Also noteworthy are cases of incumbents that were unable to deal with the dilemma of creative destruction due not to a threat posed by technological or market disruption (Foster, Reference Foster1986b) but rather to their unwillingness to cooperate with a strategic partner that presented an opportunity for radical innovation requiring that they reconfigure their hitherto successful business model. Such cases bring to our attention an important dynamic capability, namely, the ability to cooperate with firms that are regarded as competitors during periods of industry disruption (Paredes-Frigolett & Pyka, Reference Paredes-Frigolett, Pyka, Foster and Pyka2015).

The ability to cooperate during periods of industry disruption is an important microfoundation of the dynamic capabilities framework (Teece, Reference Teece2007) that has so far been rather neglected despite the comprehensive body of scholarly work on cooperation via strategic alliances in the business model literature (Amit & Zott, Reference Amit and Zott2001; Johnson, Christensen, & Kagermann, Reference Johnson, Christensen and Kagermann2008; Osterwalder & Pigneur, Reference Osterwalder and Pigneur2010; Ritter, Reference Ritter2014). Although the role of cooperation in the process of value creation is widely recognized today (Casadesus-Masanell & Ricart, Reference Casadesus-Masanell and Ricart2010; Chesbrough & Rosensbloom, Reference Chesbrough and Rosensbloom2002; Pyka, Reference Pyka2002), scholars have paid less attention to the role that cooperation plays during processes of radical business model innovation as a vehicle allowing managers to deal with the transformation of a still successful and profitable business model (Chesbrough, Reference Chesbrough2007; Markides & Sosa, Reference Markides and Sosa2013; Teece, Reference Teece2016) in environments subject to radical uncertainty (Kay & King, Reference Kay and King2020).

2.3 Two Competing Dynamic Capabilities Frameworks

The reconceptualization of dynamic capabilities proposed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1111) constitutes quite a departure from the traditional view of dynamic capabilities, as originally proposed by Teece, Pisano, & Shuen (Reference Teece, Pisano and Shuen1997) and explicated in more detail by Teece (Reference Teece2007). In particular, the reconceptualization of dynamic capabilities proposed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1111) differs from the traditional view in that dynamic capabilities:

1. 1. are defined by “specific organizational and strategic processes” instead of “routines to learn routines”;

2. 2. present “commonalities with some idiosyncratic details across firms” instead of being “idiosyncratic and firm specific”;

3. 3. are “detailed and analytic routines in moderately dynamic markets” but “simple and experiential in high-velocity markets”;

4. 4. are “predictable in moderately dynamic markets” but “unpredictable in high-velocity markets”;

5. 5. provide a source of competitive advantage but not of sustained competitive advantage because they are “somewhat rare, equifinal, substitutable, and fungible” instead of “rare, inimitable and non-substitutable”; and

6. 6. evolve not following a “unique path” but rather a “unique path shaped by learning mechanisms.”

An important difference between the reconceptualization of dynamic capabilities proposed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1113) and the traditional view of dynamic capabilitiesFootnote ⁶ is that dynamic capabilities can only obtain a “temporary competitive advantage” due to their “substitutability and fungibility and the imitable nature of best practices within an industry” (Eisenhardt & Martin, Reference Eisenhardt and Martin2000, p. 1106). Another important difference is the claim made by Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1113) that the “traditional view of dynamic capabilities collapses in high-velocity markets.”Footnote ⁷

2.4 Business Model Transformation

The framework proposed by Teece, Pisano, & Shuen (Reference Teece, Pisano and Shuen1997) seems more attuned to being deployed in phases of a lifecycle aimed at implementing substantial and radical business model transformations under deep strategic uncertainty. The Teecean dynamic capabilities framework requires that firms deploy sensing, seizing, and transforming capabilities, which are the three main categories of dynamic capabilities proposed by Teece, Pisano, & Shuen (Reference Teece, Pisano and Shuen1997) that are assumed to be sources of “sustainable enterprise performance” in rapidly changing environments (Teece, Reference Teece2007, p. 1319).Footnote ⁸ More than actual capabilities, however, sensing, seizing and transforming stand for general categories or families of capabilities. Although Teece (Reference Teece2007, p. 1342) propose some microfoundations under each of these categories, a comprehensive list of dynamic capabilities are not listed explicitly in the Teecean framework. The concept of lifecycle is not stated explicitly in this framework either, although there is an inherent lifecycle associated with the categories of sensing, seizing and transforming.

According to Eisenhardt and Martin (Reference Eisenhardt and Martin2000), dynamic capabilities are not new and strategic management scholars can benefit from reviewing the comprehensive body of research that exists today on a wide range of (dynamic) capabilities in concrete management areas such as new product development or strategic alliances. In describing what dynamic capabilities are, Eisenhardt and Martin (Reference Eisenhardt and Martin2000) follow an empirically grounded approach. This empirical approach differs from the conceptual approach followed by Teece (Reference Teece2007) in that Eisenhardt and Martin (Reference Eisenhardt and Martin2000) describe a number of concrete capabilities rather than postulating different classes of capabilities. While the Teecean approach to describing dynamic capabilities is thus primarily conceptual, the approach followed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000) is primarily empirical. However, these authors do not come up with a taxonomy of dynamic capabilities following an empirical-to-conceptual approach or with a typology of dynamic capabilities following a conceptual-to-empirical approach (Nickerson, Varshney, & Muntermann, Reference Nickerson, Varshney and Muntermann2013).

Eisenhardt and Martin (Reference Eisenhardt and Martin2000) propose that dynamic capabilities are not path dependent but rather equifinal,Footnote ⁹ which is a result of the substitutability of dynamic capabilities. The fungibility of dynamic capabilities makes them also inadequate to serve as sources of sustainable competitive advantage, as any competitive advantage achieved through them would be short-lived and could only lead to a temporary competitive advantage (D’Aveni, Reference D’Aveni1994; D’Aveni, Dagnino, & Smith, Reference D’Aveni, Dagnino and Smith2010). This is quite a departure from the ordinary capabilities that are usually deployed in moderately dynamic markets, in which a sustainable competitive advantage can be achieved through VRIN capabilities, as proposed by mainstream strategic management frameworks rooted in the resourced-based view of the firm (Barney, Reference Barney1991; Penrose, Reference Penrose1959; Wernerfelt, Reference Wernerfelt1984; Reference Wernerfelt1995).

While the dynamic capabilities postulated by Teece, Pisano, & Shuen (Reference Teece, Pisano and Shuen1997) focus on introducing and implementing strategy that can result in radical business model transformations under deep strategic uncertainty in the pursuit of evolutionary as opposed to technical fitness, the dynamic capabilities postulated by Eisenhardt and Martin (Reference Eisenhardt and Martin2000) do not address such radical business model transformations specifically and seem more attuned to implementing changes to an existing strategy by introducing incremental or substantial business model innovations, for example through the adoption of best practices. While in moderately dynamic markets the dynamic capabilities proposed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1115) focus on technical fitness, in high-velocity markets they commence to shift their focus to evolutionary fitness as the strategic uncertainty in the environment of the firm increases. This is reflected in the “ambiguous industry structure” in which they operate, which is characterized by “blurred business models, ambiguous and shifting players, and nonlinear and unpredictable change.”

However, the original focus on technical fitness of the type of dynamic capabilities needed in moderately dynamic markets is not entirely relinquished in high-velocity markets, as evidenced by the claim that “dynamic capabilities in high-velocity markets can be construed as best practices across firms” (Eisenhardt & Martin, Reference Eisenhardt and Martin2000, p. 1116). Although they retain this partial focus on the kind of technical fitness that is characteristic of the ordinary capabilities based on VRIN resources and capabilities (Wernerfelt, Reference Wernerfelt1984), the dynamic capabilities Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1111) postulate for high-velocity markets do not correspond to ordinary but rather to dynamic capabilities that are either imitableFootnote ¹⁰ or substitutable,Footnote ¹¹ and ultimately equifinal.

2.5 Dynamic Capabilities in Evolutionary Economics

The big disconnect between the two competing dynamic capabilities frameworks is in great part the result of strategic management scholars having failed to provide a formal framework able to incorporate the “dynamics” of business model transformation into a, nomen est omen, “dynamic” capabilities framework. We argue that the lack of such dynamics in the two competing dynamic capabilities frameworks has also precluded the integration of dynamic capabilities, with its view of seeking evolutionary fitness as evolution with design, purpose, and strategy (Teece, Reference Teece, Dopfer, Nelson, Potts and Pyka2023), into evolutionary economics.

We propose that the ongoing debate on what dynamic capabilities are can be settled, and the integration of dynamic capabilities into evolutionary economics can be undertaken, by adopting a lifecycle approach that incorporates the dynamics of business model innovation and transformation into a more general dynamic metacapabilities framework. According to this view, whenever firms deploy dynamic capabilities to adopt the kind of entrepreneurial management that is characteristic of new business ventures, they need to undertake business model innovations and transformations that are governed by an innovation lifecycle comprising phases and stages exhibiting different degrees of deep strategic uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020).

Although previous scholarly work on dynamic capabilities had already introduced the concept of capability lifecycles in the context of the dynamic resource-based view of the firm (Helfat & Peteraf, Reference Helfat and Peteraf2003), a lifecycle approach to dynamic metacapabilities that delimits the objectives of each phase of the lifecycle, and the type of dynamic metacapabilities and dynamic and ordinary capabilities needed in each phase, is still missing. Filling this important gap is required not only to shed light on what dynamic capabilities are and to settle the still ongoing debate on the two competing approaches to dynamic capabilities in the strategic management literature (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Teece, Reference Teece2007) but also to fulfill the more ambitious goal of integrating the full potential of dynamic capabilities into evolutionary economics, as envisioned by (Teece Reference Teece, Dopfer, Nelson, Potts and Pyka2023). Key to achieving these goals is the integration of the “dynamics” of business model transformation into a dynamic metacapabilities framework and the realization that these two approaches to dynamic capabilities operate at different levels, pursue different objectives, and are deployed during different phases of a general lifecycle we refer to as the “the lifecycle of dynamic metacapabilities.”

The type of ordinary and dynamic capabilities and dynamic metacapabilities deployed by entrepreneurial firms will depend on the phase of the lifecycle of dynamic metacapabilities they are in. In a phase ridden with radical uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020), firms will need to deploy dynamic metacapabilities endowing them with the greatest degree of flexibility required to navigate through “a sea of potentialities” in the pursuit of evolutionary fitness (Teece, Reference Teece2007). Once firms enter a phase in which the strategic uncertainty and organizational misalignment have been reduced, they will need to deploy the kind of imitable, substitutable, and equifinal dynamic capabilities that have been proposed by Eisenhardt & Martin (Reference Eisenhardt and Martin2000) for high-velocity markets in the pursuit of both evolutionary and technical fitness.

Finally, if firms enter a phase characterized by moderate strategic uncertainty and organization misalignment, they will need to deploy the kind of “ordinary capabilities” proposed by mainstream strategic management frameworks for moderately dynamic markets in the pursuit of technical fitness (Barney, Reference Barney1991; Penrose, Reference Penrose1959; Wernerfelt, Reference Wernerfelt1984, Reference Wernerfelt1995).

3.1 The Lifecycle of Dynamic Metacapabilities

The lifecycle dynamic metacapabilities governs the transition from ordinary capabilities to dynamic capabilities and onto dynamic metacapabilities and is shown in Figure 1.

Figure 1 The lifecycle of dynamic metacapabilities

3.2 Introducing the Informational View of the Firm

Dynamic metacapabilities are not rooted in a resource-based view but rather in an informational view of the firm. According to this new view, firms are construed not as bundles of resources, as postulated by the resource-based view (Amit & Shoemaker, Reference Amit and Shoemaker1993; Mahoney & Pandian, Reference Mahoney and Pandian1992; Penrose, Reference Penrose1959; Wernerfelt, Reference Wernerfelt1984), but rather as bundles of information. This informational view of the firm postulates that bundles of information decohere to bundles of resources, capabilities, and competencies as the strategic uncertainty and the organizational misalignment in the firm’s environment decrease from very high and high levels, which are characteristic of environments subject to radical uncertainty (Kay & King, Reference Kay and King2020), to moderate and low levels.

The informational view of the firm also postulates that the exploitation of actual resources, capabilities, and competencies, and the capture of Schumpeterian rents, can begin only after the process of decoherence of dynamic metacapabilities to dynamic capabilities has already taken place. It also recognizes the important role that the interplay between dynamic capabilities, with their blended focus on evolutionary and technical fitness, and ordinary capabilities, with their focus on technical fitness, plays in driving innovation and profiting from it (Teece, Reference Teece1986, Reference Teece2006, Reference Teece2018a, Reference Teece2018b). This interplay is of particular importance in environments subject to market, technological, and industry disruption, which require that firms innovate constantly in the pursuit of a temporary as opposed to a sustainable competitive advantage (D’Aveni, Reference D’Aveni1994; D’Aveni, Dagnino, & Smith, Reference D’Aveni, Dagnino and Smith2010).

According to the informational view of the firm, the reduction of radical strategic uncertainty and organizational misalignment leads to a first boundary condition, which prompts dynamic metacapabilities to decohere first to the type of transformative dynamic capabilities described by Teece (Reference Teece2007, p. 1342) in the pursuit of evolutionary fitness and then to the type of dynamic capabilities described by Eisenhardt & Martin (Reference Eisenhardt and Martin2000, p. 1110) in the pursuit of evolutionary and technical fitness. The informational view of the firm also postulates that the further reduction of radical strategic uncertainty and organizational misalignment in the environment of the firm leads to a second boundary condition, which prompts the second type of dynamic capabilities described by Eisenhardt & Martin (Reference Eisenhardt and Martin2000, p. 1110) to decohere to ordinary capabilities. The transition through this second boundary condition is needed for firms to operate in moderately dynamic markets in the pursuit of technical fitness and are associated with the deployment of the type of VRIN resources, capabilities, and competencies postulated by the resource-based view of the firm (Barney, Reference Barney1991; Penrose, Reference Penrose1959; Wernerfelt, Reference Wernerfelt1984, Reference Wernerfelt1995).

3.3 Quantum Management and the Operationalization of Dynamic Metacapabilities

Quantum management is a new management paradigm that operationalizes the dynamic metacapabilities framework described thus far. Quantum management draws upon the dynamic processes of decoherence and collapse that unfold throughout the innovation lifecycle of dynamic metacapabilities shown in Figure 1. Following the logic of this lifecycle, dynamic metacapabilities must decohere from their pure informational realm in order for radical business model transformations to unfold. The challenge for incumbents to adopt quantum management as a means to operationalize dynamic metacapabilities is the recognition of the interplay between dynamic metacapabilities, on the one hand, and dynamic and ordinary capabilities, on the other.

This interplay is governed by processes of decoherence and collapse that unfold throughout the dynamic metacapabilities lifecycle. Incumbents need to recognize when they need to deploy dynamic metacapabilities, when dynamic metacapabilities need to “decohere” to dynamic capabilities as the strategic uncertainty and organizational misalignment in the external and internal environment of the firm decrease from very high to high levels, and when dynamic capabilities need to decohere to ordinary capabilities once the strategic uncertainty and organizational misalignment decrease from high to moderate and low levels in order to render a new business model fully operational.

While the process of decoherence in quantum management operates at an informational level, the process of collapse operates at the level of bundles of resources, capabilities, and competencies. The purely informational level at which dynamic metacapabilities operate has its correlate in the informational world of subatomic particles described by quantum mechanics. The level of actual resources, capabilities, and competencies at which ordinary capabilities operate has it correlate in the classical world described by Newtonian mechanics. Dynamic capabilities find their quantum-mechanical correlate in the nebulous space where the quantum-mechanical world of subatomic particles transitions into the classical world.

4.1 The Informational View of the Firm

According to the informational view of the firm we have developed thus far, firms gain information about a “system” ridden with radical uncertainty and organizational misalignment by making “measurements.” They then use the recorded information about the measurements’ outcomes for the implementation of a new business model that conveys the logic of a radically new strategy. The operationalization of the dynamic metacapabilities framework will thus require the deployment of a number of strategies aimed at making such measurements and gaining and recording such information. This process of gathering intelligence information through dynamic metacapabilities can be construed as making a measurement to effectively reduce the number of potential objectives and strategies. The careful selection of such strategic objectives represents a boundary condition for dynamic metacapabilities, as the focus begins to shift gradually from pure exploration and discovery to exploitation.

As the boundaries between ordinary capabilities, dynamic capabilities, and dynamic metacapabilities are rather fuzzy, it is difficult to give a clear-cut separation between these different types of capabilities. This is reflected in the fact that some of the traditional dynamic capabilities analyzed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000) are regarded as ordinary capabilities according to the reconceptualization of dynamic capabilities proposed by these authors. Likewise, some of the dynamic capabilities proposed by Eisenhardt & Martin (Reference Eisenhardt and Martin2000) in high-velocity markets may be regarded as ordinary capabilities when seen from the perspective of the dynamic capabilities proposed in the Teecean framework (Teece, Reference Teece2007). A way to approach this problem is by outlining the boundary conditions that make dynamic metacapabilities decohere to dynamic capabilities and the boundary conditions that make dynamic capabilities decohere to ordinary capabilities.

4.2 Operationalizing Dynamic Metacapabilities

The operationalization of dynamic metacapabilities is essentially a problem of how to harness the full power of flexibility. Whenever firms face radical strategic uncertainty and organizational misalignment, the space of potential strategic objectives, and the strategies that firms may pursue to achieve them, increase exponentially (Kay & King, Reference Kay and King2020). What is needed in such scenarios is the ability of the firm to first explore and pursue a potentially very large number of strategies in parallel by preserving the coherent superpositions of all possible outcomes, which would correspond to the state of the system prior to making the measurement, and then to gather intelligence information to reduce the search space by forcing the system under study to decohere. This strategy would not be aimed at implementing a fully operational business model but rather at experimenting with a potentially very large number of skeleton business models. The dynamic metacapabilities deployed to achieve this goal focus on exploration and discovery and aim at achieving second-order effectiveness.

Key to understanding how decoherence occurs in quantum management is the identification of the three-dimensional space within which the deployment of ordinary and dynamic capabilities, and dynamic metacapabilities, takes place, as shown in Figure 1. The first two axes that define this space measure the level of strategic uncertainty and organizational misalignment underpinning processes of incremental, substantial, and radical business model innovation, respectively. The third axis measures the level of flexibility at which ordinary and dynamic capabilities and dynamic metacapabilities operate. Firms deploy dynamic metacapabilities to gain information that reduces the strategic uncertainty and organizational misalignment in their external and internal environment. Instead of waiting until the strategic uncertainty and organizational misalignment have been reduced, firms can take a more proactive approach by deploying dynamic metacapabilities aimed at gaining information by forcing the underlying innovation ecosystem to decohere, at which point the operationalization of a given strategy in pursuit of a chosen strategic objective can be attempted.

Quantum management allows firms to deal with technology, industry, and market disruption in high-velocity markets while still operating in the domain of gains under the logic of a successful business model that took years, if not decades, to build and perfect (McGrath, Reference McGrath1997; Peng & Wang, Reference Peng and Wang2000). With such an overarching goal in mind, we operationalize quantum management using a real options approach that deploys three classes of real options (Luehrman, Reference Luehrman1988; McGrath, Reference McGrath1999; Miller & Modigliani, Reference Miller and Modigliani1961). The first class introduces a set of real options that we have termed control options.

4.3 Control Options

Incumbent firms undergoing radical business model transformation have to validate a radically different business model that implements a radically different strategy, consolidate a still-emerging value creation system comprising all stakeholders of a new innovation ecosystem, and install inducement mechanisms for the rapid adoption of new offerings in either new or existing target markets. The control options determine the flow of control that governs the execution of the processes underlying each phase, and the stages within each phase, of the innovation lifecycle. Due to the inherent strategic uncertainty involved, the processes underlying business model innovation and transformation throughout that lifecycle are not serial but rather iterative. Control options are needed to implement such iterative processes.

4.4 Directional Options

While control options allow firms to deal with deep uncertainty by controlling the flow of execution in the absence of relevant information, or as new information becomes available, another class of options that we call directional options play an even more important role in dealing with deep strategic uncertainty. These options determine the direction of search and are exercised to endow processes of exploration and discovery with increasing levels of flexibility. Directional options allow the firm to pursue several directions of search at the same time and play therefore a key role in managing innovation processes in environments ridden with radical uncertainty (Kay & King, Reference Kay and King2020).

4.5 Alignment Options

In moderately dynamic markets, successful business models are implemented and improved through ordinary capabilities based on resources and capabilities that are valued, rare, inimitable and non-substitutableFootnote ¹⁶ (Barney, Reference Barney1991; Penrose, Reference Penrose1995). In high-velocity markets, however, substantial changes to an existing business model requires that innovative firms deploy dynamic capabilities (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Teece, Reference Teece2007) and dynamic metacapabilities, as introduced thus far. This poses a major challenge to incumbent firms, especially if these changes are radical and need to be introduced to a hitherto successful business model. Rising to meet this challenge is particularly difficult for incumbents because they tend to continue to operate under the logic of their current business model. This creates a bias toward deploying and perfecting their ordinary capabilities while their business models still operate in the domain of gains (Kahneman & Tversky, Reference Kahneman and Tversky1979; Tversky & Kahneman, Reference Tversky and Kahneman1992).

Radical business model transformations require that incumbents deploy dynamic metacapabilities to cope with processes of creative destruction not only within the firm but also in its innovation ecosystem. This poses a tremendous challenge for incumbents in terms of aligning not only their entire firm but also the entire innovation ecosystem around it for the rapid transformation and successful implementation of new business models able to implement the logic of radically different corporate and business strategies under radical uncertainty (Johnson, Christensen, & Kagermann, Reference Johnson, Christensen and Kagermann2008; Kay & King, Reference Kay and King2020).

While control and directional options allow firms to deal with deep strategic uncertainty (Kay & King, Reference Kay and King2020), there is another class of options that play a key role in obtaining the organizational alignment needed to execute new strategies that are numerous and often conflicting with one another. These options play a key role in allowing incumbent firms to transform business models that still operate in the domain of gains by addressing the question of how they can organizationally align their teams to execute the tasks required to radically transform a still successful business model. As the goal of this class of options is to organizationally align the firm for the execution of strategies aimed at transforming a business model that still operates in the domain of gains, we refer to them as alignment options.

Organizational alignment is much more difficult to obtain within firms executing a strategy that requires the radical transformation of a hitherto successful business model that is being disrupted. Alignment options allow incumbent firms to cope with technological, market or industry disruption. But they can also play a key role in the execution of strategies of emerging firms driving radical innovations.

5.1 Business Model Innovation Through Ordinary Capabilities

Since incremental business model innovation does not involve substantial or radical changes to the organizational structure of the firm, nor to the components of the business model, nor to the objective or scope of the corporate strategy, this form of business model innovation is the most common one among firms and is usually associated with new features of existing products, services, or solutions or with introducing or perfecting internal processes through best industry practices to achieve operational efficiency (Eisenhardt & Martin, Reference Eisenhardt and Martin2000). Incremental business model innovation is motivated by the need to respond to changing conditions in the environment on an ongoing basis and is implemented through ordinary capabilities that do not transform the existing business model in any fundamental way (Chesbrough & Rosensbloom, Reference Chesbrough and Rosensbloom2002; Doganova & Eyquem-Renault, Reference Doganova and Eyquem-Renault2009).

5.2 Business Model Innovation Through Dynamic Capabilities

Substantial business model innovation involves major changes to the components of the existing business model, which may include changes to the scope of the strategy, that is, to the business domain of the firm. This type of business model innovation usually involves major changes to the competitive advantage of firms and requires that they generate value propositions that are substantially better than those of their competitors based on the deployment of dynamic capabilities (Johnson, Christensen, & Kagermann, Reference Johnson, Christensen and Kagermann2008). Apple is an incumbent characterized by this type of business model innovation, which is implemented using evasive tactics that push the entire industry to higher standards and force competitors to catch up with Apple’s superior product innovations. By deploying best industry practices in product marketing and management, one of the dynamic capabilities proposed by Eisenhardt & Martin (Reference Eisenhardt and Martin2000), Apple’s competitors bring to points of parity the key attributes of Apple’s superior product value proposition. This shows how these lower-order dynamic capabilities can indeed be imitated.

Apple’s rivalry with Samsung provides us with an excellent case showing how ordinary capabilities, with their focus on leveraging and perfecting VRIN resources and capabilities as a source of sustainable competitive advantage, can peacefully coexist with the type of dynamic capabilities set out by Eisenhardt & Martin (Reference Eisenhardt and Martin2000).Footnote ²⁰ But this case also shows how the type of dynamic capabilities proposed by Teece (Reference Teece2007) can be instantiated and how they can peacefully coexist with the lower-order dynamic capabilities proposed by Eisenhardt & Martin (Reference Eisenhardt and Martin2000). Indeed, the innovation strategy of Apple is characterized by its avoidance of anticannibalization proclivities, which is proposed as one of the dynamic capabilities under the “seizing” category in the Teecean dynamic capabilities framework (Teece, Reference Teece2007, p. 1334). This highlights a key aspect, namely, that the two types of dynamic capabilities can peacefully coexist within a firm and complement each other in a value-enhancing manner.

Apple deploys dynamic capabilities based on best product innovation practices, which correspond to the kind of lower-order dynamic capabilities described by Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1106) as imitable best industry practices. Yet the avoidance of anticannibalization proclivities, as a Teecean dynamic capability, cannot be created ex nihilo and presupposes the existence of a higher-order dynamic metacapability allowing Apple to redefine its competitive advantage on an ongoing basis against the pressures not only of internal but also of external stakeholders (Arthur, Reference Arthur2012).

Considering the strategy of Apple in the mobile devices and services industry and the dynamic metacapabilities framework and its implementation through quantum management described thus far, two options stand out in the implementation of Apple’s strategy, namely, the acceleration control option and the entanglement alignment option. While the acceleration option allows Apple to gain the thrust necessary in what is today its more strategic market, the entanglement option allows Apple to organizationally align its entire organization and its innovation ecosystem toward the next release of the iPhone as its flagship product following a very tight time schedule while its current release is still operating in the domain of gains. As the innovation ecosystem mounted by Apple around the Apple Store follows a garden-walled approach that privileges control over openness, the superposition directional option does not play a key role in the implementation of Apple’s strategy. Apple’s deployment of the acceleration and entanglement options together leads to a dynamic metacapability that is characteristic of Apple and is difficult to imitate. As opposed to dynamic capabilities in product innovation, this dynamic metacapability can hardly be regarded as imitable by competitors, which suggests that this metacapability is idiosyncratic.Footnote ²¹

The fact that Apple’s competitors can catch up with Apple’s product innovations following different paths suggests that the lower-order dynamic capabilities of Apple around product innovation are not path dependent but rather equifinal.Footnote ²² However, the ability of Apple to cannibalize itself is a higher-order dynamic capability that can hardly be regarded as a best industry practice easily adoptable by its competitors. This rare and idiosyncratic higher-order dynamic capability, which is one of the microfoundations of the seizing dynamic capabilities proposed in the Teecean framework (Teece, Reference Teece2007, p. 1334), is the key to implementing the kind of evasive tactics that are so characteristic of Apple (McCray, Gonzalez, & Darling, Reference McCray, Gonzalez and Darling2011). Such evasive tactics allow Apple to outcompete rivals such as Samsung while they are still trying to catch up with Apple’s latest product innovations in the mobile devices and services industry (Arthur, Reference Arthur2012).

Although the dynamic capabilities proposed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000) are concrete lower-order dynamic capabilities, they differ from the ordinary capabilities proposed by mainstream strategic management frameworks rooted in the resource-based view of the firm (Barney, Reference Barney1991; Nelson, Reference Nelson1991; Penrose, Reference Penrose1959; Wernerfelt, Reference Wernerfelt1984, Reference Wernerfelt1995) in that they do not collapse in high-velocity markets and can lead to a temporary competitive advantage (D’Aveni, Reference D’Aveni1994; D’Aveni, Dagnino., & Smith, Reference D’Aveni, Dagnino and Smith2010). The dynamic capabilities described by Teece (Reference Teece2007), on other hand, correspond to higher-order capabilities that need to be instantiated based on dynamic metacapabilities. Lacking a dynamic metacapabilities framework for its operationalization, the Teecean dynamic capabilities framework has been criticized by some scholars as being rather vague and tautological and as lacking empirical grounding (Eisenhardt & Martin, Reference Eisenhardt and Martin2000, p. 1106). Such critique overlooks the fact that the Teecean framework proposes higher-order capabilities that can be operationalized in a myriad of different ways. There is indeed a hitherto unexplored degree of underspecification and underrepresentation in the Teecean dynamic capabilities framework that is ultimately the result of the lack of a dynamic metacapabilities framework for its operationalization. Our goal is to set out such a first dynamic metacapabilities framework capable of providing the level of flexibility required to drive the strategy of entrepreneurial firms in environments subject to radical uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020).

5.3 The Role of Ordinary Capabilities

The case of Samsung highlights the role of ordinary capabilities. The strategy of Samsung is indeed based on strong ordinary capabilities in its supply chain, which allow the firm to compete with Apple by executing encirclement tactics. Samsung’s ordinary capabilities in its supply chain, which constitute a source of competitive advantage based on resources that are rare and difficult to imitate, allow Samsung to compete with Apple by bringing to market a large number of product lines very efficiently (Cain, Reference Cain2020). Deploying these strong ordinary capabilities, Samsung competes with Apple by providing a larger variety of product lines targeting all market segments at more competitive prices, including the very lucrative high-end segment in which Apple reigns supreme. Apple, on the other hand, deploys dynamic capabilities to outcompete Samsung in the high-end segment, forcing Samsung to continually imitate the substantial product innovations pioneered by Apple. However, the decisive factor of Apple’s competitive strategy is not its ability to introduce substantial product innovations by deploying the lower-order dynamic capabilities proposed by Eisenhardt and Martin (Reference Eisenhardt and Martin2000, p. 1111) but rather its ability to continually cannibalize its current source of competitive advantage before its competitors are able to catch up.

5.4 Quantum Management and Dynamic Metacapabilities

The pursuit of second-order effectiveness by firms requires that they deploy dynamic metacapabilities to explore and discover different strategic options in parallel under the type of radical strategic uncertainty and organizational misalignment that pervades business model transformations (Kay & King, Reference Kay and King2020). Our approach to the implementation of the dynamic metacapabilities framework set out in this contribution is a novel management paradigm that we have termed quantum management. Based on a real options approach that mimic quantum-mechanical effects, quantum management allows firms in environments ridden with deep strategic uncertainty and organizational misalignment to drive their strategy along the lifecycle of dynamic metacapabilities.

As the lifecycle of dynamic metacapabilities unfolds, firms explore and validate a myriad of strategic options through new information that becomes available in their environment. This reduces the strategic uncertainty and organizational misalignment and represents a boundary condition that forces dynamic metacapabilities to abandon the pure “informational realm” by decohering to dynamic capabilities. The transition of dynamic metacapabilities to dynamic capabilities is equivalent to making a measurement that causes the “sea of potentialities comprising all potential strategic options” to decohere to a number of instantiated strategies that can begin to be implemented through a skeleton business model. While the implementation of such skeleton business models requires dynamic capabilities, their further operationalization will ultimately require that dynamic capabilities decohere to ordinary capabilities.

The real options approach to quantum management leads to dynamic metacapabilities allowing firms to entertain a great number of strategies in parallel. As long as these dynamic metacapabilities have not yet decohered, these strategies can be maintained in a coherent state, thus allowing firms to deal with radical strategic uncertainty and organizational misalignment in high-velocity markets. As they begin to decohere throughout the dynamic metacapabilities lifecycle, the number of strategies is reduced and firms begin to replace second-order with first-order effectiveness by instantiating and executing strategies in environments where the strategic uncertainty and organizational misalignment have decreased from very high to medium levels.

5.5 Dynamic Metacapabilities and Quantum Management at Work

There are notable cases of incumbents that have embraced the type of dynamic metacapabilities, as introduced thus far in this contribution. Such cases show how quantum management can be applied to deploy dynamic metacapabilities. One such case corresponds to the new grand strategy of Google. An analysis of Google’s grand strategy under Alphabet from the perspective of the dynamic metacapabilities framework and its operationalization through quantum management reveals that Alphabet, as a conglomerate of interdependent firms, is indeed executing its new grand strategy by exercising many of the real options described in connection with quantum management.

According to CB Insights, Google’s new grand strategy is based on the strategic axes shown in Table 1.Footnote ²³

The reasons why Google set the stage for the execution of its new grand strategy by creating Alphabet are shown in Table 2.

5.6 Dynamic Capabilities and Dynamic Metacapabilities

The grand new strategy of Google under Alphabet is an excellent case of how dynamic capabilities and dynamic metacapabilities can peacefully coexist. Some of the strategic options listed in Table 2 are associated with businesses with a fully functional business model that had implemented a strategy based on the deployment of dynamic and ordinary capabilities and was already delivering Schumpeterian rents. These include businesses in which Google has positioned itself as the incumbent, such as its core computational advertising business, and those in which Google has been forced to catch up as late entrant, such as the global cloud services business. But Google’s entrepreneurial agendas also include the “other bets,” which are radical innovation agendas aimed at reshaping large mature industries, such as transportation and healthcare, by rendering the current business models of incumbents in these industries obsolete.

Most industries are still dominated by incumbents operating under the logic of conventional “pipeline” business models in which the value creation process takes place in linear value chains (van Alstyne, Parker, & Choudary, Reference van Alstyne, Parker and Choudary2016). Despite ongoing efforts to transform their brick-and-mortar business models into click-and-mortar business models through digital transformation, incumbents in these industries are having a hard time trying to transform their pipeline business models into digital platform business models. As pointed out by Parker, van Alstyne, and Choudary (Reference Parker, van Alstyne and Choudary2016), the challenge for incumbents lies in that adding digital platform functionality to a conventional business model is much harder than adding product and service functionality to a platform business model. As a result, Google’s “other bets” threaten to disrupt incumbents in mature industries by invading their space with digital platform business models that outcompete their pipeline business models and are poised to become the business models of the Internet of Things as the transportation infrastructure of the Industry 4.0 and beyond.

But the business strategy of Google’s “other bets” is still mostly characterized by a lack of a functional business model able to capture Schumpeterian rents. From an information theory standpoint (Shannon, Reference Shannon1948), this lack of functionality lies in the lack of actionable information in the face of radical strategic uncertainty (Kay & King, Reference Kay and King2020), which causes the collapse of dynamic capabilities and forces the deployment of dynamic metacapabilities aimed at gaining information in the pursuit of second-order effectiveness and evolutionary fitness. Other entrepreneurial agendas that Google is pursuing through the deployment of dynamic metacapabilities include businesses that are yet to emerge as viable and where Google does not yet have a skeleton business model, such as Google’s moonshot projects.

The new grand strategy of Google is not only a quintessential case of dynamic metacapabilities at work but also of peaceful coexistence of ordinary and dynamic capabilities, on the one hand, and dynamic metacapabilities, on the other. Although this is by no means an isolated case, the cases of incumbents that led an industry and failed to transform their business models in the face of market, industry, and technological disruption are definitely more numerous (Christensen, Reference Christensen1997). These cases reveal the need to understand what dynamic metacapabilities are and when and how to deploy them. We hope the dynamic metacapabilities framework we have introduced in this contribution will be a first step toward filling this important gap.

6.1 Integrating Dynamic Capabilities into Evolutionary Economics

As advocated in a recent contribution by Teece (Reference Teece, Dopfer, Nelson, Potts and Pyka2023), the disconnect between the notion of dynamic capabilities, as understood in strategic management, and the notion of routines, as understood in evolutionary economics, is in part due to the absence of the role of what Teece (Reference Teece, Dopfer, Nelson, Potts and Pyka2023, p. 206) refers to as “entrepreneurial management” in enabling “evolution with design, purpose, and strategy.” This conceptualization of firm evolution challenges its generally accepted view in evolutionary economics, which construes firm evolution as a process that unfolds in a bottom-up fashion without recourse to any top-down design, purpose, or strategy. Yet the current disconnect around the very concept of dynamic capabilities is not only due to the different views on firm evolution held by strategic management scholars and evolutionary economists. We argue that the main reason for this disconnect is more profound and lies in the lack of an operationalization of dynamic capabilities in strategic management.

The objective of the dynamic capabilities framework is to allow firms to adopt and “implement” entrepreneurial management in rapidly changing environments subject to radical uncertainty and organizational misalignment (Teece, Reference Teece2016). Although a set of microfoundations of dynamic capabilities have been proposed Teece (Reference Teece2007), they not only lack a formal operationalization but have also remained underspecified. Despite a comprehensive body of work since the 1990s, an operationalization of “entrepreneurial management,” that is, an operationalization of dynamic capabilities, has proven to be a tough nut to crack in the field of strategic management. Given their endorsement of the top-down view of firm evolution, such lack of operationalization is more surprising among strategic management scholars, especially those advocating the Teecean view of dynamic capabilities and the role of entrepreneurial managers in firm evolution, than among evolutionary economists. Lacking such operationalization, entrepreneurial management has not only remained a nebulous and elusive concept among strategic management scholars and evolutionary economists. More importantly from a managerial standpoint, it has also remained difficult to implement and execute by (entrepreneurial) managers.

One of our main contributions at the intersection of strategic management and evolutionary economics thus lies in the operationalization of this form of entrepreneurial management. Based on three classes of real options that mimic quantum-mechanical effects, we call this new management paradigm “quantum management.” The three classes of real options introduced thus far are an important step toward the operationalization of quantum management based on an informational view of the firm. However, the goal of quantum management is not only theoretical by bringing firm evolution “with design, purpose, and strategy” into evolutionary economics, as recently advocated by Teece (Reference Teece, Dopfer, Nelson, Potts and Pyka2023). Quantum management has also important practical implications.

Operationalized through control, directional, and alignment options, quantum management sets out a decision-theoretic framework able to guide not only incumbents but also emerging firms in their pursuit of radical business model transformations along what we have referred to as the lifecycle of dynamic metacapabilities in environments dominated by deep strategic uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020). While this lifecycle approach allows us to model the dynamics of business model transformation over time, the real options approach to quantum management provides the flexibility required to deal with deep strategic uncertainty and overcome the problems of organizational misalignment that pervade business model transformations.

6.2 Quantum Management: From Dynamic Metacapabilities to Dynamic and Ordinary Capabilities

As opposed to the dynamic capabilities described by Eisenhardt and Martin (Reference Eisenhardt and Martin2000) with its focus on incremental and substantial business model innovation through the adoption of best industry practices, dynamic metacapabilities aim to implement the high degrees of flexibility needed to manage processes of business model transformation under radical strategic uncertainty and organizational misalignment (Kay & King, Reference Kay and King2020). Dynamic metacapabilities also differ from the dynamic capabilities described by Teece (Reference Teece2007) in that they correspond to a framework of metacapabilities that can be deployed to gain the information needed to implement some of the microfoundations of the Teecean dynamic capabilities framework (Teece, Reference Teece2007) in environments ridden with high levels of strategic uncertainty and organizational misalignment.

The lifecycle approach to dynamic metacapabilities we follow proposes a continuum from dynamic metacapabilities to dynamic capabilities and ultimately to ordinary capabilities as well as the existence of boundary conditions for the collapse of ordinary to dynamic capabilities, and the collapse of dynamic capabilities to dynamic metacapabilities. It also proposes boundary conditions for the inverse process of decoherence of dynamic metacapabilities to dynamic capabilities, and the decoherence of dynamic capabilities to ordinary capabilities. Inspired by quantum mechanics, decoherence occurs as processes of exploration and discovery lead to new informationFootnote ³³ that reduces the strategic uncertainty and organizational misalignment in the external and internal environment of the firm. This focus on information as the primordial asset that will lead to resources and capabilities in subsequent phases of the dynamic metacapabilities lifecycle leads to an informational view of the firm.

According to this new informational view, resources and capabilities are not created ex nihilo but are rather the result of processes of decoherence that take place as business model transformations unfold throughout the different phases of the dynamic metacapabilities lifecycle. Given the focus of dynamic metacapabilities on evolutionary fitness, we have operationalized the dynamic metacapabilities framework through a novel management paradigm that we call quantum management. By integrating the lifecycle approach to dynamic metacapabilities with a real options approach that mimics quantum-mechanical effects, quantum management allows us to unleash the power of real options in terms of increasing not only the variety of strategic options available to the firm in the face of radical strategic uncertainty and organizational misalignment but also the flexibility to entertain them as “potential strategic options” so long as the “coherence” among them is preservedFootnote ³⁴ and dynamic metacapabilities have not yet “decohered” to actual bundles of dynamic capabilities.Footnote ³⁵

While the metacapabilities lifecycle approach allows managers to deploy decision-theoretic frameworks able to guide them in the complex decisions of collapse and decoherence that pervade the type of entrepreneurial management proposed by Teece, (Reference Teece2016), the real options approach to quantum management we follow allows (quantum) managers to implement the high levels of flexibility needed to deal with the kind of radical strategic uncertainty and organizational misalignment that is inherent to business model transformations in environments subject to frequent technological, market, and industry disruption.

6.3 Toward an Informational Theory of the Firm

The dynamic metacapabilities framework and its operationalization through quantum management is quite a departure from mainstream strategic management frameworks, including dynamic capabilities frameworks based on the resource-based view of the firm (Barney, Reference Barney1991; Penrose, Reference Penrose1995).

Ordinary capabilities are construed as “VRIN capabilities” that provide sources of a sustainable competitive advantage (Wernerfelt, Reference Wernerfelt1984, p. 1344). Eisenhardt & Martin (Reference Eisenhardt and Martin2000, p. 1111) construe dynamic capabilities as “best industry practices that are imitable, fungible and equifinal” and can thus provide sources of a competitive advantage that is not sustainable but rather temporary. Teece (Reference Teece2007, p. 1319) construes dynamic capabilities as those “necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing.” These three frameworks are all rooted in the resource-based view as one of the most mainstream theories of the firm (Barney, Reference Barney1991; Penrose, Reference Penrose1995 Wernerfelt, Reference Wernerfelt1984) and inherit one of the main implicit assumptions of this view, namely, that resources and capabilities are created ex nihilo and are therefore elemental.

Based on an informational view of the firm, the dynamic metacapabilities framework is quite a departure from all these strategic management frameworks rooted in the resource-based view of the firm in that it does not construe ordinary and dynamic capabilities as emerging ex nihilo (Barney, Reference Barney1991; Penrose, Reference Penrose1995). Operationalized through quantum management, dynamic metacapabilities operate in an informational space, that is, they subsume all capabilities only as potentialities that have yet to materialize. To give rise to dynamic and ultimately to ordinary capabilities, dynamic metacapabilities will have to “decohere” from the pure informational realm of potentialities to knowledge and ultimately to actual bundles of capabilities as the process of “decoherence”Footnote ³⁶ unfolds throughout the lifecycle of dynamic metacapabilities.

As mentioned, the dynamic metacapabilities framework we are proposing construes neither ordinary nor dynamic capabilities as emerging ex nihilo. Furthermore, as knowledge derives from information and cannot be considered elemental (Devlin, Reference Devlin1999), the dynamic metacapabilities framework construes neither ordinary nor dynamic capabilities as emerging from knowledge recombinations either.Footnote ³⁷ According to the informational view of the firm we are proposing, while knowledge emerges if new valuable uses can be discovered for new information, new information emerges by harvesting data via exploration and discovery (Devlin, Reference Devlin1999), which in quantum-mechanical terms corresponds to making a measurement and keeping a record of it. Thus, in the final analysis, ordinary and dynamic capabilities neither emerge ex nihilo nor emerge from knowledge recombinations. They emerge as a result of deploying bundles of dynamic metacapabilities that operate at a higher-order, purely informational level and are implemented through quantum management following a real options approach.

The dynamic metacapabilities framework we have set out in this contribution assumes that knowledge, resources, and ultimately capabilities, whether ordinary or dynamic, are the result of bundles of information decohering to actual bundles of resources and capabilities as the strategic uncertainty and organizational misalignment in the external and internal environment of the firm decrease from very high levels to moderate and low levels (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Kay & King, Reference Kay and King2020). Operationalized through quantum management, the dynamic metacapabilities framework thus adopts a much more fundamental informational view, as opposed to a knowledge- or resource-based view, of the firm. We call it the “informational view of the firm.”

We argue that the informational view of the firm adopted by the dynamic metacapabilities framework and operationalized through quantum management is of the essence to implement the kind of entrepreneurial management advocated by the Teecean framework of dynamic capabilities (Teece, Reference Teece2007). Given its operationalization through three classes of real options that mimic quantum-mechanical effects, we have chosen the term “quantum management” for our implementation of this type of entrepreneurial management (Teece, Reference Teece2016).

The parallel between quantum mechanics and dynamic metacapabilities, on the one hand, and classical mechanics and the capabilities advocated by the resourced based view of the firm, on the other, is in part motivated by the need to drop the assumption that ordinary capabilities are generated ex nihilo. As mentioned previously, the informational view of the firm postulates that capabilities are not generated ex nihilo but are rather the result of bundles of information “decohering” to actual capabilities, whether dynamic or ordinary, as new information becomes available to the firm. Such gain of information reduces the radical uncertainty and prompts the firm to instantiate new dynamic capabilities in high-velocity markets and rapidly changing environments, which are then perfected into ordinary capabilities that can then be deployed in the pursuit of technical fitness whenever the radical uncertainty and organizational misalignment have been substantially reduced.

From a theoretical standpoint, we think that drawing this parallel between quantum mechanics and dynamic metacapabilities is not only valid but also very helpful because it allows us to understand how the informational realm in which dynamic metacapabilities operate differs from the realm of actual capabilities, whether dynamic or ordinary, in which a firm operates whenever the radical uncertainly and organizational misalignment in its environment have been reduced from very high levels to moderate and low levels. Just as quantum mechanics describes subatomic particles not in terms of actual objects but rather in terms of information about not-yet-materialized potential objects, the dynamic metacapabilities framework describes capabilities not in terms of actual capabilities but rather in terms of bundles of information about not-yet-materialized potential capabilities. These bundles of information have only the potential to become actual capabilities as the process of decoherence unfolds throughout the lifecycle of dynamic metacapabilities.

Borrowed from quantum mechanics, the gains of information associated with decoherence reduce the strategic uncertainty and organizational misalignment in the environment of the firm (Kay & King, Reference Kay and King2020) and are of the essence for the instantiation of actual dynamic and ordinary capabilities.

6.4 Dynamic Metacapabilities as a Normative Framework

Dynamic metacapabilities constitute a normative framework in that it proposes a number of metaheuristics for firms to “evolve with purpose and strategy” (Teece, Reference Teece, Dopfer, Nelson, Potts and Pyka2023, p. 215) in environments ridden with radical uncertainty and organizational misalignment. But it is also a framework grounded on cases of success and failure in driving and executing strategy in environments subject to technological, industrial, and market disruption. While cases of incumbent firms that failed to transform their business models in the face of technological, industrial, and market disruption abound (Christensen, Reference Christensen1997),Footnote ³⁸ cases of firms that have successfully implemented dynamic metacapabilities are not uncommon. The new grand strategy of Google under Alphabet is a quintessential example of dynamic metacapabilities at work. Other cases of incumbent firms that have already applied dynamic metacapabilities successfully include the rise of the of online ad syndication industry led by Google in 2002, the case of Twitter in its quest for a revenue model after its successful IPO in 2013, and the catch-up strategy of Google with Apple in 2010 (Paredes-Frigolett & Pyka, Reference Paredes-Frigolett and Pyka2023).

The Industry 4.0, as the first data-driven industrial revolution, is already exacerbating the level of technological, industrial, and market disruption in several industry sectors. Incumbents in almost any industry sector are currently struggling with the problem of transforming their current click-and-mortar business models to data-driven platforms business models. The current adoption of Artificial Intelligence and future adoption of Artificial General Intelligence as the general-purpose technology platform of the Industry 4.0 and beyond will exacerbate the level of disruption going forward.

Firms that still operate today under the logic of conventional pipeline business models rooted in the resource-based view of the firm (Barney, Reference Barney1991; Penrose, Reference Penrose1995; Wernerfelt, Reference Wernerfelt1984) will need to deploy dynamic metacapabilities to achieve very high levels of flexibility in the face of very high levels of strategic uncertainty and organizational misalignment in their internal and external environment with the ultimate goal of radically transforming their business models. These ongoing developments will contribute to consolidating the informational view of the firm we have set out in this contribution.

6.5 Dynamic Metacapabilities, the Informational View of the Firm, and How Firms Come into Existence

Both frameworks, the informational view of the firm we are advocating, on the one hand, and the resourced-based view of the firm, as a mainstream theory of the firm in strategic management and evolutionary economics, on the other, aim to explain why firms exist and how they come into existence and grow. The answer to the all-important question of how firms come into existence, however, differs in these two views of the firm in a very fundamental way.

According to the resource-based view of the firm, the answer to this question lies in the concept of core resources and capabilities that are valuable, rare, inimitable, and non-substitutable and are thus a source of sustainable competitive advantage. The informational view of the firm we are proposing differs from this resource-based view of the firm in that the genesis of the firm does not begin with the instantiation of core resources and capabilities, as defined previously, nor with the instantiation of core resources and capabilities aimed at exploring investments to deal with future threats or seize future opportunities.Footnote ³⁹ The informational view of the firm considers that the answer to the question of how firms come into existence lies in information as a precursor of knowledge, resources, capabilities, and competencies.

Information differs from knowledge, resources, capabilities, and also competencies in a very fundamental way. Resources presuppose the existence of assets and knowledge about valuable uses for them. While capabilities presuppose the existence of resources and knowledge about how to transform them in a value-enhancing manner within a functional area of the firm, competencies presuppose the existence of capabilities and the knowledge about how to interconnect them in a value-enhancing manner across functional areas of the firm. It is only by perfecting the underlying process of transformation of resources within functional areas, and the interconnection of capabilities across functional areas, through knowledge that firms can generate unique or superior core capabilities and competencies as a source of competitive advantage. This begs the important question of whether knowledge is the fundamental unit of analysis, as knowledge-based theories of the firm may suggest (Grant, Reference Grant1996; Kogut, Reference Kogut1996).

From an information theory standpoint, knowledge is defined as information plus a valuable use assigned to it (Devlin, Reference Devlin1999). As knowledge presupposes the existence of information, information is a precursor of knowledge and is therefore more fundamental. Information gives rise to knowledge only if the firm is able to find and assign valuable uses to that information for a clearly distinguishable group of potential clients and/or users (Devlin, Reference Devlin1999). Therefore, while knowledge is the precursor of resources, capabilities, and competencies, information is the precursor of knowledge and is the primordial asset of firms according to the informational view of the firm. The information realm in which dynamic metacapabilities operate deals with this fundamental problem of finding valuables uses for information.

The informational view of the firm we have introduced is aligned with the view of “firms as realizations of entrepreneurial visions” postulated by (Witt, Reference Witt2007). The key question is where such “realization” begins. Witt construes this realization as “organizing resources into envisioned businesses” and presupposes the existence of an entrepreneur such that “resource owners must be coordinated on the entrepreneur’s conception of the business” (Witt, Reference Witt2007, p. 1125). While we concur with this author in that the existence of the entrepreneur, be it the entrepreneur of a start-up or the Teecean entrepreneurial manager of an incumbent firm, or the quantum manager of a start-up or an incumbent firm, is of the essence for firms to come into existence, the informational view of the firm presented in this contribution does not presuppose the existence of knowledge, resources, capabilities, or competencies.

The informational view of the firm postulates that firms exist, albeit only as “potentialities,” as bundles of information. The challenge for a “potential” firm to come into existence lies in finding valuable uses for bundles of information as the primordial asset of the firm. Finding such valuable uses for bundles of information is an ongoing process that requires the deployment of dynamic metacapabilities and will eventually lead a “primordial firm,” if successful, to the generation of core resources and capabilities not only as valuable, rare, inimitable, and non-substitutable resources and capabilities that are a source of competitive advantage but also as “capabilities embodying exploratory investments to hedge the future” (Kogut & Kulatikala, Reference Kogut and Kulatikala2001, p. 747).

The question of how firms come into existence under the informational view of the firm is relevant not only for start-ups and emerging firms but also for incumbents. Our focus thus far on dynamic metacapabilities and incumbent firms is not due to the inability of start-up firms to deploy dynamic metacapabilities. It is rather due to the difficulties of incumbents to adopt the kind of entrepreneurial management that is characteristic of start-up firms. This type of entrepreneurial management is badly needed by incumbent firms to radically transform their business models and evolve in environments ridden with strategic uncertainty and organizational misalignment. But it is also difficult to implement by them (Christensen, Reference Christensen1997, Foster, Reference Foster1986a).

Many of the real options used to operationalize dynamic metacapabilities, especially the alignment options, aim at allowing incumbent firms to adopt the kind of entrepreneurial management that is characteristic of start-ups and emerging firms (Teece, Reference Teece2016). There is indeed abundant empirical evidence showing how emerging firms enjoy the so-called attacker’s advantage vis-à-vis incumbent firms (Foster, Reference Foster1986a). This advantage is associated with the dilemma of creative destruction that incumbents face when the need to destroy their still successful business models under deep strategic uncertainty arises. Start-ups and emerging firms are more agile, enjoy more flexibility to explore different innovation pathways and business models, and are therefore more prone to adopting the dynamic metacapabilities needed to transform a skeleton business model into a viable business model.

6.6 The Debate on Dynamic Capabilities

Underlying the dynamic metacapabilities framework there is the so-called dynamic metacapabilities lifecycle. This lifecycle allows us to reconcile the two competing views of dynamic capabilities (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Teece, Reference Teece2007). Although their boundaries are fuzzy, the distinction between ordinary and dynamic capabilities, on the one hand, and dynamic capabilities and dynamic metacapabilities, on the other, is facilitated following such a lifecycle approach.

Despite some significant differences, these two competing dynamic capabilities frameworks are both rooted in the resource-based view of the firm. They both construe dynamic capabilities as distinct from ordinary capabilities, which the resource-based view of the firm defines as those that are needed to achieve technical fitness in external environments that change at low or moderate velocity (Barney, Reference Barney1991; Penrose, Reference Penrose1995; Wernerfelt, Reference Wernerfelt1984). But there are important differences between them. Although there is an implicit lifecycle in the Teecean dynamic capabilities framework, which would comprise three phases, namely, sensing, seizing, and transforming, both frameworks do not explicitly propose a lifecycle of dynamic capabilities (Eisenhardt & Martin, Reference Eisenhardt and Martin2000; Teece, Reference Teece2007).

While the Teecean framework leaves dynamic capabilities underspecified, which according to Eisenhardt & Martin (Reference Eisenhardt and Martin2000) renders the Teecean dynamic capabilities rather tautological and vague, Eisenhardt and Martin (Reference Eisenhardt and Martin2000) describe what dynamic capabilities are by extension and propose that “rather than tautological, vague, and lacking empirical grounding, dynamic capabilities are concrete capabilities that have been studied in several management areas, such as product innovation management and strategic alliances” (Eisenhardt & Martin, Reference Eisenhardt and Martin2000, p. 1106).

Instead of proposing an actual framework, Eisenhardt and Martin (Reference Eisenhardt and Martin2000) describe dynamic capabilities as fungible, substitutable, and ultimately equifinal. They also characterize them as best industry practices that are rapidly adopted by competitors. Dynamic capabilities, as described by Eisenhardt and Martin (Reference Eisenhardt and Martin2000), are thus unable to provide a source of sustainable competitive advantage and can only deliver a temporary competitive advantage in high-velocity markets, which is a view shared by other strategic management scholars (D’Aveni, Reference D’Aveni1994; D’Aveni, Dagnino, & Smith, Reference D’Aveni, Dagnino and Smith2010).

Rather than two competing dynamic capabilities frameworks, we argue that these are two complementary frameworks of capabilities. Key to understanding the difference between them is the realization that ordinary and dynamic capabilities, and dynamic metacapabilities, operate in phases of the lifecycle of dynamic metacapabilities dominated by different levels of strategic uncertainty and organizational misalignment.

6.7 Future Work

Future work will focus on extending the dynamic metacapabilities framework by adding new real options under the three classes of real options proposed, on developing valuation models for the real options in these three classes, and on formalizing the boundary conditions for decoherence and collapse based on multicriteria decision analysis methods and tools to guide complex quantum management decisions along the lifecycle of dynamic metacapabilities.

The development of decision-theoretic models and methods in the aforementioned areas represents a major challenge and will be based not on utility theory (von Neumann & Morgenstern, Reference von Neumann and Morgenstern1944) and subjective utility theory (Fishburn, Reference Fishburn1981, Reference Fishburn1986) but rather on more modern theories in behavioral economics that draw upon the psychology of human decision-making under risk, such as prospect theory (Kahneman & Tversky, Reference Kahneman and Tversky1979; Tversky & Kahneman, Reference Tversky and Kahneman1992) and regret theory (Loomes & Sugden, Reference Loomes and Sugden1982). Future work in these areas is highly relevant because, as noted by Teece (Reference Teece2007, p. 1329), “strategic management decisions are often impaired by the lack of visibility into the criteria under which to evaluate cospecialized and complementary intangible assets.”

The dynamic metacapabilities framework, and its operationalization through quantum management, can also have a high impact on the future transformations toward sustainable economic systems in industries with conventional business models that have taken incumbents decades to develop, such as the automobile industry. The automobile industry is indeed a paradigmatic example of an industry where managers can apply quantum management to meet the challenge of throwing an old business model overboardFootnote ⁴⁰ to develop innovative and sustainable (mobility) solutions. Future work will consist in applying quantum management to solve the complex trade-offs faced by managers driving business model transformations toward sustainability in this and other industries.

We will also embark on a research agenda at the intersection of dynamic metacapabilities and digital platforms. Digital platforms have given rise to a new economic model referred to as “the global stakeholder capitalism model of digital platforms” (Paredes-Frigolett & Pyka, Reference Paredes-Frigolett and Pyka2022). The business models of digital platforms are currently disrupting the conventional “pipeline business models” of incumbents that still dominate large industries today (van Alstyne, Parker, & Choudary, Reference van Alstyne, Parker and Choudary2016).Footnote ⁴¹ As their data-driven business models are poised to become the business models of the Industry 4.0 and beyond (Paredes-Frigolett & Pyka, Reference Paredes-Frigolett and Pyka2023), digital platforms are already a testbed for the instantiation and deployment of dynamic metacapabilities. The research agenda we are proposing in this area is of the utmost relevance for understanding the role of dynamic metacapabilities in driving the strategy and implementing the business models of digital platforms as the business models of the Industry 4.0.

As gatekeepers of big data, the new fuel that is currently propelling the Industry 4.0 and is poised to propel the data-driven industrial revolutions that will follow, and with platform business models driven by the need to convert increasingly larger volumes of big data into information by assigning a meaning to data, and information into knowledge by finding valuable uses for new information, digital platforms are already living examples of the informational view of the firm. They are also in a privileged position not only to deploy dynamic metacapabilities and benefit from quantum management to enter industries still dominated today by incumbents with conventional “pipeline business models” rooted in the resourced-based view of the firm but also to disrupt these industries with platform business models rooted in the informational view of the firm, as introduced in this contribution to the Elements Series in Evolutionary Economics.