This study presents a review and re-appraisal of the epistemological and theoretical frameworks underlying an expansive body of literature that is of central importance to strategy, namely, the literature on resources, capabilities and competences (RCC). A thorough examination of epistemological and fundamental assumptions results in a structuring of the literature into three distinct schools of thought: (1) the rational-equilibrium school; (2) the behavioral-evolutionary school; and (3) the social constructionist school. The three schools are differentiated according to a set of dimensions spanning several levels of inquiry, including the epistemological, methodological and conceptual levels. In addition, the epistemological perspective employed results in an important re-interpretation of, arguably, the most important classic in the RCC field, namely the work of Edith Penrose (1959), showing that her Theory of the growth of the firm displayed a constructionist epistemology.
The study further proceeds to scrutinize and compare the dynamic capabilities (DC) and competence research programs and to show that they stem from two distinct schools of thought. Employing behavioral assumptions and an evolutionary economic theoretical base, the DC program is shown to focus on the dynamics of organizational capabilities, specifically as they relate to systematic adaptation by firms to environmental changes. On the other hand, the competence program employs a constructionist epistemology and springs from a theoretical base rooted in organizational theory, Schumpeterian and Penrosian economics blended with closed systems theory. As such, it uniquely tackles the entrepreneurial dimension whereby companies actively shape their environments and create future markets. The influence of the epistemological and theoretical foundations of the programs on the progress of their core theory is traced and the differences between dynamic capabilities and competence programs are elaborated with respect to several dimensions.
The study contributes by providing a map of the RCC field that is both deep and broad, which would help researchers work through rampant terminological confusions and situate their work as well as map the progress of the field. The study further sheds light on the similarities, differences and boundaries of the DC and competence programs, and provides a new dimension with which to view Penrose’s contribution. Finally, it contributes to the ongoing debate concerning the appropriate role of economic theory and methodology in strategy research.