Capturing value from innovation "Teece has made lasting contributions to the study of innovation." Teece's 1986 paper "Profiting from Technological Innovation" was selected by the editors as one of the best papers published in
Research Policy from 1971 to 1991 and is the most cited paper ever published in the publication. In October 2006,
Research Policy published a special issue commemorating the twentieth anniversary of the original article. The paper was updated in 2018 to give attention to emerging issues in the digital economy. In this series of papers, Teece explained why innovative firms often fail to capture economic returns from their invention. He described how it is sometimes more important for a business to be able to win at marketing, distribution, manufacturing, and other complementary areas than to come up with a big idea in the first place. He identified the factors which determine whether the firm that wins from innovation is the firm that is first to market, a follower firm, or a firm that has related capabilities that the innovation requires to provide value to a customer. The key elements in what has been called the Teece Model are the imitability of the innovation (how easily competitors can copy it) and the ownership of
complementary assets. Sidney Winter has argued that Teece's paper contributes "en passant but fundamentally, to the clarification of basic questions."
Dynamic capabilities Teece is identified as being partially responsible for the
dynamic capabilities perspective in strategic management. Dynamic capabilities have been defined as "the ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments". Further, "The concept of dynamic capabilities, especially in terms of organizational knowledge processes, has become the predominant paradigm for the explanation of competitive advantages. However, major unsolved—or at least insufficiently solved—problems are first their measurement and second their management…" According to
ScienceWatch, his paper (with Gary Pisano and Amy Shuen) "Dynamic Capabilities and Strategic Management" was the most cited paper in economics and business globally for the period from 1995 to 2005. Teece's concept of dynamic capabilities is a theory about the foundations of competitive advantage: "the capacity (1) to sense and shape opportunities and threats, (2) to seize opportunities, and (3) to maintain competitiveness through enhancing, combining, protecting, and, when necessary, reconfiguring the business enterprise's intangible and tangible assets." His concept stands parallel to the dynamic capability perspective of Eisenhardt & Martin (2000). It also builds on the idea of combinatorial capabilities (Kogut & Zander 1992).
Theory of the multiproduct firm Roberts and Saloner (2013) credit Teece with "the first attempt to build a systematic
theory of the firm scope based on profit-maximizing behavior" (827) in his 1982 article "Towards an Economic Theory of the Multiproduct Firm," in which Teece describes the existence of excess resources in firms, stating that firms could better use those resources by diversifying into new lines of business. He also presents transaction cost arguments regarding whether resources can be shared contractually, and explains that protecting those resources is a potential basis for diversification. Teece additionally builds on Williamson (1975) in arguing that "internal capital allocation may be better than what the market can achieve" (828). ==Dynamic Competition==