ABSTRACT
Resource-and capability-based models of firm strategy gain in analytical power by incorporating some of the organizational trade-offs that firms face in choosing between alternative capability building strategies. Based on the well-documented trade-off between flexibility and commitment inherent in social systems, this paper argues that firms must choose between evolutionary and revolutionary ‘capability regimes’. Empirical evidence drawn from the race of European airlines to develop critical revenue management capabilities is cited to illustrate the theory and practical relevance of capability regimes.
