ABSTRACT
This chapter provides an economic explanation of the renewal challenge and endeavors to tie the theory and practice of strategic renewal into the dynamic capabilities framework. It begins by briefly explaining core theoretical issues in organizational change. The chapter describes strategic renewal and dynamic capabilities and reviews of the dynamic capabilities framework. It analyzes how the use of the dynamic capabilities framework can enrich the study of strategic renewal by placing attention on important aspects of renewal that are too often overlooked: the sensing and seizing required to envision and plan renewal, and the cost of renewal. The chapter focuses on closing capability gaps and provides the dynamic capabilities framework as a theoretical underpinning for further development of the strategic renewal model. It identifies the essence of the problem and summarizes some of what the fields of economics and organizational behavior have said about organizational change.
