Bridging the Strategy Gap: Firm Strategy and Coevolution of Capability Space and Opportunity Space

Abstract

In the vein of evolutionary capabilities theorizing and modeling (Dosi, Nelson & Winter, 2000), this paper tries to contribute some basic rudiments of a process framework of strategic capabilities and opportunities. First, by introducing the concepts of capability space and opportunity space, we take into account both the 'supply' and the 'demand' side of capability research. Second, by considering the coevolutionary process that involves both the capability space and the opportunity space, we offer a first integration of the capabilities' two sides. Third, by arguing that this coevolutionary process uncovers the 'strategy gap' (i.e., the extant adaptation chasm between strategic capabilities and opportunities), we pave the way to the detection of the black box of the strategic capability process. Fourth, we advance the idea that firm strategy is directed to bridging the gap between the opportunity space and the capability space. In order to bridge the gulf between potential and realized strategy, this strategy process consists of three basic interacting components or metacapabilities (i.e., foresight, judgment, mindfulness), and one haphazardous and uncontrolled factor (i.e., luck). Finally, we gather and discuss some implications for evolutionary economics and strategic management and suggest a few hints for future research and extensions.

Keywords: Capability Space, Opportunity Space, Strategy Gap, Coevolution, Strategic Theory of the Firm

JEL Classification: D21, D83, L20, M21