What are dynamic capabilities?

• A. The Ability to Maintain the Same Resources Regardless of Changes
• B. The Firm's Ability to Sense, Seize, and Reconfigure Resources to Adapt to Changing Environments
• C. The Capacity to Freeze Investment for Long Periods
• D. The Skill of Performing Routine Tasks Efficiently

Answer: (B)

Dynamic capabilities describe how a firm changes its resource base in response to a shifting environment. They rely on sensing what the market will require, seizing those opportunities by aligning and deploying resources, and reconfiguring the organization—structures, processes, and capabilities—to fit new conditions. This trio captures why some firms stay competitive when things change rapidly. The other ideas describe more static or routine concerns: keeping resources unchanged despite change, delaying investments, or doing routine tasks efficiently. Those do not address the ongoing renewal and adaptation that dynamic capabilities embody. For instance, a company recognizing a new customer need, acquiring or developing the right technologies, and reorganizing teams to build and deploy new products shows dynamic capabilities in action.