The dynamic capability view runs the risk of getting caught in an epistemological trap. Definitions of dynamic capabilities according to whatever kind of outcome-level (group 1) do not allow for rival explanations (Yin, 2009) of competitive advantage, although competitive advantage is an equifinal construct that might have multifaceted causes. Even more implicit (group 1b) definitions in this respect might face the same problem to a certain extent, since even ordinary capabilities already inextricably relate to reliable success (Schreyögg & Kliesch-Eberl, 2007) or as Dosi, Nelson, and Winter (2000, p. 2) put it similarly:

“To be capable of some thing is to have a generally reliable capacity to bring that thing about as a result of intended action. Capabilities fill the gap between intention and outcome, and they fill it in such a way that the outcome bears a definite resemblance to what was intended.”

The inevitably imperfect understanding that organizations possess of their environment implies that organizational action patterns, such as routines, are selective and simplifying in their very nature. The same applies to organizational capabilities as they consist (although not exclusively) of routines or even are high level routines themselves (Dosi et al., 2000; Winter, 2003). Selectivity is the reason why social systems exist in the first place and why they are able to act within environments they do not fully understand. An organization cannot escape the inherent selectivity of its action patterns because of their self-referential nature (Luhmann, 1995). Even a capability monitoring process by second order observers (e.g. Schreyögg & Kliesch-Eberl, 2007) cannot facilitate total reflexivity because the processing of the second-order observers feedback is also subject to selectivity. Similarly, such a ‘view from nowhere’ as the notion of an external and neutral observer suggests, seems to be rather unrealistic since observing involves human actors with certain intentions and attitudes that are also to some extent part of the focal system (Schirmer & Tasto, 2009).

In sum, a reduction, but not an elimination of the inherent selectivity of organizational action patterns is feasible. This creates a risk of failure if environments change unexpectedly and blind spots become suddenly relevant. The same argument holds for uncertainty emanating from environmental complexity which ends up in simplified organizational action patterns and thus involves the same kind of risk. Taken together, selectivity and simplification are inevitable and a necessary condition for organizational action but, likewise, they potentially weaken the organization's ability to sense opportunities and threats (Teece, 2007) by impeding a sufficient degree of reflexivity.

Another important reason why organizational capabilities can only partly be flexible directly aims at these matters of sense and identity. Accordingly, organizational capabilities, as successful replication patterns, always involve the dysfunctional flipside of rigidity: In a case of environmental change they may turn “from a strategic asset into a burden” (Schreyögg & Kliesch-Eberl, 2007, p. 916). As Santos and Eisenhardt (2005) point out, besides power and efficiency considerations, competence deliberations and corresponding resource allocation decisions, an organization's boundaries are significantly shaped by its identity. Particularly relevant in complex and uncertain environments, the identity represents a common ground of values and norms resulting from collective sense-making processes (Daft & Weick, 1984). Since identity involves emotional and unconscious components it is hard to change. Instead, identity co-evolves with, or even dominates, competence-based boundary demarcating practices (Santos & Eisenhardt, 2005). This goes along with the idea of a self-referential and sense-processing system that strives to maintain its self-constituting boundaries – boundaries that are meaningful to the system. Therefore they might not change offhand, instead organizational core capabilities likewise represent potential core rigidities (Leonard-Barton, 1992). With regard to this paradox, Schreyögg and Kliesch-Eberl (2007) refer to three well-known major reasons why core capabilities might hamper organizational adaptation: (1) structural inertia (Hannan & Freeman, 1984) such as those inherent to existing organizational resources and capabilities (e.g. Gilbert, 2005), (2) possible path-dependencies and strategic lock-ins (e.g. Sydow, Schreyögg, & Koch, 2009), as well as (3) past resource commitments and their underlying social-psychological processes (e.g. Staw, 1976).

Basic insights from modern systems theory (Luhmann, 1995) contradict contemporary fluidity concepts of organizations as argued by Schreyögg and Sydow (2010). This also applies to the concept of dynamic capabilities: If one allows for a limited organizational understanding of a seemingly endless environment, one inevitably allows for selectivity, simplification, and uncertainty in organizational action which leads to the possibility of failure. If one allows for sense and identity one inevitably allows for rigidity inherent to organizational action patterns. Thus, organizational capabilities are only partly flexible. An overarching organizational capability that enables continuous adaptation to whatever kinds of environmental changes, like an everlasting fountain of youth, is therefore impossible to exist from a systems theoretic perspective.

As mentioned above, the ‘dynamic’ prefix of the dynamic capabilities concept can only imply an implicit or explicit tautological notion (group 1) since alternative definitions (groups 2 and 3) miss the very intent of the concept. As the former do not allow for other explanations of competitive advantage they are hardly empirically supportable. For example, it could be possible that the continuous adaption to environmental changes in the given period of investigation did not require the illumination of competitive blind spots. Therefore, they had no effect. Adaptations that do not touch existing blind spots bring luck and coincidence into play. They do not indicate a dynamic capability (Helfat et al., 2007; Winter, 2003). Although acknowledged within other fields (see Williamson, 1975; Lippman & Rumelt, 1982; Barney, 1986; Woo, Daellenbach, & Nicholls-Nixon, 1994) literature on dynamic capabilities largely neglects the role of luck and coincidence so far (Ambrosini & Bowman, 2009). Competitive blind spots are basically only partly assessable through an ex post rationalization or through second-order observations (Luhmann, 1995). Respective studies typically compare perceptions of competitors (Zajac & Bazerman, 1991) or of stakeholders with those of the focal firm (Ng et al., 2009). In turn, a valid observation of a dynamic capability has to rule out the existence of competitive blind spots as a rival explanation unequivocally. In other words, a dynamic capability needs an unambiguous causal link to firm success in empirical research (Ambrosini & Bowman, 2009). Apart from such ‘success stories’, what happens if a formerly successful organization, that arguably possessed a dynamic capability, suffers a serious crises? Accordingly, the firm might have ‘lost’ their dynamic capability or, alternatively, a blind spot may have become relevant, which might be ‘bad luck’. Whatever applies: Proving a causal relationship is essential to avoid tautological statements and to demonstrate the validity of a theory in this respect. However Ambrosini and Bowman (2009) argue that it is hard to show that the construct of dynamic capabilities is causally responsible for organizational success or for organizational resource allocations. Hence, time lags between deployment and outcome as well as complexity and uncertainty emanating from the organization's internal and external environment make it hard to make casual assertions.

This study's understanding of organizational capabilities rather builds on the work of Schreyögg and Kliesch-Eberl (2007) and involves the dysfunctional flipside of rigidity. Therefore, this study assumes relative capability dynamization or adaptability, instead of implicitly accepting their total flexibility as a matter of fact. Consequently, this study derives an understanding of organizational capabilities whereby the concept of dynamic capabilities represents an ideal end of a continuum rather than an empirically observable phenomenon.

The rejection of total flexibility as the conceptual core of dynamic capabilities leads this study to propose a respective alternative understanding. In view of the profound theoretical doubt that directly results in serious empirical complications, this study does not treat a dynamic capability as an empirical phenomenon. Instead the notion of dynamic capabilities should rather represent an ideal end of a continuum. The underlying dimension of this continuum describes the extent of potential capability dynamization or the degree of their adaptability, respectively. The opposite end represents the field of population ecology (Hannan & Freeman, 1977, 1984) with its heavy emphasis on rigidities and inertia, whereby the management possesses only minimal discretion to adapt to environmental changes. Modern systems theory thereby lies in between as this article indicates. Such a continuum opens the door for a discussion between formerly isolated conversations and theories and allows for the empirical testing of multiple theoretical assumptions. Hopefully, this result in an enriched and comprehensive understanding of how and to which extent organizational might change or not.

This study outlines major shortcomings of existing conceptualizations in dynamic capability research. It emphasizes the trade-off between being tautological by involving an outcome component (group 1) and being vague and arbitrary (group 2). Moreover, this study discusses problems of definitions involving ‘purpose’ to replace the outcome component (group 3). However, in order to provide a theoretical surplus the concept of dynamic must involve a tautological notion, be it explicitly or implicitly. Elsewise, the term ‘dynamic’ is not justified as it becomes either obsolete or meaningless. The resolution of this tautology trap by empirically proving a causal relationship to organizational success is hardly possible. This led to the development of an alternative understanding in which dynamic capabilities are not an empirical phenomenon but an ideal state at the end of a continuum. This allows for alternative views on organizational capabilities such as modern systems theory.

A systems theoretic view on organizational capabilities in high-velocity environments results in the insight that dynamic capabilities might not fully be achievable. A social system is self-referential and sense-processing in its very nature. Furthermore, it operates in an environment it cannot fully understand. On one hand, this leads to selectivity and simplification in organizational action patterns and hence to blind spots and uncertainty in every kind of strategic action. This potentially constrains organizational discretion for adaption. On the other hand, collective sense and identity might be hard to change. Finally, our argumentation supports the view that organizational capabilities are only partly flexible. As the resulting insight, an overarching capability that allows for continuous adaptation to every kind of environmental change cannot exist from a systems theoretic perspective. Rather, this study proposes to conceptualize organizational capabilities with respect to their potential adaptability/dynamization on a continuum while not assuming their total flexibility as a matter of fact. This paper therefore supports the development of an alternative systems theoretic understanding of organizational capabilities that goes beyond the dynamic capability perspective. The capability literature benefits from with a more balanced application of multiple theoretic perspectives.