The dilemma and its solution of deep uncertainty in the dynamic capabilities framework: Insights from modern Austrian economics

Abstract

Recent work on dynamic capabilities (DC) has developed the concept of deep uncertainty by drawing upon Frank Knight's seminal work. This study takes the concept seriously because, in Austrian economics, the way in which the concept is to be embraced has been the topic of a decades‐long debate, rooted in the dilemma inherent in the concept itself. Building upon Austrian economics, this study shows that the extant DC framework may contain the dilemma and that it may be mitigated by applying the notion of institutions as points of orientation. The paper concludes with more general implications for management theories.