Capability evolution as a cyclical process: reframing the dynamic capabilities lifecycle

Abstract

Purpose – This paper aims to develop a process theory of capability evolution that explains how organisational capabilities persist, erode and renew over time. It addresses limitations in capability lifecycle theory by reconceptualising capability evolution as a recursive process driven by capability–environment alignment and misalignment. Design/methodology/approach – The paper develops a conceptual, mechanism-based process theory by synthesising dynamic capabilities theory, capability lifecycle theory and complementary perspectives on organisational learning, process theory and organisational microfoundations. The framework identifies capability persistence, managerial recognition and capability reconfiguration as interconnected mechanisms underlying recurring capability evolution. Findings – The framework conceptualises capability evolution as a continuous, relational and recursive process. Capability–environment alignment supports persistence, while environmental change can generate misalignment and erosion. Managerial recognition of misalignment and subsequent capability reconfiguration enable renewed alignment. Each cycle reshapes the conditions for subsequent organisational adaptation. Research limitations/implications – The paper is conceptual and does not empirically test the proposed framework. Future research should examine the model through longitudinal and process-oriented studies, develop measures of its core mechanisms, and investigate its applicability across different organisational and institutional contexts. Practical implications – The framework suggests that managers should treat capability renewal as a continuous process. Regular assessment of capability–environment alignment, environmental scanning, organisational learning and capability reviews can help organisations recognise emerging capability gaps and support timely capability reconfiguration.