I've been asked to comment on this collection of three papers, each of which offers deep insights into the forces affecting the auto industry, particularly as concerns the relative positions of incumbent auto firms with respect to new electric vehicle entrants. Taken as a whole, the papers open a lens on the changes roiling the automotive sector. In this essay, I'll attempt to widen the aperture and provide a framework for a more systemic analysis of the forces reshaping the industry and the prospects for new entrants.

The business enterprise is the prime institution in economic development and growth; yet, until recently, mainstream economics has mostly treated firms as homogeneous black boxes managed by untrustworthy agents. Using economic principles, the field of strategic management has developed a nuanced approach to understanding how firms are created, organized, and grow; how they innovate and compete; and how managers manage. That approach has yielded a theoretical framework known as ‘dynamic capabilities’. Contrasts are drawn between dynamic capabilities and other approaches to the theory of the firm, including transaction cost economics and agency theory. The application of capability theory allows intellectual blinders to be removed and an understanding of differential firm-level resource allocation and performance to emerge. This brings a richer conceptual understanding of the nature of the business enterprise and its management consistent with evolutionary and behavioural economics. Policy insights into governance, inequality, economic development, and the wealth of nations follow.

During an Industrial and Corporate Change conference at the University of California, Berkeley in December 2016, a roundtable discussion on "The Legacy of Nathan Rosenberg and the Importance of Economic History" was held on December 12th, 2016. The discussion was chaired by Professor David J. Teece and included Professors David C. Mowery whose introductory comments form the basis of the present Introduction to this Nathan Rosenberg Memorial Issue. It also included roundtable interventions by Professors Kenneth Arrow, Giovanni Dosi, Uve Granstrand, Richard R. Nelson, and Gavin Wright. The following text constitutes a revised version of the contributions by each participant.

Business models, dynamic capabilities, and strategy are interdependent. The strength of a firm's dynamic capabilities help shape its proficiency at business model design. Through its effect on organization design, a business model influences the firm's dynamic capabilities and places bounds on the feasibility of particular strategies. While these relationships are understood at a theoretical level, there is a need for future empirical work to flesh out the details. In particular, studies that provide a better understanding of business model innovation, implementation, and change will also shed light on important aspects of dynamic capabilities.

This article outlines a capabilities-enriched economic theory of the firm and its sources of competitive advantage. The nature and key categories of intangibles are discussed, with an emphasis on their suitability for providing differentiation in an era when so many services and tangible goods are readily available on a global basis. The linkages in the conversion of intangibles into profits are analyzed, including the frequent need for co-specialized complements. Among the key categories of intangibles are organizational capabilities, which can be either ordinary or dynamic. Ordinary capabilities are, generally, those that can be measured against best practice and with some effort, imitated by rivals. Dynamic capabilities, which reside in both signature processes and management skills, allow the enterprise and its top management to develop conjectures about the evolution of consumer preferences, business problems, markets, and technology; validate them; and realign assets and competences to enable continuous innovation for the creation of competitive advantage. The key concepts of complementarity, entrepreneurial management, and dynamic capabilities are then applied to deepening the economic theory of the firm, combining with the dominant transaction cost approach to provide a richer understanding of why firms are needed in the economic system.

The value-capture problem for innovators in the digital economy involves some different challenges from those in the industrial economy. It inevitably requires understanding the dynamics of platforms and ecosystems. These challenges are amplified for enabling technologies, which are the central focus of this article. The innovator of an enabling technology has a special business model challenge because the applicability to many downstream verticals forecloses, as a practical matter, ownership of all the relevant complements. Complementary assets (vertical and lateral) in the digital context are no longer just potential value-capture mechanisms (through asset price appreciation or through preventing exposure to monopolistic bottleneck pricing by others); they may well be needed simply for the technology to function. Technological and innovational complementors present both coordination and market design challenges to the innovator that generally lead to market failure in the form of an excess of social over private returns. The low private return leads to socially sub-optimal underinvestment in future R&D that can be addressed to some extent by better strategic decision-making by the innovator and/or by far-sighted policies from government and the judiciary. The default value-capture mechanism for many enabling technologies is the licensing of trade secrets and/or patents. Licensing is shown to be a difficult business model to implement from a value-capture perspective. When injunctions for intellectual property infringement are hard to win, or even to be considered, the incentives for free riding by potential licensees are considerable. Licensing is further complicated if it involves standard essential patents, as both courts and policy makers may fail to understand that development of a standard involves components of both interoperability and technology development. If a technology standard is not treated as the embodiment of significant R&D efforts enabling substantial new downstream economic activity, then rewards are likely to be calibrated too low to support appropriate levels of future innovation.

Business enterprises lie at the core of ecosystems that drive economic development and growth in market economies; yet, until recently, mainstream economics has mostly treated firms like homogeneous black boxes run by opportunistic managers. The field of strategic management has developed a more nuanced approach to the understanding of how firms are created, organized and grow, how they innovate and compete and how managers manage. One of the leading paradigms in the field is the dynamic capabilities framework. In this paper, contrasts and complementarities are drawn between dynamic capabilities and economic theories of the firm, including transaction cost economics and agency theory. Connections to the Cambridge school are highlighted, including the duality between Keynes's 'animal spirits' and the dynamic capabilities entrepreneurial owner/manager. Leibenstein's x-inefficiency is juxtaposed here with d-ineffectiveness. Knowledge-based theories of the firm consistent with Cambridge conventions emerge. Intellectual exchange between strategic management and economics is encouraged to help improve the intuition behind models of firms and the economy.