The dynamic capabilities framework establishes the means by which business enterprise managers foster and exercise organizational capabilities to address current and anticipated technological and market conditions. Managers in a firm with strong dynamic capabilities can establish and periodically renew competitive advantage and sometimes shape the business environment. This Element relates the dynamic capabilities framework to important concepts from the business and economics literature, demonstrating how it applies to today's business challenges. It also offers the capabilities perspective on a theory of the firm. Most existing theories of the firm only caricature today's business enterprise. For advanced students of business, this Element provides a deeper understanding of the dynamic capabilities framework. For managers and boards, it shows how the analytical tools and mindsets that help to make their firms future-ready can be understood in relation to the dynamic capabilities framework. This title is also available as Open Access on Cambridge Core.