This article articulates a dynamic capability perspective on international business. The three essential ingredients of dynamic capability--capability possession (distinctive resources), capability deployment (resource allocation), and capability upgrading (dynamic learning)--have become increasingly fundamental to international expansion and global operations. Capability possession is critical to gaining competitive advantages and determining firm-level strategies to exploit such advantages. Capability deployment is crucial to mitigating the disadvantages of foreignness and preempting emerging opportunities. Capability upgrading is essential to the evolutionary development of sustainable advantages and creating new bundles of resources. Each of these capabilities is a necessary condition for sustained success in today's world economy characterized by increasing technological advancement and business globalization.
