David Teece

Biography

Teece grew up in Blenheim and Nelson, New Zealand and attended Waimea College before enrolling in 1967 at the University of Canterbury in Christchurch (now the site of the Christchurch Arts Centre), where he earned a bachelor's degree and a Master of Commerce degree.

He moved to the United States to attend the University of Pennsylvania, from which he received a Ph.D. in economics, specializing in industrial economics, international trade, and technological innovation. Two members of the Economics faculty had a particular influence on his research that he later acknowledged in articles he wrote in tribute to each of them: Edwin Mansfield, a pioneer in the study of industrial R&D and the economics of technological change; and Oliver Williamson, Nobel Laureate and creator of Transaction Cost Economics.

Teece taught at Stanford Graduate School of Business from 1975 until 1982, when he was hired by the Haas School of Business at U.C. Berkeley, where he is a chaired professor. He has published more than 200 academic articles and more than a dozen books, and Google Scholar notes that he has been cited at least 100,000 times. He co-founded and serves on the editorial board of two academic journals: Industrial & Corporate Change (Oxford University Press) and the Russian Management Journal.

He is married to Leigh Teece, and they are regular visitors to Christchurch. After the 2011 Christchurch earthquake, the couple offered a "sizeable" donation to the city for earthquake recovery. The money was used by his former university as seed funding for installing the classics and music school in the Old Chemistry building at the Christchurch Arts Centre. In 2017, 40 years after its move from the Christchurch Central City to the Ilam campus, the University of Canterbury returned to its original home.

Capturing value from innovation

Teece’s 1986 paper “Profiting from Technological Innovation” was selected by the editors as one of the best papers published in Research Policy from 1971 to 1991 and is the most cited paper ever published in the publication. In October 2006, Research Policy published a special issue commemorating the twentieth anniversary of the original article.

In this paper, Teece explained why innovative firms often fail to capture economic returns from their invention. He described how it is sometimes more important for a business to be able to win at marketing, distribution, manufacturing, and other areas than to come up with a big idea in the first place. He identified the factors which determine whether the firm that wins from innovation is the firm that is first to market, a follower firm, or a firm that has related capabilities that the innovation requires to provide value to a customer. The key elements in what has been called the Teece Model are the imitability of the innovation (how easily competitors can copy it) and the ownership of complementary assets. Sidney Winter has argued that Teece’s paper contributes “en passant but fundamentally, to the clarification of basic questions.”

Dynamic capabilities

Teece is identified as being partially responsible for the dynamic capabilities perspective in strategic management. Dynamic capabilities have been defined as “the ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments". Further, “The concept of dynamic capabilities, especially in terms of organizational knowledge processes, has become the predominant paradigm for the explanation of competitive advantages. However, major unsolved—or at least insufficiently solved—problems are first their measurement and second their management…”

According to ScienceWatch, his paper (with Gary Pisano and Amy Shuen) "Dynamic Capabilities and Strategic Management" was the most cited paper in economics and business globally for the period from 1995 to 2005.

Teece's concept of dynamic capabilities is a theory about the source of corporate agility: "the capacity (1) to sense and shape opportunities and threats, (2) to seize opportunities, and (3) to maintain competitiveness through enhancing, combining, protecting, and, when necessary, reconfiguring the business enterprise's intangible and tangible assets."

His concept stands parallel to the dynamic capability perspective of Eisenhardt & Martin (2000). It also builds on the idea of combinative capabilities (Kogut & Zander 1992).

Theory of the multiproduct firm

Roberts and Saloner (2013) credit Teece with “the first attempt to build a systematic theory of the firm scope based on profit-maximizing behavior” (827) in his 1982 article “Towards an Economic Theory of the Multiproduct Firm,” in which Teece describes the existence of excess resources in firms, stating that firms could better use those resources by diversifying into new lines of business. He also presents transaction cost arguments regarding whether resources can be shared contractually, and explains that protecting those resources is a potential basis for diversification. Teece additionally builds on Williamson (1975) in arguing that “internal capital allocation may be better than what the market can achieve” (828).

Consulting

In 1988, Teece founded the Law and Economics Consulting Group with other professors from UC Berkeley, providing expert witness testimony in cases including Oracle’s PeopleSoft merger battle.

Teece has worked on matters in industries ranging from music recording to DRAMS, software, lumber, and petroleum, and has testified in both state and federal court, before Congress, and before the Federal Trade Commission, as well as in international jurisdictions.

In the 2000 Napster, Inc. case, record companies acting as plaintiffs hired Teece to write an expert report in an attempt to shut down the free digital file-swapping site. U.S. District Court Judge Marilyn Hall Patel cited Teece's report several times in her ruling in favor of the music industry.

In February 2010, Teece founded Berkeley Research Group, which as of January 2014 had 26 offices in the United States, Australia, Canada, Colombia, and the United Kingdom.

In 2012, Teece provided expert testimony regarding damages in the Apple Inc. v. Samsung Electronics Co., Ltd. case.

In the 2013 Innovatio case, U.S. Federal Court Judge James F. Holderman cited Teece’s report several times.

Scholar and international executive

John Cantwell, editor of the Journal of International Business Studies, notes that Teece is perhaps the only person in the world that could qualify today, like economist Daniel Ricardo did in the past, as both an eminent scholar and business leader.

Honors

Teece holds five honorary doctorates: Saint Petersburg State University (Russia, 2000), where he was honored for his role in co-founding the business school; Copenhagen Business School (Denmark, 2004); Lappeenranta University of Technology (Finland, 2004); University of Canterbury (New Zealand, 2007); and University of Calgary (Canada, 2015). He is also an honorary professor at China's Zhongnan University of Economics and Law and King Saud University in Saudi Arabia and an Honorary Member of the Law and Economics Association of New Zealand.

In 2002, Accenture listed Teece among its Top 50 Business Intellectuals. The ranking system was based on a combination of Google name hits, LexisNexis media database searches, and citations found in the Science Citation Index and Social Sciences Citation Index.

In 2003, Lappeenranta University presented Teece with the first Viipuri International Prize in Strategic (Technology) Management and Business Economics.

A 2008 analysis by Thomson Scientific found him to be one of the top-10 most-cited scholars in economics and business from 1997 to 2007.

A 2011 article, “Innovation in Multi-Invention Contexts,” coauthored with Deepak Somaya and Simon Wakeman, was selected as the winner of the 2012 California Management Review Best Article Award. This article presents a framework designed to help guide managers of innovating firms in designing appropriate strategy when seeking to bring an innovation to market in a multi-invention context.

In the 2013 New Year Royal Honours, Teece was made a Companion of the New Zealand Order of Merit, for services to New Zealand–United States relations. He also received the Academy of International Business Eminent Scholar Award in Istanbul in July 2013. Teece is described as a “'leading authority' on matters related to antitrust and competition policy and intellectual property stating and is 'highly sought after.'”

Selected publications

Teece has published more than 200 papers and more than a dozen books. They include: