The aim of dynamic capabilities research is ambitious: to understand how firms can sustain a competitive advantage by responding to and creating environmental change (Teece, 2007). As one of the most central and difficult questions within the strategy domain, this might well be characterized as the Holy Grail of strategic management. The topical domain of dynamic capabilities, in consequence, is as broad and as complex as any in the field. It spans the domains of strategy process and content, and involves multiple levels of analysis, from managerial decision-processes, to organizational routines, to competitive interactions and environmental change. The complexity of the topic is matched, fittingly, by the complexity of the theoretical underpinnings. Undoubtedly, this has generated some confusion. It is therefore not surprising that the critique of Arend and Bromiley (A&B) in the preceding essay reflects some of this confusion. Here, we address this by clarifying the dynamic capabilities concept, in relation to its development and the challenges faced. We first survey the development path of dynamic capabilities research, and discuss the different theoretical bases of this emerging area of scholarship. Then we clarify issues regarding the definition of dynamic capabilities and discuss the link between dynamic capabilities and firm performance. As part of our analysis, we address the two main conclusions of A&B regarding dynamic capabilities research. The first is that we should abandon the dynamic capabilities approach if it does not ‘quickly develop a theoretical foundation’. The second is that regardless of the pace of theory development, we should replace these efforts with ‘work on strategic change tied to fuller theories of strategic organization’. In what follows, we explain why these conclusions are premature and unwarranted. We also address other issues raised by A&B, focusing on the main issues raised in the body of their commentary. 1