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Mid-Range Management Theory: Competence Perspectives on Modularity and Dynamic Capabilities

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Mid-Range Management Theory: Competence Perspectives on Modularity and Dynamic Capabilities

Series Editors: Ron Sanchez and Aimé Heene

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Research in Competence-Based Management Volume 8

Mid-Range Management Theory: Competence Perspectives on Modularity and Dynamic Capabilities

Edited By

Ron Sanchez

Copenhagen Business School, Denmark

Aimé Heene

Ghent University, Belgium

SeçKin Polat

Istanbul Technical University, Turkey

Umut Asan

Istanbul Technical University, Turkey

United Kingdom – North America – Japan India – Malaysia – China

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Emerald Publishing Limited

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First edition 2018

Copyright © 2018 Emerald Publishing Limited

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British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-78714-404-0 (Print)

ISBN: 978-1-78714-403-3 (Online)

ISBN: 978-1-78714-923-6 (Epub)

ISSN: 1479-3512 (Series)

Contents

List of Editors and Contributors

Editor and Author Biographies

Ron Sanchez received a BS in Humanities and Science, a BS in Architecture, a MS in Civil Engineering, and a PhD in Technology Strategy from Massachusetts Institute of Technology (MIT), as well as an MBA (with Honors) from Saint Mary’s College in California. He has been on the faculties of University of Illinois, University of Western Australia, IMD, and (for the last 16 years) has been Professor of Management at Copenhagen Business School. He has also been a visiting professor at more than a dozen universities around the world. Professor Sanchez has published more than 20 books and 70 academic papers on competence-based management theory and practice. He also pioneered the study of strategic uses of modular architectures and has published numerous papers on various aspects of modularity in product design, market strategy, industry structure, and economic organization.

Aimé Heene is an honorary senior professor at Ghent University in Belgium. Prof. Heene teaches strategic management for private and public organizations. He has published seven books (in Dutch) on strategic management and has been co-editor of many English-language volumes on competence-based strategy. Professor Heene is co-editor of the journal Research in Competence-based Management and has co-chaired ten international conferences on competence-based strategic management. A list of his publications can found at https://biblio.ugent.be/person/801000920850.

Seçkin Polat received PhD, MSc and BSc degrees from Istanbul Technical University in Industrial Engineering. He was a visiting researcher in the Department of Management Science at University of Stirling as scholar of the British Council. He served as vice dean of Management Faculty at ITU. He took on also head of the Industrial Engineering Department at ITU. He co-authored several papers on competence-based management and organized the 3rd International Conference on Competence-Based Management in Istanbul. His research efforts are on modelling managerial issues. He is currently professor in the Industrial Engineering Department and coordinator of the Engineering Management MSc Program at ITU.

Umut Asan is currently an Assistant Professor in the Industrial Engineering Department at Istanbul Technical University, Turkey. He holds a doctoral degree (Dr.-Ing.) in Industrial Engineering from Technical University of Berlin. He published papers in refereed international journals in the areas of decision making, fuzzy sets, futures research, and competence-based strategic management. His present research interests include multi-criteria decision making, applied multivariate statistical analysis, and uncertainty modeling.

Since 1996 Professor Albert Albers is the head of the Institute of Product Engineering (IPEK) at the Karlsruhe Institute of Technology and established the research fields of drive systems, design-methods and design-management as well as mechatronics. He divides product development into its systems, methods, and processes. All three areas are worked on by his team in research and teaching in order to satisfy the complexity of today’s product development. About 50 scientists are currently researching at the IPEK with a range from fundamental research to applied science in cooperation with industry. Professor Albers is also well involved in teaching, in particular by restructuring the content of teaching and by applying new teaching methods which especially aim at teaching professional skills.

Masis Arslan is a doctoral candidate at the Institute of Product Engineering under the supervision of Professor Albers. His work within the research group of design methods and management focuses on strategic R&D management and especially the management of complexity in product generation engineering within the context of the integrated product engineering model.

Sezi Çevik Onar is an Associate Professor in the Industrial Engineering Department of Istanbul Technical University (ITU) Management Faculty. She earned her BSc in Industrial Engineering and MSc in Engineering Management, both from ITU. She completed her PhD studies at ITU and visited Copenhagen Business School and Eindhoven Technical University during these studies. Her PhD was on strategic options. Her research interests include strategic management and multiple criteria decision making. She took part as a researcher in many privately and publicly funded projects such as intelligent system design, organization design, and human resource management system design. Her refereed articles have appeared in a variety of journals including Supply Chain Management: An International Journal, Computers & Industrial Engineering, Energy, and Expert Systems with Applications.

Associate Professor Jeremy Galbreath has a career spanning nearly 25 years in business and academia. A native of the United States, he spent a number of years working in Fortune 50 and entrepreneurial start-ups there, mainly engaged in business development and corporate and business unit strategic planning. After moving to Australia in 2002 and completing a PhD, he began his academic career at Curtin University in Perth. He lectures in strategy, international business, and entrepreneurship at the Curtin Graduate School of Business. His research interests are at the intersection of corporate governance, strategy, innovation, sustainability, and regions. He holds a PhD from Curtin University, an MBA from Colorado State University, and BSc and MSc degrees from Ball State University.

Chang Chieh Hang received the PhD degree in Control Engineering from the University of Warwick, England, in 1973. Professor Hang has been with the National University of Singapore since 1977, serving as Head of the Department of Electrical Engineering, Deputy Vice-Chancellor of the University in charge of research, and most recently as the founding Head of Division of Engineering and Technology Management. From 2001 to 2003 he was seconded to (Singapore) Agency for Science, Technology, and Research to serve as its Executive Deputy Chairman. His current research interest is in Innovation Policy & Strategy. Professor Hang has received numerous awards for his leadership and contributions to science and technology development in Singapore.

Lukas Krämer is a doctoral candidate at the Institute of Product Engineering under the supervision of Professor Albers. His work within the research group of design methods and management focuses on product generation engineering, strategic R&D management, and especially the management of organizational competences within R&D.

Gavin Nicholson is an Associate Professor of Accountancy at Queensland University of Technology. In addition to researching, lecturing, and developing materials in the areas of governance policy and practice, Gavin is an experienced director, governance researcher, and board consultant. He has published extensively and currently oversees several large research projects aimed at understanding how boards operate. Gavin has provided advice on corporate governance and strategy to listed and large public companies, government owned corporations, statutory authorities, not-for-profit organizations, and local government.

Ayberk Soyer is an Assistant Professor in the Department of Industrial Engineering at Istanbul Technical University. He received his PhD in Industrial Engineering from Istanbul Technical University in the year 2007 where he also received both his BSc and MSc. During his PhD studies, he visited the Marketing Department at Technical University of Berlin as a guest researcher. His current research interests include Strategic Management, Competition Management, Management and Organization, Human Resources Management, Simulation, and Project Management. He worked as a researcher and consultant in various industry and research projects.

Diego Vega is an Assistant Professor of Logistics and Supply Chain Management at Neoma Business School (Reims, France) and Researcher at the CRET-LOG research center (Aix-Marseille University). He is an Industrial Engineer and holds a PhD in management sciences: specialty on logistics from the Aix-Marseille University. His research interests include humanitarian logistics and supply chain management, temporary organizations, and competence-based strategic management. Assistant Professor Diego Vega is the corresponding author and can be contacted at: diego.vega@neoma-bs.fr.

Introduction

Ron Sanchez, Aimé Heene, Seçkin Polat, and Umut Asan, Editors

The avowed goal of the Competence-Based Management (CBM) movement since its beginnings in the 1990s has been the development of a body of theory that is both scientifically rigorous and at the same time directly applicable to the practice of management. Pursuit of this goal has led CBM researchers to introduce a new conceptual foundation for developing management theory, to employ a range of standard and novel empirical research methods, and to assist forward-thinking managers in implementing innovative management approaches.

One broad finding to emerge from nearly a quarter century of CBM research within the overall stream of research in management is that the search for “grand theory” in conventional research in management – i.e., theory that is uniformly applicable to all management contexts – has fallen on the horns of a seemingly intractable generality–particularity dilemma. Simply put, management theory that is intended to be generally applicable to all management contexts – and that is therefore articulated at a high level of generality – almost invariably proves problematic to apply to particular situations. The logical impossibility of applying the broad generalities and superficially plausible logic of the “resource-based view” (Barney 1991) to identifying strategically valuable resources ex ante is a well-known case in point (Sanchez 2010).

The dilemmas of conceptual definition and relational logic implicit in any effort to develop grand theory have led many, if not most, CBM researchers to pursue development of mid-range theory – theory whose foundational concepts, key causal relationships, and resulting explanations and predictions are intended to address specific kinds or categories of management contexts.

In this volume we bring together a set of CBM papers that first explain mid-range theory and then illustrate mid-range theory research approaches applied to key issues in dynamic capabilities and modularity.

The volume begins with a paper by Ron Sanchez and Aimé Heene on Building Theory for Management Science and Practice: An Epistemological Perspective from Competence-Based Management Theory. The authors elaborate and contrast the intent and methods of grand theory versus mid-range theory building processes. They then explain the generality–particularity dilemma that afflicts various ideas aspiring to become grand theory in management today, most notably the “resource-based view.” The authors then suggest that refocusing research in management on developing mid-range theory may not only lead to theory that is directly applicable in specific management contexts, but may also lay the foundation for future integration of contextual mid-range theories that could give rise to grand theory that is applicable across management contexts.

In the second paper in the volume, Ayberk Soyer, Sezi Çevik Onar, and Ron Sanchez examine the challenge of Overcoming Path Dependency and ‘Lock-In’ in Competence Building and Competence Leveraging Processes. The authors argue that to achieve sustained competitive success, a firm must be able to apply its current competences well, while also continuously renewing its competence base. They suggest, however, that self-reinforcing managerial and organizational mechanisms can arise from a firm’s competence leveraging processes that may work against launching and sustaining competence renewal processes. The authors focus on certain managerial behaviors that may create path dependencies that result in an organization becoming “locked-in” to its current competence leveraging, resulting in failure to renew competences and eventually in competitive failure. They suggest ways in which firms can build dynamic capabilities that can avoid lock-ins caused by self-reinforcing managerial behaviors. A case study of successful competence-renewing processes provides insights into the nature of such dynamic capabilities.

Managing processes for both competence leveraging and competence building requires that managers be able to identify both a firm’s current competences and the new competences their firms could build. In their paper Identifying Competences and Their Sources in a Not-For-Profit Organization: The Case of a Humanitarian Relief Organization, Diego Vega and Ron Sanchez argue that not-for-profit organizations have essentially the same systemic requirements for survival and success as for-profit organizations. They then report a case study of competence identification and analysis in Médecins Sans Frontières (MSF), a highly successful, global humanitarian relief organization. Analysis of the systems created by MSF for responding quickly to life-and-death crises around the world not only identifies key processes and enabling capabilities that are the basis for MSF’s much-admired competence in humanitarian relief, but also suggests a systems-analysis methodology for identifying competences in any organization.

To build new competences, organizations must be willing to undergo organizational change – often significant and even fundamental organizational change. Managing fundamental change in an organization requires leadership from management from the “top” (boards of directors) down to managers at the working level. In their paper on Building Sustainability Competence from the Top Down: A Model for Researching and Improving Boards of Directors’ Influence on Firms’ Sustainability Performance, authors Ron Sanchez, Jeremy Galbreath, and Gavin Nicholson develop a model for researching how a board of directors may influence an organization’s ability to build new social and environmental sustainability competence. Their model explores how two forms of board capital (a board’s human capital and its social capital) and three aspects of a board’s information processing (its patterns of information search, discussion and debate, and information absorption) are likely to affect the sources of cognitive flexibility that a board needs to recognize and respond to a need for improved sustainability performance. They also suggest how an organization’s strategic flexibility – as represented by its current endowments of resource flexibilities and coordination flexibilities – may moderate the relationship between a board’s decision to adopt sustainability performance goals and an organization’s subsequent achievement of those goals. The authors further suggest that the model they develop in their paper may also be used to research the influence of boards on many, if not all, forms of strategic organizational change.

Building new competences requires not just a capability to manage organizational change, but also a capability for identifying the new competences an organization should build. In their paper on Roadmap-Based Methodology for the Forecasting of Competences within Automotive Product Development, Albert Albers, Lukas Krämer, and Masis Arslan suggest how ongoing processes for systematic identification and analysis of strategic gaps in a firm’s current competences (compared to the competences it will need in the future) can lead to clear identification of new capabilities the firm needs to acquire or develop. Their paper describes a roadmap-based methodology for forecasting an organization’s future competence needs – and from that, identifying the specific capabilities a firm will need in order to have the competence(s) to meet expected market demands in the future. This methodology is illustrated through a case of a German luxury car manufacturer who uses a modular architectural framework for identifying and analyzing capabilities present and future.

Finally, in their paper Modularity in New Market Formation: Lessons for Technology and Economic Policy and Competence-Based Strategic Management, Ron Sanchez and Chang Chieh Hang appraise the ways in which use of closed-system proprietary product architectures versus open-system modular product architectures may influence the dynamics and resulting trajectories of development and growth in new product markets. They compare the evolutions of new markets in China for (i) gas-powered two-wheeled vehicles and (ii) electric powered two-wheeled vehicles to suggest that new product markets based on proprietary product architectures versus open-system modular architectures are likely to result in very different patterns and speeds of new market formation. They then suggest that new product markets based on open-system modular product architectures call for new approaches to the strategic management of innovation and product creation. They also suggest that technology and economic development policies that favor use of open-system modular architectures may provide important new stimulus to new market formation and related economic development, as well as enabling bottom-of-the-pyramid innovation processes, frugal engineering, and development of low-cost product variations for developing economies.

Taken together, the papers included in this volume confirm the power of the CBM perspective to deliver fundamental contributions to future-oriented, predictive strategic management theory, research, and practice by presenting rigorous and relevant mid-range theory and research approaches applied to dynamic capabilities and modularity.