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The concept of core competence underlies competence-based competition and competence-based management. When new firms get established, due to resource constraints, managers have to make conscious decisions to develop certain competencies and not others. In order to have all competencies that are required to be successful, firms look for strategic alliances and to leverage their partner firms’ competencies. In this paper, we develop a contingency model for firms that have to go for strategic alliances to explain which core competencies should be developed internally, which core competencies could be from the alliance partner, which type of alliance will be suitable and whether the firm should choose a short-term, long-term or permanent alliance. Using Hamel’s (1994) generic core competencies and the type of market (industrial or individual), we suggest which type of strategic alliance should be chosen for leveraging a partner’s competencies.

Agile manufacturing is largely dependent on the capabilities of its people to learn and evolve with change. However, while agile manufacturing uses e‐commerce enabled technology in a decentralized organizational setting, it remains unclear how these individual capabilities should be linked to other organizational resources to create an agile organization. Another important modern management research perspective is the internal resource‐based perspective, resulting in a phenomenon called competence‐based competition with renewed attention for competence management. Competence management comprises the management, building, leveraging and deployment of strategic and operational competencies, the causal relationships and linkages between them, and the way competencies are embedded in organizational and individual resources. In this paper, we explore the relation between agile management and time‐based competence management, and study its adoption in small batch discrete parts manufacturing environments with the help of a coarse fact‐finding survey research.

Using the framework of the philosophy of science, this chapter explores some basic theoretical issues that must be recognized and addressed in developing theory within the competence perspective. We first develop an overview of resource-based and competence-based research to highlight some fundamental theoretical issues. We then identify a set of basic assumptions for conducting a research program focused on development of a “competence-based theory of the firm.” Working from these basic assumptions, we argue for a shift in the epistemological aim of competence theory development from explaining market success to explaining firm competitiveness. We explain how such a shift theoretical focus and approach can remedy the problem of circular reasoning often observed in resource-based thinking that tries to contribute to the competence literature.

The field of research on resource-based competition is full of nuanced terminology and misunderstandings. This has led to confusion, and thus the authors offer a critical review, which provides a structure and clarity to this subject. The paper aims to discuss these issues.

This analysis structures the literature on resources, capabilities, and competences into three distinct schools of thought: the resource-based view (RBV) of the firm, the rational-equilibrium school; the dynamic capability-based view of the firm, the behavioural-evolutionary school; and the competence-based view of the firm, the social constructionist school.

The authors uncover 13 criticisms of the most widely adopted theoretical framework of the RBV of the firm – Valuable-Rare-Imperfectly imitable-Organisation (VRIO).

The misinterpretation and neglect of the classic scholarly work may help to explain why the VRIO framework has been elevated from a view to a theory and why it has received so much attention.

The authors show how the relative ease of measuring resources as compared to (dynamic) capabilities and (core) competencies has helped raise the profile of RBV.

This analysis contributes to management research by illustrating the deviation among the three schools of thought; the authors show how this has contributed to wide terminological confusion and offer a structure to help researchers situate their work within the relevant school of thought.

This paper seeks to develop a mid-range theory of how change recipient sensemaking processes affect the realization of strategic flexibility during simultaneous change in professional service firms.

The research presented is based on an exploratory embedded case study adopting a qualitative interpretive methodology, conducted at a professional service organization. A sensemaking lens was adopted in order to study organizational change processes. Data was collected through semi-structured open-ended in-depth interviews, and analyzed using first and second order analysis, inspired by the methodology used by Corley and Gioia (2004).

We identified four determinants of change recipient sensemaking: professional identification, dominant organizational discourse, equivocality of expectations, and cross-understanding between thought worlds. Case findings indicate that cognitive and affective dimensions of change recipient sensemaking are strongly interwoven in their effect on realizing strategic flexibility.

We contribute to the competence-based strategic management literature by introducing the concept of change recipient sensemaking in understanding the realization of strategic flexibility; by identifying four major determinants in a context of simultaneous change in a professional service organization; and by highlighting the interwoven and mutually reinforcing cognitive and affective dimensions of professional’s process of constructing meaning.

This paper shows how business suppliers set up processes allowing the translation of their competencies into value for the customers. As such, this paper seeks to complement the dominant view in which competencies are seen mainly as valuable for the firm owning the competencies but not for that firm's customers. In so doing, the paper seeks to contribute to two bodies of research: the notions of core competencies in strategic management and of value for customer in business marketing. These two bodies of research interact infrequently thus far, leaving the question of how value is transferred unanswered. This question is relevant because competencies are immaterial, tacit, and non-tradable assets. Hence, the research question underlying the present paper becomes: How can competencies translate into valuable outputs and be made accessible to the customer? To answer this question, a qualitative approach is used that involves a multiple-case study analysis aimed at exploring the competence-based process of value supplying in business markets. Specifically, this paper suggests the following propositions: (1) Competence-based value analysis, where suppliers anticipate customers’ competence needs, require an end-market orientation. (2) Competence-based value creation implies an accumulation of know-how that overlaps with customer competencies. (3) Competence-based value communication builds on live communication tools that allow customers to get an ongoing experience of the value potential of competencies. (4) Competence-based value delivery is based on bundles of suppliers’ competencies into tradable means and direct access to competence tools.

Competence-based theory provides valuable insights in a business context characterized by global ecosystems, co-specialization, and asset orchestration. As the unit of analysis shifts from the individual enterprise to the ecosystem, pursuing proper competence building and competence leveraging activities considering both firm-specific and firm-addressable resources becomes a key issue in strategy development.

Based on the original concepts of the competence-based theory, this paper suggests that the competence space can be a useful framework when considering alternative ecosystem strategies. Competence-based theory, emphasizing the simultaneous pursuit of competence leveraging and competence building, provides an important complement to other dynamic perspectives on strategy, such as dynamic capabilities and ambidexterity. The paper also suggests considering the inclusion of aesthetic properties as an important part of competence-based theory.

This paper presents a model of resources refinement for systematically and comprehensively deriving competence-based competitive advantages. Competence-based competitive advantages support market-based strategies. They reinforce the overall market-based advantages of low costs, product differentiation and minimal cost differentiation at the business unit level and of carrying out tasks jointly in a performance compound at the corporate level. Competence-based competitive advantages also support resource-based strategies by reinforcing the advantages of product innovation skills at the business unit level and transfer of core competences in a performance compound at the corporate level.

An issue of managing a business (unit) as a whole successfully is perceived to belong to the fundamental issues within strategic management. This paper proposes that a business unit can be managed successfully in short and longer term in its focal contexts as a set of three recursive, competence-based, and process-based systems. Many elements of Stafford Beer's (1985) viable system model along the key competence-based theoretical bases are applied to this system design task. The outcome is an ideal, recursive template for advancing competence-based business management (CBBM) and its conceptual modeling. It is assumed that it is possible to design a business unit as a viable system that is capable of sustaining a separate existence at only three levels of hierarchy, as part of single or multi-business firms. Business-process models and their redesign processes are chosen as the 2nd-order, focal system which produces a business unit's competitiveness and solves longitudinal CBBM problems. One level of recursion down includes a unit's value creating, capturing, releveraging, and respective processes that enable to solve cross-sectional problems. One level of recursion up includes a unit's existential foresights and their crafting processes that solve existential problems. Recursivity is designed inside each system in terms of three kinds of subsystems for (a) primary value releveraging, process-model redesign, and business-foresight crafting, (b) the management of varieties in releveraging, modeling, and foreseeing, and (c) the monitoring and probing of all three systems. Systemic competences are incorporated inside respective systems. Such competences possess three flexibilities of absorption, attenuation, and amplification. At each level of recursion, a competence-based process is a unit of conceptual modeling of CBBM. A business unit is defined as a set of its purposeful processes. No thing or one is left outside them. Viability is ensured by real-time interaction and the 1st-, 2nd-, and 3rd-order feedback loops between three systems. Overall, the suggested, recursive, 3-system template is intended to serve future, compatible modeling efforts among interested, pioneering firms, professional CBBM modelers, scholars, and alike. Its novelty is produced by choosing and designing the CBBM modeling as the 2nd-order system-in-focus with its two recursions, by designing and using systemic, competence-based processes as the units of conceptualization, and by choosing and drawing the figures to illustrate the 3-system template in the ways that allow also business managers comprehend and apply the suggested template in practice.

This chapter is based on a four-year literature review process that focused on conceptual business management research. A new platform for advancing business management in competence-related ways is compiled using 66 references that contain a population of 84 competence-related business management concepts published in English between the years 1990 and 2002. For the purposes of this study, the home bases of focal firms are limited to the OECD countries. Ex ante, various research traditions were regrouped into eight schools of thought on business management based on resources, competences, knowledge, organizations, processes, business dynamism, evolution, and Porter's frameworks. The eligible concepts were identified via an analysis of 50 journals and books of 18 publishers. The findings reveal that 99 authors have assigned primary or secondary roles to a firm's competences within their 84 concepts across the eight schools of thought. The two schools with primary emphasis on a firm's competences, the dynamism-based school (18 concepts) and the competence-based school (16 concepts), have produced 34 (41%) concepts. The six other schools have generated 50 (60%) concepts: 14 knowledge-based, ten resource-based, ten evolutionary, seven Porterian, seven organization-based, and two process-based concepts. The platform developed in this chapter may help researchers to focus on the most promising areas and ways to produce highly applicable concepts for managing a firm's dynamic business. Some suggestions to this end are put forth: (i) increase future collaboration between scholars, business managers, and business consultants, (ii) advance competence-based concepts primarily along the international business dimension, and (iii) conduct future competence-related literature reviews. The rigorous conduct of future reviews involves the replicable ways of searching, browsing, including or excluding, retrieving, inferring, coding, and presenting the conceptual data.