Coevolutionary Competence in the Realm of Corporate Longevity: How Long-lived Firms Strategically Renew Themselves

TLDR: In this article, the authors focus on the competence of long-lived firms to coevolve due to the joint effect of managerial intentionality and environmental selection pressures, and develop a conceptual framework that highlights an organization's coevolutionary competence.

Abstract: Understanding the phenomena of corporate longevity and self-renewing organizations has become an important topic in recent management literature. However, the majority of the research contributions focus on internal determinants of longevity and self-renewal. Using a coevolutionary framework, the purpose of this chapter is to address the dynamic interaction between organizations and environments in the realm of sustained strategic renewal, i.e. corporate longevity. To this end, we will focus on the competence of long-lived firms to coevolve due to the joint effect of managerial intentionality and environmental selection pressures. Building on coevolutionary framework, we develop a conceptual framework that highlights an organization's coevolutionary competence. Two longitudinal case studies are presented illustrating the arguments.

Figures

Figure 4. HBC’s Self-renewal Trajectory Snapshot

Figure 5. Bottleneck in the operating flexibility level during the HBC’s management initiative in exploring new market through the collaboration with the Canadian Pacific Railway in the 1870s

Figure 3. HBC’s Company Timeline (Italics fonts: Firm-specific historical events; Regular fonts: Global historical events)

Figure 6. Zooming in on HBC’s Renewal Trajectory (1930-2000)

Table 3. Coevolutionary Competence and a Firm’s Competence Modes

Table 2. A Prerequisite of Corporate Longevity: Three Principles of Self-renewal

Full text

Coevolutionary Competence in the Realm of Corporate
Longevity: How Long-lived Firms Strategically Renew
Themselves
Zenlin Kwee, Frans A.J. Van Den Bosch and Henk W. Volberda
ERIM REPORT SERIES RESEARCH IN MANAGEMENT
ERIM Report Series reference number ERS-2007-076-STR
Publication November 2007
Number of pages 39
Persistent paper URL
Email address corresponding author zkwee@rsm.nl
Address Erasmus Research Institute of Management (ERIM)
RSM Erasmus University / Erasmus School of Economics
Erasmus Universiteit Rotterdam
P.O.Box 1738
3000 DR Rotterdam, The Netherlands
Phone: + 31 10 408 1182
Fax: + 31 10 408 9640
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ERASMUS RESEARCH INSTITUTE OF MANAGEMENT
REPORT SERIES
RESEARCH IN MANAGEMENT
ABSTRACT AND KEYWORDS
Abstract
Understanding the phenomena of corporate longevity and self-renewing organizations has
become an important topic in recent management literature. However, the majority of the
research contributions focus on internal determinants of longevity and self-renewal. Using a co-
evolutionary framework, the purpose of this paper is to address the dynamic interaction between
organizations and environments in the realm of sustained strategic renewal, i.e. corporate
longevity. To this end, we will focus on the competence of long-lived firms to coevolve due to the
joint effect of managerial intentionality and environmental selection pressures. Building on
coevolutionary framework, we develop a conceptual framework that highlights an organization’s
coevolutionary competence. Two longitudinal case studies are presented illustrating the
arguments.
Free Keywords
Competence-based management, Coevolutionary competence, Corporate longevity, Strategic
renewal, Adaptive open systems
Availability
The ERIM Report Series is distributed through the following platforms:
Academic Repository at Erasmus University (DEAR),
DEAR ERIM Series Portal
Social Science Research Network (SSRN), SSRN ERIM Series Webpage
Research Papers in Economics (REPEC), REPEC ERIM Series Webpage
Classifications
The electronic versions of the papers in the ERIM report Series contain bibliographic metadata
by the following classification systems:
Library of Congress Classification, (LCC) LCC Webpage
Journal of Economic Literature, (JEL), JEL Webpage
ACM Computing Classification System CCS Webpage
Inspec Classification scheme (ICS), ICS Webpage

C
OEVOLUTIONARY COMPETENCE IN THE REALM OF CORPORATE LONGEVITY
How Long-lived Firms Strategically Renew Themselves *)
Zenlin Kwee
Frans A.J. Van den Bosch
Henk W. Volberda
Erasmus University Rotterdam
Chapter accepted in R. Sanchez and A. Heene:
Research in Competence-Based Management (RCBM),
2007, Volume 4, Elsevier
Department of Strategy and Business Environment
Erasmus Strategic Renewal Center
RSM Erasmus University
Room T07-29, Burg. Oudlaan 50
P.O. Box 1738, 3000 DR Rotterdam
The Netherlands
Tel: +31 10 4081941 / 4082005
Fax: +31 10 4089013
E-mail: zkwee@rsm.nl
www.strategyaterasmus.nl
*) We acknowledge the insightful comments of the Competence 2005 Conference reviewer of the
paper, the comments given by participants during the Conference, and the feedback from the post-
conference reviewer.

COEVOLUTIONARY COMPETENCE IN THE REALM OF CORPORATE LONGEVITY:
How Long-lived Firms Strategically Renew Themselves
ABSTRACT
Understanding the phenomena of corporate longevity and self-renewing organizations has
become an important topic in recent management literature. However, the majority of the
research contributions focus on internal determinants of longevity and self-renewal. Using a co-
evolutionary framework, the purpose of this paper is to address the dynamic interaction between
organizations and environments in the realm of sustained strategic renewal, i.e. corporate
longevity. To this end, we will focus on the competence of long-lived firms to coevolve due to
the joint effect of managerial intentionality and environmental selection pressures. Building on
coevolutionary framework, we develop a conceptual framework that highlights an organization’s
coevolutionary competence. Two longitudinal case studies are presented illustrating the
arguments.
Keywords: Competence-based management; Coevolutionary competence; Corporate longevity;
Strategic renewal; Adaptive open systems.
1

Introduction
Corporate longevity, i.e. sustained strategic renewal, merits thorough investigation. The large
volume of existing research has resulted in several prominent findings on the common
organizational characteristics of long-lived firms. These characteristics are, among others: a
strong sense of identity, a decentralized organization or a tolerant management style (De Geus,
1999; Collins & Porras, 1999; Hall, 1997), sensitivity towards the environment, (De Geus, 1999;
Cohen & Levinthal, 1990; Volberda, 1998), and conservative financing policy (Hall, 1997; De
Geus, 1999). However, these common characteristics focus mainly on the processes inside an
organization.
Such a focus is not incorrect, but rather it is incomplete because investigating corporate
longevity requires a more encompassing perspective on organizations. The pertinent perspective,
such as viewing organizations as symbiotic interacting systems (Hicks & Gullet, 1975), takes into
account both internal aspects of organizations and the forces in their environments that set limits
on organizational discretion and the strategic possibility of influencing these forces to increase
the chance of survival. Hence, a more encompassing approach requires a framework in which
both environmental selection and firm-level adaptation is captured (Aldrich, 1979, 1999).
Furthermore, a comprehensive understanding is required of how firms change and deal
with environmental developments, like technological innovation and (de-)regulation, over time
and what kinds of competences are required for self-renewal. This paper intends to address these
issues. The focus is on the competence of long-lived firms that enables them to dynamically
remain aligned with the environment due to coevolutionary interaction between environmental
selection and firm adaptation. Such competence is coined here as coevolutionary competence.
To this end, the purpose of this paper is to integrate the analytical perspective on
competence-based management into a coevolutionary framework. In doing so, this paper aims to
contribute to the literature in three ways. First, this paper will add to the richness of competence
building and competence leveraging research through the integration with the coevolution theory.
More specifically, it will contribute to the organizational competence framework by extending
the dynamic, systemic, cognitive, and holistic aspect of management processes through the
incorporation of three principles of self-renewal. Second, this paper contributes to the
understanding of multidirectional causalities between collective managerial efforts and
2

Frequently asked questions

Q1. What are the contributions in "Coevolutionary competence in the realm of corporate longevity: how long-lived firms strategically renew themselves" ?

In this paper, the authors focus on the competence of long-lived firms that enables them to dynamically remain aligned with the environment due to coevolutionary interaction between environmental selection and firm adaptation. 

Q2. What future works have the authors mentioned in the paper "Coevolutionary competence in the realm of corporate longevity: how long-lived firms strategically renew themselves" ?

Since this paper is the first attempt to use the construct of coevolutionary competence in the realm of corporate longevity, the authors acknowledge that this construct is still in its infancy and thus deserves more future work in both theoretical and empirical parts. The implication for the coevolutionary competence construct must be investigated in future research. In this respect, the authors believe 21 that their work in this paper can provide a new lens and new directions for research in competencebased management and corporate longevity. Lacking managerial intentionality to cope with these challenges will result in not being able to coevolve with the environment. 

Q3. What is the importance of balancing the level of flow at each competence mode?

Balancing the level of flow at each competence mode is of importance in helping the company to sustain its survival and its renewal trajectory. 

Q4. What is the purpose of this research approach?

This research approach aims at preserving the chronological flow to see which historical events are likely to lead to which consequences. 

Q5. What period was RTC still a commercial agent?

The 1800s The period of 1800-1820 was still an explorative period for RTC in which it was only a commercial agent in the linen industry. 

Q6. What is the impact of environmental selection on the development of coevolutionary competence?

The arrow of managerial intentionality, for instance, suggests that the impact of managerial intentionality on building a firm’s coevolutionary competence increases from competence mode 5 (operating flexibility) to competence mode 1 (cognitive flexibility regarding alternative strategic logics). 

Q7. Why did RTC experience more critical situations during the 1920s-1960s?

Due to the slow adjustment of its level of managerial intentionality with the level of environmental selection, RTC experienced critical situations during longer periods (Figure 10: 1920s-1960s) than HBC. 

Q8. What was the name of the technical component used in NASA’s satellite?

One of its technical components named Bryte materials was later used in NASA’s satellite for the Beagle II and the Mars Exploration Rover missions. 

Q9. What is the empirical research of the two long-lived firms?

The empirical research of the two long-lived firms posits that firms that continually renew themselves have a better chance to last for a long time. 

Q10. What is the obvious association between managerial intentionality and competence mode 1?

Due to the nature of the first competence mode i.e. cognitive flexibility to define alternative strategic logic, managerial intentionality is most clearly associated with competence mode 1. 

Q11. What was the reason for the bottleneck?

As a result, the bottleneck occurred at the top management level in terms of the cognitive flexibility to define strategic logics. 

Q12. What happened to the textile industry in the Netherlands?

in the period after 1910 to the second half of the 20th century (1950s), the decline of the Dutch textile industry went unnoticed by RTC.