Core capabilities and core rigidities: a paradox in managing new product development
TL;DR: The nature of the core capabilities of a firm is examined, focusing in particular on their interaction with new product and process development projects, and two new concepts about core capabilities are explored here.
Abstract: This paper examines the nature of the core capabilities of a firm, focusing in particular on their interaction with new product and process development projects. Two new concepts about core capabilities are explored here. First, while core capabilities are traditionally treated as clusters of distinct technical systems, skills, and managerial systems, these dimensions of capabilities are deeply rooted in values, which constitute an often overlooked but critical fourth dimension. Second, traditional core capabilities have a down side that inhibits innovation, here called core rigidities. Managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side. Such projects play an important role in emerging strategies by highlighting the need for change and leading the way. Twenty case studies of new product and process development projects in five firms provide illustrative data.
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TL;DR: The dynamic capabilities framework as mentioned in this paper analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change, and suggests that private wealth creation in regimes of rapid technology change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm.
Abstract: The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.
27,902 citations
Cites background from "Core capabilities and core rigiditi..."
...Dynamic capabilities thusdefined for factors of production. reflect an organization’s ability to achieve new and innovative forms of competitive advantage Resources23 given path dependencies and market positions (Leonard-Barton, 1992)....
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...Dynamic capabilities thus reflect an organization' s ability to achieve new and innovative forms of competitive advantage given path dependencies and market positions ( Leonard-Barton, 1992 )....
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Abstract: Considerable progress has been made in identifying market-driven businesses, understanding what they do, and measuring the bottom-line consequences of their orientation to their markets. The next c...
6,313 citations
TL;DR: The argument is made that dynamic capabilities are shaped by the coevolution of these learning mechanisms, and the relative effectiveness of these capability-building mechanisms is analyzed here as contingent upon selected features of the task to be learned, such as its frequency, homogeneity, and degree of causal ambiguity.
Abstract: This paper investigates the mechanisms through which organizations develop dynamic capabilities, defined as routinized activities directed to the development and adaptation of operating routines. It addresses the role of (1) experience accumulation, (2) knowledge articulation, and (3) knowledge codifi- cation processes in the evolution of dynamic, as well as operational, routines. The argument is made that dynamic capabilities are shaped by the coevolution of these learning mechanisms. At any point in time, firms adopt a mix of learning behaviors constituted by a semiautomatic accumulation of experience and by deliberate investments in knowledge articulation and codification activities. The relative effectiveness of these capability-building mechanisms is analyzed here as contingent upon selected features of the task to be learned, such as its frequency, homogeneity, and degree of causal ambiguity. Testable hypotheses about these effects are derived. Somewhat counterintuitive implications of the analysis include the relatively superior effectiveness of highly deliberate learning processes such as knowledge codification at lower levels of frequency and homogeneity of the organizational task, in contrast with common managerial practice.
6,011 citations
Cites background from "Core capabilities and core rigiditi..."
...Failure to do so turns core competencies into core rigidities (Leonard Barton 1992)....
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TL;DR: In this paper, a natural resource-based view of the firm is proposed, which is composed of three interconnected strategies: pollution prevention, product stewardship, and sustainable development, and each of these strategies are advanced for each of them regarding key resource requirements and their contributions to sustained competitive advantage.
Abstract: Historically, management theory has ignored the constraints imposed by the biophysical (natural) environment. Building upon resource-based theory, this article attempts to fill this void by proposing a natural-resource-based view of the firm—a theory of competitive advantage based upon the firm's relationship to the natural environment. It is composed of three interconnected strategies: pollution prevention, product stewardship, and sustainable development. Propositions are advanced for each of these strategies regarding key resource requirements and their contributions to sustained competitive advantage.
5,339 citations
TL;DR: In this article, the authors reconceptualize the firm-level construct absorptive capacity as a learning dyad-level measure, relative absorptive capacities, and test the model using a sample of pharmaceutical-biotechnology R&D alliances.
Abstract: Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the firm-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical–biotechnology R&D alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. © 1998 John Wiley & Sons, Ltd.
4,627 citations
Cites background from "Core capabilities and core rigiditi..."
...Absent from their theory, but central to ours, is the argument that valuable knowledge tends to be embedded in specific knowledge-processing systems (Leonard-Barton, 1992; Teece and Pisano, 1994; Spender, 1996)....
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...For an in-depth discussion of why some capabilities become rigidities, see Leonard-Barton (1992). understand not just the objective and observable components of the teacher’s capabilities, but also the more tacit components: the ‘how and why’ knowledge....
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...However, they are also a source of organizational rigidity and limit the firm’s ability to effectively manage other types of projects and problems (Leonard-Barton, 1992)....
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...Firms tend to initially respond to diminishing prospects by adapting their existing capabilities or developing new capabilities from existing organizational knowledge (Leonard-Barton, 1992; Walsh and Ungson, 1991)....
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References
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Book•
19 Mar 1985
TL;DR: A review of the book "Organizational Culture and Leadership" by Edgar H. Schein is given in this article, where the authors present a review of their approach to organizational culture and leadership.
Abstract: The article presents a review of the book “Organizational Culture and Leadership,” by Edgar H. Schein.
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TL;DR: Giddens as mentioned in this paper has been in the forefront of developments in social theory for the past decade and outlines the distinctive position he has evolved during that period and offers a full statement of a major new perspective in social thought, a synthesis and elaboration of ideas touched on in previous works but described here for the first time in an integrated and comprehensive form.
Abstract: Anthony Giddens has been in the forefront of developments in social theory for the past decade. In "The Constitution of Society" he outlines the distinctive position he has evolved during that period and offers a full statement of a major new perspective in social thought, a synthesis and elaboration of ideas touched on in previous works but described here for the first time in an integrated and comprehensive form. A particular feature is Giddens' concern to connect abstract problems of theory to an interpretation of the nature of empirical method in the social sciences. In presenting his own ideas, Giddens mounts a critical attack on some of the more orthodox sociological views. "The Constitution of Society" is an invaluable reference book for all those concerned with the basic issues in contemporary social theory.
16,208 citations
TL;DR: The most powerful way to prevail in global competition is still invisible to many companies as discussed by the authors, which is why the concept of the corporation itself has not yet been recognized as a powerful competitive advantage.
Abstract: The most powerful way to prevail in global competition is still invisible to many companies. During the 1980s, top executives were judged on their ability to restructure, declutter, and delayer their corporations. In the 1990s, they’ll be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible — indeed, they’ll have to rethink the concept of the corporation itself.
15,465 citations
Book•
01 Jan 1984
TL;DR: Giddens as discussed by the authors has been in the forefront of developments in social theory for the past decade and outlines the distinctive position he has evolved during that period and offers a full statement of a major new perspective in social thought, a synthesis and elaboration of ideas touched on in previous works but described here for the first time in an integrated and comprehensive form.
Abstract: Anthony Giddens has been in the forefront of developments in social theory for the past decade. In "The Constitution of Society" he outlines the distinctive position he has evolved during that period and offers a full statement of a major new perspective in social thought, a synthesis and elaboration of ideas touched on in previous works but described here for the first time in an integrated and comprehensive form. A particular feature is Giddens' concern to connect abstract problems of theory to an interpretation of the nature of empirical method in the social sciences. In presenting his own ideas, Giddens mounts a critical attack on some of the more orthodox sociological views. "The Constitution of Society" is an invaluable reference book for all those concerned with the basic issues in contemporary social theory.
13,552 citations