Competence-Based Strategy So Far
In the last chapter I arrived at the notion that competencies and competence-based strategy are essential for strategic management. Of course, I did not invent that notion, and in this chapter I will discuss the seminal contributions to the field of competence-based strategy and attempt to outline where work is still needed.
FUNCTIONAL DEFINITIONS OF COMPETENCIES
Generally, the concept of core competencies is attributed to Prahalad and Hamel (1990) and Prahalad (1993), so why not start there. In 1990, Hamel and Prahalad defined core competencies as: “…the collective learning in the organization, especially how to co-ordinate diverse production skills and integrate multiple streams of technologies…” (p. 82). Furthermore, Prahalad elaborated on this in his 1993 publication as (p. 45): Competence=(technology • governance process • collective learning) Regarding a core competence, Hamel and Prahalad say it must be subject to three tests:
|• Is it a significant source of competitive advantage? |
|• Does it transcend a single business? |
|• Is it hard for competitors to imitate? |
This points toward the main contribution from Hamel and Prahalad and their followers—the definition of competencies as a part of strategic