Supply Chain Strategies: Customer Driven and Customer Focused

Competence and Capability

Christopher (1996, p. 71) comments that one of the most profound changes is the recognition that even the largest business organizations will have only relatively few competencies in which they can be said to have a real distinction. This recognition has resulted in a focus upon core business and a trend to outsourcing everything else. The growth of outsourcing has placed increasing emphasis on managing relations between partners in the organizational network. Although the language of 'core competence' is recent, the concept of specialization on which it is based can be traced back to Adam Smith in 1776 and the theory of comparative advantage expounded by David Ricardo in the economics literature in the nineteenth century. [1] Furthermore, a number of different commentators have used different terms such as firm resources, organizational capabilities and core competencies interchangeably. See Table 2.2 for a summary of usage of terms.

Table 2.2

Terminology

Reference

Distinctive competence

Andrews (1971)

Hofer and Schendel (1978)

Selznick (1957)

Strategic firm resources

Barney (1986a)

Barney (1986b)

Invisible assets

Itami (1987)

Strategic firm-specific assets

Dierdickx and Cool (1989)

Core competencies

Dosi et al. (1991)

Prahalad and Hamel (1990)

Corporate culture

Cremer (1989)

Corporate capabilities

Nohria and Eccles (1991)

Organizational capabilities

Baldwin and Clark (1991)

Dynamic capabilities

Teece et al. (1997)

Definitions of Core Competence

Definitions of core competence are somewhat tautological. Resources are called strengths and a firm's strengths are regarded as strategic resources (Nanda, 1996, p. 100). Selznick (1957) was first to introduce...

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