The two sides of the coin: core competence as capability and obsolescence

Although studies of "core competence" appear frequently, the concept lacks a clear definition that allows one to operationalize it and Use it to develop falsifiable predictions. We propose a definition based oil the phenomenon that core competence is typically applied to - adaptations to different external context. Sourcing insight form the paradigm of organizational ecology, we develop arguments rooted in theories of structural inertia and environmental imprinting. Empirical analyses of failure rates of entrants in the Italian automobile industry confirm our propositions that core competence is a source of competitive advantage when industry entry is based on relevant capabilities and a source of inertia and obsolescence when core competences need to be substantially altered. We conclude that whether core competence materializes as a dynamic capability or exposes the firm to liability to selection and obsolescence is a random process. Its outcome hinges on environmental variation and the resulting firm-environment (mis)alignment and is thus largely beyond managerial control

The ecological interdependence of emergent and established organizational populations: Legitimacy transfer, violation by comparison, and unstable identities

10.1287/orsc.1060.0209Organization Science175577-59

Festina lente : learning and inertia among Italian automobile producers, 1896-1981

Based on the premise that learning and inertia develop and operate in organizations simultaneously, this paper examines under what conditions adaptation or selection will take place. We have analyzed the process of technological scope expansion among Italian automobile firms, and found that firms prone to expanding their technological competencies tend to be either specifically organized to benefit from variation-based learning or do so in response to pressures from competitive intensity in their environment. But these effects hinge on the structure of the market that evolves as the industry consolidates. We also examine the failure rates of Italian auto firms and find that implementing a core change generates negative repercussions for survival but this effect can be countered by properties of the organizational design that facilitate variation-based learning. Our results suggest that organization theory will benefit if ecological and learning theories are further integrated in future research