Management

CMI

What can be seen in practice is various firms achieving competitive advantage in different ways. There is evidence, for example, that in industries where scale is considered to be very important, small-scale innovations have completely opened up the competition, This became clear in the stagnating steel industry, where mini-mills grew rapidly in answer to the demand for all kinds οf specialist products. In the Netherlands, large-scale shipyards were engaged in a struggle for survival–with all eyes focused on the government for subsidies–while at the same time specialist firms were successful in the fields οf yacht-building and dredging. The great differences in profitability between firms within the same industry are difficult to explain by resorting to neoclassical theory. (Rumelt 169-185) For these differences lie in the introduction οf innovative concepts, new combinations οf production factors and the smart use οf technologies. The internal side οf the firm plays a crucial part in this. Firms like Primark and McDonalds, for example, have developed specific routines and skills which are difficult for competitors to imitate. The existence οf this sort οf firm-specific competencies does not fit in very well with the cookbook metaphor οf neoclassical economics. The new insights indicate that a sustainable competitive advantage can only be attained by creating new organization-specific knowledge.On the cutting edge οf strategic management and evolutionary economics, a debate is currently taking place about new theories οf the firm in which the special qualities οf knowledge are incorporated. In these theories, static thinking is replaced by a more realistic process perspective. Concepts like limited rationality (or even trial and error), path dependency and heterogeneity are all embraced. The role οf soft variables like knowledge, culture and network relations is

Back To Top