From Research to Innovation, How to Create Value for an IT Consulting and Engineering Service Firm through its Internal Research Activities

Literature Review

Drawing on both existent literature and firms’ common practices of competence management, we identify Competence based Management (CBM) and Dynamic Capabilities Framework (DCF) as essential conceptual views of the firm’s competence and related management practices (Hong & Stable, 2003). Competence based management fosters and adopts a dynamic, systemic, cognitive, holistic view of management mechanisms in today’s changing environment (Foss & Ishikawa, 2007; Freiling, Gersch & Goeke, 2008). CBM defines competence as the ability to sustain the coordinated deployment of resources in ways that help an organization achieve its goals (Sanchez & Henee, 1996). This theory focuses on designing and implementing techniques for leveraging individual skills and competences, as well as team capabilities and organizational competences.

Over the last two decades, the dynamic capabilities framework has moved to the front position of strategic management research (Di Stefano, Peteraf & Verona, 2010). To survive in fast-moving business environments, a firm needs more than difficult-to-replicate assets, but also dynamic capabilities: distinct skills, processes, procedures, organizational structures, decision rules (Teece & Pisano, 1994; Winter, 2003; Teece, 2007). DCF was originally conceptualized by Teece, Pisano & Shuen (1997); Teece & Pisano (1994) as the firm’s ability to integrate and build and reconfigure internal and external competences to address rapidly changing environments. They reflect the ability of an organization to achieve new and innovative forms of competitive advantage given path-dependencies and market positions. DCF seeks to provide a coherent framework which can both integrate existing conceptual and empirical knowledge, and facilitate prescription (Teece, Pisano & Shuen, 1997). Dynamic capabilities maintain competitive advantage once corporate performance is improved faster than its competitors (Winter, 2003) and may explain firm’s business model evolution (Brink & Holmén, 2006).