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MASTER'S THESIS
The Understanding of the CoreCompetence Concept
A Swedish Professional Service Firms perspective
Mikael Nilsson2014
Master (120 credits)Business Administration
Luleå University of TechnologyDepartment of Business Administration, Technology and Social Sciences
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Abstract
During the last twenty-five years, the core competence concept has grown to become has
become one of the best-known management concept in strategic management. Despite
the attention the core competence concept has received in scholars and its importance in
creating a sustainable competitive advantage, limited empirical research exist when
applied to professional service firms (PSFs). This despite the fact that a competitive
advantage of a service firm is obtained on the same conditions as manufacturing firms,
the possession of rare and unique resources and capabilities. The purpose of this thesis
was to explore a gap in the literature by investigating the level of understanding of the
core competence concept among PSFs. This study presents the findings of an explorative
research conducted on 35 management consulting firms in Sweden during the spring of
2014. The surveyed firms had heard about the core competence prior to the study and
considered them as important to their firms. A major conclusion that emanates from this
study is that it appears to exist a lack of connectedness between the research on core
competencies and the understanding of the concept among the surveyed management
consulting firms. The findings further indicates that it differs between what is suggested
in the research when managing the firm to compete with core competencies and how
senior manager manage their firms.
Keywords: Core competencies, Resource-based view, Sustainable Competitive
Advantage, Professional Service Firms
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Sammanfattning
Under de senaste 25 åren har konceptet ”kärnkompetenser” vuxit till att bli ett av de mest
välkända koncepten inom strategisk ledning. Trots den uppmärksamhet kärnkompetenser
har fått inom akademin och dess betydelse i att skapa uthålliga konkurrensfördelar är
forskningen begränsade i anslutning till professionella tjänsteföretag. Detta trots att
konkurrensfördelar i tjänsteföretag skapas på samma sätt som för tillverkande företag,
genom innehavet av unika resurser och förmågor. Syftet med denna studie är att utforska
detta gap i forskningen genom att undersöka graden av förståelse för
kärnkompetenskonceptet bland professionella tjänsteföretag. I denna studie presenteras
den undersökande forskning som gjorts bland 35 managementkonsult företag i Sverige
under våren 2014. De företag som deltog i studien hade kännedom om kärnkompetenser
innan studien utfördes och ansåg att de var viktiga för deras företag. En viktig slutsats
som framgår av studien är att det finns olika uppfattningar mellan forskningen på
kärnkompetenser och förståelsen för kärnkompetenser bland management-
konsultföretagen. Resultatet visar även att det skiljer sig mellan hur forskningen anser att
ett företag ska ledas för att konkurrera med kärnkompetenser och hur ledande
befattningshavare leder deras företag i dagsläget.
Nyckelord: Kärnkompetenser, Resursbaserat synsätt, uthålliga konkurrensfördelar,
Professionella tjänsteföretag
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Acknowledgements
I would like to thank my supervisor, senior lecturer TorBjörn Nilsson, for insightful
comments, encouragement and inspiration since my very first lecture in strategy. For
supporting and motivating me during this process I thank Linnea. I am very grateful to
all participating firms. The study could not have been completed without you.
Mikael Nilsson, 2014-06-01
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TABLE OF CONTENT
1. INTRODUCTION ............................................................................................ 1
1.1 Background ............................................................................................................. 1
1.1.1 The Resource based view of the firm .............................................................. 1
1.1.2 Core competencies ........................................................................................... 2
1.1.3 The Professional Service Firm ........................................................................ 3
1.2 Disposition .............................................................................................................. 5
2. LITERATURE REVIEW ............................................................................. 6
2.1 Linking Core competencies to competencies ......................................................... 6
2.2 Core competencies .................................................................................................. 7
2.2.1 Managing core competencies .......................................................................... 9
2.2.2 The roots of competitiveness ......................................................................... 10
2.3 The characteristics of core competencies ............................................................. 11
2.3.1 Value and benefit for the customer................................................................ 11
2.3.2 A unique set of resources and capabilities..................................................... 13
2.3.3 Providing access to a wide variety of markets .............................................. 16
2.4 Frame of references .............................................................................................. 17
3. PROBLEM DISCUSSION ......................................................................... 19
3.1 Research purpose and Research Questions .......................................................... 20
3.2 Delimitations ........................................................................................................ 21
4. METHODOLOGY ......................................................................................... 22
4.1 Research purpose .................................................................................................. 22
4.2 Research approach ................................................................................................ 22
4.2 Research strategy .................................................................................................. 23
4.4 Research method ................................................................................................... 24
4.5 Data collection ...................................................................................................... 24
4.6 Sample selection ................................................................................................... 25
4.7 Conceptualization ................................................................................................. 26
4.7.1 Conceptualization of research question one (RQ1) ....................................... 26
4.7.2 Conceptualization of research question two (RQ2) ....................................... 27
4.8 Survey structure .................................................................................................... 28
4.9 Quality Standards ................................................................................................. 30
4.9.1 Reliability ...................................................................................................... 30
4.9.2 Validity .......................................................................................................... 32
4.10 Data analysis ....................................................................................................... 33
5. DATA PRESENTATION ........................................................................... 34
5.1 Firm-related information ...................................................................................... 34
5.2 Core competence-related information .................................................................. 35
5.3 Firm-related information ...................................................................................... 49
6. DATA ANALYSIS ......................................................................................... 54
6.1 Core competencies ................................................................................................ 54
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6.2 The characteristics of the firms’ core competencies ............................................ 56
6.2.1 Creating Value ............................................................................................... 56
6.2.2 Unique ........................................................................................................... 57
6.2.3 Diversifier ...................................................................................................... 60
6.3 Managing the management consulting firm ......................................................... 61
7. CONCLUSIONS AND DISCUSSION ................................................. 63
7.1 Managerial implications ................................................................................... 66
7.2 Limitations ........................................................................................................ 66
7.3 Further research ................................................................................................ 66
REFERENCES ...................................................................................................... 67
APPENDIX
Appendix I: Sample frame
Appendix II: Survey in Swedish
Appendix III: Survey in English
Appendix IV: Cover letter in Swedish
Appendix V: Cover letter in English
Appendix VI: Response Frequency
Appendix VII: Variable Summary
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TABLE OF FIGURES, TABLES AND ABBREVIATIONS
Figures
Figure 1.1 The core competence hierarchy 3
Figure 1.2 Comparison of the production and delivery of services and goods 4
Figure 1.3 The tangibility spectrum 4
Figure 2.1 Competencies: The Roots of Competitiveness 11
Figure 2.2 The value co-creation framework 13
Figure 5.1 Our core competencies contributes to the retention of customers 36
Figure 5.2 Our core competencies contributes to better customer relations 36
Figure 5.3 Our core competencies contributes to attract new customer that wants to
use your services 37
Figure 5.4 Our core competencies contributes to the value creation by making your
customers demand our services prior to our customers 38
Figure 5.5 Through our core competencies, we can satisfy our customers better 38
Figure 5.6 Our competitors have similar core competencies as we do 39
Figure 5.7 We could create similar value creating strategies without our core
competencies 40
Figure 5.8 Our competitors knows the structure of your core competencies 40
Figure 5.9 It would be difficult and expensive for our competitors to develop similar
core competencies 41
Figure 5.10 Through our core competencies we can take advantage of opportunities in
our external environment 41
Figure 5.11 Through our core competencies we can neutralize external threats in our
environment 42
Figure 5.12 Our core competencies has been developed during a long time 43
Figure 5.13 Our core competencies are deeply rooted in our employees and corporate
culture 43
Figure 5.14 Through our core competencies we can take advantage of opportunities in
our external environment 44
Figure 5.15 Our core competencies can only be deployed for offering services within
one industry/market 45
Figure 5.16 Our core competencies can only be deployed for offering services within
one segment of customers 45
Figure 5.17 Our core competencies can only be deployed for offering services within
one segment of customers 46
Figure 5.18 Our core competencies are shared among all our area of businesses and
SBUs 47
Figure 5.19 Our core competencies guides our firm when entering new markets 47
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Figure 5.20 We only enter markets with similar competitive structure, rule and key
success factors as our present markets 48
Figure 5.21 Senior management’s point of view about the future compared to your
competitors 49
Figure 5.22 Business issues that absorbs senior management attention 50
Figure 5.23 Competitors view of the firm 50
Figure 5.24 The firm's strength 51
Figure 5.25 The firms focus to create competitive advantage 52
Figure 5.26 The firms transformational agenda 52
Figure 5.27 Managing by preserving status quo or designing the future 53
Tables
Table 2.1 Core competencies of leading corporations 8
Table 4.1 The main differences between the deductive and inductive approach 22
Table 4.2 Situations for different research purposes 23
Table 4.3 Reason for exclusion 25
Table 4.4 Conceptualization of RQ1 27
Table 4.5 Conceptualization of RQ2 27
Table 4.6 Survey structure 30
Table 5.1 Firm sizes 34
Table 6.1 Descriptive Statistics the variable creating value 57
Table 6.2 Correlations between statements constituting the value creation 57
Table 6.3 Descriptive Statistics for being a valuable resource 57
Table 6.4 Descriptive Statistics for being a rare resource 58
Table 6.6 Descriptive Statistics for Causally ambiguous 58
Table 6.5 Descriptive Statistics for Historical conditions 58
Table 6.6 Descriptive Statistics for Socially complex 59
Table 6.7 Descriptive Statistics for being a non-substitutable resource 59
Table 6.8 Correlations between the statements constituting the uniqueness 60
Table 6.9 Descriptive Statistics for the variable diversifier 60
Table 6.10 Correlations between the statements constituting the diversification 61
Table 6.11 Descriptive Statistics for the variable management 62
Table 6.12 Correlations between the statements constituting the management 62
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Abbreviations
CA Competitive Advantage
ILCC Individual Level Core Competencies
OLCC Organizational Level Core Competencies
PSF Professional Service Firm
RBT Resource-based Theory
RBV Resource-based View
SBU Strategic Business Unit
SCA Sustainable Competitive Advantage
SME Small- and Medium-sized Enterprises
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1. INTRODUCTION
This introductory chapter provides the reader with the background and a broader insight
to the topic for this study where concepts such as the resources based view of the firm
(RBV), core competencies, and the professional service firm (PSF) are introduced and
described. The background is then followed by the disposition that explains the outline of
this study.
1.1 BACKGROUND
The core competence concept has become one of the best-known management concept
and tool in strategic management (Ljungquist, 2007) since the publishing of the ground-
breaking article on core competencies by Prahalad and Hamel (1990). However, the
competence concept originally goes back to the 1950’s, where distinctive competencies
was described by Selznick (in Bhamra, Dani and Bhamra, 2011) as firm-specific features
not possessed by competitors. The core competence concept is closely related to and
viewed from the resource-based view (RBV) perspective (Walsh & Linton, 2001), and
due to its value enhancing characteristics (Newbert, 2008), it is considered the firms’ most
important resource (Srivastava, 2005) for creating a sustainable competitive advantage
(Prahalad &Hamel, 1990).
Core competencies can exists on two levels; organizational level core competencies
(OLCC) and individual level core competencies (ILCC) (Lahti, 1999). This thesis
explores OLCC which are referred to as core competencies throughout this study.
Despite the attention the core competence concept has received in scholars and its
importance in creating a sustainable competitive advantage, the application of the concept
has almost exclusively been on technology based and resource heavy organisations. This
despite the fact that a service firms competitive advantage is obtained on the same
conditions as manufacturing firms, i.e. the possession of rare and unique resources and
skills (Suciu & Boraza, 2010). This makes core competencies equally important for
service companies as for manufacturing companies (Prahalad & Hamel, 1990;
Ljungquist, 2014). Hence, the overall objective of this study is to explore this gap in the
literature and investigate the core competence concept among professional service firms
(PSFs) by exploring the understanding of core competencies, as well as if senior managers
within the PSFs manages their firms in a manner that enables them to compete on core
competencies.
1.1.1 THE RESOURCE BASED VIEW OF THE FIRM
The Resource-based view (RBV) or the Resource-based theory (RBT) of the firm, as it is
also called, is one of the most influential and cited theories in the history of management
theory (Ljungquist, 2007). It is an inside-out approach to understanding competitive
advantage (Von Krogh & Roos, 1995) and aims to explain why some companies are
constantly more profitable than competitors with the same resources in the same industry
(Petts, 1997). This approach to strategy formulation begins with assessing the firms’
resources, capabilities and core competencies. (Black & Boal, 1994) Grant (1991)
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consider idiosyncratic resources and capabilities as fundamentally heterogeneous across
firms in an industry, and constitutes the foundation of the long-term corporate strategy
for profitability and direction. He further argues that an industry structured and external
focused corporate strategy does not create a secure and stable foundation for the corporate
strategy in the fast changing business environment. This is also supported by empirical
evidence which show no linkage between industry structure and profitability.
Furthermore, it has been shown that differences in profitability between competitors
within industries are more important than differences in profitability between industries.
The reason for this is that globalization, technological change and diversification of
companies across industry boundaries has made previously stable industries with high
profits and less competition to become highly competitive and less profitable. Porter
(1997) argues that competitive advantage can be obtained through either a cost advantage,
differentiation advantage or through a combination of both. Grant (1991) agrees to these
different competitive advantages but he further argues that resources and capabilities are
the source of these competitive advantages. Furthermore, Porter (in Black & Boal, 1994)
agrees that deployment of unique resources is the reason why successful firms are
successful.
Grant (1991) makes a distinct difference between resources and capabilities. Resources
are inputs of the production process and include financial resources (cash flow, debt
capacity etc.), physical resources (factory, machinery etc.), human resources (all types of
employees), technological resources (high quality production, low cost factories etc.),
organizational resources (planning, control and total quality systems, culture etc. and
intangible resources (goodwill, brand name etc.) (Von Krogh & Roos, 1995). Individually
few of these resources are productive. A capability is the skills and knowledge (Petts,
1997) that enables the company to coordinate multiple resources to make them
productive. Resources are thereby the source of the company’s capabilities, and
capabilities’ are the source for the company’s competitive advantage (Grant, 1991).
1.1.2 CORE COMPETENCIES
The core competence hierarchy (see Figure 1.1), presented by Bhamra, Dani and Bhamra
(2011), shows how resources and capabilities constitutes the functional strategy of
individual strategic business units (SBU). Ljungquist (2008, 2010) notes that resources
are linked to the core competence due to its input to the value-adding process, while
capabilities are linked to the core competence through support from systems and routines.
Furthermore, the competitive strategy of individual SBUs constitutes of competencies.
Competencies are qualities possessed by individuals and teams of individuals that allows
for development and refinement of the resources and capabilities into a future desired
state (Ljungquist, 2008, 2010). Finally, the core competencies, which constitutes the
corporate strategy, consists of an aggregation of competencies residing in the individual
SBUs, which enables them to be employed in different and diverse markets. This complex
web of resources, capabilities and competencies also increases the value creation,
complexity and intangibility of the core competence which makes it hard for competitors
to detect and imitate (Gorman & Thomas, 1997).
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Figure 1.1: The core competence hierarchy
Source: Bhamra, Dani & Bhamra (2011) p. 2731
Several researchers (Agha, Alrubaiee & Jamhour, 2012; Ljungquist, 2010; Gorman &
Thomas, 1997; Peets, 1997; Prahalad & Hamel, 1990) argues that core competencies are
the most important factor for creating a corporate strategy with the goal to obtain
sustainable competitive advantage1 (SCA) and increasing organizational performance.
1.1.3 THE PROFESSIONAL SERVICE FIRM
The key features that differentiates the core product of a service firm from the core
product of a manufacturing firm is its perishability, intangibility, heterogeneity (Aung &
Heeler, 2001) and inseparability. (Hoffman & Bateson, 2010) Furthermore, the
participation and integration of the customers before, during and after the service
production and delivery process are what also differentiate a service firm from a
manufacturing firm (Gouthier & Schmid, 2003). Grönroos (in Gouthier & Schmid, 2003)
concludes that without the direct or indirect participation of the customer, services cannot
be produced. An illustration of the differences between a service producer and goods
producer are presented in Figure 1.2. The Figure shows how customers are disconnected
from the production of a good while the customers are involved and participating in the
production and delivery of a service.
1 A sustainable competitive advantage (SCA) is held by an organization when the customer perceives a
consistent difference in important product attributes between the organization and its competitors which is
the result of a gap in inimitable key capabilities that can be expected to endure over time. (Coyne, 1986)
4
Figure 1.2: Comparison of the production and delivery of services and goods
Source: Authors modification from Åsa Wallström, 2013, Lecture 4, Service Marketing
Professional service firms (PSFs), also called knowledge-intensive business services
(Muller & Doloreux, 2009; Arikka-Stenroos & Jaakkola, 2012), knowledge-intensive
firms or knowledge-based organizations (Jensen et al., 2010), differs from other service
firms in terms of the intangible knowledge-intensive input and their outputs which
consists of a high degree of tacit knowledge and intangibility. (Sahin, 2011; Muller &
Doloreux, 2009) According to OECD (2008), the professional service sector “are among
the fastest growing business services sectors in OECD countries and play an important
role in the functioning of modern economies” (p. 3). As noted by Muller and Zenker (in
Arikka-Stenroos & Jaakkola, 2012), PSFs have three distinctive characteristics:
1. They are highly knowledge intensive.
2. They have a problem solving function.
3. The service provided is strongly interactive and customer specific.
The nature of a PSF and the customer specific services provided by PSFs is categorized
as highly intangible in a tangibility spectrum (see Figure 1.3), making the product quality
and value (Sahin, 2011) difficult for customers to evaluate before consuming it (Amonini,
McColl-Kennedy, Soutar & Sweeney, 2010). This leads to customer uncertainty
(Amonini et al., 2010) and makes customer relations important features for the PSF
(Sahin, 2011).
Figure 1.3: The tangibility spectrum
Source: Authors modification of Shostack, 1977, p.77
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Management consulting firms, law firms, software firms, data mining firms, computer
firms, accounting firms and advertising firms are all companies that possess these
distinctive characteristics mentioned above and provides solutions to the specific needs
of their customers. (Sahin, 2011), Bettencourt et al. (in Muller & Doloreux, 2009) defines
PSFs as:
‘‘enterprises whose primary value-added activities consist of the
accumulation, creation, or dissemination of knowledge for the purpose of
developing a customized service or product solution to satisfy the client’s
needs’’ (p. 65).
PSFs are highly dependent on the intangible resources, such as skills and knowledge
possessed by highly trained and highly mobile professional employees. This makes the
human resources the most strategically important resource held by the PSF (Grant, 1991,
1996; Sahin, 2011; Jensen et al. 2010) to create value for the customers and reaching
firm-specific goals (Rakickaite et al. 2011). In the current business environment,
knowledge is becoming increasingly more important as a competitive source and Zach
(in Jensen et al., 2010) argues that knowledge is currently the only source for creating
competitive advantage. With the PSFs core product being business competence, skills and
problem solving (Rakickaite et al. 2011), the ‘production technology’ is represented by
the knowledge possessed by its employees. (Ofek & Sarvary in Sahin, 2011). According
to McKaig-Berliner (in Sahin, 2011) specialised knowledge held by employees
constitutes the PSFs core competence. Meanwhile, Aung and Heeler (2001) argues that
because customer relationships and customer-perceived value is more emphasized than
product utility value by senior management in service firms, the core competencies of
service firms must involve the PSFs human resources, operations and marketing function,
i.e. those “functions that are actively involved in the processes of creating and delivering
services” (p. 622).
1.2 DISPOSITION
In this introductory section the reader was introduced to the overall purpose of this study.
Furthermore, concepts such as the resources based view of the firm (RBV), core
competencies, and the professional service firm (PSF), were briefly discussed and formed
the background from this study. Based on the RBV, the literature review in the second
chapter presents relevant literature concerning the core competence concept. First, the
linkage between a firms core competencies and its competencies are presented. This leads
to what they are, how they are managed and what characteristics they have. This is
followed by a frame of references where relevant theories relevant to the data analysis are
presented. Due to the complexity of the core competence concept, the third section
presents the problem discussion which is narrowed done to the research purpose and
research questions. In the fourth chapter, the research methodology used for this study is
presented. The empirical data collected for this study is presented in chapter five, which
are then analysed and compared in chapter six against relevant theories from the frame of
references. In the seventh and final chapter, the main conclusions and implications are
presented. This is followed by limitations of this study and suggestions for further
research in connection to the topic of this study.
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2. LITERATURE REVIEW
This chapter presents related literature and existing research on the topic of this study.
From the literature review the most relevant research has then been selected to form a
frame of references.
2.1 LINKING CORE COMPETENCIES TO COMPETENCIES
In accordance with the core competence hierarchy presented in chapter one, Ljungquist
(2007) identified a hierarchy of quality and complexity between competencies and core
competencies, where the later are more advanced and complex. Ljungquist (2008) and
Lahti (1999) further argues that because of the linkage between core competencies and
competencies, competencies must first be identified in order to identify the firms’ core
competencies.
Teece, Rumelt and Dosi (1994) argues that competencies are not product specific, but
rather “differentiated technological skills, complementary assets, and organizational
routines and capacities that provide the basis for a firm’s competitive capacities in one
or more businesses”. (p. 18) Meanwhile, Sanchez (2004) defines competencies as “the
ability to sustain the coordinated deployment of assets in ways that help a firm achieve
its goals” (p. 521). It is commonly accepted that competencies are knowledge and skills,
neither measurable nor observable (Lahti, 1999), possessed by individuals and teams of
individuals that allows the firm to develop and refine resources and capabilities into a
future desired state, i.e. reaching a firm-specific goal (Ljungquist, 2007; Rakickaite et al.,
2011). However, according to Teece et al. (1994), the firms’ ability to solve technical and
organizational problems can be perceived as a measurement of the firms’ competencies.
Heikkilä and Cordon (2002) categorizes competencies into three hierarchical classes; 1)
Distinctive competencies are key capabilities that the competitors do not have and are
therefore classified as the most important competencies, 2) Essential competencies are
needed for sustaining the operation of the company and does not make the firm
distinguish from its competitors, and 3) Protective competencies which if poorly managed
will pose a substantial risk for the success of the firm. Even though individual
competencies held by employees are important for PSFs, researchers emphasise the
importance of collective learning of knowledge and skills, and institutional memory
(Rakickaite et al., 2011). Grant (1996) suggests that when the mobility of the employees
are high, the integration of knowledge is more important than knowledge and skills held
by individual employees. He further argues that the firm’s ability to access and integrate
specialised knowledge and skills held by individuals within the firm will determine to
which extent a key capability is a distinctive competence or not.
According to Hafeez, Zhang and Malak (2002), core competencies are derived from the
distinctive competencies and key capabilities of the firm, considering a core competence
a derivative of a distinctive competence (Lahti, 1999). Bogner et al. (1999) and Petts
(1997) further argues that for any competence to become a core competence, it has to be
appropriately matched to the external environment (Peteraf, 1993) and linked to the needs
of- and create value and core benefits to the customers better than competitors. This
implies that it is the customers who decide if the competence is “core” or not (Bogner et
7
al., 1999; Petts, 1997). Petts (1997) further argues that compared to competencies, core
competencies have a higher degree of complexity (combination of resources and
capabilities), invisibility (hard to identify), inimitability (not easily copied), durability
(can be used for a long time), non-substitutability (no replaceable for an alternative
competence) and superiority (better than other competences in other companies), which
all contribute to making core competencies more advanced than competencies.
Furthermore, several researchers (Ljungquist, 2010; Hafeez et al. 2002; Petts, 1997;
Snyder & Ederling, 1992; Barney, 1991) argues that in the fast changing business
environment where a competitive advantage of today can become a core rigidity and
create a competitive disadvantage of tomorrow, the core competence must be strategically
flexible for continuously upgrading and development. This is because competing firms
are always trying to imitate successful firms and if the firm fail in developing and
renewing their core competence it will be imitated by competitors and erode the firms
SCA (Srivastava, 2005). Furthermore, Srivastava (2005) argues that manager must be
willing to abandon earlier core competencies that no longer deliver sufficient customer
benefits and value which can be a result of drastically changes in technology.
2.2 CORE COMPETENCIES
“Core competence is what a firm is able to perform with excellence
compared to its competitors”
(Grønhaug & Nordhaug, 1992, p. 440)
The core competence concept has received a great extent of attention in business and
academia since C.K Prahalad and Gary Hamel published their ground breaking article;
“The Core Competence of the Corporation” in 1990. Since then, it has become one of the
best-known management concept and tool in strategic management (Ljungquist, 2007).
Prahalad and Hamel (1990) defines core competencies as:
“the collective learning in the organization, especially how to coordinate
diverse production skills and integrate multiple streams of technologies” (p.
81).
Core competencies are specialized expertise that is the result of the combination of key
capabilities which strategically differentiate a company from its competitors (Holahan,
Sullivan & Markham, 2014) Meanwhile, Prahalad and Hamel (1990) describes core
competencies as the glue that tie the firm’s business units together, which is comprised
of a combination of knowledge, skills, abilities and other characteristics within the firm
(Lahti, 1999). Lahti (1999) describes knowledge as learned and acquired information
possess by employees to perform a task; skills are the utilization of tools, equipment and
machinery to perform a task; abilities refers to performing mental and physical actions in
relation to a task; and other characteristics refers to individual traits, interest and
motivation that indicate an employee’s behaviour. It is not expertise within simply one
area or one new technology (Holahan et al., 2014). Rather they are a mixture of necessary
resources and capabilities that enable a firm to deliver a superior value to the market, and
8
thereby creating a competitive advantage2 (CA) (Wind & Mahjan, in Holahan et al.,
2014). Furthermore, Petts (1997) describe core competencies as the unique, complex,
hard to distinguish and value-adding combination of resources, capabilities and
competencies that generates fundamental support for the firms’ strengths. This leads to a
better fit between internal strengths and opportunities in the external environment
(Ljungquist 2008; Bogner et al., 1999; Coman & Ronen, 2009; Javidan, 1998).
Prahalad and Hamel (1990) suggests that the firm is fundamentally composed of systems
of activities i.e. clusters (Teece et al., 1994) and a portfolio of competencies rather than
portfolio of businesses (Walsh & Linton, 2001; Snyder and Ederling, 1992). Therefore,
SBUs should only be considered as pools of competencies (Srivastava, 2005). Srivastava
(2005) further consider a core competence as an intangible “dynamic learned resource”
that are learnt and accumulated over time, and enables the firm to function more
effectively (Lahti, 1999). They guide the firm in is diversification strategy by enabling
the firm to enter new and diverse markets through idiosyncratic and organic growth where
the core competence can be exploited best (Leavy, 2003), rather than the considering the
attractiveness of the market (Prahalad and Hamel, 1990). Table 2.1 compiles examples of
core competencies held by a few of the world’s largest corporations found throughout the
literature used in this study.
Table 2.1: Core competencies of leading corporations
Company name Core competencies in
Caterpillar After-sales service
Walt Disney Entertaining families
Indian Railways The handling of diesel engine and electric engine-based technology
Canon Optics, imaging and microprocessors
Honda Produce light-weight, fuel-efficient engines
Sony Manufacturing and miniaturizing components
3M Sticky tape
Philips Optical media
Bang & Olufsen Developing and designing high-quality, user-friendly, high fidelity equipment
Several researcher (Agha, Alrubaiee & Jamhour, 2012; Ljungquist, 2010; Gorman &
Thomas, 1997; Peets, 1997) argues that core competencies are linked to the creation of a
SCA. They consider them to be the most important and fundamental sources for creating
a corporate strategy with the goal to obtain SCA and increasing organizational
performance. Furthermore, the rapidly changing business environment makes it harder
for firms to compete for technological and product/service leadership (Grønhaug &
2 Competitive advantage (CA) is obtained by a firm when “it implements a value-adding strategy not
simultaneously implemented by a large number of other firms”. (Barney, 1991, p. 106)
9
Nordhaug, 1992) and competing on core competence leadership is therefore considered
as essential in order to obtain a SCA (Agha et al., 2012; Petts, 1997).
2.2.1 MANAGING CORE COMPETENCIES
Bogner, Thomas and McGee (1999) consider a CA as the most valuable asset a firm can
possess. It does not only affect the firm who possesses it, but it also creates challenges
for the competitors. A firms’ short-term CA is the result of the price/performance
attributes of the firms’ products (Prahalad & Hamel, 1990). Meanwhile, a SCA is the
result of managing, nurturing, developing and abandoning (Srivastava, 2005) core
competencies that are idiosyncratically shared among business units (Prahalad & Hamel,
1994). This to maximize the value proposition of the firms’ products faster and at a lower
cost than competitors (Bogner et al. 1999; Snyder & Ederling, 1992; Prahalad & Hamel,
1990). Hamel and Prahalad (in Raffnsøe & Staunæs, 2014) argues that there is a need for
continual renewal in todays’ turbulent business environment. This requires managing the
firm by moving ahead of competitors and beating the time, with an outward, future
perspective (Raffnsøe & Staunæs, 2014). This by clearing the path for the future and
questioning norms and standard of today to create the industries of tomorrow and not
feeling satisfied (Hamel & Prahalad, 1994; Raffnsøe & Staunæs, 2014). Grant (2008)
suggest that the firms has to become drivers to change rather than adopting to change.
Furthermore, with the rapid development in technology and changing business
environment, Grant (2008) argues that the greatest challenge for todays’ mangers is to
coordinate increasingly complex patterns of more sophisticated and advanced bundles of
capabilities. Ljungquist (2007) notes that because of the linkage between core
competencies and competencies, the source of core competence development and
upgrading is the development of competencies.
Hence, the real source of SCA results from the ability of senior managers to combine the
technological dimension of a core competence and the governance and collective learning
dimension, including areas of knowledge (Petts, 1997) and skills integrated in the culture
of the firm (Leavy, 2003). The technological dimension comprises tacit knowledge and
concerns the firms’ ability to design and develop new products and processes, and
managing a facility efficiently. Instead of a governance and collective learning
dimension, Teece et al. (1994) suggests an organisational/economic dimension that
concerns (1) allocative competence - deciding what to produce and how to price it; (2)
transactional competence - deciding whether to make or buy, and whether to do so alone
or in partnership; and (3) administrative competence - how to design organizational
structures and policies to enable efficient performance. Furthermore, Teece et al., (1994)
consider these dimensions as the foundation of the competitive strength and success of
the firm.
This creates core competencies that are shared across business units (Chou & Chang,
2004), who are empowered to adapt quickly to changes in the business environment.
(Prahalad and Hamel, 1990) Furthermore, Javidan (1998) notes that since this concept
acknowledges collective learning, integration and coordination, it can create better
10
synergies between business units and can encourage business units to discover common
interests, problems, capabilities or opportunities.
Furthermore, Managing and developing unique and scarce resources is directly linked to
the firms’ ability to obtain “monopolistic” or Ricardian rents3 (Walsh & Linton, 2001;
Bogner et al., 1999). This is similar to the RBV, where scarcity is related to the ease of
identifying the factors creating the resource, i.e. if it is easy for competitors to identify
the structure of a core competence, it is also easy for competitors to imitate and find
substitutes for it, and thereby decrease its ability to obtain monopolistic rents. (Black &
Boal, 1994). However, Sayles (in Black & Boal, 1994) notes that a careful understanding
of the relationships between, resources, capabilities and competencies are needed,
because a change in any of these elements will have different impacts on a core
competence, its ability to obtain monopolistic rents, and ultimately the firms’ CA. Black
and Boal (1994) suggest three types of relationships; 1) complementary – which refers to
the change in on element is offset by the change in another element, 2) enhancing – refers
to a change in one element will increases the impact of another element, and 3)
suppressing – refers to a change in on element, diminished the impact of another element.
2.2.2 THE ROOTS OF COMPETITIVENESS
Prahalad and Hamel (1990) resemble a diversified firm with a large tree (See Figure 2.1),
where the root system is represented by the firms’ core competencies which provides the
firm with stability, nourishments and sustenance. The roots are linked to the trunk which
are the firms core products or core services, i.e. the tangible form of the core competencies
(Lahti, 1999) Meanwhile, the smaller branches are SBUs and the leaves are end products
and services (Petts, 1997). Petts (1997) further argues that the core competencies that
support the core product or core service of the firm acts as an important barriers to entry
against competitors.
3 Introduced by Ricardo (1817), Ricardian rents are the value that exceeds the normal rate of return (the
above-normal rate of return) in an industry obtained through value-adding and scarce resources held by the
corporation. (Chaharbaghi & Lynch, 1999).
11
Figure 2.1: Competencies: The Roots of Competitiveness
Source: Authors modification of Prahalad & Hamel, 1990, p. 82
Being the roots of competiveness, core competencies involves communication and
involvement from many different functional levels empowering employees to work
across organizational boundaries. (Prahalad & Hamel, 1990)
In order to distinguish them from competencies, Prahalad and Hamel (1990) presents
three characteristics a core competence must possess (these will be furthered discussed
later in this chapter):
1) A core competence must contribute significantly to the perceived customer
benefit and value of a products.
2) A core competence is a competitively unique set of resources and capabilities
that make it hard for competitors to imitate.
3) A core competence should provide potential access to a wide variety of
markets.
Ljungquist (2010) observes two benefits when using these three criteria to identify a core
competence. First, the criteria refers to the definition presented by Prahalad and Hamel
earlier, and second, since they is linked to competencies, it is not an isolated concept.
Hence, a core competence is a competence that fulfil these three criteria (Ljungquist,
2008).
2.3 THE CHARACTERISTICS OF CORE COMPETENCIES
2.3.1 VALUE AND BENEFIT FOR THE CUSTOMER
The central principle in the RBV is that the relationship between customer value creation,
competitive advantage and superior firm performance are highly connected (Zubac,
Hubbard & Johnson, 2010; Clulow, Barry & Gerstman, 2007). Srivastava (2005) notes
that the “underlying criterion is that the core competence should result in superior
customer value” (p. 55). Key resources, such as core competence, are of paramount
importance for creating, enhancing and sustaining optimal customer value (Martelo,
Barroso & Cepeda, 2013; Ji, 2012) and when implementing strategies that meet particular
12
customer needs (Clulow et al. 2007). Furthermore, O’Cass and Sok (2013) argues that
distinctive competences are the real source of superior performance and achieving a
superior performance is highly linked to the ability to create superior customer value.
Woodruff (in Zubac et al., 2010) defines customer value as:
“a customer’s perceived preference for and evaluation of those product
attributes, attributes performance, and consequences arising from use that
facilitates (or block) achieving the customer’s goals and purposes in use
situation” (p. 525).
Value is commonly viewed from the customers’ perspective and can only be created
through the firms’ core competencies if managers have correctly identified the customers’
value proposition. The customers’ decision to buy a product or service depends on to what
degree the value proposition is affected by superior attributes, such as price or
performance of the product/service offering. (Zubac et al., 2010) Aarikka-Stenroos and
Jaakkola (2012) consider an optimal value proposition concerning “the best possible
balance between value-in use to be achieved and the required sacrifices” (p. 16).
Therefore, knowledge about what the customers are looking for is essential when
implementing a successful strategy (O’Cass & Sok, 2013). Furthermore, Martelo et al.
(2013) consider a firms’ ability to manage, develop and re-combine its resources and
capabilities as crucial for creating a superior customer value in the more complex and
competitive business environment.
O’Cass and Ngo (in O’Cass & Sok, 2013) suggests a three-stage process for value
creation. First, through a mangers perspective, the firm creates use value which is
presented as the firms’ value offering. The value offering is then subjectively evaluated
from the customer perspective as a perceived value-in use. The final stage consists of the
value-in exchange and occurs in the interaction between the firm and its customers. The
outcome of the interaction is the result of the reward received by the customer from using
a product or service in terms of quality and performance, and the sacrifice (monetary cost,
time, effort) (Ulaga & Eggert in Aarikka-Stenroos & Jaakkola, 2012) the customer has to
make to obtain a product or service. If the firm succeeds with realizing the customer
value-in use, it results in satisfied customers, customer retention and acquiring of new
customer (O’Cass & Sok, 2013).
However, because of the simultaneous production and consumption of services, several
researchers (Grönroos, 2008; Lapierre, 2000; Ravald & Grönroos, 1996 in Aarikka-
Stenroos & Jaakkola, 2012) argues that value is not only generated in the value-in
exchange stage, but also through the process of exchange which is affected by the
relationship and interaction between the customer and supplier. Grönroos & Voima,
(2013) argues that value-in use cannot exist in services because the supplier supports the
creation of value-in use. Hence, value creation emerges from the interaction between the
customer and supplier, which implies that “value creation is the customers’ creation of
value-in use during usage” (Grönroos & Voima, 2013 p. 137). This imnplies that
customers are co-creators of the value and PSFs contributes to the value creation through
professional knowledge and competence. In the PSF context the creation of value is
dependent on the sharing of information through a two-way dialog between the customer
13
and supplier. This is particularly difficult in complex offerings where the PSF is
dependent on accurate definition of the needs, requirements and usage provided by the
customers, but they lack the right knowledge and skills to correctly define these elements.
(Aarikka-Stenroos & Jaakkola, 2012). Furthermore, Möller & Törrönen (in Aarikka-
Stenroos & Jaakkola, 2012) concludes that the “greater the information asymmetry
between supplier and customer, the more dependent the customer and supplier are on
each other in value creation” (p. 16). Furthermore, the complexity and the asymmetrical
information inherent in PSFs offering challenges the value co-creation when suppliers
have trouble communicating the value proposition in advanced. Furthermore, the
customers have trouble understanding and evaluating the value potential.
Empirical research has identified responsiveness, flexibility, reliability and
communication skills of the service supplier as important value driven attributes in the
value creation process. (Aarikka-Stenroos & Jaakkola, 2012) Figure 2.2 show a
framework constituting the elements of co-creation in the context of PSFs.
2.3.2 A UNIQUE SET OF RESOURCES AND CAPABILITIES
According to Srivastava (2005), core competencies as the most important resource of the
company. Meanwhile, Grønhaug and Nordhaug (1992) and Von Krogh and Roos (1995)
further notes that core competence are classified as a unique and key resource (Clulow et
al., 2007) that is costly to imitate, meaning that various barriers of imitation creates a
SCA. Barriers of imitation is important since the main threat to the erosion of a CA is
through the imitation from competitors (Von Krogh & Roos, 1995). In accordance with
the RBV perspective for being a source of SCA, Hafeez et al. (2002) suggests that unique
resources have three attributes; rare, inimitable and non-substitutable. However, Barney
(1991) argues that resources with these attributes cannot create SCA unless they first can
be used to exploit opportunities or neutralize threats in the firms’ external environment
and thereby being valuable resources. Furthermore, Gouthier and Schmid (2003) suggests
that a valuable resource determines if a resource has the ability to create a CA, and the
rareness, inimitability and non-substitutability of the resource determine the sustainability
of the CA.
Figure 2.2: The value co-creation framework Source: Aarikka-Stenroos & Jaakkola, 2012, p. 17
14
CORE COMPETENCE AS A VALUABLE RESOURCE
Barney (1991) describes valuable resources in the sense that they enables the firm to
exploit opportunities and neutralizes threats in the firms’ external environment. However,
Newbert (2008) makes an important argument, arguing that in order for a valuable
resource to exploit opportunities the firm must have the capability to manage it to do so.
This means that in order for a firm to realize the potential value of a resource it has to be
exploited in combination with a capability to manage it. Gouthier and Schmid (2003)
further argues that in order for a resource to exploit opportunities it must be perceived as
valuable in the eyes of the customer, either indirectly or directly. This is also true for a
competence to be core (Bogner et al., 1999; Petts, 1997). Core competencies generates
fundamental support for a firms’ strengths (Bogner et al., 1999; Coman & Ronen, 2009),
which leads to better exploitation of strengths by creating a better fit between internal
strengths and external opportunities in the market (Javidan, 1998). Meanwhile, managing
and developing core competencies was important to empower SBUs to take advantages
of external opportunities (Prahalad & Hamel, 1990). Furthermore, Hong and Stahle (in
Rakickaite et al., 2011) concludes that based on the RBV perspective, core competencies
are the most valuable resource constituting the success of the firm.
CORE COMPETENCE AS A RARE RESOURCE
A SCA cannot be obtain by the firm if a large number of competitors possess the same
valuable resource, meaning that the resource must be distinctive to the firm. If current
and future competitors can easily have access to the same resource, they can exploit it in
the same way in their value-adding strategies, resulting in erosion of the potential CA or
SCA for the firm. (Barney, 1991) Therefore, the rareness of a resource increases the more
firm-specific the resource is (Gouthier & Schmid, 2003). Core competencies are a unique,
complex and value-adding combination or bundle of resources (Petts, 1997; Gorman &
Thomas, 1997), which was valuable in the sense that it should be managed to enable better
fit between internal strength and external opportunities (Barney, 1991; Bogner et al.,
1999; Coman & Ronen, 2009; Javidan, 1998). However, if this bundle/combination of
resources and capabilities are not rare, it will not be the source of SCA, even though it is
valuable (Barney, 1991).
CORE COMPETENCE AS AN INIMITABLE RESOURCE
The discussion above has focused on core competencies as valuable and rare resources
held by firms. Nonetheless, if other firms can obtain this similar valuable resource, it will
not be a source of SCA. Hence, the core competence must be imperfectly imitable
(Barney, 1991), which the complex combination of resources and capabilities helps to
generate (Gorman & Thomas, 1997). Barney (1991) argues that there are three conditions
that causes imperfectly imitable resources, which can be viewed as either substitutive or
additive for developing imperfect inimitability (Gouthier & Schmid, 2003):
1) Obtaining the resource is due to unique historical conditions. The history of
the firm can have a great impact on its financial performance and its CA.
Resources that has been obtained and developed throughout the firms’ unique
15
path through history can be hard or impossible for competitors to duplicate,
making them perfectly inimitable (Barney, 1991). Core competencies are
dependent on continuous development and upgrading (Bogner et al. 1999;
Snyder & Ederling, 1992; Prahalad & Hamel, 1990; Ljungquist, 2010; Hafeez
et al. 2002; Petts, 1997; Barney, 1991) and historical conditions are important.
This because the collective learning of the firm are developed over time
through experience, creating economies of experience (Grant, 1991).
2) The linkage between the resource and the SCA is causally ambiguous. A
poorly understood linkage between a firms resources and its CA makes it
difficult for competitors to imitate. This since competitors do not know what
resources and capabilities to imitate and what actions to take in order to
duplicate a similar value-adding strategy used by the firm possessing the SCA
(Barney, 1991). Barney (1991) and Grant (1991) argues that the more complex
the combination of resources are more difficult it is for competitors to identify
those resources constituting the SCA, which adds to the level of causal
ambiguous. Meanwhile, competitors who are trying to imitate the firms’ core
competence will have to imitate the identical “learning path” and make the
same investments (Srivastava, 2005). This complexity of a core competence
increases the causally ambiguity which makes the core competence difficult
for competitors to detect and imitate (Gorman & Thomas, 1997).
3) The resource generating the SCA is socially complex. Resources that
constitutes a social complex phenomenon will significantly constrain
competitors’ ability to imitate these resources (Barney, 1991). These socially
complex phenomenon is related to the governance and collective learning
dimension of the core competence embedded in the culture of the firm.
(Leavy, 2003) Meaning that the collective learning and enhanced knowledge
of single and integrated skills among groups of employees about specific core
competence elements (Edgar & Lockwood, 2012) increases the social
complex phenomenon. Furthermore, in a study conducted by Clulow et al.
(2003) it was concluded that the social phenomenon residing from a complex
combination of organizational culture and competencies held by employees
resulted in that more value could be captured in the firms’ business models.
CORE COMPETENCE AS A NON-SUBSTITUTABLE RESOURCE
Barney (1991) notes that non-substitutable resources refers to valuable resources with no
strategically equivalent that by itself are rare or inimitable. This means that there should
not exist a substitute to a valuable resource that are rare and imperfectly imitable that can
be exploited by competitors to implement the same or greater value-adding strategies.
Substitution can take two forms; 1) even though competitors cannot imitate the exact
resource, there might be similar resources that enables them to implement the same
strategies, and 2) very different resources can also be strategically substitutes, for example
a managers foresight and vision about the future held by one firm, and a planning systems
foresight and vision of the future held by another firm.
16
2.3.3 PROVIDING ACCESS TO A WIDE VARIETY OF MARKETS
Focusing on the firms’ core competencies and the strengths it supports as a base for
entering new and diverse markets (Very, 1993) is crucial and the first step for a successful
diversification (Bakker et al., 1994). Basing the diversification on the firms’ core
competencies reduces the risk and scope of a diversification (Very, 1993) and helps the
firm to better understand the new businesses competitive position in the new marketplace
(Bakker et al., 1994). The core competence concept provides the ability to define a broad
range of possible markets to enter with opportunities where they can yield optimal results
(Bakker et al., 1994). Entering new and diverse markets by using existing core
competence is highly dependent on the breadth of the core competence. This since when
the breadth of the core competence increases it facilitates new product and service
development. (Edgar and Lockwood, 2012) Roberts (in Sahin, 2011) argues that being
able to serve several markets is especially important for PSFs because the accumulated
knowledge and experience from working with one customer in one market can be used to
serve another customer in another market. This will decrease the variable costs and
increase the efficiency of the PSF by being able to provide better and more effective
solutions to their customers. McGuinnes and Thomas (1997) suggests a two-way
relationship between core competence and diversification. First, in a static term where
existing core competencies provides a direction for firm diversification. Second, in a
dynamic term where diversification is a learning process that is the result of developing
and acquiring new core competencies.
As been discussed earlier, the collective learning and coordination of core competencies
can create better synergies between SBUs (Javidan, 1998). However, Very (1993) notes
that the synergy concept aims to highlight the relationship between diversification and
firm performance, which is difficult to define and measure. Hence, Very (1993)
introduces a new concept to replace the synergy concept; relatedness.
RELATEDNESS
In a study conducted by Rumelt (in Doaei, Anuar & Hamid, 2012) it was concluded that
related diversification was more profitable than unrelated diversification. Relatedness
refers to the sharing of resources, knowledge and skills between SBUs with the objective
to create competitive advantage in the connected businesses (Doaei et al., 2012). When
diversifying the firm based on its core competencies, relatedness refers to the transfer of
competencies between SBUs. This enables senior managers of the firm to create new
diverse businesses with “a value superior to the sum of the intrinsic values of these
businesses” (Very, 1993, p. 81). Markides and Williamson (1994) notes that related
diversification based on core competencies has the advantages of creating economies of
scope, improving the quality of existing strategic assets 4 within different SBUs,
4 Markides and Williamson (1994) defines strategic assets as “assets that underpin a firm's cost or
differentiation advantage in a particular market and that are imperfectly imitable, imperfectly substitutable
and imperfectly tradable. These assets also tend to be market-specific.” (p. 149) For example the dealer and
service network created by Honda.
17
developing new strategic assets and new business faster, and developing new
competencies through learning new skills from building new strategic assets.
2.4 FRAME OF REFERENCES
Distinctive competencies are key capabilities that the competitors do not have and
therefore they are the most important competencies (Heikkilä & Cordon, 2002), and it is
from these distinctive competencies that core competencies are derived (Hafeez, Zhang
and Malak, 2002). Core competencies are the collective learning and how production
skills and technologies are coordinated and integrated, which results in a unique and
complex bundle of resources and capabilities that enable the firm to create a sustainable
competitive advantage (Hamel & Prahalad, 1990). This collective learning, coordination
and integration of specialised knowledge and skills held by individuals within the firm is
more important than knowledge and skills held by individual employees, and determines
the level of distinctiveness of a competence (Grant, 1996).
Core competencies provide the firm with stability that connects and supports the tangible
form of the core competencies (Lahti, 1999; Petts, 1997), i.e. the firms’ core product. In
PSFs this refers to business competence, skills and problem solving (Rakickaite et al.,
2011), which in turn supports the firms end products, i.e. expertise and knowledge within
one area or one new technology (Holahan et al., 2014).
A competitive advantage is the most valuable asset of the firm (Bogner, Thomas &
McGee, 1999), and is the result of the price/performance attributes of the firms products
(Prahalad & Hamel, 1990). However, to maximize the value proposition of its products
faster and at a lower cost than competitors (Bogner et al. 1999; Snyder & Ederling, 1992;
Prahalad & Hamel, 1990), and obtain a sustainable competitive advantage, the firms core
competencies must be managed, nurtured, developed and abandoned (Srivastava, 2005).
This requires moving ahead of competitors and beating the time (Raffnsøe & Staunæs,
2014) with an outward, future perspective and questioning norms and standard of today
to create the industries of tomorrow and not feeling satisfied. (Hamel & Prahalad, 1994;
Raffnsøe & Staunæs, 2014).
Prahalad and Hamel (1990) argues that core competencies must possess three
characteristics that distinguish them from competencies:
1. A core competence must contribute significantly to the perceived customer
benefit and value of a product.
The firm’s ability to manage, develop and re-combine its resources and capabilities are
crucial for creating a superior customer value in the more complex and competitive
business environment. O’Cass and Sok (2013) further argues that distinctive competences
are the real source of superior performance and achieving a superior performance is
highly linked to the ability to create superior customer value. Meanwhile, value creation
emerges from the interaction between the customer and supplier (Grönroos & Voima,
2013) with the outcome realizing the customer value-in use, it will result in satisfied
customers, customer retention and acquiring of new customer. (O’Cass & Sok, 2013)
18
2. A core competence is a competitively unique set of resources and capabilities
that make it hard for competitors to imitate.
Barney (1991) argues that for a resource such as a core competence to be the source of
sustainable competitive advantage it must first and foremost be valuable in terms of
enabling the firm to exploit opportunities or neutralize threats in the firms’ external
environment, this, according to Gouthier and Schmid (2003) determines that potential
source of a competitive advantage. Furthermore, for a core competence to be the source
of sustaining the competitive advantage it must have the uniqueness attributes of being
rare, inimitable and non-substitutable (Hafeez et al., 2002). Rare implies that the core
competence cannot be obtained or possessed by competitors (Barney, 1991), while
inimitable refers to being difficult for competitors to copy or imitate. This is caused by
three conditions; unique historical conditions, causal ambiguous and socially complex,
which can act as either substitutive or additive for developing imperfect inimitability
(Gouthier & Schmid, 2003). The third and final attribute is non-substitutable, which
implies that there should not exist strategically equivalent core competencies that by itself
are rare or inimitable.
3. A core competence should provide potential access to a wide variety of
markets.
Being able to serve several markets is especially important for PSFs because the
accumulated knowledge and experience from working with one customer in one market
can be used to serve another customer in another market. (Roberts, in Sahin, 2011) The
concept of diversification through using core competencies is called related
diversification (Very, 1993) and refers to the sharing of resources, knowledge and skills,
and the transfer of competencies between SBUs with the objective to create competitive
advantage in the connected businesses.
19
3. PROBLEM DISCUSSION
In this third chapter, the problem discussion is presented which leads to this study’s
purpose and research questions. Finally, this study’s delimitations and expected
contributions are presented.
As mentioned previously, many researchers suggests that core competence are the most
important resource for obtaining SCA. However, even though the term core competence
may seem clear and many managers are familiar with the concept, it is usually hard for
managers to identify the real core competencies. They tend to describe the core
competence concept as a synonym for a company’s strengths and what they are good at.
(Bhamra et al. 2011; Ljungquist, 2007; Leavy, 2003) However, the literature has shown
that core competencies support the firms’ strengths. According to Lahti (1999) this
confusion about the core competencies is because of its multiple definitions used in
businesses and industries, with definitions ranging from core technical and core
marketing competencies to market-specific and function-specific core competencies.
A lack of understanding of and failing to correctly identify the real core competencies
results in the risk of missing attractive opportunities and the inability to create a SCA
(Snyder and Ederling, 1992). Gorman and Thomas (1997) argues that the reason for the
difficulty of understanding the core competence concept and identifying the real core
competencies is due to the complex web of resources and capabilities that the core
competencies are built upon. While the complexity of a core competence is advantageous
in many ways, it is also difficult for firms to create, manage, exploit and nurture its core
competencies (Black & Boal, 1994) effectively in formulating a competitive strategy
(Gorman & Thomas, 1997). Meanwhile, Sheehan and Foss (2007) claims that the
difficulty for managers to identify and understand their core competencies is due to
misunderstanding about how a company’s resources contribute to the value-adding
process. Furthermore, strategies that deviates too much from the company’s resources
and capabilities are risky strategies (Javidan, 1998).
The literature review concluded that in order to be a source of SCA, core competencies
must be managed and developed. In a study conducted by Hamel and Prahalad (1994) it
was concluded that senior managers spent approximately 3 percent of their time on
building a corporate perspective of the future by considering external issues, such as
possible new technologies, planning for the future, and building a collective view of the
firms’ future among the employees. This results in less control over the firms’ future and
competitiveness problems. Hence, focusing on the future is essential if a firm is to build
new and develop existing core competencies to be a source of future SCA. Hamel and
Prahalad (1994) further argue that in order for managers to compete in the future, they
have to act as architects, challenging the norms and standards of today’s industries to
build the industries of tomorrow.
A majority of the empirical research on the core competence concept are applied on
technology advanced and heavily resource based large manufacturing company’s such as
Sony, Black and Decker, Canon, Toyota, Caterpillar, NEC, 3M and Honda etc. (Prahalad
& Hamel, 1990; Bakker, Jones & Nichols, 1994; Javidan, 1998; Bhamra et al. 2011), and
20
only few empirical research exists where the core competence concept have been applied
to small and medium sized enterprises (SMEs)5 (Petts, 1997; Munir, Lim & Knight,
2011). According to Munir et al. (2011), this is because SMEs have limited resources and
it is more difficult for them to develop core competencies. However, Bhamra et al.
(2011) argues that there are no evidence stating that the core competence concept is more
relevant to large companies as opposed to SMEs. Furthermore, only a few empirical
research connecting the core competence concept and service firms has been found, which
implies the existence of a gap in the literature to be filled. This despite the fact that
competitive advantage is obtained on the same conditions for service firms as for
manufacturing firms, i.e. the possession of rare and unique resources and skills (Suciu &
Boraza, 2010). This existing gap is supported by Ljungquist (2014) who notes that the
two main reasons for this gap is due to the fact that most of the world’s largest companies
are manufacturing companies and it is easier to duplicate technical solutions and apply it
on several business areas. However, Prahalad and Hamel (1990) and Ljungquist (2014)
further argues that core competencies are equally important for service companies as for
manufacturing companies and determines that due to clear competencies service
companies can also possess core competencies.
3.1 RESEARCH PURPOSE AND RESEARCH QUESTIONS
The purpose of this thesis was to explore a gap in the literature by investigating the level
of understanding of the core competence concept among PSFs. In order to fulfil the
purpose of this thesis, two research questions has been developed:
RQ1. What do senior managers of Swedish management consulting firms
understand about the core competence concept?
A majority of the research have applied the core competence concept on technology
advanced and heavily resource based large manufacturing organizations and only a few
empirical research is found applying core competencies on service firms. This question
seeks to fill this gap in the literature.
RQ2. Do the practising managers of Swedish management consulting firms
manage their firms to enable competing with core competencies?
Building a corporate strategy on the firms’ core competencies means that the firms must
be managed in a way that enables core competencies to be employed, developed and
managed as a the key resource held by the firm. This makes this question a key issue on
this topic. This second research question refers to investigate if the firm is managed in
such a way that enable the firm compete with core competencies and increase the firms
future competitiveness.
5 The European commission (2014) defines SMEs as companies employing between 10-249 people. Small
sized companies employ between 10-49 people and medium sized companies employ between 50-249
people.
21
3.2 DELIMITATIONS
This study has three distinctive delimitation. First, it was delimitated to only explore the
core competence concept in the management consulting industry, which included
privately owned Swedish and international management firms. Second, the firms
surveyed, had a minimum of 10 employees, i.e. only SME and large management
consulting firms was included in this study, and third, the respondents had to be familiar
with the core competence concept.
22
4. METHODOLOGY
This fourth chapter describes the research methodology used to fulfil the purpose of this
study and answer the stated research questions. This includes the research purpose, -
approach, -strategy, -method. Afterwards, the sample selection and data collection
techniques are discussed, followed by the conceptualisation of the research questions
followed by the structure of the surveys together with quality standards, and finally how
the data was analysed.
4.1 RESEARCH PURPOSE
The purpose of this thesis was to explore a gap in the literature by investigating the level
of understanding of the core competence concept among PSFs. This, because the
discussion in the previous section showed a research imperative to explore the core
competence concept in connection to service firms. Since this study aimed to asses a
phenomenon in a new light and clarify the understanding of a problem by determining
what is happening (Saunders, Lewis & Thornhill, 2009), this study relies on an
exploratory research method.
4.2 RESEARCH APPROACH
There are two research approaches; a deductive approach where a theory or hypothesis
are first developed and secondly the theory is tested through data collection and analysis,
or an inductive approach where data are first collected and analysed and secondly a theory
is developed (Saunders et al., 2009). Presented in Table 4.1 are the main differences
between the deductive and inductive approach.
Table 4.1: The main differences between the deductive and inductive approach
Deduction emphasises Induction emphasises
Scientific principles
Moving from theory to data
The need to explain causal relationships
between variables
The collection of quantitative data
The application of controls to ensure
validity of data
The operationalization of concepts to
ensure clarity of definition
A highly structured approach
Researcher independence of what is being
reached
The necessity to select samples of
sufficient size in order to generalise
conclusions
Gaining an understanding of the
meanings humans attach to events
A close understanding of research context
The collection of qualitative data
A more flexible structure to permit
changes of research emphasis as the
research progress
Less concerned with the need to
generalise
Source: Saunders et al. (2009) p. 127
This study was based on already existing theory about the core competence concept and
the empirical findings was compared with the already existing theories to be able to fulfil
23
the purpose of this thesis. Furthermore, because this study aimed to explore the core
competence concept in the management consulting industry among SME and large firms,
the sample size was sufficient large enough to generalize the conclusions among the total
population size. Therefore, the most suitable approach for this study was the deductive
approach.
4.2 RESEARCH STRATEGY
In alignment with Saunders et al. (2009) the research strategy constituted the general plan,
guiding this study to answer the research questions and the overall objective of this study.
According to Yin (2009), there are five types of research strategies; experiment, survey,
archival analysis, history, and case study. The research strategy used in this study was
decided upon the three aspects suggested by Yin (2009); 1) type of research question, 2)
if the study requires control over behavioural events, and 3) if the study focus on
contemporary events. (See Table 4.2)
Table 4.2: Situations for different research purposes
Research strategy Form of research
question
requires control over
behavioural events
focus on
contemporary events
Experiment How, why? Yes No
Survey Who, what, where, how
many, how much?
No Yes
Archival analysis Who, what, where, how
many, how much?
No Yes/no
History How, why? No No
Case Study How, why? No Yes
Source: Yin (2009) p. 8
This thesis aimed to explore a relative new area of research and by gaining a broader
understanding of the topic in question among PSFs. The stated research questions are
categorised as “What-questions”, no requirements for control over behavioural events
were needed and the thesis was highly contemporary in its nature. These arguments
classified this thesis for using either a survey or archival analysis as a research strategy.
However, archival analysis concerns analysing administrative records and documents
(Saunders et al. 2009). Conducting an archival analysis on firms’ in a large sample size,
such as in an entire industry, would have been too costly and time-consuming and was
therefore not suitable for this study. Therefore, due to the cost benefits, time-constraints,
and the ability to reach a wide geographical spread of the respondents, a survey strategy
was a more suitable research strategy for this study. Furthermore, the exploratory nature
and deductive approach of this study further strengthened the use of a survey strategy
(Saunders et al., 2009; Neumann, 2003).
24
4.4 RESEARCH METHOD
To conduct this study, a qualitative or quantitative research method and data collecting
technique could be used. The qualitative research method aims to collect non-numerical
data in the form of text, words, phrases, symbols, video clips or pictures and the
quantitative research method aims to explaining a phenomenon through collecting
numerical data that are analysed through the use of charts, tables, graphs or statistics
(Saunders et al. 2009). With the research purpose being exploratory, aiming to explore a
phenomenon and understand the state of something (Saunders et al. 2009), the most
suitable research method and data collecting technique for this study was the quantitative
research method.
4.5 DATA COLLECTION
A survey research strategy was used in this study where three different data collection
techniques could have been used; questionnaire, structured observation, and structured
interviews, which all allows for collecting a large amount for data from a sizable sample
population (Saunders et al. 2009). This study relied on a quantitative research method
and questionnaires was used as data collecting technique where self-administered internet
mediated questionnaires were administrated directly to the CEOs, managing partners,
partners, HR-managers and sales-managers of the firms which constituted the sample
frame (See Appendix I). E-mail addresses to the respondents was collected through two
different techniques. First, the firm’s website was visited to explore if the email-address
to a senior manager could be found. If no address was found on the website, the author
called the firm to ask for the right address to a senior manager, preferably the CEO or a
managing partner. With the wide geographical spread of the sample size, the financial
constraints and the possibility to let the respondents decide when to complete the
questionnaire (Neumann, 2003), administrate a questionnaire was the most suitable data
collecting technique for this study. Saunders et al. (2009) notes that questionnaires are
the most widely used data collecting technique used in the survey strategy and refers to
all data collecting technique where the respondents is asked to answer the same sets of
questions in a predetermined order. This study had three distinctive delimitations that
concluded the nature of the respondents participating in this study. These where:
- International and Swedish management consulting firms established in Sweden
- Have a minimum of 10 employees
- The respondents had to be familiar with core competencies
With the response rate to questionnaires varying considerably, from as low as 35 percent
up to 69 percent (Saunders et al. 2009), the questionnaires was first administrated in the
end of Marsh of 2014. This to ensure sufficient time for respondents to complete the
questionnaire. This first administration resulted in a response frequency of 25% or 21
completed questionnaires. In mid-April a reminding e-mail was administrated to the 63
firms included in the sample who did had not yet responded. This yielded in an additional
11 completed questionnaire, equal to a responses rate of 17.5%. Finally, in the end of
April the questionnaire was administrated a third time to the sample who until then, for
some reason had not responded yet. This third this yielded six additional completed
25
questionnaire, corresponding to a response rate of 8.5%. This concluded the total number
of completed questionnaires to 38, which equals to a 45% response rate.
4.6 SAMPLE SELECTION
According to Barney and Mackey (in Newbert, 2008), “the best resource-based empirical
work will involve collecting primary data from firms in a carefully drawn sample” (p.
750). Based on this statement, a sample of management consulting firms were surveyed
during the spring of 2014. Management consulting firms were chosen for three reasons.
First, only a few empirical studies connecting the core competence concept to service
firms has been found, indicating an imperative to explore the core competence concept
among service firms. Second, management consulting firms are classified as highly
intangible in the tangibility spectrum (see chapter one), which is the other extreme of the
tangibility spectrum from where the majority of earlier research has focused on. Third,
management consulting firms are highly dependent on competencies held by their key
resources, i.e. employees and groups of employees, from where clear core competencies
could be found. The Swedish Association of Management Consultants (2012) defines a
management consulting firm as a firm that with an autonomous and independent position
provides advice and/or practical assistance in organization-wide management issues, such
as organizational and leadership development on behalf of the clients’ owners, board or
management.
Through Konsultguiden (2013) a list of 83 management consultancy firms were identified
as suitable participants for this study. Through personal research an additional 11
management consultancy firms were identified as qualifying as possible respondents.
After cross-referencing with the previous list, six additional consultancy firms were added
to the sample frame. After researching the contact information of possible respondents,
seven firms was deleted from the list, due too different aspects, see Table 4.3. The total
sample frame consisting of 84 managing consultancy firms who was asked to participate
in this survey is found in Appendix I. The time frame and low cost of surveying these
firms through online-questionnaires made surveying the entire sample population feasible
for this thesis.
Table 4.3: Reason for exclusion
Reasons for exclusion Number of firms
Were not able to contact the respondent 3
Did not have time to respond to a
questionnaire
2
Did not respond to questionnaires due to
internal policies
2
Total 7
26
To ensure that someone else than the intended respondent did not complete the
questionnaire, it was submitted by email to the person intendant to respond to the
questionnaire. This since, according to Saunders et al. (2009), most users read and
respond to their own emails, which improved the reliability of the data. If the right person
could not be contacted, either by phone or email, the questionnaire was sent to a
gatekeeper i.e. secretary, coordinator or receptionist, who forwarded the questionnaire to
the person intendant to respond to the questionnaire.
As noted before, the questionnaire was administrated to 84 managing consulting firms,
from which 38 firms responded. This is equal to a response rate of 45% and are in the
range of response rates that was expected and discussed by Saunders et al. 2009.
Furthermore, three questionnaires was excluded from the analysis because of either too
few employees and could thereby not be classified as an SME or large firm, or because
the respondent was not familiar with the core competence concept. This resulted in 35
valid responses (corresponds to a response rate of 42%) which are presented and analysed
in later chapters.
4.7 CONCEPTUALIZATION
Miles and Huberman (1994) describes a conceptual framework as “something that
explains either geographically or in narrative form, the main things to be studied – the
key factors, constructs or variables- and the presumed relationships among them” (p.
18). In order to fulfil the purpose of this study and answer the stated research questions,
the literature presented in the previous section was critically reviewed and the most
appropriate theories was selected to constitute the basis for this study, and presented in
the frame of references.
4.7.1 CONCEPTUALIZATION OF RESEARCH QUESTION ONE (RQ1)
The first research question refers to provide a better understanding of how PSFs
understand the core competence concept. Building on the previously reviewed literature,
a combinations of previous research has been used to operationalize this research
question. The research on core competencies has shown that in order to distinguish a core
competence from competencies it must fulfil three criteria. With competencies as the
product of PSFs, and core competencies being derived from competencies, the literature
has shown the importance of understanding the characteristics of a core competence in
order to be a source of sustainable competitive advantage.
The research has shown that value is commonly viewed through the customers’
perspective and with the characteristics of services, the value is co-created and emerges
from the interaction between the customer and supplier. This makes it impossible for
customers to evaluate and understand the value potential in a service and can only be done
after the service is consumed. Because of this difficulty in evaluating the value offer, the
outcome of realizing the customer value-in use as presented by O’Cass & Sok (2013) has
been used to linking the firms’ core competencies to the value contributing characteristic.
To explore the inimitability of a firms’ core competence, it has been analysed as a
resource constituting the firms’ SCA. The research has shown that in order for a resource
27
to be the source of sustainable competitive advantage it has to be valuable, inimitable,
rare and non-substitutable. The third and final characteristic a core competence must
possess is its ability to provide access to diverse market through diversifying by
relatedness and dominant logic of management. In Table 4.5 these characteristics is
presented together with the connected main authors that has been used to conceptualize
this first research question.
Table 4.4: Conceptualization of RQ1
RQ1 Concept on core competencies
as … Main authors
What do practising managers of
Swedish management consulting
firms understand about the core
competence concept?
… contributing sufficiently to
the value creation
Grönroos & Voima,
2013; O’Cass & Sok,
2013
… a valuable, rare, inimitable
and non-substitutable resource Barney, 1991
… provider of access to diverse
markets
Prahalad and Hamel,
1990; Leavy, 2003;
Javidan, 1998; Very,
1993
4.7.2 CONCEPTUALIZATION OF RESEARCH QUESTION TWO (RQ2)
The second research questions aims to provide information about how PSFs are managed.
The previous research concluded that core competencies has to be managed and
developed in order to be a source of SCA. A combination of research from Raffnsøe and
Staunæs (2014), Newbert (2008) and Hamel and Prahalad (1994) has been used to
operationalize this question. It was concluded that managers needed to have an outward
and future perspective when managing their firms to compete in the future while
questioning and challenging present norms and standards in current industries to create
tomorrows’ industries, which has also been a basis for conceptualize this second research
question. (See Table 4.5)
Table 4.5: Conceptualization of RQ2
RQ2 Concept on senior managers… Main authors
Do the practising managers of
Swedish management consulting
firms manage their firms to
enable competing with core
competencies?
… attention Hamel & Prahalad,
1994; Newbert, 2008;
Raffnsøe & Staunæs,
2014 … transformational agenda
28
4.8 SURVEY STRUCTURE
For this study, a custom-designed questionnaire was used (see Appendix II for the
Swedish version and Appendix III for the English version) that was constructed following
guidelines proposed by Saunders et al. (2004). The questionnaire tested four variables
(creating value, unique, diversifier, and management) in connection to the core
competence concept. The introductory email and cover letter that preceded the
questionnaire (see Appendix IV for the Swedish version and Appendix V for the English
version) included a brief presentation of the intention and purpose of the study followed
by a presentation of the research topic which was formulated to make the topic interesting.
This was followed by a short description about time to completion, confidentiality,
number of questions and a security code for identification. The use of a security code was
also due to the ease of returning to that specific respondent if any error would have
occurred when entering the data and checking for errors (Saunders et al., 2009).
The survey itself was created using Google Form and comprised of three sections. The
first section consisted of both qualitative semi-structured questions as well as quantitative
questions regarding the respondents’ view of core competencies and firm-related
information. These questions provided information about the respondents firm-size,
general knowledge about core competencies and if they perceived core competencies as
important to their firms. Depending on the answers in this section the respondents was
either asked to proceed with the next section or asked to skip section two and continue
with the third section of the questionnaire. Data provided in this section made it possible
to clean the data in section two from respondents who clearly did not understand the core
competence concept and its importance.
The second section of the questionnaire was only answered depending on the
respondents’ answers to the questions in section one and was core competence-related.
These questions where quantitative and the respondents were asked to rate a number of
statements related to the firms core competencies on a six-point Likert-scale , i.e. 1 =
entirely agree and 6 = do not agree at all. This section comprised three sub-sections related
to the theory on the core competence concepts and the three characteristics it must fulfil.
The first sub-section regarded core competencies as a contributor to value of the product.
According to Prahalad and Hamel (1990), a core competence must contribute
significantly to the value of the product. However, in a service context the value-in use
of the product is co-created and emerges from the interaction between the customer and
supplier (Grönroos & Voima, 2013). The services produced by PSFs are highly
intangible, making it hard for customers to evaluate the value offering (Amonini et al.,
2010). According to O’Cass & Sok, (2013), succeeding in realizing the customers’ value-
in use will result in satisfied customers, customer retention and acquiring new customer.
Therefore this sub-section of the questionnaire was related to if the firms core
competencies contributed significantly to the outcome from succeeding with realizing the
customer value-in use, and thereby answering if the core competence of the firm was a
contributor to the co-value creation process.
29
The second sub-section regarded core competencies as a unique combination of resources
and capabilities that are difficult for competitors to imitate. Grønhaug and Nordhaug
(1992), Von Krogh and Roos (1995) and Clulow et al. (2007) describe core competencies
as unique and key resources held by firms. Basing this study on the RBV, Barney (1991)
acknowledges four attributes resources must have in order to be a source of SCA. First,
the resources must be valuable in the sense that it enables the firm to exploit opportunities
and neutralize threats. Second, they must be rare, i.e. firm-specific. Third, the resources
must be hard for competitors to imitate, and fourth there cannot be any equivalent
substitutions that can be used to create similar value-adding strategies. Therefore, this
second section aimed to answer if the firms’ core competencies where unique and difficult
for competitors to imitate.
The third sub-section regarded the core competence as a provider of access to a wide
variety of markets. Prahalad and Hamel (1990) argues that the core competencies should
guide the firm in its diversification strategy by entering markets where the core
competence can be exploited best (Leavy, 2003), and thereby create synergies (Javidan,
1998). However, according to Very (1993), the synergy concept should be replaced by
relatedness. In terms of diversifying the firm based on its core competencies, relatedness
refers to the transfer of competencies between SBUs. This last sub-section was therefore
related to answering if the firms’ core competence was or could be used in diverse
marketplaces.
The third and final section of the questionnaire was again firm-related and related to the
corporate culture and management of the firms. According to Hamel and Prahalad (1994),
core competencies can only be built and developed in a culture where the managers are
having the idea of designing the future by being innovative and not follow the norms.
Therefore, this section aimed to clarify how the respondents manage their firms, if they
were in full control of their firms’ future and if their perspective of competing in the future
were suitable for deploying core competencies. A Likert scale was used to evaluate if the
respondents devoted too much energy for preserving the past (scoring to the left of the
scale) instead of creating their future (scoring to the right of the scale). Table 4.6 shows
the structure of the questionnaire used for this thesis.
30
Table 4.6: Survey structure
Questions Theory Source
Fir
m-r
ela
ted
info
rma
tio
n 1 Control question The European commission
2 Control question To be evaluated
3 Control question To be evaluated
4 Control question To be evaluated
Co
re c
om
pet
ence
-rela
ted
info
rma
tio
n
5 The firms core competence To be evaluated
6
Th
e ch
arac
teri
stic
s o
f
core
co
mp
eten
cies
Value-creating Grönroos & Voima, 2013; O’Cass
& Sok, 2013
7 Inimitable Barney, 1991
8
Provide access to different
markets
Prahalad and Hamel, 1990; Leavy,
2003; Javidan, 1998; Very, 1993
Fir
m-r
ela
ted
in
form
ati
on
9
Managing by preserving the past or
creating the future
Hamel & Prahalad, 1994; Newbert,
2008; Raffnsøe & Staunæs, 2014
10
11
12
13
14
15
4.9 QUALITY STANDARDS
The quality, credibility and level of response rate of any study depend to a great extent
on how the questions in a questionnaire are constructed. In this study, the quality standard
are based on two elements; reliability which refers to if the results is repeatable under the
same and similar circumstances but with different samples, and validity which refers to
the truthfulness of the study and how well the results “fits” with the actual reality
(Saunders et al., 2009).
4.9.1 RELIABILITY
In order for this study to be valid, it had to be tested for reliability problems first (Saunders
et al., 2009). Mitchell (in Saunders et al., 2009) presents three approaches to assess the
reliability of a study:
1. Test re-test - the respondents are asked to answer the same questionnaire twice
in a short time frame. The collected data is then correlated to see if the
respondent have responded similarly in both questionnaires.
31
2. Internal consistency - correlating the responses to every individual question
with other questions in the questionnaire to measure if it produces similar
scores
3. Alternative form - comparing responses to alternative forms of the same
question within the questionnaire
For this study, the internal consistency and alternative form approach was used to assess
the reliability. Cronbach’s alpha (α) was calculated (see equation 1) using SPSS for
Windows to measure the internal consistency of the entire questionnaire. With α = 0.990
for the variable creating value, α = 0,696 for unique, and α = 0.750 for diversifier, which
are close to or within the acceptable rage of 0.7-0.8 (Everitt, 2002), it is was concluded
that these variables are internally consistent and yield reliable results. However, for the
variable management, α = 0.536, which is below the acceptable level of 0,7 and in the
results concerning management, careful interpretations is needed.
𝛼 = 𝑛
𝑛−1 [1 −
1
𝜎2 ∑ 𝜎𝑖2𝑛
𝑖=1 ] (1)
Furthermore, with a questionnaire containing nine main question concerning the firm and
the core competence concept with five to eight sub-statements (see Appendix II and III,
questions 5-8), the author concluded that using alternative form statements was a suitable
approach to further evaluate the reliability without extending the number of questions.
Which could have made the respondents perceive the questionnaire as being too long to
answer and lower the level of response rate. When comparing the alternative responses it
was found that a few questionnaires contained different responses to the alternative
questions. If the responses deviated by more than one point, the questionnaire was
excluded from the study. However, in those questionnaires where the responses deviated
slightly and towards the same direction it was included in the study. This because the
author concluded that it was still sufficient to yield reliable results.
With the sample population of this study being senior managers, it was concluded that
the use of the test re-test and alternative form approach to assess the reliability was to a
disadvantage for this study. This, because the sample population have limited time to
complete the questionnaire. Persuading the respondents to answer the same questionnaire
twice, as with the test re-test approach, might have annoyed the respondents who, even
though they completed the questionnaire a second time, could have affected the
truthfulness of the answers.
Furthermore, according to Robson (in Saunders et al. 2009) there are four threats to the
reliability of a study; 1) subject or participant error - when there is a risk of collecting
different responses depending on the time of the day, week, and month, 2) subject or
participant bias - when the respondents answer what their managers want to hear, 3)
observer error - when different researcher are included in the same study to conduct data
collection individually which yield several different ways of asking question, and 4)
observer bias - when there are different ways of interpreting the responses.
32
The greatest threat to the reliability of this thesis is the subject or participant error. To
ensure a minimization of the subject or participant error in this study, the questionnaires
was administrated on a Tuesday. This gave the respondent’s time on Monday to complete
any indwelling tasks that may had come up during the weekend or been left from the
week before. It also ensured that the respondents had time to complete the questionnaire
before the end of the week when work-related task had to be completed.
4.9.2 VALIDITY
Saunders et al. (2009) notes that the validity of a study can be analysed through four
different aspects; internal validity, content validity, criterion-related validity and
construct validity.
Internal validity refers to the ability the questionnaire is measuring what the researcher
intends to measure. This means how well the results actually represents the reality of what
is measured. Even though the questionnaires are reliable, they can still have insufficient
internal validity if the respondents interpret the questions in a different way than the
researcher, resulting in the inability to answer the stated research question. The problem
with this is that if the researcher knows how the actual reality looks like, then there are
no need for collecting the data (Saunders et al. 2009). The gap in the literature that was
identified indicates that the actual reality is unknown. However, in order to increase the
internal validity in this study, the questions in the questionnaire was constructed with the
help of similar studies related to the area of the core competence concept and the RBV in
manufacturing companies. This known reality of another sector was then applied to the
service sector and thereby ensuring that the questionnaire was measuring what it intend
to measure, and the stated research questions could be answered. Furthermore, in order
to make sure that the respondents and researcher interpreted the questions in the same
way the questionnaire was first tested among 6 people who was asked to give their opinion
about the language and structure of the questions and the questionnaire. These people was
not necessarily knowledgeable about strategic management and the core competence
concept. Following the first testing, the questionnaires was re-tested among 2 people who
held the same positions, i.e. senior management, in their companies as the respondents
and was familiar with strategic management. These people was then asked to give their
opinion on the questionnaire prior to administrating the questionnaires to the sample
population. This increased the internal validity of this study by assuring that both the
respondents and researcher interpreted the questions in the same way.
Content validity refers to how well the measurement questions in the questionnaire
provide sufficient coverage to answer the research questions. This study followed the
recommendations discussed by Saunders et al. (2009) to increase the content validity in
a study to ensure sufficient coverage to answer the stated research questions. The content
validity was increased by clearly defining the research purpose through a profound
literature review of earlier research on the area of core competencies presented in the
literature review. This further ensured that sufficient coverage of the research questions
were provided by the questionnaire.
33
Criterion-related validity refers to how well the questions in the questionnaire ensures
accurate predictions (Saunders et al. 2009). Since no predictions were to be made in this
study, the criterion-related validity were not considered as important for this study and
will therefore not be discussed any further.
Construct validity concerns the extent to which the questions in the questionnaires
measures the theoretical construct it intend to measure and from which conclusions can
legitimately be made from the conceptualization of the theoretical construct. (Saunders et
al. 2009). To increase the construct validity of this study, the questionnaire was based on
the conceptualisation of theories and concepts found in the profound literature review and
presented in the frame of references. This ensured that conclusions could be made from
the findings that were related to the theoretical construct of this study.
4.10 DATA ANALYSIS
For this study, the statistical tool SPSS for Windows was used to transform the collected
raw data in order for it to be analysed. In accordance to Saunders et al. (2009), the
quantitative data type collected in this study is categorical, and more specifically ranked
(ordinal) data, which means that the values cannot be measured numerically. This since
the respondents was asked to rate how strongly they agreed or disagreed on statements in
relation to the three variables value creating, imitable and diversifier that are the
characteristics of a core competence. Before the data was entered into SPSS it was
prepared and a coding scheme was developed to form a codebook. This because of its
time-saving ability in the analytic process (Saunders et al., 2009). To make sure that the
correct data was entered into SPSS it was copied from the spreadsheet where the
responses was collected into a grid format and then pasted in to SPSS with columns
representing variables (questions) and rows representing cases (surveys). After the data
was entered into SPSS it was cleaned and checked for errors using the two proposed
processes presented by Saunders et al. (2009) and Neumann (2003). First, possible code
cleaning was used to check all entered variables for impossible and illegitimate codes,
codes that was not part of the code scheme, and second, contingency cleaning was used
to check the data for impossible and illogical combinations and relationships of codes.
This to identify and correct any errors that might have occurred during coding or entering
the data, which could have threatened the validity of this study and prevented any false
or incorrect conclusions was presented (Saunders et al., 2009; Neumann, 2003) by the
author. Furthermore, the qualitative questions of the survey was also cleaned, where
inconsistent and answers that was irrelevant relative the specific question was excluded
from the analysis. It was the categorized to investigate if any trends or differences could
be found in the data.
34
5. DATA PRESENTATION
In this chapter the collected data from all 35 valid questionnaires is presented. The data
is categorized by first presenting responses to firm-related questions concerning the core
competence concept in general. Second, data the responses to core competence-related
questions are presented, and third, responses to firm-related questions concerning the
management are presented. For more detailed responses and response frequencies, see
Appendix VI.
5.1 FIRM-RELATED INFORMATION
Question 1: How many employees do you have in Sweden?
Table 5.1 shows the size of the
respondents firms and how many
percentage of the respondents that
categorizes within the specific
intervals. As the chart shows, 19 of
the 35 respondents, or 54,29%
where representing firms that are
classified as Small firms with 10-49
employees, while medium-sized
firms with 50-249 employees where
represented among seven respondents (34,28%) and finally, four, or 11,43% of the
respondents where represented by large firms. This according to the definition used by
the European commission on SMEs.
Question 2: Have you heard about core competencies?
This questions was a control and eliminatory question and therefore 100% or all 35 valid
responses had heard about core competencies before. It was concluded by the author that
if the respondents had not heard about core competencies before, he or she would not
have contributed to this study with reliable answers and was therefore excluded from the
study.
Question 3: Can you define core competencies?
This question was also acting as a control question, and all of the respondents who
answered that they had heard about core competencies before, further answered that they
could define core competencies. As the literature review previously concluded, it is
important to being able to define core competencies in order identify the real core
competencies in a firm.
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
11-30 12 34,3 34,3 34,3
31-49 7 20,0 20,0 54,3
50-100 9 25,7 25,7 80,0
101-249 3 8,6 8,6 88,6
More
than 249 4 11,4 11,4 100,0
Total 35 100,0 100,0
Table 5.1: Firm size
35
Question 3a: If Yes, how would you define core competencies?
When the respondents was asked how they would define core competencies word such
as, unique-, specific- firm-specific-, deeply-rooted-, central-, critical-, hard to copy-,
vital-, and strategically important competencies, demanded by customers and essential
for creating and delivering the firms core value and services, as well as constituting the
firms competitive advantage was used. Others described core competencies as what you
are good at, a combination of human and structural capital, and what differentiate a firm
from its competitors.
Question 4: Do you consider core competencies as important to your firm?
35 or 100% of the respondents considered core competencies as important to their firms.
This was also a control or eliminating question. This because if they were not considered
as important to the firm, the respondent might not provide reliable and accurate answers
to what their real core competencies are.
Question 4a: If Yes, why do you consider core competencies as important to your
firm?
The respondents suggested that for their firms, core competencies was essential for their
operations and to provide superior value, as well as succeed, compete and survive in the
long-term in the highly competitive management consulting industry. Others stated that
it allowed the firm to have higher prices, which leads to higher profits. Furthermore, it
was suggested by the respondents that their core competencies was important to their firm
because it is a competence that cannot be bought, it is what they sell, and they guide the
firm in future development and enables the firm to offer unique services. Finally, one
respondent noted that without their core competencies they could not use their resources
and expertise held by consultants to offer services with superior value.
5.2 CORE COMPETENCE-RELATED INFORMATION
Question 5: What are your core competencies?
A majority of the respondents described their core competencies as within different areas
of expertise, which included competence within developing strategies, organisational
development and theory, implementation, change management, project management,
CRM, advisory in different areas such as IT, strategy, transactions and tax, data
warehouse, business intelligence, database, SQL, sales and marketing, accounting, SAP,
and analysis and research, to name a few. Others have identified their core competencies
in how they work in engagements and with clients to create trust, their problem solving
ability, the ability to understand the clients’ problem, having a holistic view when
working in projects, project management, delivery capabilities, and deep knowledge
about specific industries.
36
Question 6: Why does your core competencies contribute significantly to the value
creation of your service offer?
Statement 1 - Our core competencies contributes to the retention of customers
Figure 5.1 shows that among the 35 respondents, 57.14 % agreed entirely that their core
competencies contributed to the retention of customers while 17.14% did not agree at all
to this statement. 14.29 % answered that they to some degree agreed to the statement,
scoring a 2 and 8.57% scored a 5, i.e. did not agree at all to some degree. This resulted in
a mean value of 2.4 with a standard deviation of 2.018. The median is 1.00, showing that
more than 50% of the respondents agreed entirely. Furthermore, the positive skewness of
1.055 shows that there is an unsymmetrical distribution of answers around the mean, i.e.
there is a higher concentration of the mean, toward agreeing to this statement.
Statement 2 - Our core competencies contributes to better customer relations
As Figure 5.2 shows, 74.287% of the respondents agreed to various degrees that their
core competence contributed to better customer relations, scoring a 1, 2 or a 3, where
42.86% agreed entirely. Meanwhile 17.14% of the respondents did not agree at all to this
Statistics
N Valid 35
Missing 0
Mean 2,40
Median 1,00
Std. Deviation 2,018
Skewness 1,055
Statistics
N Valid 35
Missing 0
Mean 2,51
Median 2,00
Std. Deviation 1,915
Skewness 1,042
Figure 5.1: Our core competencies contributes to the retention of customers
Figure 5.2: Our core competencies contributes to better customer relations
37
statement. This resulted in a mean of 2.51 with a standard deviation of 1.1915. The
median of 2.00 indicates that more than 50% of the respondents scored either a 1 or a 2.
The positive skewness of 1.042 shows there is an unsymmetrical distribution of answers
around the mean with a high concentration of responses to the left of the mean, towards
agreeing to this statement.
Statement 3 - Our core competencies contributes to attract new customer that wants to
use your services
45.71% of the respondents agreed entirely that their core competencies attracted new
customers, while 14.29% of the respondents did not agree to this statement (see Figure
5.3). Furthermore, 28.567% of the respondents agreed to the statement to various degrees,
scoring either a 2 or a 3. Meanwhile, 11.428% of the respondents disagreed to various
degrees, scoring either a 4 or a 5. This resulted in a mean value of 2.46 with a standard
deviation of 1.884. The median of 2.00 indicates that more than 50% of the respondents
scored either a 1 or a 2. The positive skewness of 1.050 shows there is an unsymmetrical
distribution of answers around the mean with a high concentration of responses to the left
of the mean, towards agreeing to this statement.
Statistics
N Valid 35
Missing 0
Mean 2,46
Median 2,00
Std. Deviation 1,884
Skewness 1,050
Figure 5.3: Our core competencies contributes to attract new customer that
wants to use your services
38
Statement 4 - Our core competencies contributes to the value creation by making your
customers demand our services prior to our customers
When stating that their core competencies contributed to the value creation, 74.277% of
the respondents agreed to various degree, scoring either a 1, 2, or 3, where 45.71% agreed
entirely (see Figure 5.4). Meanwhile, 17.14% of the respondents did not at all agree to
this statement, and 8.571% disagreed to various degrees, scoring either a 4 or a 5. This
resulted in a mean value of 2.49 with a standard deviation of 1.931. The median was 2.00
which indicates that more than 50% of the respondents scored either a 1 or a 2. The
positive skewness of 1.050 shows there is an unsymmetrical distribution of answers
around the mean with a high concentration of responses to the left of the mean, towards
agreeing to this statement.
Statement 5 - Through our core competencies, we can satisfy our customers better
Figure 5.5 shows that when stating that their firm could satisfy their customer better with
their core competencies, 51.43% of the respondents agreed entirely, while 22.857%
agreed to the statement to various degrees, scoring a 2 or a 3. 17.14% to the respondents
did not agree to this statement at all with 8.571% disagreeing to some degree, scoring a
5. 25 (71.43%) respondents totally, or close to, totally agreed. This resulted in a mean
value of 2.46 with a standard deviation of 1.990. The median was 1.00 which indicates
that more than 50% of the respondents scored a 1. The positive skewness of 1.028 shows
Statistics
N Valid 35
Missing 0
Mean 2,49
Median 2,00
Std. Deviation 1,931
Skewness 1,050
Statistics
N Valid 35
Missing 0
Mean 2,46
Median 1,00
Std. Deviation 1,990
Skewness 1,028
Figure 5.4: Our core competencies contributes to the value creation by
making your customers demand our services prior to our customers
Figure 5.5: Through our core competencies, we can satisfy our customers better
39
there is an unsymmetrical distribution of answers around the mean with a high
concentration of responses to the left of the mean, towards agreeing to this statement.
Question 7: How do you and your competitors view your core competencies?
Statement 1 - Our competitors have similar core competencies as we do
When stating that competitors have similar core competencies as their firm, 28.57% of
the respondents did not agree to the statement, scoring either a 4 or a 5. Meanwhile,
71.43% agreed that competitors have similar core competencies to various degree, where
14.29% agreed entirely (see Figure 5.6). This resulted in a mean value of 2.74 with a
standard deviation of 1.146. The distribution of the responses was concentrated to the
centre of the mean with 80% scoring either a 2, 3 or a 4. No respondent totally disagreed
to this statement, while 14.29 % agreed entirely. This resulted in a mean of 2.74, which
is close to the middle of the scale and a standard deviation of 1.146. The median was 3.00
which indicates that more than 50% of the respondents scored either a 1, 2 or a 3. The
skewness was slightly positive with 0.167 which shows that even though a majority of
responses was to the left of the mean, towards agreeing to the statement, it was nearly
symmetrical, i.e. evenly distributed responses around the mean.
Statistics
N Valid 35
Missing 0
Mean 2,74
Median 3,00
Std. Deviation 1,146
Skewness ,167
Figure 5.6: Our competitors have similar core competencies as we do
40
Statement 2 - We could create similar value creating strategies without our core
competencies
As shown in Figure 5.7, among the 35 respondents, 40% of the respondents did not agree
at all to being able to create similar value-adding strategies without their core
competencies, where 77.141% disagreed to various agrees, scoring either a 1,2, or a 3.
Meanwhile, 5.714% agreed entirely to create similar value-adding strategies without their
core competencies. This resulted in a mean value of 4.69 with a standard deviation of
1.530. The median was 5.00 which indicates that more than 50% of the respondents
scored either a 5, or a 6. The negative skewness of -1.106 shows there is an unsymmetrical
distribution of answers around the mean with a high concentration of responses to the
right of the mean, towards disagreeing to this statement.
Statement 3 - Our competitors knows the structure of our core competencies
As Figure 5.8 shows, the distribution of the responses is concentrated towards the middle
of the scale, with 82.87% of the respondents scoring either a 2, 3, or a 4. Meanwhile,
2.857% agreed entirely and 2.857% did not agree at all. This resulted in a mean value of
3.06 with a standard deviation of 1.530. The median was 3.00 which indicates that more
than 50% of the respondents scored either a 1, 2, or a 3. The positive skewness of 0.719
Statistics
N Valid 35
Missing 0
Mean 4,69
Median 5,00
Std. Deviation 1,530
Skewness -1,106
Statistics
N Valid 35
Missing 0
Mean 3,06
Median 3,00
Std. Deviation 1,162
Skewness ,719
Figure 5.7: We could create similar value creating strategies without our core
competencies
Figure 5.8: Our competitors knows the structure of your core competencies
41
shows there is an unsymmetrical distribution of answers around the mean with a high
concentration of responses to the left of the mean, towards agreeing to this statement.
Statement 4 - It would be difficult and expensive for our competitors to develop similar
core competencies
Figure 5.9 shows that according to 68.57% of the respondents, it is difficult and expensive
for competitors to develop similar core competencies in various degrees, where 11.43%
agreed entirely. 2.857 did not agree at all, and 28.57% disagreed to various degrees,
scoring either a 4 or a 5. This resulted in a mean value of 2.94 with a standard deviation
of 1.305. The median was 3.00 which indicates that more than 50% of the respondents
scored either a 1, 2, or a 3. The positive skewness of 0.448 shows that the distribution of
the responses is slightly unsymmetrical around the mean with a higher concentration of
responses to the left of the mean, towards agreeing to this statement.
Statement 5 - Through our core competencies we can take advantage of opportunities in
our external environment
Among the 35 respondents, 88.57% agreed to various degree that their firm could take
advantage of external opportunities through their core competencies, coring either a 1, 2
or a 3, where 25.71% agreeing entirely. Meanwhile 11.43% of the respondents disagreed
Statistics
N Valid 35
Missing 0
Mean 2,94
Median 3,00
Std. Deviation 1,305
Skewness ,448
Statistics
N Valid 35
Missing 0
Mean 2,34
Median 2,00
Std. Deviation 1,162
Skewness ,824
Figure 5.9: It would be difficult and expensive for our competitors to develop
similar core competencies
Figure 5.10: Through our core competencies we can take advantage of opportunities in
our external environment
42
to this statement in various degrees, scoring either a 4 or a 5, with no respondents not
agreeing at all (see Figure 5.10). This resulted in a mean value of 2.34 with a standard
deviation of 1.162. The median was 2.00 which indicates that more than 50% of the
respondents scored either a 1, or a 2. The positive skewness of 0.824 shows an
unsymmetrical distribution of answers around the mean with a high concentration of
responses to the left of the mean, towards agreeing to this statement.
Statement 6 - Through our core competencies we can neutralize external threats in our
environment
When stating that the firm could neutralize external threats, 5.714% of the respondents
agreed entirely, and 54.29% agreed in various degrees, scoring either a 2 or a 3. 39.997%
disagreed to this statement in various degrees, scoring either a 4, or a 5, where 2.857%
did not agree at all (see Figure 5.11). This resulted in a mean value of 3.31 with a standard
deviation of 1.278. The median was 3.00 which indicates that more than 50% of the
respondents scored either a 1, 2, or a 3. The positive skewness of 0.172 shows there is a
slightly unsymmetrical distribution of answers around the mean with a high concentration
of responses to the left of the mean, towards agreeing to this statement.
Statistics
N Valid 35
Missing 0
Mean 3,31
Median 3,00
Std. Deviation 1,278
Skewness ,172
Figure 5.11: Through our core competencies we can neutralize external
threats in our environment
43
Statement 7 - Our core competencies has been developed during a long time
Figure 5.12 shows that a majority, 80% of the respondents, considered their core
competencies as being developed during a long time, scoring either a 1, or a 2.
Meanwhile, 17.142% of the respondents did not agree to this statement, scoring either a
4, or a 6, where 8.571% did not agree at all. This resulted in a mean value of 2.20 with a
standard deviation of 1.451. The median was 2.00 which indicates that more than 50% of
the respondents scored either a 1, or a 2. The positive skewness of 1.651 shows there is
an unsymmetrical distribution of answers around the mean with a high concentration of
responses to the left of the mean, towards agreeing to this statement.
Statement 8 - Our core competencies are deeply rooted in our employees and corporate
culture
When stating that the firms core competencies was deeply rooted in the firms’ employees
and corporate culture 40% of the respondents agreed entirely. Furthermore, 45.711%
agreed to various degrees, scoring either a 2, or a 3. Meanwhile, 14.285% did not agree
to various degrees, scoring either a 4, 5 or a 6 (see Figure 5.13). This resulted in a mean
value of 2.11 with a standard deviation of 1.367. The median was 2.00 which indicates
that more than 50% of the respondents scored either a 1, or a 2. The positive skewness of
Statistics
N Valid 35
Missing 0
Mean 2,20
Median 2,00
Std. Deviation 1,451
Skewness 1,651
Statistics
N Valid 35
Missing 0
Mean 2,11
Median 2,00
Std. Deviation 1,367
Skewness 1,467
Figure 5.12: Our core competencies has been developed during a long time
Figure 5.13: Our core competencies are deeply rooted in our employees and
corporate culture
44
1.467 shows there is an unsymmetrical distribution of answers around the mean with a
high concentration of responses to the left of the mean, towards agreeing to this statement.
Question 8: How do you use your core competencies in strategic decision making?
Statement 1 - Through our core competencies we can take advantage of opportunities in
our external environment
This was an alternative form statement which had been asked earlier in the questionnaire
(see statement 5 in question 7). Figure 5.14 shows that among the 35 respondents, 85.71%
respondents agreed to various degree that their firm could take advantage of external
opportunities through their core competencies, scoring either a 1, 2, or a 3, where 31.43%
agreed entirely. No respondents did not agree at all, but 14.287% disagreed to various
degrees, scoring either a 4, or a 5. This resulted in a mean value of 3.20 with a standard
deviation of 1.256. The median was 2.00 which indicates that more than 50% of the
respondents scored either a 1, or a 2. The positive skewness of 1.207 shows there is an
unsymmetrical distribution of answers around the mean with a high concentration of
responses to the left of the mean, towards agreeing to this statement.
Statistics
N Valid 35
Missing 0
Mean 2,20
Median 2,00
Std. Deviation 1,256
Skewness 1,207
Figure 5.14: Through our core competencies we can take advantage of opportunities
in our external environment
45
Statement 2 - Our core competencies can only be deployed for offering services within
one industry/market
As presented in Figure 5.15 above, 31.43% of the respondents did not agree at all that
their core competencies could only be deployed within one market/industry. Furthermore,
42.861% scored a 4 or a 5, i.e. disagreeing to some degrees. Meanwhile, 25.715% agreed
to this statement to various degrees, where 11.43% agreed entirely. This resulted in a
mean value of 4.40 with a standard deviation of 1.718. The median was 5.00 which
indicates that more than 50% of the respondents scored either a 5, or a 6. The negative
skewness of -0.963 shows there is an unsymmetrical distribution of answers around the
mean with a high concentration of responses to the right of the mean, towards disagreeing
to this statement.
Statement 3 - Our core competencies can only be deployed for offering services within
one segment of customers
This was a statement in alternative form (see the previous statement). As presented in
Figure 5.16, among the 35 respondents, 71.434% disagreed to various degrees to this
statement, where 34.29% did not agree at all. 11.43% agreed entirely and 17.144% agreed
Statistics
N Valid 35
Missing 0
Mean 4,40
Median 5,00
Std. Deviation 1,718
Skewness -,963
Statistics
N Valid 35
Missing 0
Mean 4,37
Median 5,00
Std. Deviation 1,784
Skewness -,865
Figure 5.15: Our core competencies can only be deployed for offering services
within one industry/market
Figure 5.16: Our core competencies can only be deployed for offering services
within one segment of customers
46
to some degrees, scoring either a 2, or a 3. This resulted in a mean value of 4.37 with a
standard deviation of 1.784. The median was 5.00 which indicates that more than 50% of
the respondents scored either a 5, or a 6. The negative skewness of -0.865 shows there is
an unsymmetrical distribution of answers around the mean with a high concentration of
responses to the right of the mean, towards disagreeing to this statement.
Statement 4 - If we would enter a new market, we would have to develop new core
competencies for that specific market
This statement can further be considered an alternative form (see question 8, statement
1). Figure 5.17 shows that 14.29% of the respondents agreed entirely when stating that
new core competencies needed to be developed for a specific market when diversifying.
Furthermore, 45.71% scored a 2, or a 3, i.e. agreeing to some degrees. Meanwhile,
8.571% did not agree at all, and 31.46% disagreed to some degrees, scoring either a 4, or
a 5. This resulted in a mean value of 3.23 with a standard deviation of 1.516. The median
was 3.00 which indicates that more than 50% of the respondents scored either a 1, 2, or a
3. The positive skewness of 0.232 shows there is a slightly unsymmetrical distribution of
answers around the mean with a high concentration of responses to the left of the mean,
towards agreeing to this statement.
Statistics
N Valid 35
Missing 0
Mean 3,23
Median 3,00
Std. Deviation 1,516
Skewness ,232
Figure 5.17: If we would enter a new market, we would have to develop new
core competencies for that specific market
47
Statement 5 - Our core competencies are shared among all our area of businesses and
SBUs
When stating that the firms’ core competencies were shared among the firms SBUs,
31.43% agreed entirely, with 45.71% agreeing to some degrees, scoring either a 2, or a 3.
22.858% disagreed to various degrees, with 11.43% not agreeing at all (see Figure 5.18).
This resulted in a mean value of 2.60 with a standard deviation of 1.631. The median was
2.00 which indicates that more than 50% of the respondents scored either a 1, or a 2. The
positive skewness of 0.955 shows there is an unsymmetrical distribution of answers
around the mean with a high concentration of responses to the left of the mean, towards
agreeing to this statement.
Statement 6 - Our core competencies guides our firm when entering new markets
To this statement about core competencies as guiding diversification, 25.71% agreed
entirely, while 60% agreed to some degrees, scoring either a 2, or a 3. Meanwhile,
14.285% did not agree at all, scoring either a 5, or a 6 (see Figure 5.19). This resulted in
a mean value of 2.37 with a standard deviation of 1.416. The median was 2.00 which
indicates that more than 50% of the respondents scored either a 1, or a 2. The positive
skewness of 1.398 shows there is an unsymmetrical distribution of answers around the
Statistics
N Valid 35
Missing 0
Mean 2,60
Median 2,00
Std. Deviation 1,631
Skewness ,955
Statistics
N Valid 35
Missing 0
Mean 2,37
Median 2,00
Std. Deviation 1,416
Skewness 1,398
Figure 5.18: Our core competencies are shared among all our area of
businesses and SBUs
Figure 5.19: Our core competencies guides our firm when entering new
markets
48
mean with a high concentration of responses to the left of the mean, towards agreeing to
this statement.
Statement 7 - We only enter markets with similar competitive structure, rule and key
success factors as our present markets
When stating that the firm only entered markets with similar competitive structure, rule
and key success factors as their present markets, 17.14% did not agree at all, and 11.43%
agreed entirely, which is presented in Figure 5.20. Furthermore, 51.43% scored either a
2, or a 3, i.e. agreeing to some degrees as opposed to 20% who disagreed to some degrees,
scoring either a 4, or a 5. This resulted in a mean value of 3.40 with a standard deviation
of 1.594. The median was 3.00 which indicates that more than 50% of the respondents
scored either a 1, 2, or a 3. The positive skewness of 0.355 shows there is a slightly
unsymmetrical distribution of answers around the mean with a high concentration of
responses to the left of the mean, towards agreeing to this statement.
Statistics
N Valid 35
Missing 0
Mean 3,40
Median 3,00
Std. Deviation 1,594
Skewness ,355
Figure 5.20: We only enter markets with similar competitive structure, rule
and key success factors as our present markets
49
5.3 FIRM-RELATED INFORMATION
Question 9: How does senior management’s point of view about the future compare
with that of your competitors?
Figure 5.21 shows that when asked about senior managers point of view the future
compared to their competitors, 11.43% scored a six, i.e. entirely conventional and
farsighted. Furthermore, 65.72% scored conventional and farsighted to some degrees,
scoring a 4, or a 5. Meanwhile, 22.854% of the respondents scored either a 1, 2, or a 3,
i.e. conventional and reactive to various degrees, where entirely conventional and reactive
was scored by 2.857%. This resulted in a mean value of 4.26 with a standard deviation of
1.146. The median was 4 which indicates that more than 50% of the respondents scored
either a 4, 5, or a 6. The negative skewness of -0.664 shows there is an unsymmetrical
distribution of answers around the mean with a right concentration of responses to the left
of the mean, towards being conventional and farsighted.
Statistics
N Valid 35
Missing 0
Mean 4,26
Median 4,00
Std. Deviation 1,146
Skewness -,664
Figure 5.21: Senior management’s point of view about the future compared to
your competitors
50
Question 10: Which business issues absorbs more senior management attention?
When asked about which business issues that absorbed most of senior managers’
attention, 51.427% scored regenerating core strategies to various degrees, as opposed to
48.567% scored reengineering core processes to various degrees, scoring either a 1, 2, or
a 3 (see Figure 5.22). This resulted in a mean value of 3.57 with a standard deviation of
1.195. The median was 4.00 which indicates that more than 50% of the respondents
scored either a 4, 5, or a 6. The negative skewness of -0.069 shows an almost symmetrical
distribution of answers around the mean, with a slightly higher concentration of responses
to the right of the mean, towards regenerating core strategies.
Question 11: How does competitors view your firm?
When asked how competitors viewed their firms in terms of being either a rule maker or
a rule follower, 2.857% scored that they were viewed as a clear rule maker by their
competitors. Furthermore, 68.57% of the respondents scored that they were perceived as
mostly rule makers to some degrees, scoring either a 4, or a 5. Meanwhile, 28.574%
Statistics
N Valid 35
Missing 0
Mean 3,57
Median 4,00
Std. Deviation 1,195
Skewness -,069
Statistics
N Valid 35
Missing 0
Mean 4,09
Median 4,00
Std. Deviation ,981
Skewness -,378
Figure 5.22: Business issues that absorbs senior management attention
Figure 5.23: Competitors view of the firm
51
scored a 2, or a 3, i.e. they were to some degrees viewed as mostly rule followers (see
Figure 5.23). This resulted in a mean value of 4.09 with a standard deviation of 0.981.
The median was 4.00 which indicates that more than 50% of the respondents scored either
a 4, 5, or a 6. The negative skewness of -0.378 shows there is a slightly unsymmetrical
distribution of answers around the mean with a higher concentration of responses to the
right of the mean, towards being viewed as mostly rule makers.
Question 12: What is your firm's strength?
Figure 5.24 shows that when asked if the firms’ strengths was either operational
efficiency or innovation and growth, No respondents scored pure innovation and growth,
but 68.57% answered that their firms’ strength to some degree is within innovation and
growth, scoring either a 4, or a 5. Meanwhile, 31.431% scored either a 1, 2, or a 3, i.e. to
various degrees consider their strength being within operational efficiency, where 8.571%
considering their strength being pure operational efficiency. This resulted in a mean value
of 3.83 with a standard deviation of 1.339. The median was 4.00 which indicates that
more than 50% of the respondents scored either a 4, 5, or a 6. The negative skewness of
-0.915 shows there is an unsymmetrical distribution of answers around the mean with a
high concentration of responses to the right of the mean, towards innovation and growth.
Statistics
N Valid 35
Missing 0
Mean 3,83
Median 4,00
Std. Deviation 1,339
Skewness -,915
Figure 5.24: The firm's strength
52
Question 13: What is your firm's focus to create competitive advantage?
Figure 5.25 shows that among the 35 respondents, 88.57% consider their foresight as their
focus when creating a competitive advantage, scoring either a five or six. No respondents
considered mostly catching up as their focus, and 5.714% considered mostly catching up
to some degree when creating competitive advantage, scoring a 2, or a 3. This resulted in
a mean value of 5.09 with a standard deviation of 1.530. The median was 5.00 which
indicates that more than 50% of the respondents scored either a 5 or a 6. The negative
skewness of -1.678 shows there is an unsymmetrical distribution of answers around the
mean with a high concentration of responses to the right of the mean, towards the firms’
foresight as a focus when creating competitive advantage.
Question 14: What has set your transformational agenda?
When asked what set their firms transformational agenda, a majority, 91.43% scored a 4,
5, or a 6, i.e. their foresight. No respondents considered their competitors in this question.
8.571% scored a 3, meaning that to a small degree, competitors set their transformational
Statistics
N Valid 35
Missing 0
Mean 5,09
Median 5,00
Std. Deviation ,853
Skewness -1,678
Statistics
N Valid 35
Missing 0
Mean 4,91
Median 5,00
Std. Deviation ,919
Skewness -,545
Figure 5.25: The firms focus to create competitive advantage
Figure 5.26: The firms’ transformational agenda
53
agenda (see Figure 5.26). This resulted in a mean value of 4.91 with a standard deviation
of 0.919. The median was 5.00 which indicates that more than 50% of the respondents
scored either a 5 or a 6. The negative skewness of -0.545 shows there is an unsymmetrical
distribution of answers around the mean with a high concentration of responses to the
right of the mean, towards their firms’ foresight.
Question 15: Do you spend the bulk of your time as a maintenance engineer
preserving the status quo or as an architect designing the future?
Among the 35 respondents, a majority, 97.15%, of the respondents spent most of their
time as architects designing their firms’ future, scoring either scored a 3, i.e. to a small
degree spent a bulk of their time as being engineers (presented in Figure 5.27). This
resulted in a mean value of 5.00 with a standard deviation of 0.686. The median was 5.00
which indicates that more than 50% of the respondents scored either a 5 or a 6. The
negative skewness of -0.580 shows there is an unsymmetrical distribution of answers
around the mean with a high concentration of responses to the right of the mean, towards
being architects.
Statistics
N Valid 35
Missing 0
Mean 5,00
Median 5,00
Std. Deviation ,686
Skewness -,580
Figure 5.27: Managing by preserving status quo or designing the future
54
6. DATA ANALYSIS
In this sixth chapter, the empirical data from the previous chapter is analysed, which will
lead to the understanding of the core competence concept among the surveyed firms and
if they are managed in a way that advocates when competing compete with core
competencies.
6.1 CORE COMPETENCIES
The respondents provided a wide range of different definitions of core competencies (see
Appendix VI, question 3a) and it was found that these definitions could be categorized
into four different categorizes; core competencies are competencies that-, are unique,
creates competitive advantage, are connected to the customer value and valued by
customers, and are essential to operate the business and deliver the services.6
20% of the respondents was categorized as defining core competencies as unique
competencies. The unique competence was further described as a competence that were
difficult to trade between competitors which gave the firm an advantage when delivering
a superior customer value and demanded by the customers. This had an impact when the
respondents was asked why they considered core competencies as important to their firm.
In general the respondents consider them important because they were essential for the
success and survival of the firm, and without them delivering services would not be
possible. Having unique competencies, further enabled the firm to obtain a higher price.
This further influenced the respondents when they were asked to identify their core
competencies. The stated core competencies were focused on the unique knowledge and
expertise held by different market/business units within the firm, ranging from specific
knowledge about certain industries and accounting and tax legislations too the ability to
understand the overall picture in a project through the whole change management process.
This further indicates that the respondents consider their unique knowledge and expertise,
or end product, which they sell to their customers as their core competence, or the core
product which constitutes the end-product.
Among the 35 responses, 28% stated definitions that could be categorised as a
competence that creates a competitive advantage for the firm. This was further
acknowledged by core competencies as vital and important to the firm that enabled the
firms to maintain their strategic and competitive position in the industry. These
definitions further influences why they were important to the firm. A majority of the
respondents highlighted the competitive advantage it provides for the firm and enables it
to compete in the highly competitive management consulting industry. Constituting the
firms competitive advantage was further indicated by some respondents considered it to
guide the firm by only focusing on developing, deploying and marketing their core
competencies and out-source less value-adding activities. When stating their core
competencies, 50% identified their core competencies as concerning the firms’
6 Note that these categorisation was not always entirely clear and some definitions could be placed in
more than one category.
55
knowledge in different areas, which they sell to their customers. Meanwhile, the
remaining 50% of the respondents in this category considered their core competencies as
being more abstract, and concerning recruiting and developing employees as well as the
firms’ creative and analytical abilities.
17% of the respondents defined core competencies as competencies that are connected to
creating customer value and valued by customers. According to these respondents, core
competencies are what the firm is good at, and competencies that are valuable from the
customer perspective and essential for delivering value to the customers. As with the
previous categories, the definition influenced why they are important to the firm. The
respondents considered them important because they were their product and therefore
central for creating value-adding consulting. Furthermore, they were important because
the firm needed skills to satisfy their customers’ expectations and provide them with
solutions to their problems. In line with the definition provided by the respondents, their
core competencies was identified as focusing on what the customer are buying from the
firm, i.e. knowledge within certain areas such as strategy, management, value creation,
project management, implementation etc. This implies that a majority of these
respondents are considering their end product as being their core competence, and a few
of the respondents consider their core-product such as how they work in teams and
together with customers. However, among the respondents, words such as “might be” or
“we believe” was used when describing their core competencies indicating that some
respondents was not really sure about what their real core competencies were.
The fourth category includes 35% of those respondents who defined core competencies
as competencies that are essential for operating the business and deliver the service.
According to these definitions, core competencies was of strategic importance and
connected to the core business and the firm could not operate and perform engagements
and activities without them, and deliver the core offer. Furthermore, they were defined as
what everyone in the industry must know, i.e. an essential competence. Being defined as
essential to operate the business, it clearly had an impact on why they were important.
They were considered important because they constitutes the “spine” of the firm. They
are fundamental for the survival and success, and form the strategic direction for the entire
firm. Aligned with the definition, a majority of the respondents in this category stated
their core competencies as their service offering which is fundamental to the firm and
generates income. This included change-, project- and process management, knowledge
in organisational functions and different IT-systems, knowledge about the consulting role
and activities performed by the consultant etc. This indicates that the respondents who
have defined core competencies as essential to operate the business consider core
competencies as being their core product or end product. Where knowledge about the
consulting role and activities performed by the consultants can be classified as the firms’
core product, and the service offering such as knowledge in different areas and functions
can be classified as end products because it is basically what is offered to the customers.
56
6.2 THE CHARACTERISTICS OF THE FIRMS’ CORE
COMPETENCIES
6.2.1 CREATING VALUE
Regarding the realizing of the value-in use and co-creation of the value-in use of services,
this study found that a majority of the respondents considered their identified core
competencies as contribute to the value-creation and benefit of the customers by realizing
the value-in use and co-creation of value, with 71 % of the respondents agreeing entirely,
scoring a 1, or 2, on all five statements. (See Appendix VII, Table 1) In order to analyse
the contribution to the value creation, an index was created for the variable and through
analysing the descriptive statistics, presented in Table 6.1. This study found that with a
mean of 2.00, the respondents highly agrees that their core competencies contribute to the
value creation. Furthermore, with a median of 1.00, according to more than 50% of the
respondents agrees entirely, i.e. their core competencies can be viewed as contributing
significantly to the value-in use and co-creation of value, and thereby the outcomes of
realizing the value-in use for the customer.
Table 6.1: Descriptive Statistics the variable creating value
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Creating Value 35 1 6 2,00 1,00 1,906 1,093
Valid N (listwise) 35
The correlations for the statements was computed, and as Table 6.2 shows, a very strong
positive correlation was found between the statements that are significant at a 0.01 level,
and the outcomes for realizing the value-in use. This implies that the core competencies
that the respondents have identified qualifies for contributing to the value and benefit of
the customers and thereby possess this characteristic that distinguish core competencies
from competencies.
Table 6.2: Correlations between statements constituting the value creation
1. 2. 3. 4. 5.
1. How many employees do you have in Sweden?
2. Our core competencies contributes to the retention of customers -,075
3. Our core competencies contributes to better customer relations -,133 ,957**
4. Our core competencies contributes to attract new customer that wants to use
your services -,056 ,933** ,927**
5. Our core competencies contributes to the value creation by making your customers demand our services prior to our customers
-,116 ,968** ,972** ,940**
6. Through our core competencies, we can satisfy our customers better ,012 ,949** ,939** ,947** ,936**
**. Correlation is significant at the 0.01 level (2-tailed).
57
6.2.2 UNIQUE
In terms of being the most important and key resource of the firm (Srivastava, 2005;
Grønhaug & Nordhaug, 1992; Von Krogh & Roos, 1995), comprised of a unique set of
resources and capabilities, Barney (1991) argues that a core competence must have four
attributes; valuable, rare, inimitable and non-substitutable. A summary of the responses
concerning the uniqueness of the respondents’ core competencies are presented in
Appendix VII, Table 2.
Valuable, means that the core competence must enable the firm to take advantage of
opportunities and neutralize threats in the external environment (Barney, 1991). It was
found that a majority of the respondents agreed to be able to take advantage of
opportunities through their core competencies. However, in term of neutralizing threats,
with a mean of 3.31 (see question 7, statement 6) the respondents could not agree entirely
to the statement. An index for these two statements was created and through calculating
descriptive statistics (see Table 6.3) it was found that the mean was 2.83 with a standard
deviation of 0.813. Furthermore, the positive skewness of 0.028 indicates that the
responses was almost evenly distributed around the mean and the median of 3.00 shows
that more than 50% of the respondents consider their core competencies as being
classified as a valuable resource This implies that there is a higher concentration of
responses towards agreeing that their core competencies are valuable in term of how
Barney (1991) describe a valuable resource. However, it further implies that there are
responses distributed towards the disagreeing side of the scale, i.e. their core
competencies cannot be categorized as a valuable resource.
Table 6.3: Descriptive Statistics for being a valuable resource
Rare resources are those that are distinctive to the firm, and thereby difficult or costly to
obtain and develop by competitors (Barney, 1991). The respondents was asked to score
two statements concerning the rareness of their core competencies (see question 7,
statement 1 and 4, for a correct analysis, the responses in statement one was reversed).
An index was created for the two statements and descriptive statistics was calculated (see
Table 6.4). Through the descriptive statistics it was found that the mean value for the
variable rareness is 3.63, which is slightly towards the disagreeing to the rareness of their
core competencies. This finding is further strengthened by the median of 4.00, which
indicates that more than 50% of the respondents disagrees to the statement that their core
competencies can be categorized as rare.
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Valuable_resource 35 1 5 2,83 3,00 ,813 ,028
Valid N (listwise) 35
58
Table 6.4: Descriptive Statistics for being a rare resource
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Rareness 35 2 6 3,63 4.00 ,877 ,206
Valid N (listwise) 35
Inimitable concerns the complexity of the bundle of resources and capabilities that
constitutes the core competence. Barney (1991) discusses three conditions which can be
viewed as either substitutive or additive for developing imperfect inimitability for
developing imperfectly imitable resources; unique historical conditions, causally
ambiguous, and socially complex, These three conditions were all tested (see question 7,
statements 3, 7 and 8) and the descriptive statistics is presented in Table 6.5, 6.6 and 6.7.
With a median of 2.00 it was found that more than 50% of the respondents to a higher
degree agreed that historical conditions and especially socially complex constituted the
inimitable of their core competencies, while causally ambiguous, with a median of 3.00
was less agreed upon as constituting the inimitability among the majority of the
respondents. Furthermore, the mean value was also clearly lower, towards agreeing, for
historical conditions and socially complex than for causally ambiguous which indicates
that more respondents agreed to a greater extent. However, the skewness of causally
ambiguous (0.719) was clearly less than for historical conditions and socially complex,
which shows that the responses was to a greater extent concentrated closer to the mean
for causally ambiguous. With a skewness of 1.651 for historical conditions and 1.467 for
socially complex, the distribution of the responses was to a greater extent distributed
further away from the mean, which indicates that the were large differences in how the
respondents answered to these two statements.
Table 6.6: Descriptive Statistics for Causally ambiguous
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Causally ambiguous 35 1 6 3,06 3,00 1,162 ,719
Valid N (listwise) 35
Table 6.7: Descriptive Statistics for Historical conditions
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Historical conditions 35 1 6 2,20 2,00 1,451 1,651
Valid N (listwise) 35
59
Table 6.8: Descriptive Statistics for Socially complex
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Socially complex 35 1 6 2,11 2,00 1,367 1,467
Valid N (listwise) 35
Non-substitutable resources refers to valuable resources with no strategically equivalent
that by itself are rare or inimitable. Through calculating the descriptive statistics (see
Table 6.9), it was found that with a mean of 4.69 and a median of 5.00, a great majority
of the respondents considered that similar value-adding strategies could not be created
without their specific core competencies. This implies that the firms, rely heavily on their
core competencies and consider them as important, non-substitutable inputs in their
corporate strategies.
Table 6.9: Descriptive Statistics for being a non-substitutable resource
The correlations among the statements concerning the uniqueness of the respondents’
core competencies was further calculated and presented in Table 6.10. It shows that on a
significant level of 0.01, historical conditions and social complexity that constitutes the
inimitability are strongly positive correlated with core competencies as a valuable
resource by neutralizing threats and taking advantages of opportunities. This implies that
the respondents agree that their core competencies are inimitable and valuable resources
to the firm. Furthermore, this study found a high negative correlation between the
inimitability (statement 8 and 9) and the non-substitutability (statement 3) of the
respondents’ core competencies. This indicates that according to the respondents, their
core competencies cannot be considered as both inimitable and non-substitutable.
Meanwhile, a strong negative correlation between taking advantage of opportunities and
create similar value-adding strategies. This negative correlation is the result of stating
statement 3 in a negative way, and shows that there is actually a positive correlation
between not being able to create similar value-adding strategies and taking advantages of
opportunities. This indicates that according to the respondents, their core competencies
constitutes their value adding-strategies and at the same time help the firm in exploiting
external opportunities.
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Non-substitutable 35 1 6 4,69 5,00 1,530 -1,106
Valid N (listwise) 35
60
Table 6.10: Correlations between the statements constituting the uniqueness
1. 2. 3. 4. 5. 6. 7. 8.
1. How many employees do you have in Sweden?
2. Our competitors have similar core competencies as we
do -,059
3. We could create similar value creating strategies without our core competencies
,265 -,249
4. Our competitors knows the structure of your core
competencies -,221 ,387* ,110
5. It would be difficult and expensive for our
competitors to develop similar core competencies -,102 ,049 -,245 ,099
6. Through our core competencies we can take advantage of opportunities in our external environment
-,077 ,399* -,633** ,029 ,421*
7. Through our core competencies we can neutralize
external threats in our environment ,208 ,338* -,053 ,126 -,253 -,114
8. Our core competencies has been developed during a
long time ,015 ,156 -,673** -,216 ,488** ,621** -,067
9. Our core competencies are deeply rooted in our
employees and corporate culture -,122 ,263 -,728** -,078 ,432** ,752** -,122 ,833**
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
6.2.3 DIVERSIFIER
When exploring the respondents’ core competencies as guiding the firms in exploiting
opportunities and entering new diverse markets, also known as related diversification (see
Appendix VII, Table 3 for a summary of statements) an index of the statements was
created and descriptive statistics calculated and presented in Table 6.11. With a mean of
3.22 and a median of 3.00 it was found that a majority of the respondents considered their
core competencies as guiding their firms when entering new industries and markets. The
negative skewness of -1.121 further implies that the responses were highly concentrated
towards the left of the mean, towards agreeing to the statements and thereby agreeing to
guide the firms when growing idiosyncratically. This conclusion is further strengthened
when analysing the maximum value of the index, which is four, which shows that the
responses was distributed between agreeing entirely and disagreeing to a small degree.
Table 6.11: Descriptive Statistics for the variable diversifier
In Table 6.12, the correlations between the statements constituting this final characteristic
of a core competence of providing access to a wide variety of markets is presented. It was
found that on a significant level of 0.01, exploiting advantages of external opportunities
was strongly positive correlated with the sharing of core competencies and guiding the
firm when entering new market (statement 6 and 7). This implies that according to the
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistics Statistic Statistic
Diversifier 35 1 4 3,22 3,00 ,613 -1,121
Valid N (listwise) 35
61
respondents, their core competencies are used when exploiting opportunities in not just
existing markets, but in new markets as well which results in the sharing of their core
competencies among their areas of business and SBUs. The strong negative correlation
between taking advantages of opportunities and deploying the same core competencies
for offering services within one segment and industry (see statement 3 and 4) is a result
from stating statement 3 and 4 negatively and thereby further shows that the according to
the respondents, their core competencies can be used to exploit opportunities in more than
one industry and segment. This phenomenon was also found between guiding the firm
when entering new markets (statement 7) and deploying the same core competencies for
offering services within one segment and industry (see statement 3 and 4). Furthermore,
a high positive correlation was found between guiding the firm when entering new
markets (statement 7) and the sharing of core competencies among business areas and
SBUs. This implies that the firms are using their core competencies through idiosyncratic
growth and has enabled the firms to create new areas of business and enter new market.
Table 6.12: Correlations between the statements constituting the diversification
1. 2. 3. 4. 5. 6. 7.
1. How many employees do you have in Sweden?
2. Through our core competencies we can take advantage of opportunities in our external environment
,017
3. Our core competencies can only be deployed for offering services within one industry/market
,202 -,692**
4. Our core competencies can only be deployed for offering services within one segment of customers
,078 -,730** ,919**
5. If we would enter a new market, we would have to develop new core competencies for that specific market
-,092 -,287 ,404* ,359*
6. Our core competencies are shared among all our area of businesses
and SBUs ,066 ,572** -,361* -,413* ,014
7. Our core competencies guides our firm when entering new markets -,009 ,701** -,583** -,708** -,287 ,678**
8. We only enter markets with similar competitive structure, rule and key success factors as our present markets
-,082 ,032 ,165 ,132 ,363* -,061 -,068
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
6.3 MANAGING THE MANAGEMENT CONSULTING FIRM
A total of seven questions were used to evaluate how the respondents managed their firms
and if they devoted to much time and energy for preserving the past instead of creating
their future. In order to explore the management variable (see Appendix VII, Table 4 for
a summary of questions), an index was created constituting the seven questions and
descriptive statistics calculated (see Table 6.13). With the minimum value being 3.00 it
was found that no respondents entirely devoted to much time and energy for preserving
the past. However, the mean value of 4.00 as well as the median of 4.00 shows that more
than 50 % of the respondents scored either a 3 or a 4 indicating that a majority of the
respondents is placed in the centre of the scale. This is further clarified by the slight
negative skewness of -0.217, which implies a slightly higher concentration of responses
to the left of the mean value, towards preserving the past instead of creating the future.
62
Table 6.13: Descriptive Statistics for the variable management
N Minimum Maximum Mean Median Std. Deviation Skewness
Statistic Statistic Statistic Statistic Statistic Statistic Statistic
Management 35 3,00 6,00 4,00 4,00 ,53378 -,217
Valid N (listwise) 35
When computing the correlation between the questions (see Table 6.14) it was found that
on a significant level of 0.01, there is a strong positive correlation between how the
respondents answered to question three and six. This indicates that how the firm is
perceived by its competitors have an impact on the firms’ transformational agenda and
vice versa, i.e. if your foresight sets the transformational agenda, then according to the
respondents, the firm will be perceived as mostly rule makers by their competitors.
Furthermore, a strong positive correlation on a significant level of 0.05 was found
between how the respondents answered on question five and six, indicating that the
respondents’ transformational agenda determines how they create a competitive
advantage.
Table 6.14: Correlations between the statements constituting the management
.
1. 2. 3. 4. 5.
1. How does senior management’s point of view
about the future compare with that of your
competitors?
2. Which business issues absorbs more senior
management attention? -,132
3. How does competitors view your firm? ,058 ,183
4. What is your firm's strength?? ,049 ,137 ,079
5. What is your firm's focus to create competitive
advantage? ,338* ,066 ,307 ,142
6. What has set your transformational agenda? ,189 -,088 ,628** -,132 ,422*
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
63
7. CONCLUSIONS AND DISCUSSION
In this final chapter, major conclusions are presented, which leads to answering the two
stated research questions from chapter three. This is followed by a discussion concerning
the analysis of the empirical data. Towards the end of this chapter, managerial
implications, limitations and suggestions for further research are presented.
A major conclusion that emanates from this study is that core competencies are
considered as important in the management consulting industry. However, and
importantly, there exists an apparent and deep lack of understanding of what real core
competencies are among the surveyed management consulting firms, and how valuable
they can be to the firm when constituting a corporate strategy. This study further
concludes that the surveyed firms devote too much time and energy for preserving the
past, rather than creating their future by adopting long-term strategies, aiming for future
leadership and success. Which indicates that the surveyed firms are managed by focusing
and concentrating on shorter-term strategies which creates a short-term competitive
advantage. The findings from this study are important for future research of the core
competence concept because they describe the level of understanding of the core
competence concept within management consulting firms, which is an areas with
insufficient empirical research.
The theory behind the core competence concept and the idea of creating strategies that
take advantage of them is based on the premise that core competencies are “the collective
learning in the organization, and how diverse production skills are coordinated and
integrated with technologies (Prahalad and Hamel, 1990), which makes them intangible
and unique to the firm. Ofek and Sarvay (in Sahin, 2011) resemble the production
technology of a PSF with the knowledge possessed by its employees and therefore the
definition of core competencies within PSFs includes the collective learning, coordination
and integration of the knowledge possessed by the firms individual employees. Only a
small number of respondents defined core competencies as a mix of competencies or the
combination of resources. The definition provided by the majority of the respondents
more defines the characteristic of a core competence as being unique and contributing to
the value creation. However, it does not define it. What is missing in these definitions is
the collective learning, and how the firm coordinate and integrate knowledge. What has
been described by most respondents is the outcome of the definition presented by
Prahalad and Hamel (1990). This misunderstanding of defining a core competence further
influenced the identified core competencies as presented by the respondents.
In Figure 2.1 (roots to competitiveness), core competencies was illustrated as the root
system which provides the firm with stability, nourishments and sustenance by Prahalad
and Hamel (1990). The roots was then connected to and supported (Petts, 1997) the
tangible form of the core competence, i.e. the core service/product (Lahti, 1999), with the
leaves being the end services or products. This indicates that in PSFs the end service are
knowledge and expertise within certain specific areas such as implementation, change
management, sales, strategy development, cost savings, CRM, tax advisory, IT-systems,
industry knowledge etc. that are the firms service offering and offered to customers,
64
which were all described as the firms’ core competencies by a majority of the respondents.
Furthermore, Holahan et al. (2014) notes that a core competence is not expertise within
one area or one new technology. Rather, core competencies are a combination of
knowledge, skills, abilities and other characteristics within the firm (Lahti, 1999), that
strategically differentiate it from its competitors (Holahan et al., 2014).
This study further found that some respondents had identified their core competencies in
how the work in engagements and with clients to create trust, their problem solving
ability, the ability to understand the clients’ problem, having a holistic view when
working in projects, project management, delivery capabilities, and deep knowledge
about specific industries. However, Rakickaite et al. (2011) argues that business
competence, skills and problem solving, which can be used to support end products, are
the core product of a PSF. This argument is further strengthened by Teece et al. (1994),
who argues that the firms’ ability to solve technical and organizational problems is a
measurement of the firms’ competencies. The firms’ core competencies are thereby
located deeper in the firm and supports the core product, and are the reasons why their
core product is superior to the competitors. As mentioned by some respondents, their
stated core competencies enabled the firm to obtain a higher price for their services cue
to the value it provides for the customers. This is in accordance to Walsh and Linton
(2001) and Bogner et al. (1999) who suggested that having core competencies is directly
linked to the firms’ ability to obtain Ricardian rents. However, Prahalad and Hamel
(1990) discussed that the price/performance attributes of the firms’ products and services
results in a short-term competitive advantage and not a sustainable competitive
advantage, which is the result from managing, nurturing, developing and abandoning
(Srivastava, 2005) core competencies (Prahalad & Hamel, 1994).
Regarding the realizing of the value-in use and co-creation of the value-in use of services
(Grönroos & Voima, 2013) and the outcomes from realizing the customer value-in use,
suggested by O’Cass and Sok (2013), this study concludes that the core competencies
stated by the respondents contributed significantly to the value and benefit of the
customers as suggested by Prahalad and Hamel (1999). This finding could be expected
after analysing the core competencies, because core products and end products was stated
as core competencies which was considered the firms service offering and therefore
demanded and valued by the customers.
However, in this study it was concluded that the core competencies provided by the
respondents could not be classified as a unique set of resources and capabilities that make
it hard for competitors to imitate. Srivastava (2005) considered core competencies as the
most important resource to the firm and Barney (1991) suggested that for a resource to
create a competitive advantage it must be valuable and Hafeez (2002) and Gouthier and
Schmid (2003) argues that the rareness, inimitability and non-substitutability of that
resource determine the sustainability of the CA. Though this study found that the core
competencies stated by the respondents was valuable, it was also concluded that they
could not be both inimitable and non-substitutable at the same time. This might be due to
that a majority of the respondents considered knowledge and expertise possessed by the
employees and with the mobility of the employees, the integration of knowledge is more
65
important than knowledge and skills held by individual employees (Grant, 1996), which
otherwise makes it substitutable. Furthermore it was concluded that in terms of rareness
more than 50% of the respondents did not agreed that their core competencies were not
rare. This because a majority of the respondents suggested that their competitors had
similar core competencies as they did. If current and future competitors can easily have
access to the same resource or core competence, they can exploit it in the same way in
their value-adding strategies, resulting in erosion of the potential CA or SCA for the firm
(Barney, 1991).
Finally it was concluded that according to the respondents, their core competencies
enabled them to enter new diverse markets and agreed that their core competencies guided
their firms when growing idiosyncratically which has enabled the firms to create new
areas of business and enter new market. This resulted in a sharing of their core
competencies among their areas of business and SBUs.
In terms of managing their firms, it was concluded that the majority of the respondents
managed their firms neither entirely devote too much time and energy for preserving the
past, or entirely managed their firms by creating their future. In order to maximize the
value proposition of the firms services faster and at a lower cost than competitors, several
researchers (Bogner et al., 1999; Snyder & Ederling, 1992; Prahalad and Hamel, 1990,
1994); that there is a need for continual renewal. The surveyed firms appears to
concentrate more on short-term strategies such as reengineering the firms’ core processes
instead of managing through a future perspective and adopting long-term strategies such
as regenerating core strategies for the entire firm. This requires managing, nurturing,
developing and abandoning (Srivastava, 2005) core competencies, and moving ahead of
competitors and beating the time (Raffnsøe & Staunæs, 2014) with an outward, future
perspective by clearing the path for the future and questioning norms and standard of
today to create the industries of tomorrow and not feeling satisfied. (Hamel & Prahalad,
1994; Raffnsøe & Staunæs, 2014). This by pursuing to become drivers to change rather
than adopting to change (Grant, 2008).
As a concluding remark, with several researchers (Grant, 1991, 1996; Sahin, 2011; Jensen
et al. 2010) arguing that due to the great dependency of intangible resources, such as skills
and knowledge possessed by highly trained and highly mobile professional employees,
human resources constitutes the most strategically important resource held by the PSF.
Because of this, the author find it interesting and remarkable that no respondent
considered knowledge management and the identifying, storing and sharing of knowledge
within the firm as a core competence. This rather new area of research which is
underpinning the newly introduced concepts of the competence-based theory of the firm
should be highly interesting for PSFs or knowledge-intensive firms, such as management
consulting firms to developed and exploited as a core competence.
66
7.1 MANAGERIAL IMPLICATIONS
These findings and conclusions have significant implications for the surveyed firms. If
they do not have a clear understanding of the core competence concept, and the real core
competencies of the firm are not correctly identified, they cannot be utilised in the firm’s
corporate strategies. Furthermore, if the firms believe that they have something that
differentiate them from their competitors and provide the firm with a competitive
advantage that actually are quite ordinary in the industry and who competitors can acquire
or develop with relative little effort, their competitive advantage will erode and cannot
provide the firm with a sustainable competitive advantage. One reason for this
misunderstanding might be that the surveyed firms consider the knowledge possessed by
their employees as what differentiate them from their competitors and makes them
unique, which they might. However, core competencies are located deeper in the firm,
and supports the consulting activities and the knowledge possessed by the employees, and
the uniqueness is provided by the combination of both resources, capabilities and
competences within the firm that enables the firm to strategically differentiate itself from
their competitors.
7.2 LIMITATIONS
The primarily limitation for this study was the sample size. The questionnaire was
originally administrated to 84 management consulting firms, only 35 questionnaires was
completed and considered as providing the study with reliable and valid results. This
makes it difficult to generalize the results throughout the whole management consulting
industry. An additional limitations which needs to be considered in this study is the fact
that the respondents was asked to score questions regarding to their competitors and their
view of the future and the firm, which impacted the results and should therefore be taken
with caution. This study provided the study with a clear picture of how senior managers
in management consulting firms had identified their core competencies and neither the
research or the findings was linked to the financial performance or the impact their core
competencies had on the firms competitive advantage.
7.3 FURTHER RESEARCH
With the introduction of the competence-based theory of the firm and due to the fact that
knowledge is becoming increasingly more important as a competitive source to the firms,
and in accordance to Zach (in Jensen et al., 2010) who consider knowledge as currently
the only source for creating competitive advantage. As of today, limited empirical
research exists on how core competencies are managed and developed in knowledge
intensive firms. Ljungquist (2014) argues that there is likely an underlying core
competence-system that enables the firms to manage and develop their core
competencies. However, this likely system is yet to be identified and is therefore
interesting for further research.
67
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APPENDIX
APPENDIX I: SAMPLE FRAME
Company name Company name Company name
A.T. Kearney Enfo Pointer Pqm
Acando Ernst & Young, Advisory Preera AB
Accenture AB Fasticon Procure It Right
Actea Frontit Propia
Alfakonsult Frontwalker Prosales
Applied Value Gartner PwC Advisory
Arbetslivsresurs Governo Qeep Sverige AB
Arthur D. Little Greenwich Consulting Nordic Quartz+Co
Askus Consulting AB Implement Consulting Group Ramboll Management
Consulting
Avalon Innovation Indea Resources Global Professionals
Axholmen InterPares Rewir
Bain & Company Kairos Future Samarbetande Konsulter
BCG Karlöf Consulting AB Solving Efeso
BearingPoint KPMG Advisory & Tax Stretch
Canea Partner Group Kvadrat Sweco Eurofutures
Canvisa Consulting Level21 Towers Watson
Capacent LynxEye Triathlon
Capgemini Consulting Mantec Trinovo
Centigo AB McKinsey & Company Trivector
CFI Group Mercer Vadestra Strategy
CGI Business consulting Meritmind Valcon
Connecta Navet VEGA
Consultus Nextport Wenell Management AB
Cordial Business Advisers
AB Northstream Visab Consulting
Deloitte Occam Associates XLENT Consulting Group
Donald Davies & Partners Omeo Financial Consulting AB Xmentor
Ekan Management Ontrax Zeb/
Element AB PA Consulting Group
APPENDIX II: SURVEY IN SWEDISH
APPENDIX III: SURVEY IN ENGLISH
APPENDIX IV: COVER LETTER IN SWEDISH
Till <FÖRETAGETS NAMN>,
Jag är en mastersstudent inom internationell affärsmiljö vid Luleå Tekniska
Universitet som för tillfället skriver min mastersuppsats och vill undersöka graden av
förståelse för kärnkompetenskonceptet bland managementkonsultföretag som är
verksamma i Sverige. Ny och fördjupad kunskap inom detta område kan leda till en
ökad förståelse för den kompetenstäta managementkonsultbranschen, ett område som
är relativt oexploaterat.
Den snabbt föränderliga och konkurrenskraftiga omvärld som många företag idag
ställs inför gör det svårt att konkurrera med teknologier och produkter/tjänster. Istället
anser ett flertal forskare att företag måste konkurrera med kärnkompetenser om de vill
uppnå uthålliga konkurrensfördelar och bättre resultat. Med hänsyn till detta är det av
stor vikt att studera förståelsen för detta koncept.
• Detta frågeformulär består av 17 frågor;
• Det tar cirka 5-10 minuter att genomföra;
• All information är konfidentiell;
• För att säkerställa giltigheten på dina svar, ber jag dig att skriva in denna kod i
frågeformuläret: <SÄKERHETSKOD>
Din medverkan är mycket viktig och jag hoppas att du kan ta tid att besvara denna
enkät!
För att besvara enkäten, klicka på länken nedan:
https://docs.google.com/forms/d/1mHFX3qkVUxrU3BE7Ip3mmPYZNhi0v_gjoKRd
UmnajKg/viewform
Tack för din medverkan!
Om du har några frågor eller kommentarer vänligen kontakta mig:
Mikael Nilsson
Tel. 070 - 404 30 49
APPENDIX V: COVER LETTER IN ENGLISH
To "COMPANY NAME",
I am a master student in International Business at Lulea University of Technology
who currently are doing my master’s thesis by studying the level of understanding of
the core competence concept among Swedish management consulting firms. New and
extended knowledge within this area may lead to increased understanding about the
highly competence-driven management consulting industry. An area which is relative
unexplored.
The fast changing and competitive business environment faced by many companies
of today makes it hard to compete on technologies and products/services. Instead,
several researchers consider competing with core competencies as essential for
companies if they want to achieve a sustainable competitive advantage and better
financial results. Hence, it is highly important to study the understanding of this
concept.
• This questionnaire consists of 17 questions;
• It takes approximately 10-15 minutes to complete;
• All information provided is confidential;
• To secure the validity of the data provided please insert this security code in your
questionnaire: <CODE>
Your participation is very important and I hope you have time to respond to this
questionnaire!
To answering the questionnaire, please click on the link below:
https://docs.google.com/forms/d/1mHFX3qkVUxrU3BE7Ip3mmPYZNhi0v_gjoKRd
UmnajKg/viewform
Thank you for your participation!
If you have any questions or comments, please contact me:
Mikael Nilsson
Tel. 070 - 404 30 49
APPENDIX VI: RESPONSE FREQUENCY
Question 1: How many employees do you have in Sweden?
Question 2: Have you heard about core competencies?
Have you heard about core competencies?
Frequency Percent Valid Percent Cumulative
Percent
Valid Yes 35 100,0 100,0 100,0
Question 3: Can you define core competencies?
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
11-30 12 34,3 34,3 34,3
31-49 7 20,0 20,0 54,3
50-100 9 25,7 25,7 80,0
101-249 3 8,6 8,6 88,6
More
than 249 4 11,4 11,4 100,0
Total 35 100,0 100,0
Frequency Percent Valid
Percent
Cumulative
Percent
Valid Yes 35 100,0 100,0 100,0
Question 3a: If Yes, how would you define core competencies?
Unique competence
that our customers’
demands and our
competitors have
(hopefully) less off.
Unique firm-specific
knowledge,
structured in a way
that makes it difficult
to leave the firm.
What everyone should
know, the base.
Knowledge that is
hard to copy and
creates competitive
advantage.
The area of
knowledge our
delivery process is
built around, i.e.
where we contribute
to what is missing at
the customers.
The unique
competence that
provides the company
the justification to
operate in a specific
industry.
The competence in a
company that
constitutes the core of
knowledge and
experience that make
you successful.
The competence
constituting the
overall business, i.e. a
strategically
important one.
Unique
competencies/knowl
edge inside our
company.
Those competencies
that are important to
perform a specific
activity.
Those competencies in
the organisation who
are vital in order to
sustain the uniqueness
in their
services/products
which constitutes the
sustained market
position.
Core competence is
the unique
competence and
ability possessed by a
company which
contributes ti the
delivery of a unique
customer value.
Those competencies
constituting the firm’s
business offering and
who are critical in the
delivering that offer.
What you are good
at and what you
should do. What the
customers are
valuing and where
you can be better
than the
competitors.
Core competencies
are competence that
is central to the firm’s
ability to satisfy our
customers’ needs and
to achieve our goals
and mission.
The mix of
competencies an
organisation needs to
create added value for
the customer.
Competencies that
are required for the
company to operate
its core business, i.e.
the part of the
company that guides
the company in its
future direction.
Those competencies
and related activities
which creates an edge
and competitive
advantage, and the
opportunity to obtain
a premium, ensure
more delighted
customers etc.
Our most important
competence,
specialist
competencies which
constitutes our
competitive
advantage.
Core competence is
the competence an
organisation must
possess to achieve its
financial and
organisational goals.
Core competencies are
those abilities that
creates unique and
sustainable
competitive advantage
in relation to its
customers,
competitors and
suppliers.
Those deeply rooted
and specific
competencies held by
our consultants and
which makes us
”better” than our
competitors.
Important
competencies which
makes us competitive
in the market.
What is perceived
(by the customer) as
the unique and most
value creating when
hiring our company.
Those competencies
that creates our
competitive
advantage and
supports our strategic
position.
The critical and firm-
specific competence
(often held by
individuals) which is
essential for the value
creation delivery to
customers.
Those competencies
that differentiate a
company from its
competitors, i.e.
performing
something unusually
well of do something
someone else is not
doing. Competencies
that are of
strategically
importance.
Technological and
commercial
knowledge concerning
consulting through a
business perspective
which both a short-
term and long-term
impact.
Competence that is
related to the
company’s
competitive
advantage and
where the company
is better that
competitors.
Central competencies
in the company that
are important to
perform different
types of engagements,
where core
competence can be
combined with
specific expertise.
Our unique
competence that give
us an advantage in
competitive situations.
Those competencies
required for us to be
able to deliver our
core service.
Business Strategy
Business Design
IT Strategy
Sourcing strategy
Transformation
Competencies that
are unique to the
company, with a
clear customer
value.
A company’s core
competence is their
combination of
human and structural
capital.
Question 4: Do you consider core competencies as important to your firm?
Question 4a: If Yes, why do you consider core competencies as important to your firm?
Without them we
cannot deliver our
services. It is a matter
of survival.
We cannot operate
without them.
They differentiate us
from our competitors
and creates superior
value for our
customers and us.
It is important for us to
really understand why
new and existing
customers chose to hire
us.
It is our offering, as a
management
consulting firm,
competence is our
product.
It constitutes our
whole organisation
and future
development.
It is constitutes the
entire existence of
all value added
consulting.
Because we sell
knowledge within our
area of core
competence.
They are essential for
our whole operation
Because it is a
competitive industry.
Because we would not
be able to compete in
this industry without
our core
competencies.
Because you cannot
purchase this
competence and at
the same time
develop the firm.
The effects leads to
higher prices, i.e.
higher profit and
higher retention of
more satisfied
customers, which
results in a long-term
profitable growth.
As consultants we
survive by being highly
knowledgeable in
certain areas.
Therefore, a high level
of competence within
these areas is needed.
Because it enable us to
recruit and retain
employees, as well as
clarify for our
customer when to hire
us. Our unique market
position.
They make us
competitive.
It is essential when
reacting.
Because we live on
our core
competencies.
Because without a
number of specific
competencies in certain
business areas we could
offer our customers
substantial and effective
solutions.
Core competencies are
the spine of the
company, i.e. the base
for the operations
within the company.
As a consulting firm,
we live out of our
competence at having
core competencies is
essential for our
success, especially if
it adds superior
customer value while
being paid a
reasonable amount of
money.
Without our unique
core competencies
we cannot use our
resources and
expertise held by
our consultants to
offer services with
superior value
relative our
competitors.
Because we have to
be skilled within the
craft of consulting
and meet the
expectations of our
customers.
Furthermore, we need
to develop core
competencies to be
competitive relative
our competitors.
Because they are what
we have to develop,
nurture and market.
Other competencies that
do not create similar
customer value or
offered at a competitive
price can be outsourced
and supplied in
relationships with
suppliers and partners.
A unique core
competence provide us
with a unique offer
which is needed for
long-term success in
the highly competitive
Swedish management
consulting industry.
Because it constitutes
our success.
** Because no respondent considered core competencies as not important, question 4b was eliminated from the results
and analysis.
Frequency Percent Valid
Percent
Cumulative
Percent
Valid Yes 35 100,0 100,0 100,0
Question 5: What are your core competencies?
Strategy, Management, Organisation,
Implementation, i.e. change
management, project management,
investigation and analysis. In
addition we consider knowledge
about the public sector as a system a
core competence.
Experience in project- and program
management as well as methodology
and methods complemented with
practical engagements. Furthermore,
that you endorses our core values –
courage, safety and capability.
The ability to create an operational
strategy for our customers including tools
such as, presenting technique, create
business cases, decision making, and
implementing various activities with the
help of the clients organisation.
- Advanced advisory in IT
- Designing processes and
implementation of IT-systems within
CRM
- Digitalisation
- Cost savings
- Administrative work
- Corporate Management
- Risk and regulations in the financial
sector
Our core competence is to understand
and have the ability to act
professionally in the role as consultants
in every unique situation with the client.
Which means s having knowledge about
areas such as, strategic development,
organisational issues, system support
issues, process development,
organisational management etc. As well
as being able to understand the clients’
problem, be a project- and change
manager, being able to deliver
solutions and results to the client.
Abstract, human abilities such as:
- Behaviour and attitudes
- Creative ability
- Personal responsibility
- Knowledge about the logics with in
projects
- Functional competence
- The ability to create trust
- The ability to deliver complex changes
in teams.
Our core competence is to have a
holistic view during an engagement,
from the development of strategies to
the impact of designing the structures
and implementation of solution.
Data Warehouse, Business Intelligence,
Database, SQL, Sales and Marketing
projects, as well as attracting,
developing and retaining consultants.
Analytical ability
Social competence
Drive
Educational ability
Holistic view
Telecom, problem solving and
analysis.
Long experience combined with deep
knowledge and social ability. A high
level of delivery capabilities, often
exceeding expectations.
Knowledge about SAP, as well as
knowledge about processes within Sales
and Procurement, integration.
Our core competences are connected
to how we work in teams and together
with our clients.
MBM
True Lean
Principle-based change management
Customer focus
Competence within evaluation, regional
development, statistics, investigation,
research, entrepreneurship and business
development.
Bridge the gap between business and
organisation, How to create a
behaviour in an organisation that
yield results, and create a balance
between strategy, process, tools,
management, and the individual.
Organisational knowledge within
several industries which constitutes our
business areas; Corporate Finance,
Strategic advisory, Business
development and Business systems.
Conduct fact-based strategy- and
organisational development through
projects. Furthermore, we conduct
change management in large
organisations, as well as manage
processes such as project management,
knowledge development, knowledge
management and proliferation. Finally,
we have a core competence in building
and maintaining customer relationship.
Change Management
Our deep knowledge within specific
industries and our way of working.
Transports, sustainability and consultant
competencies.
Accounting, tax legislations,
transactions, as well as unique
knowledge within certain consulting.
The sales process
Brands
SEO-History
Satisfied customers
Management, business skills, Real estate
financing, organisational theory, Real
Estate-, Tenancy-, and Labour law, and
the public procurement act.
Marketing (e.g. social media), Sales,
Delivery of projects, Recruitment and
Employee development.
- Change Management
- The consultation process
- Knowledge within different areas and
industries
- Networking and Sales
- Our way of working
- System knowledge
- Coaching
- Labour knowledge
- Solution-based practices
Actuarial, financial and Human
Relations related knowledge.
Market analysis and research
Value creation and strategy
Process- and project management
Advisory
Our core competence is how to manage
and implement changes within our clients
support functions.
Knowledge about organisational key
success factors within Sales.
Question 6: Why does your core competencies contribute significantly to the value
creation of your service offer?
Statement 1 - Our core competencies contributes to the retention of customers
Our core competencies contributes to the retention of customers
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 20 57,1 57,1 57,1
2 5 14,3 14,3 71,4
3 1 2,9 2,9 74,3
5 3 8,6 8,6 82,9
Do not agree at all 6 17,1 17,1 100,0
Total 35 100,0 100,0
Statement 2 - Our core competencies contributes to better customer relations
Our core competencies contributes to better customer relations
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 15 42,9 42,9 42,9
2 10 28,6 28,6 71,4
3 1 2,9 2,9 74,3
4 1 2,9 2,9 77,1
5 2 5,7 5,7 82,9
Do not agree at all 6 17,1 17,1 100,0
Total 35 100,0 100,0
Statement 3 - Our core competencies contributes to attract new customer that wants to
use your services
Our core competencies contributes to attract new customer that wants to
use your services
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 16 45,7 45,7 45,7
2 9 25,7 25,7 71,4
3 1 2,9 2,9 74,3
4 1 2,9 2,9 77,1
5 3 8,6 8,6 85,7
Do not agree at all 5 14,3 14,3 100,0
Total 35 100,0 100,0
Statement 4 - Our core competencies contributes to the value creation by making your
customers demand our services prior to our customers
Our core competencies contributes to the value creation by making your
customers demand our services prior to our customers
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 16 45,7 45,7 45,7
2 9 25,7 25,7 71,4
3 1 2,9 2,9 74,3
4 1 2,9 2,9 77,1
5 2 5,7 5,7 82,9
Do not agree at all 6 17,1 17,1 100,0
Total 35 100,0 100,0
Statement 5 - Through our core competencies, we can satisfy our customers better
Through our core competencies, we can satisfy our customers better
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 18 51,4 51,4 51,4
2 7 20,0 20,0 71,4
3 1 2,9 2,9 74,3
5 3 8,6 8,6 82,9
Do not agree at all 6 17,1 17,1 100,0
Total 35 100,0 100,0
Question 7: How do you and your competitors view your core competencies?
Statement 1 - Our competitors have similar core competencies as we do
Our competitors have similar core competencies as we do
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 5 14,3 14,3 14,3
2 11 31,4 31,4 45,7
3 9 25,7 25,7 71,4
4 8 22,9 22,9 94,3
5 2 5,7 5,7 100,0
Total 35 100,0 100,0
Statement 2 - We could create similar value creating strategies without our core
competencies
We could create similar value creating strategies without our core
competencies
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 2 5,7 5,7 5,7
2 2 5,7 5,7 11,4
3 4 11,4 11,4 22,9
4 3 8,6 8,6 31,4
5 10 28,6 28,6 60,0
Do not agree at all 14 40,0 40,0 100,0
Total 35 100,0 100,0
Statement 3 - Our competitors knows the structure of our core competencies
Our competitors knows the structure of our core competencies
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 1 2,9 2,9 2,9
2 12 34,3 34,3 37,1
3 12 34,3 34,3 71,4
4 5 14,3 14,3 85,7
5 4 11,4 11,4 97,1
Do not agree at all 1 2,9 2,9 100,0
Total 35 100,0 100,0
Statement 4 - It would be difficult and expensive for our competitors to develop similar
core competencies
It would be difficult and expensive for our competitors to develop similar
core competencies
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 4 11,4 11,4 11,4
2 11 31,4 31,4 42,9
3 9 25,7 25,7 68,6
4 6 17,1 17,1 85,7
5 4 11,4 11,4 97,1
Do not agree at all 1 2,9 2,9 100,0
Total 35 100,0 100,0
Statement 5 - Through our core competencies we can take advantage of opportunities in
our external environment
Through our core competencies we can take advantage of
opportunities in our external environment
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 9 25,7 25,7 25,7
2 12 34,3 34,3 60,0
3 10 28,6 28,6 88,6
4 1 2,9 2,9 91,4
5 3 8,6 8,6 100,0
Total 35 100,0 100,0
Statement 6 - Through our core competencies we can neutralize external threats in our
environment
Statement 7 - Our core competencies has been developed during a long time
Through our core competencies we can neutralize external threats in
our environment
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 2 5,7 5,7 5,7
2 8 22,9 22,9 28,6
3 11 31,4 31,4 60,0
4 6 17,1 17,1 77,1
5 7 20,0 20,0 97,1
Do not agree at all 1 2,9 2,9 100,0
Total 35 100,0 100,0
Our core competencies has been developed during a long time
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 12 34,3 34,3 34,3
2 16 45,7 45,7 80,0
3 1 2,9 2,9 82,9
4 3 8,6 8,6 91,4
Do not agree at all 3 8,6 8,6 100,0
Total 35 100,0 100,0
Statement 8 - Our core competencies are deeply rooted in our employees and corporate
culture
Our core competencies are deeply rooted in our employees and
corporate culture
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 14 40,0 40,0 40,0
2 13 37,1 37,1 77,1
3 3 8,6 8,6 85,7
4 1 2,9 2,9 88,6
5 3 8,6 8,6 97,1
Do not agree at all 1 2,9 2,9 100,0
Total 35 100,0 100,0
Question 8: How do you use your core competencies in strategic decision making?
Statement 1 - Through our core competencies we can take advantage of opportunities in
our external environment
Through our core competencies we can take advantage of
opportunities in our external environment
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 11 31,4 31,4 31,4
2 15 42,9 42,9 74,3
3 4 11,4 11,4 85,7
4 1 2,9 2,9 88,6
5 4 11,4 11,4 100,0
Total 35 100,0 100,0
Statement 2 - Our core competencies can only be deployed for offering services within
one industry/market
Our core competencies can only be deployed for offering services within
one industry/market
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 4 11,4 11,4 11,4
2 3 8,6 8,6 20,0
3 2 5,7 5,7 25,7
4 3 8,6 8,6 34,3
5 12 34,3 34,3 68,6
Do not agree at all 11 31,4 31,4 100,0
Total 35 100,0 100,0
Statement 3 - Our core competencies can only be deployed for offering services within
one segment of customers
Our core competencies can only be deployed for offering services within
one segment of customers
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 4 11,4 11,4 11,4
2 4 11,4 11,4 22,9
3 2 5,7 5,7 28,6
4 2 5,7 5,7 34,3
5 11 31,4 31,4 65,7
Do not agree at all 12 34,3 34,3 100,0
Total 35 100,0 100,0
Statement 4 - If we would enter a new market, we would have to develop new core
competencies for that specific market
If we would enter a new market, we would have to develop new core
competencies for that specific market
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 5 14,3 14,3 14,3
2 7 20,0 20,0 34,3
3 9 25,7 25,7 60,0
4 6 17,1 17,1 77,1
5 5 14,3 14,3 91,4
Do not agree at all 3 8,6 8,6 100,0
Total 35 100,0 100,0
Statement 5 - Our core competencies are shared among all our area of businesses and
SBUs
Our core competencies are shared among all our area of businesses and
SBUs
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 11 31,4 31,4 31,4
2 9 25,7 25,7 57,1
3 7 20,0 20,0 77,1
4 3 8,6 8,6 85,7
5 1 2,9 2,9 88,6
Do not agree at all 4 11,4 11,4 100,0
Total 35 100,0 100,0
Statement 6 - Our core competencies guides our firm when entering new markets
Our core competencies guides our firm when entering new markets
Frequency Percent Valid
Percent
Cumulative
Percent
Valid Agree entirely 9 25,7 25,7 25,7
2 16 45,7 45,7 71,4
3 5 14,3 14,3 85,7
5 3 8,6 8,6 94,3
Do not agree at all 2 5,7 5,7 100,0
Total 35 100,0 100,0
Statement 7 - We only enter markets with similar competitive structure, rule and key
success factors as our present markets
We only enter markets with similar competitive structure, rule and key
success factors as our present markets
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Agree entirely 4 11,4 11,4 11,4
2 6 17,1 17,1 28,6
3 12 34,3 34,3 62,9
4 4 11,4 11,4 74,3
5 3 8,6 8,6 82,9
Do not agree at all 6 17,1 17,1 100,0
Total 35 100,0 100,0
Question 9: How does senior management’s point of view about the future compare with
that of your competitors?
How does senior management’s point of view about the future compare with that of
your competitors?
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Conventional and reactive 1 2,9 2,9 2,9
2 1 2,9 2,9 5,7
3 6 17,1 17,1 22,9
4 11 31,4 31,4 54,3
5 12 34,3 34,3 88,6
Conventional and farsighted 4 11,4 11,4 100,0
Total 35 100,0 100,0
Question 10: Which business issues absorbs more senior management attention?
Which business issues absorbs more senior management attention?
Frequency Percent Valid
Percent
Cumulative
Percent
Valid Reengineering core process 1 2,9 2,9 2,9
2 6 17,1 17,1 20,0
3 10 28,6 28,6 48,6
4 9 25,7 25,7 74,3
5 8 22,9 22,9 97,1
Regenerating core strategies 1 2,9 2,9 100,0
Total 35 100,0 100,0
Question 11: How does competitors view your firm?
How does competitors view your firm?
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
2 2 5,7 5,7 5,7
3 8 22,9 22,9 28,6
4 11 31,4 31,4 60,0
5 13 37,1 37,1 97,1
Mostly as a rule follower 1 2,9 2,9 100,0
Total 35 100,0 100,0
Question 12: What is your firm's strength?
What is your firm's strength??
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
Operational efficiency 3 8,6 8,6 8,6
2 4 11,4 11,4 20,0
3 4 11,4 11,4 31,4
4 9 25,7 25,7 57,1
5 15 42,9 42,9 100,0
Total 35 100,0 100,0
Question 13: What is your firm's focus to create competitive advantage?
What is your firm's focus to create competitive advantage?
Frequency Percent Valid
Percent
Cumulative
Percent
Valid 2 1 2,9 2,9 2,9
3 1 2,9 2,9 5,7
4 2 5,7 5,7 11,4
5 21 60,0 60,0 71,4
Our foresight 10 28,6 28,6 100,0
Total 35 100,0 100,0
Question 14: What has set your transformational agenda?
What has set your transformational agenda?
Frequency Percent Valid
Percent
Cumulative
Percent
Valid 3 3 8,6 8,6 8,6
4 7 20,0 20,0 28,6
5 15 42,9 42,9 71,4
Our foresight 10 28,6 28,6 100,0
Total 35 100,0 100,0
Question 15: Do you spend the bulk of your time as a maintenance engineer preserving
the status quo or as an architect designing the future?
Do you spend the bulk of your time as a maintenance engineer preserving
the status quo or as an architect designing the furture?
Frequency Percent Valid
Percent
Cumulative
Percent
Valid
3 1 2,9 2,9 2,9
4 5 14,3 14,3 17,1
5 22 62,9 62,9 80,0
Mostly as an architect 7 20,0 20,0 100,0
Total 35 100,0 100,0
APPENDIX VII: VARIABLE SUMMARY
Table 1: Statistics - Valuable
Table 2: Statistics - Unique
Our core competencies
contributes to the retention of
customers
Our core competencies
contributes to better customer
relations
Our core
competencies contributes to
attract new customer that
wants to use
your services
Our core competencies
contributes to
the value creation by
making your customers
demand our
services prior to our
customers
Through our
core competencies,
we can satisfy
our customers better
N Valid 35 35 35 35 35
Missing 0 0 0 0 0
Mean 2,40 2,51 2,46 2,49 2,46
Median 1,00 2,00 2,00 2,00 1,00
Std. Deviation 2,018 1,915 1,884 1,931 1,990
Skewness 1,055 1,042 1,050 1,050 1,028
N % N % N % N % N %
Agree entirely 20 57,1 15 42,9 16 45,7 16 45,7 18 51,4
2 5 14,3 10 28,6 9 25,7 9 25,7 7 20,0
Valid 3 1 2,9 1 2,9 1 2,9 1 2,9 1 2,9
4 3 8,6 1 2,9 1 2,9 1 2,9 3 8,6
5 0 0 2 5,7 3 8,6 2 5,7
Do not agree at
all 6 17,1 6 17,1 5 14,3 6 17,1 6 17,1
Total 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0
Our competitors
have similar
core competencies
as we do
We could create similar value
creating
strategies without our core
competencies
Our competitors
knows the
structure of your core
competencies
It would be
difficult and
expensive for our competitors to
develop similar
core competencies
Through our
core competencies
we can take
advantage of opportunities
in our external
environment
Through our
core competencies
we can
neutralize external threats
in our
environment
Our core competencies
has been
developed during a long
time
Our core competencies are
deeply rooted in
our employees and corporate
culture
N Valid 35 35 35 35 35 35 35 35
Missing 0 0 0 0 0 0 0 0
Mean 2,74 4,69 3,06 2,94 2,34 3,31 2,20 2,11
Median 3,00 5,00 3,00 3,00 2,00 3,00 2,00 2,00 Std. Deviation 1,146 1,530 1,162 1,305 1,162 1,278 1,451 1,367
Skewness ,167 -1,106 ,719 ,448 ,824 ,172 1,651 1,467
N % N % N % N % N % N % N % N %
Valid Agree entirely
5 14,3 2 5,7 1 2,9 4 11,4 9 25,7 2 5,7 12 34,3 14 40,0
2 11 31,4 2 5,7 12 34,3 11 31,4 12 34,3 8 22,9 16 45,7 13 37,1
3 9 25,7 4 11,4 12 34,3 9 25,7 10 28,6 11 31,4 1 2,9 3 8,6
4 8 22,9 3 8,6 5 14,3 6 17,1 1 2,9 6 17,1 3 8,6 1 2,9
5 2 5,7 10 28,6 4 11,4 4 11,4 3 8,6 7 20,0 0 0 3 8,6
Do not agree at
all
0 0 14 40,0 1 2,9 1 2,9 0 0 1 2,9 3 8,6 1 2,9
Total 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0
Table 3: Statistics - Diversifier
Table 4: Statistics - Management
Through our
core
competencies
we can take
advantage of
opportunities in
our external
environment
Our core
competencies
can only be
deployed for
offering services
within one
industry/market
Our core
competencies
can only be
deployed for
offering services
within one
segment of
customers
If we would
enter a new
market, we
would have to
develop new
core
competencies
for that specific
market
Our core
competencies
are shared
among all our
area of
businesses and
SBUs
Our core
competencies
guides our firm
when entering
new markets
We only enter
markets with
similar
competitive
structure, rule
and key success
factors as our
present markets
N Valid 35 35 35 35 35 35 35
Missing 0 0 0 0 0 0 0
Mean 2,20 4,40 4,37 3,23 2,60 2,37 3,40
Median 2,00 5,00 5,00 3,00 2,00 2,00 3,00 Std. Deviation 1,256 1,718 1,784 1,516 1,631 1,416 1,594
Skewness 1,207 -,963 -,865 ,232 ,955 1,398 ,355
Valid
N % N % N % N % N % N % N %
Agree
entirely 11 31,4 4 11,4 4 11,4 5 14,3 11 31,4 9 25,7 4 11,4
2 15 42,9 3 8,6 4 11,4 7 20,0 9 25,7 16 45,7 6 17,1
3 4 11,4 2 5,7 2 5,7 9 25,7 7 20,0 5 14,3 12 34,3
4 1 2,9 3 8,6 2 5,7 6 17,1 3 8,6 3 8,6 4 11,4
5 4 11,4 12 34,3 11 31,4 5 14,3 1 2,9 2 5,7 3 8,6
Do not
agree at all 0 0 11 31,4 12 34,3 3 8,6 4 11,4 0 0 6 17,1
Total 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0
How does
senior management’s
point of view
about the future compare
with that of
your competitors?
Which business issues absorbs
more senior management
attention?
How does competitors
view your
firm?
What is your
firm's strength??
What is your firm's focus to
create competitive
advantage?
What has set your
transformation
al agenda?
Do you spend the
bulk of your time as a maintenance
engineer
preserving the status quo or as
an architect
designing the furture?
N Valid 35 35 35 35 35 35 35
Missing 0 0 0 0 0 0 0
Mean 4,26 3,57 4,09 3,83 5,09 4,91 5,00 Median 4,00 4,00 4,00 4,00 5,00 5,00 5,00
Std. Deviation 1,146 1,195 ,981 1,339 ,853 ,919 ,686
Skewness -,664 -,069 -,378 -,915 -1,678 -,545 -,580
Valid
N % N % N % N % N % N % N %
1* 1 2,9 1 2,9 0 0 3 8,6 0 0 0 0 0 0
2 1 2,9 6 17,1 2 5,7 4 11,4 1 2,9 0 0 0 0
3 6 17,1 10 28,6 8 22,9 4 11,4 1 2,9 3 8,6 1 2,9
4 11 31,4 9 25,7 11 31,4 9 25,7 2 5,7 7 20,0 5 14,3
5 12 34,3 8 22,9 13 37,1 15 42,9 21 60,0 15 42,9 22 62,9
6* 4 11,4 1 2,9 1 2,9 0 0 10 28,6 10 28,6 7 20,0
Total 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0 35 100,0
*
1 = Conventional and reactive
6 = Conventional
and farsighted
*
1 = Reengineering
core process
6 = Regenerating core strategies
*
1= Mostly as a rule follower
6 = Mostly as a
rule maker
*
1 = Operational Efficiency
6 = Innovation
and growth
*
1 = Mostly catching up
6 = Our foresight
*
1 = Our Competitors
6 = Our foresight
*
1 = Mostly as an Engineer
6 = Mostly as an
architect
