• organizational knowledge;
  • core competence;
  • resource-based theory

The development of the ‘resource-based theory of the firm’ has helped to reorient the field of strategic management towards a focus on the organizational processes and structures which produce ‘core competencies’. By challenging previous assumptions of market determinism this approach seems to open up the prospect of a greater dialogue with the theories and concerns of organization studies. This paper aims to determine the scope of such a dialogue by developing an appreciation and critique of the core competencies framework from an organizational perspective. In this context, the key feature of resource-based theories is seen to be their focus on organizational knowledge rather than decision-making processes as the engine of competitive performance. This focus has a powerful resonance with studies of knowledge in organizations, particularly those forms of knowledge which are linked to product and process design.

However, despite the important shift towards a knowledge-based view of competition, the core competencies approach fails to follow the logic of its own argument as far as the organizational appropriation of knowledge is concerned. In their pursuit of an ontological model of competitive performance –defining the essential causes of firm competitiveness – resource-based approaches neglect the socially embedded qualities of organizational knowledge. As a result, the social construction of knowledge, encompassing the dilemmas posed by the employment relationship and the pitfalls of institutionalization, is neglected. Instead, a smoothly linear model is developed linking skills, competence and competitiveness. This mechanistic view is further reinforced by reliance on a command and control model of the management process. Organizational knowledge is not a biddable resource at the disposal of top management.