Core competency

Abstract: We draw on the resource-based theory to examine how information systems (IS) resources and capabilities affect firm performance. A basic premise is that a firm's performance can be explained by how effective the firm is in using information technology (IT) to support and enhance its core competencies. In contrast to past studies that have implicitly assumed that IS assets could have direct effects on firm performance, this study draws from the resource complementarity arguments and posits that it is the targeted use of IS assets that is likely to be rent-yielding. We develop the theoretical underpinnings of this premise and propose a model that interrelates IS resources, IS capabilities, IT support for core competencies, and firm performance. The model is empirically tested using data collected from 129 firms in the United States. The results provide strong support for the research model and suggest that variation in firm performance is explained by the extent to which IT is used to support and enhance a firm's core competencies. The results also support our proposition that an organization's ability to use IT to support its core competencies is dependent on IS functional capabilities, which, in turn, are dependent on the nature of human, technology, and relationship resources of the IS department. These results are interpreted and the implications of this study for IS research and practice are discussed.

Abstract: Today's knowledge- and service-based economy offers companies a chance to increase profits through strategic outsourcing of intellectually based systems. As companies disaggregate intellectual activities internally and outsource more externally, they approach true virtual organization with knowledge centers interacting largely through mutual interest and electronic ? rather than authority ? systems. In this article, Quinn outlines an integrated knowledge and outsourcing strategy that can mitigate the risks and concerns associated with outsourcing. Companies with successful knowledge strategies follow these well-accepted principles: They concentrate on developing "best in world" capabilities that customers genuinely care about. An effective core competency strategy focuses on two to four cross-functional, intellectually based service activities or knowledge and skill sets that the company can build and maintain at best-in-world levels to provide a flexible platform for future innovations (at least one directly connected to understanding the customer). Such core competencies become "strategic blocks" that prevent a firm's suppliers from directly attacking its markets and increase the firm's bargaining power and security. They leverage the capabilities and investments of others by exploiting three areas of intellectual outsourcing: (1) traditional service or functional activities performed in-house (e.g., accounting, IT, or employee benefits); (2) complementary, integrative, or duplicative activities scattered throughout the company; and (3) disciplines, subsystems, or systems in which outsiders have greater expertise or capabilities for innovation. They innovate constantly. Links to outside knowledge sources that are able to assemble diverse expertise greatly affect the timing and amplitude of innovations. Sophisticated outsourcing supported by new electronic communications, modeling, and monitoring techniques enables companies to reduce innovation cycle times and costs by 60 percent to 90 percent and decrease investments and risks by equal amounts. They eliminate inflexibilities, such as fixed overhead, bureaucracy, and physical plant, by tapping the resources of the downstream customer chain and the upstream technology and supply chain. How can a company best manage risks and develop the full potential of intellectual outsourcing? Successful outsourcers carefully develop and implement certain crucial management controls that Quinn describes. Outsourcing also must become a top management issue because lower- to intermediate-level managers tend to be actively hostile to outsourcing ? fearing loss of jobs, prestige, or power.

Abstract: In this qualitative field study, I explore how the construction of a cultural institution's identity is related to the construction of strategic capabilities and resources. I investigated the 1996 musicians' strike at the Atlanta Symphony Orchestra (ASO), which revealed embedded and latent identity conflicts. The multifaceted and specialized identity of the ASO was reinforced by different professional groups in the organization: the ideologies of musicians and administrators emphasized institutional resource allocations consistent with the legitimating values of their professions, i.e., artistic excellence versus economic utility. These identity claims, made under organizational crisis, accounted for variations in the construction of core competencies. I propose a model that explicates how the construction of core capabilities lies at the intersection of identification and interpretive processes in organizations. Implications are discussed for defining firm capabilities in cultural institutions and for managing organizational forms characterized by competing claims over institutional identity, resources, and core capabilities.