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Sustainable entrepreneurship in dialogue
Abstract
The general mind‐sets in economics do not fulfil the needs of a sustainable development of society. This article questions the dominant economic paradigms and transforms the stock resource allocation model based on the exploitation into the TIMES‐model, a flow resource allocation model based on exploration. In the traditional resource allocation of the firm, natural resources are treated as commodities or even ignored, while labour and capital resources are overemphasised. The sustainable firm however will be confronted with changes that encompass: a change from profit thinking to value thinking; a change from exploitation to exploration; cooperation next to competition; and a shift to a new resource allocation model (the so‐called TIMES‐model). These transformations are fundamental in character and need other assumptions based on a sustainable worldview.
... Moreover, actors often trick themselves by balancing out small sustainable contributions with other, more considerable sustainable damage, as described in the low-cost theory of sustainable behaviour (Diekmann and Preisendörfer, 2003;Voinov, 2017). Therefore, it remains to be seen to what extent a proposed paradigm shift in innovation management from selfish and rational to moral, social and nature-based innovations is materializing (Hofstra, 2007). ...
... While a lack of a clear definition of sustainability is certainly a limitation of this study, as we discuss below, we chose to interpret sustainability in terms of the SDGs and use them to track the sustainability records of businesses. All in all, it remains to be seen to what extent a proposed paradigm shift from selfish and rational to a moral, social, and nature-based entrepreneurship is materialising (Hofstra, 2007). ...
New digital ventures play a very important role in the creation of new products and services and are a major driver of current economies. At the same time, there is growing awareness about sustainability and more interest in transformation towards a more sustainable future. This raises the question about rational choices of digital entrepreneurs and the subsequent contributions of new digital ventures in terms of sustainability. In times of rapid disruption through digital technologies, many new enterprises are driven by such new technologies. But to what extent do digital technology start-ups contribute to sustainability? An analysis of 320 start-ups from a large survey of entrepreneurial activities in the Berlin metropolitan region indicates that digital technology start-ups primarily focus on economic goals, with social and environmental goals being of lower importance or even ignored. This makes us question the priorities of current frameworks and incentive schemes.
... Yet dialogic actions represent a "core mechanism" for fundamental organizational change that drives the entrepreneurial journey toward sustainability, because of the ill-defined process and goals, and dilemmas and conflict are inherent to its undertaking (Argyris & Schön, 1978;Mazutis & Slawinski, 2008, p. 438). Entrepreneurial actions for sustainability strategy are thus dialogic in nature, holding the potential to create new opportunities through conversations proactively (Fletcher, 2006;Hofstra, 2007;Kurucz, Colbert, & Wheeler, 2013). ...
Transformations of the industrialized food sector toward more sustainable food production, manufacturing, and consumption take place through individual and collective learning processes. Achieving transformational change requires intra- and inter-organizational learning to embed alternative principles in business operation, foster new social arrangements, and develop creative strategies in support of sustainable food practices. Research has made much progress in conceptualizing transformation processes of the food sector – addressing definitional ‘what’ questions. Also, scholars have conducted thorough analyses of the underlying motivations that support businesses in pursuing organizational sustainability – addressing motivational ‘why’ questions. Yet, empirical research examining how businesses engage in learning processes that can lead to broader transformational change is still missing – that is, the research on the role of businesses in the food sector has not engaged with ‘how’ questions.
This thesis responds to this gap by building on a dynamic conception of learning to empirically explore the relationship between transformations of the food sector and the contextual meaning- making, knowledge mobilizing, and procedural action through which businesses realize change for sustainability. More specifically, this thesis draws attention to the role that different forms of knowledge assume in supporting intra- and inter-organizational learning processes that allow businesses to purposefully take action for sustainability in complex situations. For the empirical research, I employ a mixed-methods approach (including semi-structured interviews, participant observations, analytic autoethnography, and document analysis) to examine how learning supports craft breweries – small, independently owned businesses that are inspired by non-industrial production methods – to collectively advance system change. I present the conducted research in three articles detailing how small businesses engage in and bring about transformational change for sustainability. While written as independent articles, they comprise a whole, as collectively, this work offers insights into how small businesses draw on knowledge as a resource to support action for sustainability.
The first manuscript empirically demonstrates the importance of alternative narratives for learning as they enable small businesses to construct storylines of how they engage in sectoral transformations. I explore how craft breweries draw on alternative principles and actions to guide the construction of narratives that verbalize a new future into existence beyond industrialized and competitive markets.This research offers a nuanced understanding of the collective ability of small businesses to discursively construct new meanings and new stories that illustrate the need for and existence of alternative social arrangements to support sustainability transformations.
The second manuscript elucidates how craft breweries that work in a concentrated and internationally connected industry, mobilize knowledge in support of collective action to construct sustainability niches in an otherwise hostile environment. The findings demonstrate how learning is supported by the translation between tacit and explicit forms of knowledge, so-called knowledge conversion. The research shows how small businesses challenge the conventional industry logics and practices by mobilizing knowledge conversion in support of sustainability experimentation. I offer a comprehensive conceptual framework and detailed empirical examination of how small businesses respond to and transform the context in which they operate, collectively formulate goals for directing change, and bring tangible assets into service of experimentation to realize emergent possibilities.
The third manuscript systematically explores the learning processes through which entrepreneurs develop sustainability strategies while navigating the tensions and challenges involved in realizing sustainability within the host context. Building on conceptualizations of entrepreneurship as an evolutionary process, I empirically explore the learning process of two small businesses in the brewing industry. This research details how small businesses create and mobilize knowledge to intentionally design organizational change, develop shared agency for the support of appropriate interventions, and leverage context-specific resources for acting appropriately in complex situations. Moreover, I offer insights into how small businesses can engage leverage entrepreneurial actions to support learning processes for sustainability strategies.
This thesis emphasizes the ability of small businesses as meaning-makers and proposes a dynamic approach for understanding the role of knowledge and action in transformations for sustainability. I offer empirical evidence of the learning processes through which businesses generate meaningful action for contextually realizing change, and reflexively and deliberately (re)align their actor roles with the so created alternative social arrangements. Knowledge plays a crucial role in this process as it supports small businesses to creatively and cooperatively shape future goals and direct change. Overall, this work can help to support small businesses in coordinating concerted efforts to create viable enterprises from bringing about change for sustainability. It draws attention to the agency of small businesses in crafting new narratives, alternative social arrangements, and sustainability strategies that help support transformations of the industrialized food sector.
... 152-155). Thus, together with authors such as Hofstra, they align themselves with some of Dean and McMullen " s ideas and argue for the need for entrepreneurial action in areas that are not traditionally included in the business fold, but which have an impact on business and society (most obviously the institutional framework)(Hofstra, 2007). Linked to the " opportunities " theme are articles that discuss the skills and traits that are associated with opportunity recognition in the sustainability field. ...
... In view of entrepreneurs' capacity suggest entrepreneurs' for focusing on 'first order objectives' 5 they argue that other variables need to be included in research if studies are to accurately portray the impact of entrepreneurship on sustainability. This idea is echoed by scholars such as Hofstra (2007), and Johnstone and Lionais (2004) who view sustainability entrepreneurs as the potential authors of paradigmatic change. ...
Sustainability entrepreneurship (SuE) is an emergent field of study
that focuses on the founding and growth of firms that combine the creation of
economic value with the pursuit of the environmental and social objectives of
sustainable development. A review of the SuE literature is carried out from a
critical management studies perspective and five main themes are identified.
The article notes that the field is powerfully influenced by its roots in ‘green’
entrepreneurship and that authors are generally uncritical of the concepts of
‘sustainable development’ in relation to entrepreneurship. From the perspective
of bottom-of-the-pyramid populations it is suggested that these trends involve
both risks and opportunities. The author calls upon scholars to integrate a
broader range of voices and entrepreneurial topics under the sustainability
entrepreneurship umbrella, and suggests that the field make greater use of
concepts of sustainable development that are participatory and embedded in
nature.
Nachhaltigkeitsorientiertes Unternehmer*innentum gewinnt – nicht zuletzt ob seiner steigenden Relevanz für die Lösung akuter sozialer und ökologischer Probleme – auch in der Forschung an Bedeutung. Frauen wird hier besonderes Potenzial zugeschrieben, das jedoch bislang noch nicht ausreichend gehoben wird. Enormer Forschungsbedarf liegt daher auf der Schnittstelle „Women-Sustainability-Entrepreneurship“. Da Grundlage jeden unternehmerischen Handelns die Identifikation und Ergreifung unternehmerischer Gelegenheiten ist, soll dies im Mittelpunkt unseres Artikels stehen. Wir führen Elemente der Entrepreneurship-, Nachhaltigkeits- und Gender-Forschung zusammen und stellen vor, wie die Entstehung nachhaltiger, von Frauen entwickelter Geschäftsideen untersucht werden kann. Eine Analyse von Lebensläufen mit besonderem Blick auf die Gründungsgeschichten und der Vergleich unterschiedlicher Orientierungsrahmen mithilfe von narrativen Interviews und der dokumentarischen Methode kann zeigen, wie Frauen nachhaltigkeitsorientierte unternehmerische Gelegenheitsfenster identifizieren und öffnen, um erfolgreiche Nachhaltigkeitsunternehmen zu gründen.
The chapter discusses two aspects of the theory of the firm. One is the question of what is a regenerative firm, and how the traditional view of the firm changed when one adopts an integral transdisciplinary worldview. The second is what are the consequences when we leave the assumption of the extrinsic value of the nature. The central question is: How can firms transform themselves from a mainly extrinsic to a more intrinsic value orientation to nature? She is defending the necessity to transform anthropocentric business models into more ecocentric ones. Shifts to business models in which nature has an intrinsic value have fundamental consequences for the theory of the firm. The chapter compares 'creative destruction' in which the value creation follows out of destruction of other values with the 'law of seed' where the natural cycles of continuous creation and regeneration carry out life. The latter can contribute creating value-based spiritual economic structures which bring together the rich diversity of man and nature. The regenerative firm can be an important driver for building an integral transdisciplinary world.
This paper investigates whether eco-spirituality has the potential to become a core competence for successful business management. The authors open with a critical discussion of sustainable entrepreneurship and continue by describing the role of regenerative eco-innovation. The paper then compares different spiritual and economic perspectives about doing business. The conclusion is that the innovations of regenerative businesses help restore eco-system health, and go beyond typical business activities for value creation.
This chapter introduces readers to the topics of social entrepreneurship and hybridity of social and financial values. A South African case study is used to illustrate the particular challenges faced by social entrepreneurs
in a sub-Saharan context
. The emergence of the Greenpop
as a social enterprise
is described, and the strategies developed by its founders to ensure effectiveness and survival are identified. Particular attention is paid to how a business model was developed to ensure financial sustainability, while enabling the venture to create social value, to the way in which founders promote the distinctiveness of their enterprise among other social ventures, as well as to the factors associated with venture success.
Capital and labor have become the dominant pillars of business strategies, leading to exploitation and destruction of Earth's systems. We lost our connection with Nature. Regenerative business is a realm for entrepreneurs to reconnect with Nature, considering Nature as a mentor and an incredible source of knowledge.
Researchers in eco-innovations are increasingly concerned with building upon models that are focused upon the concept of nature and related issues of eco-effectiveness for the short and long-term welfare of society and nature, rather than building knowledge on models that are solely based on eco-efficiency, in the short-term in which it is assumed that nature exists for the convenience of man. The proposed change in perspective requires a shift from an anthropocentric to a more eco-centric approach. This shift challenges us to understand and to work with different types of relationships between humans and nature while building upon the basic principles of biology and thermodynamics of the eco-system. In this article, the authors propose a typology of eco-innovations, based on an analysis of historical developments of ideas and concepts pertaining to human and nature interactions. The authors consider nature to be of central importance and they appeal for a dialogical approach to nature in developing innovations that are appropriate from an ecological, social and economic perspectives.
The Theory of Industrial Ecology (Korhonen, 2004a) classified the properties and characteristics of industrial ecosystems: • the physical flows of matter and energy • the structural and organisational properties. I focus on the theory of the concept of diversity, an important concept in ecology, biology and sustainable development research. Can the concept of diversity be valuable and useful for developing industrial ecosystems, if yes, how, and if not, why not? A case study from energy and forest industry is analysed against diversity and other key industrial ecology principles. Furthermore, six arguments from the literature arguing for the value of the concept of diversity are evaluated. The article contributes by identifying and analysing the many different dimensions that the concept of diversity has. The definition, understanding and perception of the concept strongly affect its value. This suggests that the dominant engineering and natural science aspects of industrial ecology need to be bridged to business, management, organisational and policy studies, to social sciences and cultural studies.
Considers structural inertia in organizational populations as an outcome of an ecological-evolutionary process. Structural inertia is considered to be a consequence of selection as opposed to a precondition. The focus of this analysis is on the timing of organizational change. Structural inertia is defined to be a correspondence between a class of organizations and their environments. Reliably producing collective action and accounting rationally for their activities are identified as important organizational competencies. This reliability and accountability are achieved when the organization has the capacity to reproduce structure with high fidelity. Organizations are composed of various hierarchical layers that vary in their ability to respond and change. Organizational goals, forms of authority, core technology, and marketing strategy are the four organizational properties used to classify organizations in the proposed theory. Older organizations are found to have more inertia than younger ones. The effect of size on inertia is more difficult to determine. The variance in inertia with respect to the complexity of organizational arrangements is also explored. (SRD)
The analysis of the interactions between natural resource scarcity, technological innovation and the dynamics of eco- nomic systems has a long-standing tradition in economics. During the 1980s and the early 1990s, a new phase of these interactions initiated under the effects of technological revolution and the problem of the environment. The general concept behind this book is that the issue of natural resou- cesand the environment in relation to economic growth can- not be addressed without due consideration for the effects of technological innovation on thedynamics of economic sy- stems. Technological innovation alone, however, is not a sufficient condition for the sustainability of economic growth. Policies may have a role in solving the internatio- nal distribution problems generated by the non-converging development path of developed and developing countries. In particular, the new international order shaped by the events of the 1980s, made it possible for world management to ad- dress the problems of poverty and the environment.
"An important, controversial account ... of the way in which man's use of poisons to control insect pests and unwanted vegetation is changing the balance of nature." Booklist.
Modern management theory is constricted by a fractured epistemology. which separates humanity from nature and truth from morality. Reintegration is necessary if organizational science is to support ecologically and socially sustainable development. This article posits requisites of such development and rejects the paradigms of conventional technocentrism and antithetical ecocentrism on grounds of incongruence. A more fruitful integrative paradigm of “sustaincentrism” is then articulated, and implications for organizational science are generated as if sustainability, extended community, and our Academy mattered.
Economic theory will make little progress in understanding and incorporating the role of entrepreneurship unless the term acquires a precise, operational meaning. This historical survey demonstrates the many definitions and facets of entrepreneurship advanced by economists throughout the ages. It concludes that until economics is fully equipped to deal with the dynamics of everyday life, the role of the entrepreneur will likely be understated.
Ecological problems rooted in organizational activities have increased significantly, yet the role corporations play in achieving ecological sustainability is poorly understood. This article examines the implications of ecologically sustainable development for corporations. It articulates corporate ecological sustainability through the concepts of (a) total quality environmental management, (b) ecologically sustainable competitive strategies, (c) technology transfer through technology-for nature-swaps, and (d) reducing the impact of populations on ecosystems. It examines the implications that these concepts have for organizational research.
In this article, the notion of syncretic rent-seeking behavior is proposed to explain how firms generate economic rents through competition and cooperation. Previously, competition and cooperation have been viewed largely as opposite ends of a single continuum. By conceptualizing competition and cooperation as distinct but interrelated dimensions, we develop a four-cell typology of rent-seeking strategic behaviors. Propositions linking syncretic rent-seeking behavior, organizational competencies, and business performance are offered to guide future theory development and research efforts.
Contrary to Barney (1990) in his reply to Donaldson (1990), this article points out that the strength of criticism of organizational economics lies in part in apprehensions about its deleterious effects upon management theory. The article also argues that there is continuing reason to doubt that organizational economics readily lends itself to synthesis with traditional management theory. The issues of the narrowness of the motivational model in organizational economics and its offensiveness and the bias against systems-level analysis and against management are discussed.
1. Introduction 2. Entrepreneurial Theories in the History of Economic Thought 3. The Disappearance of the Entrepreuneur from Microeconomic Theory - A History 4. An Explanation of the Disapperance of the Entrepreneur - The Description 5. An Explanation of the Disapperance of the Entrepreneur - The Rationale 6. An Explanation of the Disappearance of the Entrepreneur - The Motivation.
This study analyzes organization of economic activity within and between markets and hierarchies. It considers the transaction to be the ultimate unit of microeconomic analysis, and defines hierarchical transactions as ones for which a single administrative entity spans both sides of the transaction, some form of subordination prevails and, typically, consolidated ownership obtains. Discusses the advantages of the transactional approach by examining three issues: price discrimination, insurance, and vertical integration. Develops the concept of the organizational failure framework, and demonstrates why it is always the combination of human with environmental factors, not either taken by itself, that causes transactional problems. The study also describes each of the transactional relations of interest, and presents the advantages of internal organization with respect to the transactional condition. The analysis explains why primary work groups of the peer group and simple hierarchy types arise. The same transactional factor which impede autonomous contracting between individuals also impede market exchange between technologically separable work groups. Peer groups can be understood as an internal organizational response to the frictions of intermediate product markets, while conglomerate organization can be seen as a response to failures in the capital market. In both contexts, the same human factors, such as bounded rationality and opportunism, occur. Examines the reasons for and properties of the employment relation, which is commonly associated with voluntary subordination. The analysis attempts better to assess the employment relation in circumstances where workers acquire, during the course of the employment, significant job-specific skills and knowledge. The study compares alternative labor-contracting modes and demonstrates that collective organization is helpful in enhancing the acquisition of idiosyncratic knowledge and skills by the work force. The study then examines more complex structures -- the movement from simple hierarchies to the vertical integration of firms, then multidivisional structures, conglomerates, monopolies and oligopolies. Discusses the market structure in relation to technical and organizational innovation. The study proposes a systems approach to the innovation process. Its purpose is to permit the realization of the distinctive advantages of both small and large firms which apply at different stages of the innovation process. The analysis also examines the relation of organizational innovation to technological innovation. (AT)
All people use indicators in making day-to-day decisions. For example, in deciding on what type of clothes to wear, the cloud
cover, sunlight, and outside temperature are rapidly evaluated. Even faster evaluations of numerous indicators take place
when driving a car in traffic. The indicators used in daily life are selected, often not even consciously, for their known
or assumed information content and its easy digestibility. The information is in many situations also implicitly assumed to
have predictive power, an assumption which is rarely tested for its accuracy. Over time, with proper training and growing
experience, most people manage, however, to sustain their lives based on such uncertain information flows.
This book discusses the development of a theory on the growth of the firm. It is shown that the resources with which a particular firm is accustomed to working will shape the productive services its management is capable of rendering. The experience of management will affect the productive services that all its other resources are capable of rendering. As management tries to make the best use of the resources available, a ‘dynamic’ interacting process occurs which encourages growth but limits the rate of growth.
Interest in the resource-based view of the firm continues to grow in the field of business policy and strategy. Recently, most of this interest seems to have been focused on understanding the empirical implications of this theory and especially on how a firm's resources and capabilities can affect its performance. Evaluating the empirical implications of the resource based view is, of course, a worthwhile endeavor. We present an overview of contributions in this issue.
Hybrid organizational arrangements, in which two or more sover- eign organizations combine to pursue common interests, raise signif- icant questions for both scholars and managers. A review of previous research yields four key issues-breadth of purpose, boundary de- termination, value creation, and stability mechanisms-that form the core of a theory of hybrid arrangements. This theory is then used tc generate researchable propositions that explore differences among types of hybrids and to offer insights for managers of hybrid organi- zations. Observers of the corporate landscape are wit- nessing an increase in the variety and complex- ity of organizational forms, many of which rep- resent strategic alliances between organiza- tions, for example, acquisitions, joint ventures, license agreements, research and development (R & D) partnerships, and so forth. These alli- ances result from strategic and operating moves by firms that have adapted to emerging oppor- tunities as well as those that are repositioning themselves within existing industrial frame- works. The hybrid arrangements represented by
Following a decade of declining productivity and failed organizations, many U.S. companies in the eighties have been forced to rethink their competitive approaches. This search is producing a new organizational form—a unique combination of strategy, structure, and management processes that the authors refer to as the "dynamic network." This new form is forcing the development of new concepts and language and provides new insights into the workings of existing strategies and structures. In the future, many organizations will be designed using concepts such as vertical disaggregation, internal and external brokering, full-disclosure information systems, and market substitutes for administrative mechanisms. This article describes where and how rapidly the dynamic network form will emerge and discusses its implications for strategists, organization designers, and policymakers.
The standard economic analysis holds that resource allocation in the industrial sector is primarily a market process operating through the capital markets. The current political resurgence of free market economics has popularized this approach. Contrary to this approach the authors demonstrate that: (1) trends in the size, diversity and administrative complexity of firms; (2) structural features of the capital markets; and (3) the emergence of the state as a major source of capital in developed countries imply that internal organizational and political/ ideological considerations are also vital to understanding resource allocation in the economy.
For many centuries, industrial societies in the Western modernity have been driven by a dominant social paradigm (DSP). It is argued in this paper that this paradigm has some serious difficulties in the light of the development of the field of corporate social responsibility and in the light of its practice. Therefore, a new paradigmatic foundation is required for corporate social responsibility. The dominant social paradigm is contrasted with metaphors and principles that are derived from sources that are outside the paradigmatic basis of Western modernity, and outside the paradigm of neoclassical economics. These new metaphors and principles may be suitable for further development of the corporate social responsibility paradigm as well as for reconsideration of the economics paradigm.
Modern management theory is constricted by a fractured epistemology which separates humanity from nature and truth from morality. Reintegration is necessary if organizational science is to support ecologically and socially sustainable development. This paper posits requisites of such development and rejects the paradigms of conventional technocentrism and antithetical ecocentrism on grounds of incongruence. A more fruitful integrative paradigm of sustaincentrism is then articulated and implications for organizational science are generated as if sustainability, extended community and our academy mattered.
The paper explores the usefulness of analysing firms from the resource side rather than from the product side. In analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested. These tools are then used to highlight the new strategic options which naturally emerge from the resource perspective.
In parallel with a theoretical acceptance of the importance of the laws of competition to formulate strategy, the realization is growing that cooperative behavior among firms is at the root of many success stories in today's management. This situation calls for an effort to develop a theoretical framework to study both aspects of firm behavior (cooperative and competitive) as compatible, complementary aspects of a unique reality. Indeed, the cooperative relationships of a firm can be the source of its competitive strength.
This paper develops the concept of strategic network, as a tool to understand those cooperative relationships and their role in the strategy of the firm. There are three main tasks of the paper: first, to show that strategic networks are but a ‘mode of organization’; second, to study the economic conditions of existence of a network; finally, to analyze the conditions of existence of a network from the point of view of its internal consistency. In a final section some of the most obvious strategic implications of the framework are outlined.
Interorganizational networks generally have been discussed in the context of nonprofit agencies. Providing an alternative between the open market and the internalization of activity the network potentially may be even more important in business. This is especially true in international operations and in industrial and services marketing. Involving technology transfer, information exchange, accounting and finance as well as marketing, network management calls for a holistic approach. To serve as an engine of growth the network also requires strategic planning both at the overall level and in member firms.
The article reflects on the diffusion of the ‘resource-based view of the firm’ into academic and practitioner thought. The contributions of many people are noted. In closing, I offer some speculations about the future use of these ideas.
There are not many books that are genuine classics, and only a handful in business and management whose insights and ideas last for 50 years and more. This book is one of the very few 'must reads' for anybody seriously interested in the role of management within the firm. Originally published in 1959, The Theory of the Growth of the Firm has illuminated and inspired thinking in strategy, entrepreneurship, knowledge creation, and innovation. Edith Penrose's tightly-argued classic laid the foundations for the resource based view of the firm, now the dominant framework in business strategy. She analyses managerial activities and decisions, organizational routines, and also the factors that inevitably limit a firm's growth prospects. For this new anniversary edition, Christos Pitelis has written a new introduction which both tells the story of Penrose's extraordinary life, and provides a balanced assessment of her key ideas and their continuing relevance and freshness.
Development of a firm's core competencies is identified as the key for global leadership and competitiveness in the 1990s. NEC, Honda, and Canon are used as exemplars of firms that conceive of themselves in terms of core competencies. Core competencies are the organization's collective learning and ability to coordinate and integrate multiple production skills and technology streams; they are also about the organization of work and delivery of value in services and manufacturing. A firm must conceive of itself as a portfolios of competencies, instead of a portfolio of strategic business units (SBUs). The latter limit the ability of firms to exploit their technological capabilities; they are often dependent on external resources. The real source of advantage lies in management's ability to consolidate corporate-wide technologies and production skills into competencies, which will allow individual businesses to adapt to emerging opportunities. Cultivating core competencies does not mean outspending rivals on RD (2) they significantly contribute to the customer benefits of the end-product; and (3) they should be difficult for competitors to imitate. Cultivating core competencies also means benefiting from alliances and establishing competencies that are evolving in existing businesses. The tangible links between core competencies and end products are core products, which embody one or more core competencies. Companies must maximize their world manufacturing share in core products. Global leadership is won by core competence, core products, and end products; global brands are built by proliferating products out of core competencies. Firms must avoid the tyranny of the SBU, the costs of which are (1) under investment in developing core competencies and core products, (2) imprisoned resources, and (3) bounded innovation. Top management must add value to a firm by developing strategic architecture, which will avoid fragmenting core competencies, establish objectives for competence building, make resource allocation priorities transparent and consistent, ensure competencies are corporate resources, reward competence carriers (personnel who embody core competencies), and focus strategy at the corporate level. A firm must be conceived of as a hierarchy of core competences, core products, and market-focused business units. Obsession with competence building will mark the global winners of the 1990s. (TNM)