Abstract

Since the early 1990’s the resource based view and core competency concepts have been the focus of strategic management within academia and industry alike. However, it is largely documented that the vast majority of the research which has been conducted has been centred on large complex firms, often operating multibusiness and/ or multinational business strategies. This thesis addresses this void in the body of literature by studying the implications of applying the resource based view and core competency concepts to the Small and Medium Enterprise (SME) sector.

The research has been supported by the Department of Trade and Industry (DTI) in the way of a Knowledge Transfer Partnership and aims to suggest a methodology of applying accepted models within the resource based view and core competency fields of research to SMEs.

Utilising a case study approach, this study contributes empirical research to the body of literature surrounding the application of the resource based view and core competency concepts by uncovering concerns about the firm analysis models in practice. This research study aims to offer answers on a specific dilemma of a UK based manufacturing SME by utilising a diagnostic approach to identify the core competencies of the firm which may also be replicated in similar organisations.

The research study utilises a diagnostic nature with constant review of the approach aiming to utilise existing methodologies within the literature to fully validate the results of exploratory focus groups and thus determine the most effective way to answer two specific research questions:

1) What are the core competences of Steel Tubes Ltd?

2) How can making a contribution to a diagnostic method, with further research to validate it, be used as a method to identify core competencies within SMEs?

The methodology consisted of four main phases with the aim to discover general themes within the business and then undertake an investigative approach to identify the core competencies of the firm.

Phase One aimed to offer the researcher an in-depth insight into the background of and operation of Steel Tubes using methods such as process mapping, reviewing financial records and stakeholder interviews. With a deeper understanding of how the company operates the criteria for Phase Two was formed. Phase Two involved focus groups with key influencers and decision makers within the business to investigate the success factors of the organisation.

Phase Two consisted of two groups, one of senior management and another or middle management. This divide not only meant that any hierarchical friction could be avoided and therefore honest and open answers extracted, it also meant that the researcher would have different results to compare and contrast to increase the validity of the findings. In order to offer an external perspective and another input of data, similar discussion topics were also used for interviews with key customers and suppliers. Having three points of data to analyse enabled the researcher to identify common themes which could lead to the establishing the basis of Steel Tube’s success and a solid platform from which to further investigate the core competencies of the organisation.

The results from this stage produced nine key success factors, six of which were echoed in both of the research group which amplified their importance to the competitive advantaged that Steel Tubes had developed. These key success factors included:

1. Comprehensive In-House Production Capability

2. Experience in Small Batch Production

3. Prototyping Skills

4. Flexible and Accommodating Production

5. Good Teamwork at the Operational Level

6. High Perceived Quality in the Industry

7. Production Capacity

8. Knowledge and Experience of Bending

9. Planning and Logistics Systems

Having established key attributes of the firm’s success, Phase Three involved the participants conducting a ranking exercise in order for the researcher to establish which attributes are thought to be more critical than others. This exercise also enabled the researcher to further verify the results by comparing them to established frameworks within the literature such as Barney’s VRIO (2002) methodology and Hamel and Prahalad’s Three (1994) questions.

The results from the analysis of this phase identified some stark results. When comparing the attributes to the frameworks it became apparent the methodologies were too rigid and therefore although they proved to be useful checkpoint markers, they failed to offer any understanding of the relationships that are considered to be the underpinning of competitive advantage within the firm and thus identifying a firm’s true core competencies.

Although the results from Phase Three may not have identified the firm’s core competencies, it did offer further insight into which attributes enabled the organisation to achieve a competitive advantage and therefore offered a basis to conduct further research into the relationships between those key attributes.

Social Sciences have long been using casual mapping, a form of cognitive mapping, as a method of identifying an individual’s mental relationships between given elements. Eden (2002) further developed this concept to aid organisations in identifying core competencies and it is this model which has offered a basis for the structure of Phase Three.

Having split the participants into two separate groups as in Phase Two, the final session involved aligning the key attributes identified in Phases Two and Three, to Eden’s (2002) mapping exercise. Unsurprisingly the two groups produced similar results which not only confirmed the validity of the results, but the strength of the methodology also. The results from the four phases of research have identified two core competencies of Steel Tubes:

1. Flexible order taking and communication systems.

2. Personal service to customers utilising specialist prototyping and product development expertise.

Although the diagnostic approach that has been utilised to identify the core competencies of Steel Tubes has been designed with reference to a single case, the methodology has been designed around existing frameworks with the premise of allowing the approach to be extendable to other SMEs. The methodology that has been designed within this research study utilises analytical techniques that can be easily replicated within other organisations of a similar size.

This research study explains how to apply this methodology within an organisation and demonstrated how existing knowledge of the firm and existing frameworks can be utilised to identify core competencies as a basis of competitive advantage and diversification.  The thesis explains in detail the fundamental rules that need to be followed to ensure that this methodology is effective in its deployment. 

Additional Notes

Supervisor: Paul Trott

Course: Master of Philosophy - MPhil

Date Deposited: 2017-05-10

URI/permalink: https://library.port.ac.uk/dissert/dis12879.html