ABSTRACT
As technology bundles, core competencies make a critical contribution to the unique functionality of a range of end-products. Encompassing disciplines includes total quality control, just-in-time manufacturing systems, value engineering, flexible manufacturing systems, accelerated product development, and total customer service. Such disciplines allow a product to be delivered to customers at the best possible price/performance trade-off. Core competencies and value-creating disciplines are not distributed equally among firms. Expansion-minded competitors, exploiting such firm-specific advantages, bring the skill deficiencies of incumbents into stark relief. In interviews with both the European firm and its Japanese partner, it became clear that the bargaining power of the Continental firm had grown as its learning had progressed. For the European firm, each stage of learning, when complete, became the gateway to the next stage of internalization. Managers in a Japanese firm whose European partner had shown a high propensity to learn, believed that ultimate control came from being ahead in the race to create next-generation competencies.
