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A New Tool for Resurrecting an Old Theory of the Firm

Knowledge at Wharton·@HashtagPLUS·about 1 month ago
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It’s one of the oldest, most fundamental ideas in management theory: that executives should understand how the many distinct functional components of a firm — production, distribution, product mix, human resources — interrelate to achieve the proper fit. For a firm to establish an effective, overarching strategic position relative to its competitors — what management theorists call “firm positioning” — the varied functional elements should, ideally, be complementary and reinforcing. In recent years, however, this notion of comprehending the “part-whole” relationship of the firm fell out of favor as thinkers turned to other concepts to analyze and explain why organizations are effective. One well-known concept that emerged was the idea that companies could turn to core competencies to attain competitive advantage.…

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