Core capabilities and core rigidities: A paradox in managing new product development
Citation: Dororthy Leonard-Barton (1992) Core capabilities and core rigidities: A paradox in managing new product development. Strategic Management Journal (RSS)
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Tagged: Business (RSS) Strategy (RSS), Capabilities (RSS), Product Development (RSS)
Leonard-Barton's paper is about firm capabilities but is framed explicitly in terms of product development in particular. Leondard-Barton breaks down capabilities into technical systems, skills, managerial systems and offers that firm values occupy a fourth important type of capability. Second (and more importantly), she argues that these capabilities can also act as liability and that in certain situations (e.g., in dynamic environments) they can act as rigidities that keep firms from adapt and acting in ways that might be beneficial. In this sense, core capabilities are a paradox in that they both enhance and inhibit product development.
To define capabilities, the authors cite what (presumably?) is a very early draft of Dynamic capabilities and strategic management by Teece, Pisano and Shuen which they define as, "a set of differentiated skills, complementary assets, and routines that provide the basis for a firm's competitive capacities and sustainable advantage in a particular business."
Using the dimensions described above, Leonard-Barton presents evidence from 20 product and process development projects in the form of extensive case-studies in 5 different firms (Ford, Chaparral Steel, Hewlett Packard, and two anonymous companies) that supports her argument in favor of this paradox.
The paper is structured primarily into two sections: the first exploring the upsides to core capabilities in each of the four dimensions, and the second exploring the downsides and they way they introduce inflexibility.
Theoretical and Practical Relevance
Leonard-Barton's paper has been cited nearly 3,000 times 18 years after its publication. Although its data comes from product development, it's contributions has been most solidly felt in the literature on capabilities. It is cited in seminar work including Dynamic capabilities and strategic management by Teece et al. and A resource-based view of the firm by Wernerfelt.
Most authors cite Leonard-Barton as evidence of how capabilities can be a two-edged sword. That said, although few authors have followed through and explored the negative impact of these capabilities citing her paper largely as a sort of disclaimer or a statement of a known limitation.