This paper critically analyzes Prahalad and Hamel's seminal 1990 Harvard Business Review article, "The Core Competence of the Corporation." The paper summarizes the article's central premise — that core competence emerges from communication, collaboration, and cross-organizational commitment rather than from technology alone — and evaluates how the authors use examples from Canon, GE, and NEC to support their framework. The analysis identifies strengths in the authors' treatment of organizational culture and change management, while also noting a key weakness: the article provides valuable diagnostic insight into common pitfalls but falls short of offering a scalable, prescriptive framework for organizations seeking to identify and sustain their core competencies.
The premise of The Core Competence of the Corporation (Prahalad & Hamel, 1990) is predicated on the assumption that greater communication and collaboration, coupled with accountability on the part of senior managers, leads organizations to discover their core competencies. The authors argue that core competence has more to do with communication, involvement, and a deep commitment to working across organizational boundaries than with technology alone (Prahalad & Hamel, 1990). Using examples from Canon, GE, NEC, and others, the authors support these core concepts with illustrations drawn from decades of corporate growth.
The authors present a narrative that accurately captures the dynamics that led to the exceptionally rapid growth of Canon, GE, and others as these companies sought to continually refine and expand their core competencies over three decades. Citing the triple-digit growth these companies experienced as evidence of exceptional insight into their core competencies, the authors point to the change management aspects of core competencies just as much as to the technological dimensions of innovation (Prahalad & Hamel, 1990).
This approach creates a framework that allows for richer levels of analysis throughout the article, demonstrating how the maturation and transition of technologies is driven more by an organization's ability to communicate effectively than by purely technology-driven innovation. This is also evident in how effectively the authors illustrate cases where communication directly led to greater degrees of core competency attainment, compared with organizations that relied on more mechanistic, formulaic means of attempting to reinvent themselves.
The authors further illustrate, through detailed examples, how Canon, GE, and NEC each cultivated an exceptionally strong organizational culture capable of supporting collaboration and communication workflows. The inherent advantages of making core competency development part of an organization's culture are demonstrated by how effectively these companies defined a core competency beyond a single technology or indefensible technology-based advantage.
The authors are emphatic that when a strategic business unit begins to dominate a given area of core competency, organizations can become myopic and increasingly inward-focused. The result is a short-term and ultimately ineffective approach to managing innovation and the ongoing development of core competency.
"Absence of prescriptive, scalable guidance for practitioners"
"Cited source: Prahalad and Hamel 1990"
You’re 68% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.