Distinctive Competence and Competitive Advantage

Abstract

DISTINCTIVE COMPETENCE AND COMPETITIVE ADVANTAGE planning refers to a firm's efforts to monitor, understand, and adapt to a changing environment in order to establish and maintain a favorable competitive position. Recently, attention has been directed toward assessing and improving the strategic planning activities of smaller companies. It has been claimed that systematic planning can positively affect small business success.1 processes of environmental assessment, internal analysis, and the development of goals, objectives, and supporting strategies are typically stressed.2 These activities are often ignored or approached haphazardly by small business owner/managers.3 1 K. Mayer and S. Goldstein, First Two Years: Problems of Firm Growth and Survival (Washington, D.C.: Business Administration, 1961); C. Orpen, The Effects of Long-Range Planning on Business Performance: Further Examination,' Journal of Business Management (January 1985), pp. 16-23; R. B. Robinson, Jr. and J. A. Pearce II, Research Thrusts in Firm Planning,' Academy of Management Review (January 1984), pp. 128-137; and G. Vozikis and W. F. Glueck, Small Business Problems and Stages of Development,' Proceedings of the Academy of Management National Meetings (1980), pp. 373-377. 2 J. E. Van Kirk and K. Noonan, Key Factors in Planning,' Journal of Business Management (July 1982), pp. 1-7; R. Moyer, Strategic Planning for the Firm,' Journal of Business Management (July 1982), pp. 8-14; R. B. Robinson, Jr. and W. F. Littlejohn, Important Contingencies in Firm Planning,' Journal of Business Management (July 1981), pp. 45-48; P. H. Thurston, Should Companies Make Formal Plans?' Harvard Business Review (September-October 1983), pp. 162-188; J. G. Wacker and J. S. Cromartie, Adapting Forecasting Methods to the Firm,' Journal of Business Management (July 1979), pp. 1-7; and J. A. Timmins, M. C. Fraker, and J. Brown, Large Firm Forecasting Techniques Can Improve Business Making,' Journal of Business Management (July 1979), pp. 14-18. 3 D. L. Sexton and P. Van Auken, A Longitudinal Study of Business Planning,' Journal of Business Management (January 1985), pp. 7-15; W. D. Jones, Characteristics of Planning in Firms,' Journal of Business Management (July 1982), pp. 15-19; D. L. Sexton and P. M. Van Auken, Prevalence of Planning in the Business,' Journal of Business Management (July 1982), pp. 20-26; G. H. Rice and R. E. Hamilton, Decision Theory and the Businessman,' American Journal of Business (January 1979), pp. 7-15; T. W. Still, An Exploratory Investigation of Planning Behavior in Firms,' D. B. A. dissertation, Florida State University, 1974; and T. Cohn and R. A. Lindberg, How Management Is Different in Companies (New York: American Management Association, 1972). Little research has focused on the development of distinctive competence, competitive advantage, and sustainable competitive advantage,4 despite the fact that these concepts are critical to the strategic thrust and eventual success of the small business. These factors must be explicitly recognized for their role in shaping a firm's strategic response to its particular competitive situation. 4 Some initial efforts in this area were made by T. Neil, Competence: Marketing Strategy for Survival,' Journal of Business Management (January 1986), pp. 16-21; and D. G. Watkin, Toward Competitive Advantage: Focus Strategy for Retailers,' Journal of Business Management (January 1986), pp. 9-15. Distinctive competence may be defined as some skill, activity, or capacity that the business is uniquely good at in comparison to rival firms.5 Producing better quality products than competitors, having a more knowledgeable and skilled workforce, or being able to react to customer demands much more quickly than competitors are examples of distinctive competence. …

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