Competence-Based Firm Operating in Capital Investment Markets
|Corresponding Author: Huovinen, Pekka|
|Author(s): Huovinen, P.|
|Organisation(s): Construction Economics and Management, Helsinki University of Technology (Finland)|
|The suggested paper is related to a study in progress, titled ĒDeveloping
international competiti-veness of Finnish firms operating in foreign capital
investment marketsĒ and funded by Technology Development Centre in Finland
The generic problem of managing a firmís competitiveness in dynamic
markets is here approached from the recursive systems view (Beer 1985,
1975) coupled with the competence-based view (Sanchez, Heene and Thomas
1996; Heene and Sanchez 1997; Sanchez and Heene 1997). A firm is conceptualized
as a set of the three recursive, viable, competence-based systems in order
to solve ex ante the three interrelated subproblems of a firmís competitiveness
(Huovinen 1998) as follows:
It is argued that by applying the recursive systems view, we are likely to be able to enhance our understanding of the internal chains of causalities which explain a firmís (non-) competitiveness. These causes can be identified as being embodied in a firmís three recursive systems, their elements and connexions. It is argued that the most Ēin-depthĒ causes may reside in (top) managers, owners, and advisers (participating in decision making) as regards their cognitive capabilities, logics, and values.
By definition, the recursivity implies that the subsystems or elements of the open system (a firm) are interrelated with real-time linkages. Thus, any change(s) of a particular subsystemís element will influence both in real-time and after a delay(s) the other subsystems as well as the status of its fellow-elements. For example, when one of the top managers of the firm makes a new decision or revises one of his/her previous decisions, this latest decision will influence the actions of his/her subordinates, colleagues and boss(es) both as individuals and teams in various ways. In addition, the preceding, triggering factor (of his/her decision) may lie inside and/or outside the firm in question.
From the normative view, managing targeted (positive) future changes of a firmís competitive-ness can be based (a) first on pre-planning, e.g. development plans, predictions or scenarios of the desired future state of affairs as well as a set of alternate posititive and negative states, (b) on decision-making, i.e. making strategic choices among the alternatives, and (c) finally leading and controlling the implementation. These managersí tasks seem to become more and more difficult to perform in the context of volatile capital investment or construction markets. A major change in markets (e.g. shifts back to barter trade relations inside the Russian construction markets during the year 1998) means that the related firms must change their behavior accordingly often within a day, days, or weeks. Concurrent environmental changes require, in principle, that the managers in questions are capable of understanding the primary chains of causalities behind (construction) business logic, strategies, and processes.
In the dynamic context, in particular, it seems to be worth trying to design new better methods enabling the concurrent analysis of the status of (construction) markets as well as that of a firmís operations and its underlying competitiveness (interrelated with the market). The faster a key person(s) can get structured interrelated information of the actual or anticipated events, the better the basis for his/her (their) conduct of decisions and actions.
Thus, the aims of the suggested paper are as follows: (a) identifying and choosing the key dimensions for analyzing concurrently the interdependencies and status among the three types of the systems within a recursive firm, (b) defining a set principles for a concurrent analysis of a recursive competence-based firm, (c) illustrating the suggested concurrent way to analyze with a few examples or tests, and (d) concluding with the remarks on designing a method for this concurrent analysis.