Effect of Core Competence on Competitive Advantage and Organizational Performance

Abstract

In highly competitiveness market core competence has emerged as a central concept for competitive strategy.Core competence is the knowledge set that distinguishes a firm and provides a competitive advantage over others.The main purpose of this study is to investigate the relationship between core competence, competitiveadvantage and organizational performance. Core competence was measured through three dimensions: sharedvision, cooperation and empowerment. Competitive advantage was also measured through flexibility andresponsiveness. The proposed model was tested in the context of Paint Industry in the UAE. The survey wasadministered electronically to a total of 77 managers. Results indicate that it appears to be consistent and reliablescales. Finding indicates that, while core competence has a strong and positive impact on competitive advantageand organizational performance, competitive advantage has also significant impact on organizationalperformance. Results confirm the varying importance of core competence dimensions on competitive advantageand organizational performance. It has also been found that flexibility have higher impact on organizationalperformance than responsiveness. To remain competitive and obtain competitive advantages, managers can try toincrease organizational performance by managing each dimension of core competence i.e. shared vision;cooperation and empowerment.