The process of competence leveraging in related diversification: a case of technology management at a composite-material company

This paper explores the process of competence leveraging in a technology-related diversification as part of a firm's approach to maintaining a competitive edge. While competence leveraging seems to be an important issue, little attention has been given in recent studies to discussing the process with the focus being on the outcome only. A research framework consisting of decision-making, coordination and adaptation processes is proposed and examined in this study to conceptualise the dynamic process of competence leveraging during a related diversification. In particular, we argue that some of the difficulties involved in this process can explain why some firms struggle or fail while pursuing a related diversification, a task which we often mistakenly believe to be straightforward. This study suggests that the competence gap resulting from the strategic intent in the decision-making phase; the inertia derived from the resistance by the staff to internal resource reallocation in the coordination phase; and the decision to carry on with commitments while facing a negative outcome in the adaptation phase could jeopardise the outcome of the attempted related diversification. An in-depth case study of a composite-material based contract manufacturer is used to illustrate the process of how a firm may face and handle these difficulties while leveraging its existing competence.