Full article: [[Danneels, E. 2007. The process of technological competence leveraging|/static/files/MBI/Module%206/READINGS_Danneels_SMJ2007.pdf]]

What is the process of [[technological competence leveraging|Technological competence leveraging]], and can insight into this process explain why technologies may be underutilized? Examples of companies that leverage their competences well are Honda as it applies its technological know-how and production facilities related to combustion engines to cars, lawnmowers, generators, motorcycles, and so on and Canon who exploits its expertise in optics and lens grinding to serve markets as diverse as photolithography, cameras, and copiers.

The study found that the presence of a competence to serve current customers (a first-order customer competence) and the lack of a competence to gain access to new customers (a second-order marketing competence) both constrain technology leveraging.

It is not sufficient for a technology to have many applications. To leverage its technology by applying it to additional markets, ''a firm must build complementary market-related assets to serve those
markets''. Market-related resources include:
* knowledge of customer needs, preferences
* purchasing procedures,
* distribution and sales
* access to customers,
* customer goodwill or franchise reflected in the reputation of the firm and its brands
* communication channels for exchange of information between the firm and customers during development and commercialization of the product.

Together these market-related resources constitute a ‘[[customer competence|Customer competence]]’—the ability to serve a particular market. There are difficulties in leveraging technological competences. Reasons are:
# Leveraging technology involves the identification of a technological competence as distinct from the products in which it is embodied. 
## Competences are not product-specific; they transcend any particular product.
## A firm’s capability lies upstream from the end product— it lies in a generalizable capability which might well find a variety of final product applications (see [[M5-S6 - Reading - Summary Teece - Profiting from technological innovation]])
# Complementary market-related assets are needed to access new markets
## What is missing in our understanding of the process of technological competence leveraging is the role of resource allocation and transformation.
## While a technological competence may be identified for possible leveraging across multiple applications, ''the creation of market-related resources can be highly problematic''.
## The transformation of generic firm resources into specific resources, and subsequently into valuable output, has so far been unproblematic and implicit in resource-based theory

The case study presented in this reading suggests that ''the allocation of fungible resources'' and the ''transformation of these fungible resources into new market-related resources'' are a function of the ''firstorder customer competence'' and the ''second-order marketing competence of a firm.''

What is missing in our understanding of the process of technological competence leveraging is ''the role of resource allocation and transformation''.
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Sun, 30 May 2010 11:42:41 GMT
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