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International Bulletin of Business Administration

ISSN: 1451-243X Issue 6 (2009)

© EuroJournals, Inc. 2009

http://www.eurojournals.com

93

The Impact of Core Competencies on

Competitive Advantage: Strategic Challenge

Jehad S. Bani-Hani

Department of Business Administration, Jadara University, Irbid, Jordan

E-mail: [email protected]

Tel: +962-777404102; Fax: +962-2-7201210

Faleh, Abdelgader AlHawary

Department of Business Administration Applied Science Private University, Amman, Jordan

E-mail: [email protected]

Tel: +962-795777198; Fax: +962- 6- 5232899

Abstract

This study examines the impact of core competencies on competitive advantage andit applied on Jordanian insurance organizations. The population for this study consisted of

all the Jordanian insurance organizations heads. A simple random sampling technique was

used to select the respondents surveyed for this study, a total of 61 questionnaires wereadministered to respondents chosen from 18 company; statistical tools were used to test the

hypothesis such as: spearman correlation, and multiple regression. The findings indicatedthat there is a significant positive relationship between core competencies and competitive

advantage from the sample point view. The study also showed that the core competencies

had a significant impact on competitive advantage.

Keywords: Core Competence, Organizations Performance, Competitive Advantage,Jordan Insurance Companies

1. IntroductionCompanies need to learn to manage tomorrow's opportunities as competently as they manage today's

businesses. The discovery of new competitive space is helped when a company has a class of

technology generalists that can move from one discipline to another. The new market development can be geared up by developing the capability to redeploy the human resources quickly from one business

opportunity to another. It is the top management's responsibility to inspire the organization with a view

of distinct goals and help them to achieve and reach the set target (Hamel and Prahalad, 1991).Building core competence becomes essential to competitive advantage building, because

advantages emanating from the product-price-performance-tradeoffs are almost short term. Especially

in an era where technologies are altering the existing boundaries of business; advantage can last onlythrough competence enjoyed at the very roots of products. And only through expertise over several

technologies and a complete command on their infinite variety of users, a company can occupy a

highly advantageous position. An organization's management needs to consolidate corporate-wide

technologies and production skills into competencies that empower individual businesses to adoptquickly to changing opportunities. The corporation is like a tree that grows from its roots, core products are nourished by competencies and engender business units, whose fruit are products. Three

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tests are proposed to identify core competencies in an organization: a core competence provides potential access to a wide variety of markets, it should make a significant contribution to the perceived

customer benefits of the end product, and finally a core competence should be difficult for competitors

to imitate. The core products provide a tangible link between identified core competencies and the end products. The real competitive advantage lies in integrating operations for the sake of hitting demand

quality targets or meeting specialized customer needs. (Ramaswamy and Namakumari 1996, Banerjee

and Krishnamoorty 1995, Hamel and Prahalad 1990)

The organizations need to build its strategies within different clear scenarios, in different ways, based on different competencies for the purposes of achieving real advantages in the shadow of

unknown, risk, and uncertain future. Therefore, The ultimate purpose of this study is to investigate the

impact of core competencies on competitive advantage.

2. Study ObjectivesBasically, the lack of academic research in Jordan support whether or not a relationship between the

core competencies and competitive advantage exists motivate the researchers to investigate this

subject. Therefore, this study attempt to provide some viewpoints, and empirical results to understandthis relationship. Following are the main objectives of this study:

3. Investigating the main categories of core competencies within the researched companies.4. Investigating the role of core competencies in achieving competitive advantage fore the

researched companies.

3. Literature Review3.1. Core Competence

Much of the research on competitive advantage focused on core competencies as a major source of that

advantage, core competencies include the particular set of skills and resources affirm possesses as well

as the way those resources are used to produce outcomes (Fiol, 2001).

The concept of core competence, as fundamental to organizational renewal and as a drivingforce behind strategic change, interests both managers and scholars. It is a complex and challenging

concept: it is difficult to specify theoretically, to identify empirically as a phenomenon, and to apply in

practice. Scholars have recently recognized these problems in general conceptual discussions (Hafsiand Thomas, 2005) and in core competence-specific empirical research (Wang et al., 2004).

Competencies are commonly agreed to reside in individuals and teams of individuals, implying

that the competence concept involves a cumulative hierarchy. This cumulative hierarchy notion isevident in many streams of research concerning the associated concepts: i.e. single-, double-, and

triple-loop learning, which are based on competencies, capabilities, and dynamic capabilities,

respectively, according to Savory (2006). Another researcher has adopted similar notions of hierarchy:i.e. first-order competence, which comprises customer and technological competencies; integrative

competence, which is the ability to combine the previous competencies; and second-order competence,which is the ability to create first-order competencies (Danneels, 2002). Scholars also distinguish

between “distinctive competence” and “core distinctive competence” (Eden and Ackermann, 2000).The two competencies involve a hierarchy: the former is a particular strength within a company that is

difficult to imitate and may be used to generate sustainable profits; the latter are competencies “that

primarily drive the aspirations system” (Eden and Ackermann, 2000, p. 16). A final example of ahierarchy involves three competence categories: distinctive competencies, which are the most

important in a company; necessary competencies, which do not differ from those of competitors but

which are needed for operational reasons; and protected competencies, which can hurt the company if misused (Heikkilä and Cordon, 2002). The first two examples can be assumed to involve qualitative

hierarchy in terms of differences in importance.

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Core competencies are particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value. Core competencies are the collective

learning in organizations, and involve how to coordinate diverse production skills and integrate

multiple streams of technologies. It is communication, an involvement and a deep commitment toworking across organizational boundaries. Few companies are likely to build world leadership in more

than five or six fundamental competencies.

Hamel and Prahalad (1994) define core competence as a bundle of skills and technologies that

enable a company to provide a particular benefit to customers. Core competencies are not productspecific; they contribute to the competitiveness of a range of products or services. They are the roots of

competitiveness and individual products and services are the fruit. A core competence is a tapestry

woven from the threads of distinct skills and technologies. A skill must meet three tests to beconsidered as a core competence, i.e., customer value, competitor differentiation, and extendibility.

Identification is arguably the starting point of all core competence research (Clark, 2000) and is

the matter on which most previous research has focused (e.g. Eden and Ackermann, 2000; Javidan,1998). The process of identifying core competencies usually entails having employees identify core

competencies by scanning and assessing company-critical resources, capabilities, and competencies

(Prahalad and Hamel, 1990) – three factors commonly referred to as “associated concepts”. In theidentification process these concepts often become conceptually and empirically merged, something

that occurs in strategic management research too, when these associated concepts are definedinterchangeably. For example, capabilities and competencies are defined interchangeably by Spanosand Prastacos (2004), resources and capabilities by Peteraf and Bergen (2003) and Ray et al., (2004),

and skill, competence, and capability by Hamel and Prahalad (1994). Other scholars, however, have

more usefully distinguished these associated concepts (Branzei and Thornhill, 2006; Makadok, 2001;

Helfat and Peteraf, 2003; Savory, 2006; Ljungquist, 2008). Although merging the associated conceptsis occasionally justifiable, it normally makes sense to distinguish them by their characteristics. In fact,

each concept is acknowledged to be substantial enough to have its own major research stream in the

strategic management field, namely, the resource-based, competence-based, and dynamic capability- based streams (Sanchez, 2004; Teece et al., 1997). Although neglecting the associated concepts'

distinguishing characteristics may occasionally be useful in complex identification processes, for more

advanced core competence matters doing so is unsatisfactory. The very diversity of the conceptsenhances our understanding of core competence, and is relevant to research issues such as core

competence management, a matter going far beyond mere identification.

An organizational core competency is an organization's strategic strength. It is what the

organization does best and what it should never outsource. Organizational core competencies—theunique resources of an organization—affect many products and services and provide a competitive

advantage in the marketplace (Johnson & Scholes, 2002).

3.2. Competitive Advantage

Every organization is a victim of its own success, so there is a need of diversification, which creates a

different mix of talents and capabilities. It must learn how sustain competitive advantage it should protect itself from being despoiled and assimilate new sources of technologies, skills and core

competencies.

Competitive advantage is at the heart of firm's performance. It is concerned with the interplay between the types of competitive advantage, i.e., cost, and differentiation, and the scope of the firm's

activities. The value chain plays an important role in order to diagnose and enhance the competitiveadvantage. A sustainable competitive advantage creates some barriers that make imitation difficult.

Without a sustainable competitive advantage, above average performance is usually a sign of

harvesting (Porter, 1985).Competitive advantage is, in very basic words, a position a firm occupies against its

competitors.

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According to Michael Porter, the three methods for creating a sustainable competitiveadvantage are through:

1. Cost leadership - Cost advantage occurs when a firm delivers the same services as its

competitors but at a lower cost.2. Differentiation - Differentiation advantage occurs when a firm delivers greater services for

the same price of its competitors. They are collectively known as positional advantages

because they denote the firm's position in its industry as a leader in either superior services

or cost.3. Focus (economics) - A focused approach requires the firm to concentrate on a narrow,

exclusive competitive segment (market niche), hoping to achieve a local rather than

industry wide competitive advantage. There are cost focus seekers, who aim to obtain alocal cost advantage over competition and differentiation focuser, who are looking for a

local difference.

The secret of a sustainable competitive advantage lies in performing every step in the valuechain in an appropriate way. A competitive advantage essentially has to be one that not only merely

represents better performance than that of its competitors, but also delivers genuine value to the

customer, thus ensuring a dominant position in the market. The internal resources and capabilities of anorganization play a very important role in building competitive advantage. The organizations that want

to build competitive advantages, which cannot be eroded (no matter how much change is there in theenvironment), must make linkages between the advantage and the capabilities underlying it asimpenetrable and as confusing as possible. Also the most important part of the competitive advantage

stems from a capability that is impossible to replicate (Sinha, 1998).

To acquire competitive advantage in any market, a firm needs to be able to deliver a given set

of customer benefits at lower costs than competitors, or provide customers with a bundle of benefits itsrivals cannot match. To realize the potential that core competencies create, a company must also have

the imagination to envision markets that do not yet exist and the ability to stake them out ahead of

competition. A company will strive to create new competitive space only if it possesses an opportunity-horizon that stretches far beyond the boundaries of its current businesses. This horizon identifies, in

broad terms, the market territory the management hopes to stake out over the next decade, a terrain that

is unlikely to be captured in anything as precise as a business plan (Hamel and Prahalad 1991; Porter 1980)

The basis for competitive advantage is the ability to create knowledge and move it from one

part of the organization to another. The creation of knowledge is a dynamic and continuous process

involving interactions at various organizational levels. Organizations must learn from their environment how to survive and produce competitive condition that shapes the character of success.

Time is an important factor, and it eventually renders nearly all advantages obsolete. Learning is the

only sustainable source of advantage, so managers must link their core competence to different types of strategies across time. The real competitive advantage lies in integrating operations for the sake of

demanding quality targets or meeting specialized customer needs. An organization should provide a

differentiating edge to be competitive to serve customers better, which is a newer method by which a

company can turn more profitable. Due to fierce global competition, senior management mustunderstand not only the technologies but also the competencies and motives of competitors. Building

successful alliances requires identifying the core competencies of both the partners and developing thestrong interpersonal skills and values needed to manage them. If an organization's capabilities are

scarce, defensible, or hard to imitate, these can form the basis for sustainable competitive advantageand surplus profits. The organizations pick up skills, abilities, and resources that are unique to them,

reflecting their particular path through history. These resources and capabilities reflect the unique

personalities, experiences, and relationship that exist only in a single organization. Such resources can

be the sources of sustained competitive advantage, and those imitating these resources will be at a costdisadvantage building them. An organization's competitive advantage potential depends on the value,

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rareness, and imitability of its resources and capabilities. However, to fully realize this potential, anorganization must also be organized to exploit its resources and capabilities. If strategic assets are

imperfectly imitable, imperfectly substitutable and imperfectly tradable assets necessary to underpin an

SBU's cost or differentiation advantage in a particular market, then core competencies can be viewedas the pool of experience, knowledge and systems etc. that exist elsewhere in the same corporation

which can be deployed to reduce the cost or time required either to create a new strategic asset or

expand the stock of existing one. In a dynamic world, only organizations that are able to continually

build new strategic assets faster and cheaper than those of their competitors will earn superior returnsand create long term competitive advantage. In this process core competencies have a pivotal role to

play (Ray et al., 2004, Markides and Williamson 1994).

3.3. Related Work

Study of (Clardy, 2008) aimed to examines the importance of Resource-Based View (R-BV) of strategy in core competencies as the critical basis for sustainable competitive advantage. Yet,

discussions of strategy typically ignore the role of the Human Resource Development (HRD) function

in core competency development and management. The literature on strategic HRD is reviewed to

locate the R-BV as a basis for redefining HRD's role in organizational strategy. Three strategic rolesfor the HRD function in core competency management are proposed and discussed: participating in

strategic planning, developing core competencies, and protecting them. Specific tasks for each role are

proposed.Study of (Cheng and Yeh, 2007) aimed to identify the core competencies of the air-cargo

forwarding industry and to investigate the relationship between core competencies and sustainable

competitive advantage (SCA). This study therefore adopts the resource-based view of the firm toexamine the cause-and-effect relationships of internal dimensions such as resources, capabilities, and

logistics services on SCA in the air-cargo forwarding industry. In addition, several external factors

affecting SCA were examined. Results indicate that resources, capabilities, and logistics services all

positively influence SCA. Capabilities are considered to be the most essential internal dimensioninfluencing the SCA of air-cargo forwarders. In terms of the capabilities dimension, staff capability to

provide better customer service was the critical factor. The results of this study will be useful for

conducting future strategic planning of air-cargo forwardingStudy of (Ljungquist, 2007) aimed to outline a model that is conceptually and empirically

applicable by practitioners in contexts extending beyond mere core competence identification. This

study presents a conceptual review of a model. And demonstrates that the associated concepts(competence, capability, and resources) have characteristics that differ both conceptually and

empirically. The findings also indicate that competencies are central to core competence matters; it is

possible to distinguish them analytically by three criteria. Furthermore, the notions of hierarchysuggested in previous research could not be verified which implies that the associated concepts all

reside at the same hierarchy level.

Study of (Mooney, 2007) examine core competence , distinctive competence, and competitive

advantage as the most important business concepts that managers, researchers, and educators rely onfor decision making, pedagogy, and research. However, little attention has been paid to defining these

concepts. As a result, they have become buzzwords that are used so frequently that their meanings are

often taken for granted but are not fully understood. In this article, the author reviews the evolution of these concepts in business literature and provides comprehensive definitions, conceptual models, and

examples to help clarify and distinguish the concepts so that failures of communication can be avoided.Study of (Srivastava, 2005) aimed to develop a theroritical framworke for critical competencies

which can serve as a guide for managers helping them apply the concept of cor competencies for

gaining competitive advantage. The study makes several major contributions, some of them (I) it provides a considered and comprehensive literature review on the subject of cor competence, (II) it

presents prposed frameworke for critical competence showes that the possission of meta/ core

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competencies will inself not result in competitive advantage; rather, it is important to undrstand howthese competencies are utilized for adding value to the firm. The main conclusion of this study is that

for achieving sustainable competitive advantage, firms need to have a critical comptence.

Study of (Kak, 2002) aimed to examine the potential of an organization's sustainablecompetitive advantage depends on the rareness and imitability of its resources and capabilities. The

less imitable a competitive advantage is, the more cost disadvantage is faced by the competitor in

imitating these competencies. Thus, core competence is an important source of sustained competitive

advantage for corporate success and greater is its economic return. The literature has been reviewed for the sources of core competence, role of core competence for competitive advantage, and formulation of

strategy with core competence and flexibility in a more focussed manner. The organizational learning,

strategic flexibility, effective technology management, and people provide the important sources of core competence.

4. Study QuestionsThis study is concerned with answering the following questions:

1. What are the main categories of core competencies in the Jordanian insurance companies.2. To what extent do the following dimensions of core competence (Unique Resources, Knowledge

Systems, Capabilities, Facilities, Processes) positively affect the achievement of competitiveadvantage in the Jordanian insurance companies.

5. Hypotheses and Study Model1. The dimensions of core competencies have a significant positive relationship with competitive

advantage.

2. There is a significant impact fore the core competencies on competitive advantage.

Figure 1 : Study Model

Independent Variable

core competencies

- Unique Resources

- Knowledge Systems

- Capabilities- Facilities

- Processes

Dependent Variable

competitive advantage

6. Methodology6.1. Population & Sample

The target population for this study comprised all the insurance companies listed in Amman Stock Exchange. (21 company), A sample of (18) companies were chosen randomly from the targeted

population, 72 questionnaires were distributed (4 questionnaires for each company), the response rate

was 85% (61 usable responses).

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6.2. Data Collection

Secondary data was collected based on the findings of published papers, articles, books, prior studies,

and the World Wide Web. The primary data collection was carried out using a self-designedquestionnaire, this adopted instrument comprises three sections, the first section covers the

demographic information (Gender, Age, Experience, Current Position). The second section contains

(30) items measuring core competency, the third section measures competitive advantage through (15)

items also, Five Likert-type scales were used to score the responses.

6.3. Instrument Validity and Reliability

To ensure the face validity of the instrument tool, it was given to five expert referees from Jordanianuniversities. The referees displayed their constructive comments and suggestions, which were taken

into consideration. The reliability of data collected instrument was measured using Cronbach's alpha

coefficient; the reliability test was conducted to check for inter-item correlation in each of the variablesin the questionnaire. The closer Cronbach's alpha is to one, the higher the internal consistency

reliability (Sekaran, 2003). The test results are as follows: Cronbach alpha for Independent Variable =

0.82, Cronbach alpha for dependent Variable = 0.83, Cronbach alpha for over all instruments = 0.90which approached to the acceptable limit.

6.4. Data Analysis Methods

Statistical Package for Social Sciences (SPSS) was used to analyze the data. Descriptive techniques

such as; frequencies, percentages, means, standard deviation (Std.) and coefficient of variation (CV)

were used to describe the variables. Spearman correlation and multiple regression analysis were used totest hypothesis of the study.

7. Statistics Analysis and Hypothesis Testing7.1. Study Results Description

The mean, standard deviation, and coefficient of variation (CV) of the study questions related corecompetencies (independent variable) and the competitive advantage (dependent variable) are

summarized in table (2).

7.1.1. First: Core Competency

Table (1) shows the results that represent core competencies omponents, and it appeared as follow:

Table 1: The results of the Core Competence Components

Item Mean Std. CV

Unique Resources 4.6 0.57 0.12

Knowledge-Based Systems 4.3 0.78 0.18Capabilities 3.9 0.76 0.19

Facilities 2.57 0.91 0.35Processes 4.4 0.71 0.16

Examination of the mean value listed in Table (1) reveals that the most important items were:

Unique Resources (4.60), Processes (4.40), Knowledge-Based Systems (4.30). The less importantitems were: Facilities (2.57), and Capabilities (3.90).. The standard deviation lies between (0.57-0.91),

while the coefficient of variation lies between (0.12-0.35).

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7.1.2. Second: Competitive Advantage

Table (2) shows the results that describes the main items that represent competitive advantage, and it

appeared as follow:

Table 2: The results of Competitive Advantage factors

Item Mean Std. CV

Offering a better range of services 4.17 0.84 0.20Improving the quality of your services 4.31 0.91 0.21Making your services unique 4.30 0.62 0.14

Improving your quoting process 3.75 0.77 0.21

Delivering on time 3.46 0.73 0.21

Buying better 4.12 0.74 0.18Educating your staff in areas like product knowledge and customer service 3.28 0.77 0.23

Having clear and simple lines of communication 3.77 0.59 0.16

Exceeding customer expectations 3.68 0.69 0.19

Based on mean value the results show that the most important items were: Improving the

quality of your services (4.31), making your service unique (4.30), Offering a better range of services

(4.17), Buying better (4.12). The less important items in terms of mean value were: Educating your

staff in areas like product knowledge and customer service (3.28), and Delivering on time (3.3.46) Thestandard deviation lies between (0.59-0.91), while the coefficient of variation lies between (0.14-0.23).

7.1.3. Hypotheses Testing

The hypotheses of this study are aimed to investigate and examine the relationship between core

competencies and competitive advantage on one hand, and on the other hand investigate and examine

the impact of core competencies on competitive advantage.Multiple regression analysis was conducted to test the hypotheses. Multiple regression

identifies how much of the variance in the dependent variable will be explained when a set of variables

is able to predict a particular outcome. Using multiple regression analysis is subject to normality of the

data. Therefore, the values of skewness and kurtosis (measures of distribution) for each variable are

showed in Table (3) in order to check the study variables for assumption of normality. In general askewness/ kurtosis value greater than one indicates a distribution that differs significantly from normal

symmetric distribution (Hair et al., 1998). Skewness and kurtosis values within the range of -1 to +1indicate an acceptable range, while values filling outside that range indicate a substantial departure

from normal distribution (Hair et al., 1998). Reviewing the descriptive statistics presented in Table (3)

shoes that skewness and kurtosis values fall within the acceptable range which means that the data isnormally distributed.

Table 3: Measures of Descriptive Statistics of the Study Variables Variable Variable Type Mean Std. Skewness Kurtosis

Unique Resources Independent 4.6 0.57 -0.791 0.117

Knowledge-Based Systems Independent 4.3 0.78 -0.653 0.125

Capabilities Independent 3.9 0.76 -0.685 0.114

Facilities Independent 2.57 0.91 -0.667 0.062Processes Independent 4.4 0.71 -0.779 0.054

Competitive Advantage Dependent -0.576 0.650

Multicollinearity between the five independent variables using the collinearity statistics;Tolerance and Variance Inflation Factor (VIF). Tolerance is the amount of variance is in independent

variable that is not explained by the other independent variables. VIF measures how much the variance

of the regression coefficient is inflated by multicollinearity (Hair et al., 2003). The minimum cutoff value for tolerance is typically (0.10). The maximum acceptable cutoff value for the VIF is (10). In

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other words, to indicate no problem with multicollinearity tolerance value should not be less than(0.10) while VIF value should not be more than (10). Looking at the information for the regression

model summarized in table (5), and considering the above rules, the results haven't shown any problem

with multicollinearity scince the tolerance values and the VIF values for the all independent variablesare ranging within the acceptable limits of the collinearity (Tolerance, VIF).

The results of data analysis and hypotheses testing are summarized in Table 4 and Table 5. As

seen in Table 4, the output indicates that there is a strong positive significant correlation at (P≤0.05)

between core competencies and competitive advantage, which implies that the higher the insurancecompanies in Jordan interested in maximizing its competencies, the higher the opportunity to achievecompetitive advantage at (r = 0.83).

Table 4: Correlation of the Core Competence Components and Competitive Advantage

Competitive Advantage

Core CompetenceR Sig. (2-Tailed) Tolerance VIF

Unique Resources 0.84 0.00 0.725 1.256

Knowledge-Based Systems 0.63 0.01 0.748 1.273

Capabilities 0.71 0.00 0.695 1.678

Facilities 0.59 0.06 0.668 1.874

Processes 0.81 0.00 0.755 1.356Core Competence 0.83 0.00 0.718 1.487

Table 5: Regression for Core Competence - Competitive Advantage

Competitive advantage

Core Competence

β β Sig. R 2

Standard

Error

F Sig.

Unique Resources 0.831 0.01 0.71 0.66 40.11 0.00

Knowledge-Based Systems 0.627 0.00 0.40 0.46 19.14 0.01

Capabilities 0.689 0.00 0.50 0.37 44.03 0.00Facilities 0.576 0.03 0.35 0.77 10.13 0.06

Processes 0.807 0.00 0.66 0.45 42.82 0.00

Core Competence 0.827 0.002 0.69 0.31 44.63 0.00

Table (5) shows that the results emerged from the multiple regression analysis revealed that the

coefficient of determination (R 2) which predicts the relationship between the independent variable

(core competencies) and the dependent variable (competitive advantage) is equal to (69%). Thisindication shows that (69%) of the total variation in the competitive advantage (as indicated by the R-

Square value) is accounted for by the core competencies (independent variable) and significant at

(P≤0.05), in addition, the value of Beta (β=0.429, P≤0.05). This is enough to establish a cause – effectrelationship between core competencies and competitive advantage, so second hypothesis is accepted.

8. ConclusionsAfter analyzing the data and testing the hypotheses, the following major conclusions were reached:1. Core competence dimensions (unique resources, processes, and Knowledge-Based Systems) are

provided in high percentages with a mean (4.6, 4.4, 4.3) receptively but the facilities are low with

a mean equal (2.57) compared with the expected mean which is (3).

2. The core competence development process enable the organization to pour its growing stream of innovation into the global markets and creat new competitive space to stake its capabilities and

ahead of the competition..

3. There is significant statistical relationship between core competencies and competitive advantage

at the confidence (P≤0.05).

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4. The study revealed that core competencies have a significant statistical impact on competitiveadvantage and explains (69%) of the variation in competitive advantage.

9. RecommendationsUtilizing the findings of this study can help managers make some of business environment changes

that require the firm to be more flexible in order to respond effectively and efficiently to these changes.

In other words, core competence dimensions facilitate the planning of operations strategy to enhancethe competitive advantage of a firm. To put the findings of this study into Jordanian insurance context,

it could be concluded that Jordanian insurance companies need to match competitive advantage withcore competence dimensions in order to have the ability to (I) consider core competencies when

planning, implementing, and controlling the operations strategy of a firm that can achieve competitive

advantage. (II) Identify a list of business practices, policies, and critical success factors that lead toachieving the real competitive advantage.

In Summary, the findings of this study have the following practical implications for managers:

1. The Jordanian insurance companies are highly encouraged to develop a clear strategy allow

them to benefit more from their available unique resources and processes in order toimprove its performance that will leads to achieve competitive advantage.

2. Top management of the Jordanian insurance companies are invited to use severaldimensions of core competencies in planning, setting, and achieving the competitiveadvantage..

3. Jordanian insurance companies is extremely encouraged to analyze the effect of core

competencies on achieving organizational performance.

10. Limitations and Directions for Future ResearchIt is well considered that the strength of any study project lies in the recognition of its limitations.

Several limitations in this study should be noted. The study has not take into consideration the effect of

the moderating variables like company strategy, size and structure on the impact of core competencies

on competitive advantage. In addition, the results of this study apply only to the Jordanian insurancecompanies classified in Amman Stock Exchange Market. Thus, these results may not be generalisable

in small companies. Also, there was a lack of local and regional empirical studies previously conductedin the fields of this study on Jordan or Arab business environment. The above limitations should be

viewed as opportunities for future work. The following directions are suggested for future research:

• Examining the role of core competencies in organizational performance in industrial sector.

• Investigating the role of the moderating and interviewing variables like company strategy, size,and structure on the relationship between core competencies and competitive advantage.

• Conducting empirical studies on the relationship between other dimensions of core competence

(i, e, resource flexibility, customer involvement, product flexibility) and organizational strategy.

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