Linking management development to firm performance through competencies and capabilities

Abstract

Knowledge is a firm resource and skillful management of that knowledge enables competitive advantage. The increasing recognition that sophisticated management of knowledge is essential to maintaining competitive advantage has increased the desire of firms to invest in strategic management development. Indeed, firms spend a significant amount on management development but these efforts are often disconnected from strategic intent. If managerial capabilities play an important role in fostering competitive advantage, we need to explore how organizations develop and nurture such capabilities. Furthermore, we need to gain a better understanding of how managerial knowledge translates into higher performance capabilities. The thesis of this paper is that by placing management development programs in the context of current strategic theories of the firm, and ideas about organizational learning and human resource management we may be able to better relate management development programs to firm performance. This paper develops the concept of management capabilities and competencies as a bridge linking management development activities and firm performance through the development of managerial capabilities and competencies.