Learning How to Govern and Learning How to Solve Problems: On the Co‐Evolution of Competences, Conflicts and Organizational Routines

Abstract Highlights the specificity of organizational competencies and their routinized, inertial, and conflictual properties from the perspective of the individual firm, arguing that persistent and distinctive variation among firms can best be understood by taking these properties into account, but only after also taking account of the pervasive influence of institutions in different countries. The role of organizational routines in explaining firm differences is addressed; with the critical competencies of firms embodied in the operational routines, they are difficult to copy and their evolution is constrained by both the characteristics of the firm itself and the environment of the firm. This is designated ‘competence specificity’, where competencies are seen not only as involving problem‐solving and learning skills, but also as including skills and rules governing firm internal relationships; hence, there is also a dual role of organizational routines—as problem‐solving procedures, and as governance devices or mechanisms for coordination. The firm is then interpreted as a behavioural entity that must compromise between several different functions and activities; this complex picture is not reducible to viewing a firm simply as a nexus of contracts, instead, competencies and routines are viewed as co‐evolving with the environment in which they are embedded. Inertia is thus ‘built into’ this concept of the firm, and in prying open this ‘organizational black box’, the authors also indicate several avenues for future research.