competence development and organizations’ level of competitiveness

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Competence Development and Organizations’ Level of Competitiveness Cătălina Radu, Ana Maria Grigore Academy of Economic Studies, Bucharest, Romania [email protected] [email protected] Abstract: This paper provides a framework for analyzing competitiveness and competences. What is competitiveness and how could it be obtained? How competences should be developed in organizations? Which competences are more relevant for competing succ essfully, human capit al or technological competences? Are there any correlations between these variables? This paper aims to summarize the results of our empirical study conducted in Romania and to answer all the above questions. It also aims to present our view regarding competitive positions. Of course, each organization’s competitiveness level depends not only on their own competence developme nt process, but also on competito rs and their strategies. Dynamics is a main issue that was taken into account when developing our model. The model was tested on a sample of 98 Romanian organizatio ns from different fields of activity. Intelligent organizations can develop useful competences in a shorter period and/or at a higher level than competitors do. The main idea of our model is just a basic one: organizations need to become more and more intelligent. Keywords: human capital, technological competences, organizations’ competitiveness, strategy 1. Intr oductio n This paper aims to analyze the relationship between organizat ions’ developed compet ences and their level of competitiveness. We define competitiveness as the capability to successfully compete, to provide products and services as o r more effec tively and efficiently tha n relevant competitors for a specific time frame . Competitiveness is clearly a time-dependent structure (a currently competitive firm is not necessarily competiti ve in the future). Our main interest was the evaluation of dynamic competitiveness, since we consider that any organization is interested in results not just at a given time, but in dynamics. Organization is an open system that has to adapt to the changing environment (and why not, to determine at least some elements of the environment to work in i ts favor). Moreover, we can easily realize that an organization’s level of competitiveness at a specific time is an effect (which we can measure in various forms), and is also one of the factors influencing the level of comp etitivenes s in future (cause). We followed this causal relationship to develop a model for analyzing the dynamic competitiveness. 2. Literature review 2.1 Organizat ion’s Level of Competitiveness and Knowledge Management According to modern approaches, knowledge management is considered a key driver of organization’s competitiveness, as it deals with different resources that can aid decision makers in many ways (Keen, 1991). It is clear that effective knowledge management has become a crucial issue for businesses (Renzl, 2008), the main base for creating and sustaining organizations’ competitiveness and their core competence capabilit ies. The present competit ive env ironment means more informati on so urces, rapidly changing technologies, new management practices, more competences and shorter life cycles, therefore organizational change is more and more important (Tseng, 2009). Managers need complete and updated information and they hope to rely on their knowledge workers; as expected, this hope is useless if these experts are not effectively motivated to continuously deepen thei levels of knowledge (Carneiro, 2000). Knowledge sharing practices contribute to organizational performance through the development of human capi tal (Hsu, 20 08). It is very important t o manage e mployees, th eir knowled ge and competences in such a way that the organization can build a long-term competitive advantage (Ordóñez de Pablos and L ytras, 2008) 2.2 The need for a causal model of organiza tion’s competi tiveness We partially disagree with the resource-based theory, since, assuming that two organizations have exactly the same resources (which is virtually impossible, but still assuming that) we will see however that one is better than the other.

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Competence Development and Organizations’ Level of Competitiveness

Cătălina Radu, Ana Maria GrigoreAcademy of Economic Studies, Bucharest, [email protected][email protected]

Abstract: This paper provides a framework for analyzing competitiveness and competences. What iscompetitiveness and how could it be obtained? How competences should be developed inorganizations? Which competences are more relevant for competing successfully, human capital or technological competences? Are there any correlations between these variables? This paper aims tosummarize the results of our empirical study conducted in Romania and to answer all the abovequestions. It also aims to present our view regarding competitive positions.Of course, each organization’s competitiveness level depends not only on their own competencedevelopment process, but also on competitors and their strategies. Dynamics is a main issue that wastaken into account when developing our model. The model was tested on a sample of 98 Romanianorganizations from different fields of activity.Intelligent organizations can develop useful competences in a shorter period and/or at a higher levelthan competitors do. The main idea of our model is just a basic one: organizations need to becomemore and more intelligent.

Keywords: human capital, technological competences, organizations’ competitiveness, strategy1. IntroductionThis paper aims to analyze the relationship between organizations’ developed competences and their level of competitiveness.We define competitiveness as the capability to successfully compete, to provide products and services as or more effectively and efficiently than relevant competitors for a specific time frame .Competitiveness is clearly a time-dependent structure (a currently competitive firm is not necessarilycompetitive in the future).Our main interest was the evaluation of dynamic competitiveness, since we consider that anyorganization is interested in results not just at a given time, but in dynamics. Organization is an opensystem that has to adapt to the changing environment (and why not, to determine at least someelements of the environment to work in its favor). Moreover, we can easily realize that anorganization’s level of competitiveness at a specific time is an effect (which we can measure invarious forms), and is also one of the factors influencing the level of competitiveness in future (cause).We followed this causal relationship to develop a model for analyzing the dynamic competitiveness.

2. Literature review2.1 Organization’s Level of Competitiveness and Knowledge ManagementAccording to modern approaches, knowledge management is considered a key driver of organization’s competitiveness, as it deals with different resources that can aid decision makers inmany ways (Keen, 1991).It is clear that effective knowledge management has become a crucial issue for businesses (Renzl,2008), the main base for creating and sustaining organizations’ competitiveness and their corecompetence capabilities. The present competitive environment means more information sources,rapidly changing technologies, new management practices, more competences and shorter lifecycles, therefore organizational change is more and more important (Tseng, 2009).Managers need complete and updated information and they hope to rely on their knowledge workers;as expected, this hope is useless if these experts are not effectively motivated to continuously deepenthei levels of knowledge (Carneiro, 2000).Knowledge sharing practices contribute to organizational performance through the development of human capital (Hsu, 2008). It is very important to manage employees, their knowledge andcompetences in such a way that the organization can build a long-term competitive advantage(Ordóñez de Pablos and Lytras, 2008)

2.2 The need for a causal model of organization’s competitivenessWe partially disagree with the resource-based theory, since, assuming that two organizations haveexactly the same resources (which is virtually impossible, but still assuming that) we will see however that one is better than the other.

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If two people play the same strategy game several times, it is usually the same person who winsevery time. The reason? It may be a greater experience in that game, or it may be just a better strategic approach compared with the other player. It is clear therefore that the use of resources is themost important element, and not the resource by itself.However, it is important to note that this is the case for approximately equal resources; if there arelarge discrepancies between resources, it is clear that having more resources means higher chancesto win, yet, even then, success is not guaranteed.

The use of resources we talk about refers to the so-called „competence-based competitiveness”theory, as expressed by Hamel and Prahalad (1994). Hamel and Prahalad have examined a series of aspects regarding investment, alliances, international expansion strategies, new product launchesand they have noticed that competitive organizations, although from different fields of activity, have animportant element in common: a strategic intent. Competitive organizations generally manage tocreate new forms of competitive advantage and virtually rewrite the rules of competition. Thesecompanies pay attention to their current competitive space, but they do not overlook any idea of creating a new one.Managerial and technological capabilities can lead to sustained competitive advantage in rapidlychanging markets only by sensing the trend of changes and understanding their implications, andreconfiguring firm-specific resources and processes continously to match environmental requirements(Jiao et al, 2010).Kim and Mauborgne (2005) showed that in the over-crowded today's economy, competition leads to a“red ocean” in which competitors strive to capture an increasingly limited “pool” of profits. The authors

believe that future market leaders will succeed not by trying to eliminate competition, but by creating“blue oceans” consisting of undisputed market areas, capable of rapid development The basic idea isvalue innovation, which is created in the area where an organization's actions favorably affect boththe cost structure and the level of customer value. Costs are reduced by eliminating and reducing theless relevant factors an industry competes on; buyer value is increased by raising and creatingelements the industry has never offered.We strongly believe there is need for a causal model. The main difficulty in building such a modelcomes from the fact that we generally consider competitiveness as an effect (company X iscompetitive, while Y is not and we can justify for the two examples which would be the causes that ledto a competitive and respectively to an uncompetitive firm). Yet competitiveness is not just an effect; itis also a cause.

3. Conceptual framework3.1 Model for analyzing organizations’s competitiveness in dynamicsThe model we propose is a result of a dynamic perspective on competitiveness. It is important tofocus not only on performance (competitiveness as a “result”), but also on the competitive potential,on the organization’s ability to defend and to renew its sources of competitive advantage(competitiveness as a “driver of competitive advantages” ).Measuring dynamic competitiveness is quite a big challenge, as it is clear that parts of the game arewon by different players. If two organizations have at a point approximately the same level of competitiveness (measured on a pre-defined scale), their actions will be those which will make adifference for the future (competitiveness as a driver of performance is equal for the twoorganizations, while competitiveness as a result is different). Dynamic competition is an ongoingchallenge for organizations to continuously improve their game on the market and many times to seekto rewrite the rules of competition (Carpenter and Sanders, 2007).An analysis of the competitiveness of a company at a given time (static) requires a thorough activitywhich consists of centralizing a large amount of data (which is sometimes difficult to obtain or inacurate), an adequate analysis of this information on the basis of a well-structured model, andespecially a demarcation of position regarding the competitors. If such an analysis appears to be verydifficult, a dynamic positioning with respect to the competitors is even more difficult. However, such ananalysis is also more useful.Competitiveness is a controversial issue that requires continuous investigations that consider thepermanent dynamics of the involved variables. The main idea of this model is that future level of competitiveness is a result variable that depends on a series of cause variables: current level of competitiveness, current actions of the analyzed organization as well as of organization’s maincompetitors, leadership development, organization’s current competences and potential of competitiveness and all the external environment. Future level of competitiveness is the result of atransformation process that takes place depending on all the above mentioned factors (Radu, Grigoreand C ătăneţ, 2009) .

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Briefly, our proposed model can be seen in the following figure:

Figure 1: Organization’s dynamic competitiveness

Our proposed model is based on the hypothesis that an organization’s level of competitiveness atmoment N+1 is certainly influenced by the organization’s level of competitiveness at moment N (asstated in the resource-based theory). However, a very high level of competitiveness at moment Ndoes not necessarily lead to very good results also for the moment N+1, as between the two moments

there is a transformation process that depends in its turn on several factors, one of which refers tothe developed competences within organization.

3.2 Organization’s competencesIn our model current competences are seen as an independent variable affecting the current actionsof the organization and thus its future level of competitiveness.From the perspective of strategic management, Hitt, Ireland and Hoskisson (2005) definecompetences as a combination between resources and capabilities. Such a combination may be acore competence in the case of resources and capabilities that are valuable, rare, difficult to imitate or substitute and exploitable; this is actually the resource-based view (Barney, 1991).Hamel and Prahalad (1990) considered key competences as “gateways to future opportunities”. Acore or key competence consists of a range of skills and technologies that represent an advantage toa particular organization from a significant point of view of its customers (Hamel and Prahalad, 1994).Competences do not differ from product to product; they make possible for that organization to be

competitive for a range of products.Technological competences refer to research and development (R&D) capabilities that managersseek to extend by operating their businesses in various markets (Tihanyi et al, 2009). However, corecompetences based only on technological development are not enough, or, in other words, will not besustained only by themselves for a longer period of time; human capital is the key and therefore weshould also analyze competences based on human capital.

3.3 Organization’s current actions and those of competitorsThrough the interaction between themselves and through their interaction with the environment, theorganization's current actions and those of its competitors influence the future level of competitiveness of a given organization. From this perspective, organization's current actions are an

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independent variable, but also a result-variable, depending on leadership, potential of competitiveness, organizations’ competences and the influences of the external environment.In order to evaluate an organization’s current actions, our inspiration came from the chess game(case in which there are only two “competitors”, but the idea can be extended to any other strategygame, where the number of players may significantly increase) (Radu, 2009). The question was “Howshould be the actions of a player in order to win (assuming the two players of approximately equalcapabilities)?”. Although the chess game is substantially different from a project, the answer (at least

from our point of view) was the same: the triangle cost-time-quality.Cost: A player will not be able to win unless it is constantly attentive to the cost of his/her actions. In chess, for example, it is important not to lose pieces at a higher rate than thepartner does (except for strategic movements, of course, when sacrificing pieces meansgaining tactical or positional compensation or even winning the game). For organizations,attention to the cost of actions means a better use of resources, outsourcing non-coreactivities and use of strategic partners; these were actually the elements we pursued in our questionnaire;Time: Chess players have to rapidly react to partners’ movements, or, in other words, have toconstructively dispose of their time. What we particularly analyzed for the respondingorganizations was their rapid adaptation to new conditions, organizations’ flexibility;Quality: A player in vain will rapidly move (time), acting in order not to lose pieces (cost), if he/she underestimates the objective of the game: checkmate. It often happens for a player tolose, being “trapped” by trying to defend his/her pieces. For organizations also it is very

important not to underestimate the goal and therefore the focus on customer. We tried to findout, through our questionnaire, the extent to which organizations manage to focus oncustomer.

3.4 The main hypotheses of our modelOur proposed model, as schematically shown in Figure 1, is based on several hypotheses(dependence or inter-dependence relationships graphically expressed as arrows). For the purpose of this paper, the following three hypotheses are relevant:

Hypothesis 1. Organization’s core competences have a direct influence on the organization'scurrent actions (positive relationship). Since in the literature (Kak, 2008) core competencesare considered to be the result of two main factors – human capital and technology – wedivided this hypothesis into two:H1.1. Core competences related to human capital have a direct and positive influence on the organization's current actions.H1.2. Core competences related to technology have a direct and positive influence on the organization's current actions.Hypothesis 2. The current level of competitiveness is a variable closely correlated with theorganization’s current actions, without being a causal relationship.Hypothesis 3. The organization’s current actions and those of competitors influence the futurelevel of competitiveness, leading to a transformation process that explains the transition fromthe level of competitiveness at moment N to the level of competitiveness at moment N+1.

4. Methodology4.1. Data collection and analysisIn order to test our hypotheses, we have developed a questionnaire of 54 questions. Thequestionnaire was applied in two stages, June-September 2007 and June-September 2009. The ideawas to analyze the evolution over time (moments N and N+1).Initially we distributed 223 questionnaires to middle or top managers of different Romanianorganizations (7 of them nonprofit organizations and 216 companies of all sizes and from differentfields of activity). The response rate in 2007 was 56.95% (127 completed questionnaires). However,our final analysis was limited to only 98 of these organizations, as 4 of the organizations analyzed in2007 did not exist anymore in 2009, 5 did not respond anymore in 2009 and 20 were eliminated after completing the questionnaire as the questionnaires were not correctly completed.

4.2. Analysis of data obtained after applying the questionnaireAfter processing the information received from the 98 analyzed organizations, we calculated scoresfor each of the variables considered in our hypotheses for each organization separately on a scale of 1 to 10. These are presented in the following table:

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Table 1: Information regarding the variables in our hypotheses (after processing the questionnaires)

No. Level of competitiveness

at moment N

Technologicalcompetences

Human capitalcompetences

Organization’scurrent actions

Level of competitivenessat moment N+1

1 9.61 7.92 9.12 9.32 8.322 9.47 9.60 8.24 9.25 9.42

3 9.41 9.28 9.53 9.48 9.474 9.37 8.00 8.98 9.05 9.475 9.28 8.80 9.12 9.65 8.996 9.10 9.30 9.62 8.87 9.157 8.89 9.62 9.40 9.28 8.768 8.75 8.76 8.90 8.83 8.649 8.69 9.35 7.37 9.52 8.50

10 8.64 8.52 9.29 9.40 9.2411 8.61 8.51 9.28 9.00 8.8712 8.49 9.12 8.35 9.18 9.1213 8.40 6.48 8.73 8.50 8.5214 8.34 5.29 7.32 9.30 7.9915 8.32 8.73 8.02 7.99 8.5316 8.09 6.28 8.32 9.15 8.1217 8.08 7.90 8.30 7.98 8.1018 8.08 8.90 7.95 8.30 7.8519 7.99 9.10 8.18 8.75 7.6320 7.95 9.12 8.12 8.48 7.5021 7.88 8.67 7.27 8.25 8.1222 7.79 8.58 9.20 7.42 8.9023 7.70 8.50 7.43 8.67 7.2524 7.68 8.63 8.09 8.42 8.1225 7.62 9.20 7.20 7.38 8.5026 7.59 6.43 7.83 8.40 7.2827 7.50 5.12 8.02 7.85 6.9928 7.46 4.98 7.39 8.13 6.6729 7.43 7.48 7.82 8.11 8.23

30 7.41 4.97 6.18 7.50 7.3431 7.32 6.42 5.18 8.05 7.2532 7.36 7.28 7.00 7.83 7.1633 7.32 8.64 7.80 8.08 8.1234 7.20 7.99 7.50 7.18 6.3035 7.19 8.62 7.69 6.98 7.4936 7.12 6.89 7.07 8.05 6.8037 7.08 6.13 8.92 6.24 8.5038 7.03 5.89 6.99 7.69 7.1939 7.03 7.99 6.42 6.87 7.2040 7.00 8.81 7.05 7.25 6.9841 6.90 6.98 6.38 7.75 7.2142 6.88 7.56 6.25 7.32 7.3543 6.85 7.50 7.05 7.75 7.2944 6.73 8.14 5.32 6.21 5.6745 6.69 5.97 6.80 5.93 7.7946 6.62 5.04 6.76 7.27 6.7247 6.60 8.73 6.07 6.98 6.3048 6.51 7.42 7.02 6.85 6.4249 6.50 8.14 6.37 7.00 6.2350 6.43 7.11 6.59 7.15 7.1151 6.41 4.97 6.25 6.14 7.0552 6.41 8.30 5.20 6.18 5.4153 6.38 6.12 6.75 6.81 6.34

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No. Level of competitiveness

at moment N

Technologicalcompetences

Human capitalcompetences

Organization’scurrent actions

Level of competitivenessat moment N+1

54 6.37 7.69 6.03 7.15 6.2955 6.31 8.38 5.99 5.83 6.4756 6.28 5.82 6.30 6.75 6.0857 6.19 5.90 6.63 7.09 6.10

58 6.16 7.25 6.21 5.80 5.9959 6.10 6.89 6.00 6.26 6.2060 6.08 8.19 6.29 6.73 6.0361 6.03 7.13 5.90 7.00 6.0662 6.00 5.74 5.65 5.88 5.9963 5.97 6.90 4.98 6.62 5.4864 5.92 8.02 6.19 6.10 5.8765 5.83 8.02 7.14 6.29 4.1766 5.83 6.67 5.90 5.41 5.3067 5.80 5.67 5.95 6.50 5.8568 5.76 7.80 5.48 5.95 5.9869 5.74 5.69 7.60 6.08 6.1270 5.63 6.53 5.28 6.38 5.3471 5.62 7.12 5.10 5.39 5.2872 5.57 4.68 6.22 6.43 5.2373 5.56 8.11 5.78 5.50 5.2974 5.53 5.50 5.20 5.10 6.1675 5.50 6.48 5.82 6.08 5.1276 5.48 5.40 5.48 4.80 5.2877 5.47 7.15 5.05 6.38 5.3478 5.40 5.00 5.62 5.62 5.2479 5.38 4.83 5.60 4.43 5.1980 5.34 6.03 4.24 5.17 5.1681 5.30 7.60 5.14 5.75 4.9982 5.28 5.33 5.54 6.00 4.9683 5.26 4.69 4.98 6.32 5.4884 5.19 7.13 5.32 5.05 5.67

85 5.19 4.02 5.00 5.69 5.3086 5.10 6.29 4.85 5.27 5.2587 5.03 4.37 5.50 4.73 5.6488 4.97 6.05 4.53 5.75 4.9389 4.92 3.95 5.31 4.64 5.0090 4.92 5.12 6.08 5.32 5.5491 4.68 7.02 7.48 5.30 4.3992 4.45 6.32 4.80 4.71 4.3893 4.32 4.12 4.30 4.98 4.2894 4.17 6.32 6.36 4.32 4.3095 4.09 6.19 4.96 4.55 4.9896 3.97 5.09 4.29 4.71 3.5097 3.95 3.87 4.62 4.19 3.2598 3.72 4.11 6.31 4.40 4.57

We analyzed a series of statistical indicators – mean, median, standard deviation, smallest value andlargest value. These are presented in Table 2. As we will see from this table, the difference betweenmean and median for each of the five variables considered is quite small, indicating little effect of outliers. Also, the standard deviation is small (taking also into consideration the fact that we used ascale of 1 to 10).Comparing the level of competitiveness at moment N (2007) with the one at moment N+1 (2009), themean is the same, but the median is further from the mean in 2009, when the standard deviation is alittle higher. Both minimum and maximum decreased, but the smallest value decreased more than thelargest value.

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Table 2: Statistical indicators for the five variables

No. Variable Mean Median Standarddeviation

Smallestvalue

Largestvalue

1 Level of competitiveness atmoment N 6.62 6.47 1.42 3.72 9.61

2 Average score of technology-related competences 6.98 7.12 1.54 3.87 9.623 Average score of human

capital-based competences 6.69 6.38 1.40 4.24 9.624 Organization’s current actions 6.92 6.86 1.48 4.19 9.655 Level of competitiveness at

moment N+1 6.62 6.32 1.50 3.25 9.47

Of course, these comparisons are not very useful, because it is important to analyze what happenedto each organization separately (if the level of competitiveness of an organization decreased, whileanother one increased by the same amount – what it acually happened – the average remains thesame, but in fact the interpretation is more complex). The following sections will test our hypothesesby considering what happened with each organization separately.

5. Hypotheses Testing5.1 Hypothesis 1H1.1. Core competences related to human capital have a direct and positive influence on the organization's current actions.We can express graphically the relationship between the two variables, with the correspondingregression line.

Figure 2: Regression line “Human capital competences – Organization’s current actions”

As we can see, the relationship can be expressed by a linear regression. The coefficient of determination R 2 is 0.6508 – 65.08% variation in the organization's current activities is explained bythe variation in human capital competences. However, in this case, the number is not very precise,because of multicoliniarity reasons which we will explain in another section.The F-test value is 178.9393, and p value is very low (1.16 · 10 –23 ), which confirms the validity of theregression model anayzing the dependence between the two variables (results are only slightlydistorted).H1.2. Core competences related to technology have a direct and positive influence on the organization's current actions.This relationship can also be expressed graphically:

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Figure 3: Regression line “Technological competences – Organization’s current actions”

Both the graph and the coefficient of determination R 2 (this time smaller, of only 0.3719) show that

between these variables there is a dependance relationship, although not as strong as the one thattook into account the human capital. F test and p value have suitable values in order to validate themodel (56.8362 and respectively 2.65 · 10 –11 ), yet the dependence is indeed weaker.

5.2 Hypothesis 2The current level of competitiveness is a variable closely correlated with the organization’s current actions, without being a causal relationship.To test this hypothesis, it is enough to calculate Pearson’s correlation coefficient for the current levelof competitiveness and the organization’s current actions. The coefficient is 0.95, an extremely highvalue indicating the fact there is indeed a strong correlation between the two variables.We excluded the causal relationship between the two variables because they have a common “cause”

– the organization’s actions at moment N-1. These, on the one hand, continue more or less atmoment N and also lead to a level of competitiveness at moment N (as organization’s current actionsinfluence the level of competitiveness at moment N+1).

5.3. Hypothesis 3The organization’s current actions and those of competitors influence the future level of competitiveness, leading to a transformation process that explains the transition from the level of competitiveness at moment N to the level of competitiveness at moment N+1.We formulated this hypothesis thinking of strategy games. The result depends very much on both aplayer’s actions and those of its competitors.Figure 4 shows the dependence relationship between the organization’s current actions and its futurelevel of competitiveness.The coefficient of determination R 2 has a high value (0.773). Linear relationship of dependencebetween the two variables is strong, as it can be seen from the figure, as there are quite few distantpoints (outliers). F test and p value show that the model is valid (F test value is 326.9442 and p valueis 1.13 · 10 –32 ).The only influence which could not be tested by using the questionaire was the one of the actions of competitors on the organization’s level of competitiveness (in fact the only negative relationship in our model). However, this relationship is supported by many real examples. Moreover, the relationship isstill demonstrated, because we already validated the hypothesis that the organization’s currentactions positively influence its future level of competitiveness. In other words, effective actions willincrease its competitiveness. If we measure competitiveness, for example, by market share, it meansthe organization's market share will increase because of its actions. A competitor’s market sharecannot increase unless other competitor’s market share decreases. In other words, if there are twocompetitors A and B, the positive actions of A will reduce the level of competitiveness for B and this isclear not only for market share, but for any other indicator that measures an organization’sperformance related to the performance of others (therefore any indicator of competitiveness).

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Figure 4: Regression line “Organization’s current actions – Level of competitiveness at moment N+1

5.4. Multicoliniarity şi implications for our modelMulticoliniarity refers to the situation in which two or more exogenous variables are actually stronglycorrelated with each other, which raises some problems to a regression model (there is an increase inthe variance of those estimators of linear regression model’s parameters that correspond to theexogenous variables in a linear significant dependence) (Voineagu, Ţiţan, Şerban, Ghiţă, Tudose,Boboc and Pele, 2007). However, multicoliniarity does not actually bias results; it just produces larger standard errors (O'Brien, 2007).Multicoliniarity problem can be solved in many ways. As it could be seen, we preferred to use thesimple regression model several times (for each hypothesis separately) with the advantage of a clear analysis and the disadvantage of slightly distorted correlation and error results.Taking into account the objective of this paper and only the analyzed variables, there are not anymulticoliniarity problems, as Pearson’s correlation coefficient for the variables “human capitalcompetences” and “technological competences” is 0.57. However, there are some a bit higher correlation coefficients between these variables and others in our model; although not very high, they

may indicate the fact that all our results may be a little different from what resulted from all our regression analyses).

6. ConclusionsAll our hypotheses were validated, the model was empirically confirmed by analyzing data from thecompleted questionnaires.Organizations need to increase their intelligence in order to develop competences that shouldenhance their level of competitiveness.With respect to core competences and their importance, we were a little disappointed by the fact thatthe organizations included in our sample do not consider neither technological competences, nor human capital competences to be very important (they recognize their importance, but not veryclearly). However, we positively note that in the second phase of applying the questionnaire aprogress could be seen (although the responding managers took into account the effects of financialcrisis in their area – 2009 compared to 2007) and that progress was higher with respect to humancapital , which is a more "stable" competence than technology (data shown in Table 1 do not provethis aspect, because the analysis focused on how the competences at moment N influence the levelof competitiveness at moment N+1, yet data were collected on competences also in 2009 – momentN+1).

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