Competency Profiling of Organization’s Absorptive Capacity Development

Abstract

This study examines the relationship between competencies and absorptive capacity in organizations. Absorptive capacity, defined by Cohen and Levinthal, is a firm’s ability to acquire, assimilate, transform, and leverage external knowledge for business opportunities. Competency refers to individual capabilities for effective task performance. The study explores the recursive nature of absorptive capacity, where individual competencies contribute to its development within the firm. Four competency domains - learning capability, business-orientation, self-orientation, and social intelligence - are identified, forming a framework for analyzing competencies required at different absorptive capacity stages. Aligning competency development with specific stage requirements enhances absorptive capacity. Valuable insights are provided for management, especially HR professionals, to design and manage competency, foster absorptive capacity development, and support organizational growth strategies.

1. Introduction

This study examines the relationship between absorptive capacity (ACAP) and competency management (CM). ACAP refers to a firm’s ability to effectively acquire, assimilate, and utilize external knowledge to enhance its internal capabilities [1]. ACAP strongly connects to CM [2, 3, 4]. CM involves identifying and developing the skills, knowledge, and abilities required by individuals within an organization to perform their roles effectively [5, 6, 7]. Individual-level competencies play an important role in the development and utilization of ACAP at the firm level.

Competencies enable individuals to effectively acquire and assimilate external knowledge, collaborate, and share knowledge with others, and adapt to changing business environments. By aligning CM efforts with ACAP, organizations can enhance the necessary skills and capabilities in their workforce [8, 9].

Competency models serve as valuable tools in organization talent acquisition, development, and reward systems, enabling the evaluation of personnel performance across various departments [9]. These models and the associated assessments are widely utilized in all areas of business operations. It is crucial to have a skilled team of experts who can not only apply their knowledge but also utilize their acquired skills, experience, and a blend of traditional, unconventional, and contemporary approaches [10]. This team plays a vital role in facilitating employees’ understanding and comprehension of the information, ideas, and data exchanged during work processes.

In the dynamic and competitive global economy, characterized by globalization, innovation, and advancements in information technology, the development of knowledge is pivotal and serves as the foundation for success. To effectively adapt to change, organizations must identify and define the specific skills required across various roles. By implementing a competency benchmarking and assessment system, companies can strategically enhance their employees’ capabilities [8]. This system should be embraced by organizations aiming to improve the competence of their workforce and stay up-to-date with evolving trends. Through the establishment of a comprehensive capacity enhancement system that encompasses all levels of the organization, significant progress can be achieved.

Organizations need to build their absorptive capacity [11, 12, 13] to leverage their competitive advantage. This literature review seeks to shed light on the competencies that drive the development of ACAP and provide valuable insights for organizations seeking to strengthen their competitive position.

2. Literature review

This section is to identify the competency components that are essential to the development of organizational ACAP.

2.1 Why competency management matters

Competencies encompass the skills, personal traits, and behaviors that contribute to exceptional performance [14]. In the context of a job, competencies comprise both technical skills and personal qualities that distinguish high performers, who consistently exhibit these competencies with superior outcomes compared to average employees. By assessing which career paths hold greater importance for the organization and which are of lesser significance, the company can strategically plan for future growth [15]. Additionally, identifying employees who meet the company’s expectations in terms of performance level enables targeted skill and knowledge development opportunities through reassignment to new responsibilities that transcend traditional work function boundaries.

Competency refers to an individual’s ability [16] to undertake assigned tasks and deliver results that align with the expected level of quality. Competency provides a sustainable competitive advantage [17]. Each employee possesses a distinct competency profile, and this profile needs to align with the required competencies for performing assigned tasks effectively.

The effectiveness of the CM system hinges on its integration with the performance measurement system. It is important to note that CM systems can vary across different companies [18]. Each system needs to be implemented and tailored to suit the specific requirements of the company and align with its unique business context. The concept of “performance” landscape is shifted from following rules to avoid errors to focusing on objective of responding to customer’s needs [19]. These distinct performance approaches reflect varying values, beliefs, norms, and cultures, thereby necessitating different sets of competencies.

2.2 Evolution of the competency management model and organizational learning

A job competence model defines the specific roles or positions that are often unique to a particular job type or work unit. This model provides a robust framework for designing individualized training and development programs, as well as conducting performance evaluations. The design principles of the CM model are largely derived from an understanding of how individuals learn [20].

Bloom’s taxonomy of educational objectives [21] has provided a foundation framework for the development of numerous competency models [22, 23, 24]. Bloom designed the learning competency model based on the progression of information from initial reception, cognitive processing, and the translation of results into observable behavior during task performance [25]. The structure of Bloom’s model aims to capture the broad essence of competencies, avoiding excessive specificity associated with various organizational contexts [26].

Bloom’s taxonomy model of learning revolves around three competency domains: the cognitive (knowledge) domain, which pertains to an individual’s ability to recognize, process, and recall information to develop knowledge; the affective (attitudes) domain, which relates to an individual’s capacity to internalize, adjust, lead, and exhibit values, attitudes, and cultural alignment in task execution for the business; and the psychomotor (skills) domain, which encompasses an individual’s capability to regulate, manage, adapt, anticipate, socialize, and respond to oneself. The psychomotor domain is often referred to as the manipulative domain, as it involves the competency to organize and control one’s own actions. It is worth noting that Bloom’s original study in 1956 solely focused on the cognitive domain, with the affective and psychomotor domains remaining unexplored. Within the cognitive domain, there are six sub-domains: (1) knowledge; (2) comprehension; (3) application; (4) analysis; (5) synthesis; and (6) evaluation.

To enhance comprehension and simplify the terminology used in Bloom’s taxonomy within the cognitive domain, Krathwohl [23] revised the model by shifting the focus from contextual considerations to the learning process itself. The proposed cognitive sub-dimensions were redefined as follows: (1) remember, (2) understand, (3) apply, (4) analyze, (5) evaluate, and (6) create. This updated version of the cognitive domain competency model, developed by Krathwohl, has gained widespread acceptance and adoption by many scholars and practitioners [24, 27, 28].

Building upon Bloom’s work, Eiss and Harbeck [25] (see also: Naim and Lenka [29]) expand the scope of competency development by focusing on the affective domain. Their approach emphasizes a behavioral-based learning sequence rather than a sequence based on the absorption of information. In this behavioral-based sequence, the development of competency begins with identifying the desired learning outcomes. The learning process is then broken down into smaller steps, with the final step being the performance feedback loop. They highlight the significance of the feedback loop, which is often overlooked but plays a crucial role in the learning process. They proposed that the observation of behavior should encompass the following processes: (1) receiving or attending, (2) responding, (3) valuing, (4) organizing values, and (5) categorizing the complexity of values. The learning cycle is initiated by external stimuli, which, in combination with attitudes, interests, and motivation, drive individuals to engage in performance and learning. They view the affective domain as central to competency evaluation, recognizing its importance in assessing and developing competencies effectively.

Competency, as defined by Giesecke and Mcneil [30], encompasses an individual’s skills, technical knowledge, and personal attributes that contribute to successful task performance. The CM model emphasizes twelve distinct abilities: (1) analytical skills, problem-solving, and decision-making; (2) communication skills; (3) creativity and innovation; (4) expertise and technical knowledge; (5) flexibility and adaptability; (6) interpersonal and group skills; (7) leadership skills; (8) organizational understanding and global thinking; (9) ownership, accountability, and dependability; (10) planning and organization skills; (11) resource management; and (12) service attitude and user satisfaction. This comprehensive model encompasses both the cognitive domain and the affective domain, considering attitudes, interests, and the iterative learning process.

According to Begam and Tholappan [31], the psychomotor domain within Bloom’s model is not a suitable psychometric indicator for assessing business competency. It is more applicable as a measure for elementary school children, focusing on the control and coordination of motor skills such as agility, coordination, strength, flexibility, balance, and endurance. Simpson [32] further elaborates on the psychomotor domain, outlining five sub-domains: (1) perception, (2) set, (3) guided response, (4) mechanism, and (5) complex overt response. Building upon Simpson’s model, Hoque [33] expands it by introducing two additional psychomotor sub-domains: (6) adaptation and (7) origination.

Tomassini and Zanazzi [34] have constructed a competency model based on reflexivity theory, which focuses on an individual’s mental capacity to reflect on oneself within social relationships. The model encompasses two distinct types: the reflexive stance and the self-development stance. The reflexive stance is individual-specific and involves the construction of self-identity. Reflection plays a crucial role in shaping individual strategies, while self-development aligns with both formal and informal learning approaches. Within the reflexivity domain, there are six sub-domains: (1) identifying and decision-making; (2) communication; (3) judgment; (4) inter-relationship analysis; (5) entrepreneurship; and (6) balancing individual life and society. On the other hand, the self-development stance comprises three components: (1) fundamental cognitive skills, which encompass systems thinking and pattern recognition; (2) emotional intelligence, which involves self-awareness and self-management; and (3) social intelligence, which encompasses social awareness and relationship management.

Cripe and Mansfield [14] put forward a three-prong competency model that encompasses dealing with people, dealing with business, and self-management. The attributes associated with dealing with people align with the cognitive domain competency, encompassing skills such as critical thinking, interpretation, and understanding. Dealing with business, on the other hand, can be categorized as business orientation, focusing on the ability to navigate and operate within a business context. Lastly, self-management pertains to self-orientation, emphasizing the capacity to effectively manage oneself in various aspects.

Capaldo et al. [6] classified competency into four domains: technical-specialistic—technical capabilities that are necessary to perform the job; self-efficacy—individual capabilities; managerial competencies—individual capability to lead; and radical competencies—individual capability on interrelationship.

Rocha Fernandes et al. [35] classified competency into two domains: business domain and socializing domain. The business domain constitutes of creativity and innovation, strategic direction, focus quality, KM, self-development, customer orientation, result orientation, project management, safety, and decision making. The socializing domain consists of communication, leadership, negotiation, change management, relationship building, and teamwork.

Hsieh et al. [36] focus their CM study on learning organization culture. This perspective categorizes the competency model into five domains: knowledge sharing and learning, skills development, self-concept and self-worth, personal characteristics, and motivation and behavioral aspects. Lopes et al. [7] also focus their study on competency development in learning organization and knowledge management. Their study confirms that KM led to an efficient CM system.

Table 1 represents the possible combinations of competency.

Source	Mapping detail to competency domains
	Cognitive (Knowledge; individual skill)	Affective (Attitude; personal attribute; business-orientation)	Psychomotor (Skills; self-management; self-orientation)	Social intelligence
Bloom [21]	Recognizing Processing Recalling	Absorb Adjust Lead Demonstrate value Attitude Culture	Regulate Manage Adapt Adjust Foresee Socialize Respond	–
Krathwohl [23]	Remember Understand Apply Analyze Evaluate Create	–	–	–
Eiss and Harbeck [25]	–	Receiving or attending Responding Valuing Organizing values Categorizing value complexity	–	–
Giesecke and Mcneil [30]	Analytical skill Creativity and Innovation	Leadership Organizational understanding and global thinking Ownership, accountability, dependability Planning and organizing Resource management Service attitudes	–	Interpersonal and group skills Communication skill
Ali Begam et al. [31]	–	–	Agility Coordination Strength Flexibility Balance endurance	–
Simpson [32]	–	–	Perception Set Guided response Mechanism Complex overt respond	–
Hoque [33]	–	–	Adaptation origination	–
Tomassini and Zanazzi [34]	System thinking Pattern recognition Identifying	–	communication Interrelationship analysis Self-awareness Self-management Decision-making judgment	Social awareness Relationship management Balancing life, work, and social relations
Cripe and Mansfield [14]	Conceptual thinking Forward thinking Initiative	Preventing and solving problems Achieving result Strategic thinking	Self confidence Stress management Personal creditability Flexibility Thoroughness	Leading Communicating and influencing
Capaldo et al. [6]	Information search and diagnostic	Transfer of knowledge Perform KM Lead project of change	Rules and regulation compliance Self-control Problem solving Monitor activities and process	Listen to others Communicate and willingness to discuss Manage conflicts
Rocha Fernandes et al. [35]	Creativity and Innovation Strategic direction	KM Planning, organizing, and controlling Safety, health, and environment Customer orientation	Focus on quality Result orientation Decision making Teamwork	Communication Negotiation Relationship building Leadership/people management
Hsieh et al. [36], Lopes et al. [7]	–	KM	Self-concept Self-worth Personal characteristics	Motivation and behavior traits

Table 1.

List of possible competency values, elicited from systematic literature review.

Source: author’s own elaboration.

In this context, the cognitive domain is now referred to as Learning Competency, encompassing activities such as observation, recognition, interpretation, processing, matching, and understanding. The affective domain has been renamed as business orientation, emphasizing the ability to perform, coordinate, collaborate, and lead within a business context. The psychomotor domain is now called Self-orientation, as it encompasses the intention to improve oneself and acquire the necessary skills to handle challenging tasks. The Social Intelligence domain has been introduced to reflect the importance of cultivating social or network capital within job roles.

All competencies from Table 2 are combined and normalized to eliminate duplicate values and categorized into competency attributes. Attributes are mapped to the competency domains Table 3 shows the result of normalization and categorization.

Competency Level	Competency attribute	Description	Competency domain
Remember Understand Apply Identifying Search and diagnostic	Knowledge recollection and interpretation	Matching existing knowledge to new opportunities	Learning Competency
Analyze Evaluate Categorizing value complexity Valuing	Analytic and synthetic thinking	Analyzing and synthesizing information for business value
System thinking Pattern recognition	Conceptual thinking	Think in system dynamic landscape
Origination Foresee (forward thinking) Creativity and Innovation	Creativity and Innovation	Ability to foresee the value and identify solution for current and next problems.
Decision-making Judgment Problem-solving	Decisiveness	Ability to make decision.
Responding Compiling with firm’s culture Receiving or attending	Drive for success	Ability to carry on the work to reach the target.	Business-Orientation Competency
Thoroughness Focus on quality Result orientation	Attention to details	Ensure work accuracy and completeness.
Entrepreneurship Organizational understanding and global thinking Ownership, accountability, dependability Strategic thinking	Entrepreneurial Capability	Ability to see the big picture, strategize ways to deliver result, and take on responsibility for the course of actions.
Resource management Planning and organizing Perform KM	Planning, Organizing, and Controlling	Ability to manage and execute tasks.
Service attitudes Perception or growth mindset Creditability Perform as instructed or guided process	Self-Confidence and Integrity	Demonstrating personal creditability, reliability, and consistency in the eyes of others.	Self-orientation Competency
Respond Strength Endurance or persevere	Stress Management	Ability to work under pressure
Complex overt respond Flexibility Agility Adapt Adopt	Flexibility	Ability to adapt and change to condition of working
Self-awareness Self-management Balancing life and work Regulate oneself Manage oneself Self-concept Self-worth Personal characteristics	Personal Goal and Development	Have clear life goals and take action to achieve the goals.
Interpersonal and group skills Relationship management Leadership Lead project of change Manage conflicts	Leading	Ability to lead others.	Social Intelligence
Communication skill Listen to others Communicate and willingness to discuss	Communicating	Ability to communicate clearly and precisely to others, as well as ability to understand clearly.
Coordination	Collaborating and Teamworking	Ability to work as a team, be a good supporter.
Social awareness Motivation and behavior Negotiation	Influencing	Convincing others to provide support, including noticing, interpreting, and empathizing others when in concerns.
Interrelationship awareness and analysis social relations Relationship building	Socializing	Developing and maintaining network of socializing and collaborating.

Table 2.

Competency mapping, normalization, and categorization.

Author’s own coding and interpretation.

ACAP Step	ACAP characteristics	Competency Attributes Required in Each Step of ACAP Development
		Learning capability (Cognitive domain)	Business-orientation (Affective domain)	Self-orientation (Psychomotor or skills domain)	Social intelligence
Value identification	See potential of new knowledge to business. Analyze and decide to absorb.	Knowledge recollection and interpretation	–	Self-confidence and integrity Personal goal and development	–
Acquisition	Incept the external knowledge with focus on intensity, speed, and direction based on prior knowledge. Entire value addition process is seen.	Analytic and synthetic thinking Conceptual thinking Creativity and innovation	–	Self-Confidence and Integrity Personal Goal and Development	–
Assimilation	Utilize existing knowledge structure to understand the new knowledge. Cognitive structure remains intact. Using old frame to explain the phenomena.	Knowledge recollection and interpretation Decisiveness	Drive for success Attention to details. Planning, organizing, and controlling	Stress Management Flexibility	Communicating Collaborating and teamworking Leading
Transformation	Combine the new knowledge structure with the existing knowledge structure. Cognitive structure is altered for new knowledge to fit. Need new frame to understand the phenomena.	Knowledge recollection and interpretation Decisiveness	Drive for success Attention to details Entrepreneurial capability Planning, organizing, and controlling	Stress management Flexibility	Communicating Collaborating and teamworking Leading
Exploitation	Leverage new potential with new resource re-configuration. Knowledge in market management is the key enabler of success.	Decisiveness	Entrepreneurial capability Planning, organizing, and controlling	Flexibility Stress management	Communicating Collaborating and teamwork
Socialization	Support the ACAP building process by lowering the barrier among each ACAP component	–	–	–	Leading Communicating Collaborating and teamworking Influencing Socializing
Appropriability	Foresee the value of knowledge and the path that lead to innovation	Knowledge recollection and interpretation Creativity and innovation Analytic and synthetic thinking Conceptual thinking Analytic and synthetic thinking	Entrepreneurial capability	–	–
Feedbacking	learn and adjust the process and routine to ensure the correct path is followed	Analytic and synthetic thinking	Drive for success Entrepreneurial capability	Flexibility Stress management	Influencing Communicating

Table 3.

Competency required for ACAP development.

Source: author’s synthesis.

2.3 Absorptive capacity and the business implications

2.3.1 Absorptive capacity and its evolutions

Cohen and Levinthal [1] define the term “absorptive capacity” as a firm ability to acquire, assimilate, and exploit new external knowledge to create the firm’s competitive advantage. Zahra and George [37] reify the construct by grouping the ACAP components into two main categories: Potential ACAP (PACAP) and Realized ACAP (RACAP). PACAP combines acquisition and assimilation competencies and pertains to the ability to acquire and disseminate external knowledge within the organization. RACAP combines transformation and exploitation competencies, focusing on the adaptation of internal resources, integration of newly acquired knowledge, and leveraging this equipped knowledge to create a competitive advantage for the firm. Todorova and Durisin [38] propose that the transformation competency is not a sequential step following assimilation but an interconnected alternate path. As a result, they introduced an additional competency called “recognition of value” as a preceding process before acquisition. Furthermore, they emphasized that “social integration” is not solely a required competency for knowledge assimilation but also has an impact on the entire ACAP generation process. Senivongse et al. [39] identify the relevant factors that influence the efficacy of ACAP development. A factor to have a significant impact on the flow and utilization of knowledge is the feedback mechanism. Feedback is necessary at every stage of the flow. Feedback is not only limited to internal units but also extends to external entities within the value chain.

Figure 1 is the ACAP framework used for this study. It depicts the flow of knowledge flow from external sources and internal existing knowledge stock in the organizational learning process of socializing, externalizing, combining, and internalizing [37, 38, 39, 40].

Figure 1.

ACAP construct references for this study (sources: Adapted from Todorova and Durisin [38]).

2.3.2 Absorptive capacity recursive property

According to Nonaka and Takeuchi [41], knowledge generation begins at the individual level and expands to the group and organizational levels through socialization. Davenport and Prusak [42] support this view, highlighting the process of transforming information into knowledge through individual internalization, interpretation, and contextual experimentation. The newly absorbed knowledge has a transformative effect on an individual’s behavior and outcomes. This includes sharing new knowledge with colleagues, co-constructing new routines and processes, and even shaping new working cultures, ultimately expanding knowledge from the individual to the team and the entire organization [43].

The development of ACAP involves a multi-level learning process [44, 45, 46]. It begins with an individual’s recognition of new information and the decision to acquire and internalize it as knowledge. Individual knowledge is then assimilated within the team or department, leading to the development of new internal processes, routines, procedures, policies, cultures, and norms within the organization. As a result, ACAP is a recursive process that encompasses the acquisition, assimilation, transformation, and exploitation of new knowledge, progressing from the individual (Micro) level to the team and department (Meso) level, and finally to the organizational (Macro) level.

Therefore, it becomes evident that ACAP possesses a recursive nature in terms of knowledge creation and expansion, starting from the individual level and extending throughout the organizational hierarchy. This further emphasizes the significance of people’s competencies within the organization for ACAP development. By assessing and planning competency development at the individual level, with a specific focus on enhancing the organization’s ACAP, it becomes possible to measure the effectiveness of ACAP construction.

2.3.3 Competency factors that impact the development of a firm’s absorptive capacity

In the process of absorption of new external knowledge, ACAP is generated at different levels from the individual to the firm. As introduced above, ACAP development requires the preparation of individual competencies, with an individual’s competencies incorporating the firm’s ACAP. However, different levels of ACAP development involve different sets of competencies. It is crucial to examine which competency components are necessary for different levels of ACAP development.

Value Identification of external knowledge is the primary step of ACAP development, the key component to efficiently define external knowledge. At this stage, an information analysis needs to be performed to assess the value of the new knowledge. With the purpose of the organization in mind, the strategic opportunity and constraints need to be identified before deciding to absorb the knowledge. The trustworthiness of the source is also vital for the reliability and success of value realization [47, 48]. The individual who foresees the potential of new knowledge must have the technical knowledge, as well as the understanding of company’s values, visions, strategies, the need for change, and how to lead from beginning to ending systematically [49]. The capability to explore for information, understand the context, judgment, and decision-making are the cognitive abilities highly utilized at this stage.

Acquisition is the process of incept external knowledge [37]. This process focuses on intensity, speed, and direction. Intensity and speed are the capabilities of how a firm can see the necessity of having new knowledge and how fast the adoption can occur. Direction is the path to accommodate the implementation of external knowledge into the firm. In acquiring knowledge, the process involves a multidisciplinary inception team [39]. Working with members from multiple teams requires interpersonal management skills, functional knowledge of related fields, social capability to help with learning, individual self-organization, project management skills, leadership skills, and communication skills [50].

Assimilation, the recollection of prior knowledge, plays an important role in easing the absorption, interpretation, patterning, and conceptualizing to integrate new knowledge into the existing knowledge structure of the organization [51]. Assimilation process requires individual analysis, synthesis, interpretation, comprehension, learning, and understanding ability [37]. At this point, the individual’s cognitive structure is not altered [38].

Transformation is the stage of new knowledge creation (1). This stage involves problem-solving and combined-knowledge internalization. Creativity and innovation lead the transformation, and new knowledge is added to the stock of existing knowledge [37]. Effort intensity is the key enabler for success in generating and integrating new knowledge. The combined knowledge enforces the entrepreneurial action with the recognition of business opportunity [52]. At this point, the individual’s cognitive structure is altered [38].

Exploitation is where combined knowledge is applied [1] and operationalized [53, 54]. The outcome of this stage is the new product or service [37]. This will leverage the firm’s competitive advantage. The balance between the firm’s objective and profitability goals must be met for business sustainability [55]. At this stage, market knowledge is the key success enabler. The individual must understand the customers’ dynamics to identify the business opportunity. Analytic capability, understanding of the firm’s strategy, information analytic capability, market testing, and conceptual thinking are required to successfully perform [56].

Socialization is an important capability that eases the ACAP building process by lowering the barrier between each ACAP component. Socializing strengthens the relationships among the external knowledge sender and internal knowledge receivers, and among internal knowledge transferers and internal recipients. It eases the coordination for resource configuration, operational process integration, and improves the relationship between the individual and the firm’s customers.

Appropriability is the ability to foresee how external knowledge can be leveraged and benefit the firm’s commercial advantage. This competency allows individuals to identify opportunities for the organization, within the area of responsibility to develop alternatives and innovate new processes, and pattern for the solution to the existing or the next problems [57].

Feedback plays an important role in enabling individuals to learn and adjust to ensure they are on the right path. Feedback requires giving and taking comments. Reflexive learning is the key activity of this element. Feedbacking can be stressful, thus, communication is the key enabler for success.

3. Construct of competency for ACAP development

With the defined competencies in the categorized domains, these competencies are to be mapped with the entire process of ACAP development. Table 3 denotes the competencies required at each step of ACAP. The selection and assignment of competencies are reviewed and validated by KM experts at the Institute for Knowledge and Innovation-Southeast Asia.

4. Discussion

Competency is an inherent attribute that resides at the individual level. Each person within the organization plays a role in the development of ACAP, starting from the foundational level and gradually building up through an escalation process to achieve firm-level ACAP. Effectively managing individual competency is a critical initial step towards securing a sustainable competitive advantage for the organization. Managing competency entails collaborative efforts between leaders and the HR department. It involves three key activities [6]: (1) Identifying the specific competencies required for each occupational role; (2) Administering assessment tests to evaluate the presence of these competencies; and (3) Establishing a correlation between individual competencies and performance indicators to gauge effectiveness. By implementing these activities, organizations can proactively manage and leverage the competencies of their workforce to drive success.

To begin with, the leader of the team collaborates with the HR department to determine the specific competencies and their corresponding competency levels required for each functional role [6]. This process involves engaging in discussions and establishing a benchmark by identifying the competencies exhibited by the top-performing individuals in each role. The top performer is then invited to undergo a competency assessment, which serves as a reference point for exceptional job performance.

Next, the same assessment test is administered to all employees within the organization, enabling their individual competencies to be benchmarked against the established references. This step reveals any competency gaps and facilitates the formulation of competency development plans tailored to individual’s needs. Additionally, it results in the creation of a group competency profile that serves as a baseline for periodic comparisons during subsequent assessment cycles.

Lastly, once the competency gaps have been identified, personalized competency development plans are devised for everyone, considering the projected development requirements for the entire group. The progress of development is assessed through performance evaluations, and the level of competency development achieved may be linked to merit-based performance awards. Figure 2 illustrates the comprehensive process of CM, including competency assessment, functional assessment, and performance management integration [58].

Figure 2.

Competency management process (source: author’s own construct).

Functionality assessment focuses on evaluating technical proficiency and the ability to perform specific tasks. To assess functional competency, a suitable approach is to employ knowledge mapping and auditing methodologies [59, 60]. This involves identifying the necessary knowledge and skills required to fulfill a particular job, identifying any knowledge gaps, and determining the areas of scarce knowledge that need to be addressed. A plan is then formulated to develop the required knowledge, either through internal resources or by acquiring it externally.

Furthermore, CM serves as a foundation for various strategic HR initiatives [61]. Job values and career paths can be systematically identified, and intangible values can be quantified for objective evaluation. The organization’s corporate culture and values can also benefit from competency management, as they are shaped by the competencies reflected in competency profiles. Additionally, the delegation of authority and signature regulations can be established as byproducts of the CM system [62, 63].

5. Conclusion

In conclusion, ACAP plays a vital role in leveraging external knowledge and enhancing the firm’s ability to seize business opportunities. It is a firm-level capability that relies on the competencies of individuals within the organization. This study highlights the recursive nature of ACAP, wherein competencies at the individual level contribute to the development and accumulation of the firm’s ACAP.

The review of competency literature has provided valuable insights into the specific competencies required for effective learning and ACAP development. The four domains of Learning Capability, Business-orientation, Self-orientation, and Social Intelligence have been identified as key components of competency. It is important to note that each stage of ACAP development may necessitate a distinct set of competencies, tailored to the individuals responsible for that stage.

By recognizing and fostering the required competencies, firms can strengthen their ACAP and enhance their ability to integrate external knowledge into existing resources. This understanding underscores the importance of aligning competency development initiatives with the stages of ACAP, ultimately driving the firm’s competitive advantage and growth.