Technological capabilities and foreign direct investment in China

In the incomplete contracting view, one finds boundedly rational managers who face opportunism. Therefore, firms arise from efforts to secure the rents that flow from transaction-specific assets. Langlois and Robertson develop the competence perspective in their evolutionary theory of firm capabilities. Paralleling the efforts in evolutionary economics, strategic management theorists are developing both a competence view of the firm and a theory of competence-based competition. This chapter addresses to what extent is R-A theory’s resourcebased view of the firm consistent or inconsistent with the evolutionary, competence perspective. It argues that R-A theory fully accommodates the competence perspective by viewing competences as higher-order resources that are comprised of distinct packages or bundles of basic resources. Being evolutionary, R-A theory views innovation and organisational learning as endogenous, firms and consumers as having imperfect information, and institutions and public policy as affecting economic performance.