The purpose of this chapter is to discuss the nature of the general management dominant logic concept (generally referred to below as simply ‘dominant logic’) and to connect it with key issues in learning, knowledge creation, and managerial choice. We also speculate on some potentially fruitful avenues for applying and extending the theory of dominant logic. This is not intended primarily as a review although many important aspects of a review are necessary to the fundamental purpose of the chapter. What is intended is to extend the usefulness of the dominant logic concept in understanding and exploring various organizational phenomena and connect it more firmly to various other concepts and literatures. Those interested in a basic review are referred to the original source (Prahalad and Bettis, 1986) and to a variety of other sources (e.g. Bettis and Prahalad, 1995; Bettis, 2000; Ginsberg, 1990; Grant, 1988; Ramanujam and Varadarajan, 1989; Von Krogh and Roos, 1996). Some relevant literature is also reviewed later in the chapter.
The concept of a general management dominant logic arose in response to the need to examine why firms find it so hard to manage (1) diversification (even ‘related’ diversification) and/or (2) rapid or discontinuous change in a core or base business (Prahalad and Bettis, 1986). Although superficially different, the issues of diversification and change in the core business both involve the necessity to change the mental models of managers. Such changes go far beyond the intellectual recognition of the need to change and have proven very difficult to accomplish in practice; and practitioner-oriented work by Sull (1999) and by Foster and Kaplan (2001) testifies to the difficulties involved.
Dominant logic provides a simple and potentially powerful way of thinking about various strategic issues. There are certainly other frameworks for thinking about these issues, and we claim no particular advantage for dominant logic. We do believe that it is one useful way for organizing reflection about and thoughtful inquiry into issues related to strategic change.
In what follows we first discuss the fundamental nature of the dominant logic concept. We then discuss two concepts important to understanding the impact of a dominant logic: (1) ‘condensation’ of dominant logic into visible and invisible organizational features and (2) ‘variance suppression’ at the dominant logic level, and how it interacts with variance suppression effects at other levels of analysis. We end with two sections reviewing some important literature and possible directions for future research.