INTRODUCTION

Firms can (and often do) learn from each other. Benchmarking has become an accepted and increasingly widely practiced initiative for interfirm learning. Benchmarking specific capabilities and processes in one firm against another can help both firms’ managers identify strategic gaps in their capabilities and processes. More detailed forms of benchmarking may even suggest specific ways in which capabilities and processes can be improved. However, extracting significant learning from benchmarking with another company – while not unnecessarily revealing important sources of competitive advantage – requires a careful, balanced approach to managing a benchmarking process. In their paper “Limitations and challenges of benchmarking: A competence-based perspective,” Jörg Freiling and Sybille Huth develop a competence-based framework for managing benchmarking. While agreeing with the important potential benefits that benchmarking can bring to competence building, the authors point out a number of threats to a firm that may arise in a benchmarking process. In particular, the authors suggest that careful attention be paid to managing isolating mechanisms during benchmarking. Isolating mechanisms may bring a benefit by protecting strategic capabilities and processes from unintended discovery and imitation by either firm, while at the same time obscuring intended observations of each firm’s capabilities and processes that may defeat the basic intent of the benchmarking exercise. Careful management of isolating mechanisms should help assure that both parties to a benchmarking process will successfully navigate the three crucial steps identified by the authors in an effective benchmarking process: recognition, assimilation, and exploitation of new “best practices.”