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This paper is concerned with the formulation of a framework for understanding the development and change of the competences of firms. Today, there is near universal agreement that the competitiveness of firms rests on the (core) competences that firms possess. However, little attention has been devoted to the notion of competence development. In the paper, it will be argued that there is, indeed, a need for research and management practice of competence development. It will also be argued that organisational learning theory is a key to understanding competence development. Based on this, a model for competence development is proposed. This is the main contribution of the paper. The paper then concludes with a number of questions yet to be answered by research on competence‐based strategy.

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