Dominant logic relates to the main means a company uses to make a
profit. In essence, it is an interpretation of how a company has succeeded. It describes the cultural norms and beliefs that the company espouses.
Dominant logic can be useful when applied to
corporate diversification. In this sense, dominant logic is a common way of thinking about strategy across different businesses.
Negatively, it is logic which locks a company into thinking about making money in only one way, called as "blinder effect." It is often used when talking about inefficient reasons for diversification of a company. This narrowed approach by a company can prevent a conducive environment for innovating and can stifle creativity. Dominant Logic is antipodal to the idea of using different methods and ways for generating profit. It is similar to the idea of
kaizen
is concept referring to business activities that continuously improve all functions and involve all employees from the CEO to the assembly line workers. ''Kaizen'' also applies to processes, such as purchasing and logistics, that cross organ ...
which focuses on one process.
Recently, the concept of dominant logic is further expanded to overcome its blinder effect, for example, by nourishing dynamic dominant logic (Dwipayana et al., 2021).
Kor and Mesko argue that a firm's dominant logic can be implicit within routines, procedures and capabilities. They distinguish it from the related concepts of the dominant logic of the management team which is in turn influenced by the managerial capabilities. They view this dominant logic as changing over time in response to information in response to its absorbative capacity which is in turn influenced by the orchestration of the decision-making team, feedback and mentoring.
History
In the field of
strategic management
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of Resource management, resour ...
,
C. K. Prahalad and
Richard A. Bettis Richard A. Bettis is the Ellison Distinguished Professor of Strategy and Entrepreneurship at the Kenan-Flagler Business School, University of North Carolina at Chapel Hill. He is known for his work on corporate strategy, global business strategy and ...
described the concept of dominant logic in 1986. Prahalad and Bettis suggested that the way top managers deal with the increasing diversity of strategic decisions in a company, which are caused by acquisitions or structural changes in the core business, depends on the
cognitive orientation of those top managers. Dominant logic consists of the mental maps developed through experience in the core business.
See also
*
Service-dominant logic
Service-dominant (S-D) logic, in behavioral economics, is an alternative theoretical framework for explaining value creation, through exchange, among configurations of actors. It is a dominant logic. The underlying idea of S-D logic is that huma ...
*
Dynamic dominant logic
Dynamics (from Greek δυναμικός ''dynamikos'' "powerful", from δύναμις ''dynamis'' "power") or dynamic may refer to:
Physics and engineering
* Dynamics (mechanics)
** Aerodynamics, the study of the motion of air
** Analytical dynam ...
Notes
References
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Strategic management
Organizational theory
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