12/29/2005

Use the Law to Strategic Advantage

What all firms have in common is the ability to integrate legal considerations into the firm?s overall strategy, not only to stay out of trouble but also to create value and manage risk. That?s what winning legally is all about. So contends Constance E. Bagley, associate professor of business administration at Harvard Business School, in this interview from HBS Working Knowledge. From the interview:

"Q: How can managers ensure that legal strategy aligns with corporate strategy?

A: Framing is critical here. There are legal aspects to every corporate strategy. Law is not separate and apart from what managers do. The law affects each of Porter's Five Forces as well as the resources and capabilities of the firm. The availability of patents may be key to deciding what barriers to entry exist. The enforceability of covenants not to compete and assignments of inventions may determine who captures the value of knowledge created by employees. The risk of product liability may make it unwise to pursue certain marketing strategies..."