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Journal ArticleDOI

Resource Allocation as an Outcropping of Strategic Consistency: Performance Implications

01 Oct 1993-Academy of Management Journal (Academy of Management)-Vol. 36, Iss: 5, pp 1026-1051

AbstractSimilarities in financial resource allocations across the lines of business of diversified firms may indicate corporate strategic consistency, which may lead to superior corporate performance. In s...

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Citations
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Journal ArticleDOI
Abstract: Using unique data provided by the CEOs of 80 large U.S. firms, the authors examined relationships among the stakeholder attributes of power, legitimacy, urgency, and salience; CEO values; and corpo...

1,661 citations

Journal ArticleDOI
Abstract: Firms allocate their limited resources between two fundamental processes of creating value (i.e., innovating, producing, and delivering products to the market) and appropriating value (i.e., extracting profits in the marketplace). Although both value creation and value appropriation are required for achieving sustained competitive advantage, a firm has significant latitude in deciding the extent to which it emphasizes one over the other. What effect does strategic emphasis (i.e., emphasis on value creation versus value appropriation) have on firm’s financial performance? The authors address this issue by examining the effect that shifts in strategic emphasis have on stock return. They find that the stock market reacts favorably when a firm increases its emphasis on value appropriation relative to value creation. This effect, however, is moderated by firm and industry characteristics, in particular, financial performance, the past level of strategic emphasis of the firm, and the technological envi...

725 citations

Journal ArticleDOI
Abstract: Organizations are combining resources through acquisitions and alliances in record numbers. Since publication of our original study in 1991, research has confirmed that resource complementarity creates the potential for greater synergy from acquisitions and alliances, leading to higher long-term firm performance as an end result. The valuable, unique, and inimitable synergy that can be realized by integrating complementary resources provides an opportunity for the firm to create competitive advantages that can be sustained for a period of time. In addition, complementary resources present opportunities for enhanced learning as well as the development of new capabilities. However, we also suggest that the existence of complementary resources is a necessary but insufficient condition to achieve synergy. The resources must be effectively integrated and managed to realize the synergy.

675 citations


Cites background or result from "Resource Allocation as an Outcroppi..."

  • ...Harrison et al. / Journal of Management 27 (2001) 679–690...

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  • ...The Harrison et al. (2000) model, combined with findings on resource complementarity, offer an explanation for the near-zero returns acquiring firms receive as well as the contradictory findings on relatedness (e....

    [...]

  • ...We conclude from this analysis that Harrison et al.’s (1991) original findings have not only gained support over time, but that they suggest an important and valuable conclusion regarding access to and use of complementary resources....

    [...]

Journal ArticleDOI
Abstract: Although organizational research posits various relationships between a firm's slack resources and performance, findings to date have been ambiguous. To provide insight into this relationship, this study employed a meta-analysis based on 80 samples from 66 studies (n=54,249). Results provided evidence of a positive relationship among all three slack types (i.e., available, recoverable, and potential) and financial performance and showed that studies controlling for industry-relative performance demonstrated a stronger positive potential slack–performance relationship than those not including these controls. The analysis also found that studies employing lagged slack measures did not show a stronger positive slack–performance relationship than those employing current year measures for either recoverable or potential slack, a result counter to the one hypothesized. Overall, results highlight the importance of additional research into intervening factors impacting the slack–performance relationship.

358 citations

Journal ArticleDOI
Abstract: Building on recent arguments advocating the benefits of different types of employment flexibility, we examine the relationships among the four types of employment (knowledge-based, job-based, contract, and alliances) and firm performance. The results indicate that a greater use of knowledge-based employment and contract work is positively associated with firm performance. The results also indicate that both knowledge-based employment and contract work positively interact with job-based employment to impact firm performance. In addition, the relationships between knowledge-based employment and firm performance, as well as between job-based employment and firm performance, vary across levels of technological intensity.

290 citations


References
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Book ChapterDOI
Abstract: Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.

43,350 citations


Additional excerpts

  • ...Causal ambiguity exists when the relationship between the resources a firm controls and the profits they create are imperfectly understood (Barney, 1991)....

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  • ...A Resource-based Perspective on Diversification From a resource-based view, business executives should manage diversified resources so as to achieve a sustainable competitive advantage (Barney, 1991), which should lead to short- and long-term economic profits (Mahoney & Pandian, 1992)....

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  • ...A key issue in determining whether a resource can generate profits is whether it is idiosyncratic (Barney, 1991; Mahoney & Pandian, 1992)....

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01 Jan 1998
Abstract: COMPETITIVE ADVANTAGE introduces a whole new way of understanding what a firm does. Porter's groundbreaking concept of the value chain disaggregates a company into 'activities', or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Now an essential part of international business thinking, COMPETITIVE ADVANTAGE takes strategy from broad vision to an internally consistent configuration of activities. Its powerful framework provides the tools to understand the drivers of cost and a company's relative cost position. Porter's value chain enables managers to isolate the underlying sources of buyer value that will command a premium price, and the reasons why one product or service substitutes for another. He shows how competitive advantage lies not only in activities themselves but in the way activities relate to each other, to supplier activities, and to customer activities. That the phrases 'competitive advantage' and 'sustainable competitive advantage' have become commonplace is testimony to the power of Porter's ideas. COMPETITIVE ADVANTAGE has guided countless companies, business school students, and scholars in understanding the roots of competition. Porter's work captures the extraordinary complexity of competition in a way that makes strategy both concrete and actionable.

17,660 citations


"Resource Allocation as an Outcroppi..." refers background in this paper

  • ...For example, it is possible for two companies to produce the same product but have very different perspectives on the usefulness of research and development in the way it is produced (Porter, 1985)....

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Journal ArticleDOI
Abstract: Summary The paper explores the usefulness of analysing firms from the resource side rather than from the product side. In analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested. These tools are then used to highlight the new strategic options which naturally emerge from the resource perspective.

17,255 citations


Additional excerpts

  • ...The purpose of this article is to present theory and empirical evidence that support a resource-based view of the relationship between diversification and performance (Barney, 1988; Harrison, Hitt, Hoskisson, & Ireland, 1991; Mahoney & Pandian, 1992; Wernerfelt, 1984)....

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  • ...The findings reported herein lend some support to the viability of a resource-based approach to the study of diversity (Harrison et al., 1991; Mahoney & Pandian, 1992; Wernerfelt, 1984)....

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Book
01 Jan 1959
Abstract: Introduction Preface 1. Introduction 2. The Firm in Theory 3. The Productive Opportunity of the Firm and the 'Entrepreneur' 4. Expansion Without Merger: The Receding Managerial Limit 5. 'Inherited' Resources and the Direction of Expansion 6. The Economies of Size and the Economies of Growth 7. The Economics of Diversification 8. Expansion Through Acquisition and Merger 9. The Rate of Growth of Firms Through Time 10. The Position of Large and Small Firms in a Growing Economy 11. Growing Firms in a Growing Economy: The Process of Industrial Concentration and the Pattern of Dominance

14,125 citations

Book
01 Jan 1985
Abstract: COMPETITIVE ADVANTAGE introduces a whole new way of understanding what a firm does. Porter's groundbreaking concept of the value chain disaggregates a company into 'activities', or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Now an essential part of international business thinking, COMPETITIVE ADVANTAGE takes strategy from broad vision to an internally consistent configuration of activities. Its powerful framework provides the tools to understand the drivers of cost and a company's relative cost position. Porter's value chain enables managers to isolate the underlying sources of buyer value that will command a premium price, and the reasons why one product or service substitutes for another. He shows how competitive advantage lies not only in activities themselves but in the way activities relate to each other, to supplier activities, and to customer activities. That the phrases 'competitive advantage' and 'sustainable competitive advantage' have become commonplace is testimony to the power of Porter's ideas. COMPETITIVE ADVANTAGE has guided countless companies, business school students, and scholars in understanding the roots of competition. Porter's work captures the extraordinary complexity of competition in a way that makes strategy both concrete and actionable.

13,579 citations