Showing papers on "Competitive advantage published in 2012"
Posted Content•
TL;DR: In this paper, the authors argue that the factors leading to a resource-based advantage also predict who will appropriate rent and that knowledge-based assets are promising as a source of sustainable advantage because firmspecificity, social complexity and causal ambiguity make them hard for rivals to imitate.
Abstract: Most theories of competitive advantage seek to explain rent capture at the firm level but ignore which internal stakeholders will appropriate this rent. For example, IO economics focuses on market structure and the resource-based view focuses on unique firm-level capabilities that rivals cannot imitate or acquire. As researchers apply these frameworks, they either: 1) assume rent is captured by shareholders, 2) treat within-firm rent appropriation exogenously, or 3) ignore internal rent appropriation altogether. However, internal rent appropriation determines how much of the rent will be observable in measures of firm performance and is therefore central to empirical research focused on firm performance. What if rent from a competitive advantage is appropriated internally so it cannot be observed in performance measures? The resource-based view was not formulated to examine who will get the rent. Yet, this essay argues that the factors leading to a resource-based advantage also predict who will appropriate rent. Knowledge-based assets are promising as a source of sustainable advantage because firm-specificity, social complexity and causal ambiguity make them hard for rivals to imitate. Accordingly, these strong roles for internal stakeholders may grant them a great deal of bargaining power especially relative to investors who contribute the most fungible of all resources. This article integrates the resource-based view with the bargaining power literature by defining the firm as a nexus of contracts. This lens can help to explain when rent will be generated and, simultaneously, who will appropriate it. In doing so, it provides a more robust theory of firm performance than the resource-based view alone. This lens might also be useful for examining other theories of firm performance.
934 citations
TL;DR: In this paper, the authors identify three boundary conditions that limit the applicability of this logic and then offer a more comprehensive framework of human capital-based advantage that explores both demand-and supply-side mobility constraints.
Abstract: The strategy literature often emphasizes firm-specific human capital as a source of competitive advantage based on the assumption that it constrains employee mobility. We first identify three boundary conditions that limit the applicability of this logic. We then offer a more comprehensive framework of human capital–based advantage that explores both demand- and supply-side mobility constraints. The critical insight is that these mobility constraints have more explanatory power than the firm specificity of human capital.
554 citations
Book•
27 Sep 2012
TL;DR: Theories of the firm, strategic management, and leadership are discussed in this paper, where four Rs of profitability: Rents, Resources, Routines, and Replication are discussed.
Abstract: 1. An Exploration of Common Ground: Integrating Evolutionary and Strategic Theories of the Firm N.J. Foxx, C. Knudsen, C.A. Montgomery. 2. Strategic Management and the Exploration of Diversity D.A. Levinthal. 3. Competitive Advantage and Industry Capabilities N.J. Foss, B. Eriksen. 4. Capabilities and Coherence in Firms and Markets R.N. Langlois. 5. Inertia and Transformation R.P. Rumelt. 6. Resource-Based Strategy in a Stochastic Model B. Wernerfelt. 7. Four Rs of Profitability: Rents, Resources, Routines, and Replication S.G. Winter. 8. Theories of the Firm, Strategic Management, and Leadership C. Knudsen. 9. Business Strategy from the Population Level J. Freeman. 10. Of Diamonds and Rust: a New Look at Resources C.A. Montgomery. Index.
547 citations
Book•
01 Jan 2012
TL;DR: In this paper, a company can innovate along any of 12 different dimensions with respect to its offerings, platform, solutions, customers, customer experience, value capture, processes, organization, supply chain, presence, networking, and brand.
Abstract: Faced with the prospects of slow growth, commoditization and global competition, companies like General Electric Co., Microsoft Corp. and Ford Motor Co. have now emphasized innovation as critical to their future success. But what exactly is innovation? Although the subject has risen to the top of the CEO agenda, many companies have a mistakenly narrow view of it. They might see innovation as synonymous with new product development or traditional research and development. But such myopia can lead to the systematic erosion of competitive advantage. As a result, companies in a given industry can come to resemble one another over time. In actuality, business innovation is far broader in scope than product or technological innovation. In fact, a company can innovate along any of 12 different dimensions with respect to its (1) offerings, (2) platform, (3) solutions, (4) customers, (5) customer experience, (6) value capture, (7) processes, (8) organization, (9) supply chain, (10) presence, (11) networking, and (12) brand. Nissan Motor Co., for example, has innovated along the platform dimension, using essentially the same small engine block to power a variety of models, including an upscale midsize sedan, a large sedan, luxury sedans, a minivan and a sports coupe. Enterprise Rent-A-Car has innovated along the customers and presence dimensions, placing car rental locations in the neighborhoods where people live and work rather than at airports. Together the 12 dimensions of innovation can be displayed in a new framework called the ?innovation radar,? which companies can use to manage the increasingly complex business systems through which they add value.
533 citations
TL;DR: In this article, the authors investigate the role of leadership behaviour as a key antecedent for management innovation at the organization level and investigate its moderating role, finding that smaller, less complex, organizations benefit more from transactional leadership in realizing management innovation while larger organizations need to draw on transformational leaders to compensate for their complexity.
Abstract: Recent research on management innovation, i.e. new managerial processes, practices, or structures that change the nature of managerial work, suggests it can be an important source of competitive advantage. In this study, we focus on management innovation at the organization level and investigate the role of leadership behaviour as a key antecedent. Due to its prominent role within organizations, top management has the ability to greatly influence management innovation. In particular, we focus on leadership behaviour and examine transformational and transactional leadership. Additionally, as contextual variables like organizational size may influence the impact of leadership, we investigate its moderating role. Findings show that both leadership behaviours contribute to management innovation. Interestingly, our study indicates that smaller, less complex, organizations benefit more from transactional leadership in realizing management innovation. On the other hand, larger organizations need to draw on transformational leaders to compensate for their complexity and allow management innovation to flourish.
524 citations
TL;DR: In this paper, the authors combine co-word analysis, cluster analysis, and frequency analysis to review 342 articles on the strategic management of innovation published in seven journals from 1992 to 2010 and develop suggestions for future research which could help to promote future theory development and provide relevant material for policy decisions that managers and executives have to make when they manage innovation.
Abstract: Strategic management scholars have long emphasized the importance of innovation for a firm's competitive advantage and performance. However, the current state of knowledge about the strategic management of innovation is characterized by conflicting theoretical predictions, persisting knowledge gaps and theoretical inconsistencies. Adopting a ‘systematic' approach to reviewing the literature, this paper combines different quantitative methods - co-word analysis, cluster analysis and frequency analysis - to review 342 articles on the strategic management of innovation published in seven journals from 1992 to 2010. On the basis of these analyses, suggestions are developed for future research which could help to promote future theory development and provide relevant material for policy decisions that managers and executives have to make when they manage innovation.
465 citations
Posted Content•
TL;DR: In this article, the authors propose that retail business models are best viewed as changes in three design components: (1) the way in which the activities are organized, (2) the type of activities that are executed, and (3) the level of participation of the actors engaged in performing those activities.
Abstract: A retail business model articulates how a retailer creates value for its customers and appropriates value from the markets. Innovations in business models are increasingly critical for building sustainable advantage in a marketplace defined by unrelenting change, escalating customer expectations, and intense competition. Drawing from extant strategy and retailing research, we propose that innovations in retail business models are best viewed as changes in three design components: (1) the way in which the activities are organized, (2) the type of activities that are executed, and (3) the level of participation of the actors engaged in performing those activities. We propose six major ways in which retailers could innovate their business models to enhance value creation and appropriation beyond the levels afforded by traditional approaches to retailing. We also describe the drivers of business model innovations, the potential consequences of such innovations, and numerous examples from retail practice that highlight our concepts and arguments. In doing so, we provide a starting point for academic research in a domain that is deficient in theoretical and empirical research, and offer retailing managers a framework to guide retail business model innovations for sustainable competitive advantage.
434 citations
TL;DR: In this paper, the authors investigated the effect of entrepreneurship orientation on the performance of small and medium sized firms during the current global economic crisis and found that proactive firm behavior positively contributes to SME performance during the economic crisis.
Abstract: Entrepreneurial Orientation (EO) is often mentioned as an antecedent of growth, competitive advantage and superior performance, and prior empirical research has often shown a positive relationship between EO and performance appears to exist. However, an important question that remains unanswered is what effect EO might have on firm performance during periods of economic crisis, and the severe environmental turbulence that accompany such crises. This research is a first investigation towards the effects of EO on the performance of small and medium sized firms during the current global economic crisis. In this study we use the multidimensional model of EO and test a series of hypotheses pertaining to its performance effects using survey data gathered from 164 Dutch SMEs. The present research shows that proactive firm behavior positively contributes to SME performance during the economic crisis. We further show that innovative SMEs do perform better in turbulent environments, but those innovative SMEs should minimize the level of risk and should take action to avoid projects that are too risky.
417 citations
TL;DR: In this article, resource-based theory suggests that purchasing and supply chain management will often have the attributes that can enable them to be sources of sustained competitive advantage, contrary to Ramsay's (2001) conclusion and Hunt and Davis's (2008) positioning.
Abstract: Contrary to Ramsay's (2001) conclusion and Hunt and Davis's (2008) positioning of their recent article, resource-based theory suggests that purchasing and supply chain management will often have the attributes that can enable them to be sources of sustained competitive advantage.
417 citations
Book•
28 Aug 2012
TL;DR: In this paper, the authors provide an overview of flexible process-aware information systems (PAIS) with a strong focus on methods and technologies fostering flexibility for all phases of the process lifecycle (i.e., modeling, configuration, execution and evolution).
Abstract: In todays dynamic business world, the success of a company increasingly depends on its ability to react to changes in its environment in a quick and flexible way. Companies have therefore identified process agility as a competitive advantage to address business trends like increasing product and service variability or faster time to market, and to ensure business IT alignment. Along this trend, a new generation of information systems has emergedso-called process-aware information systems (PAIS), like workflow management systems, case handling tools, and service orchestration engines. With this book, Reichert and Weber address these flexibility needs and provide an overview of PAIS with a strong focus on methods and technologies fostering flexibility for all phases of the process lifecycle (i.e., modeling, configuration, execution and evolution). Their presentation is divided into six parts. Part I starts with an introduction of fundamental PAIS concepts and establishes the context of process flexibility in the light of practical scenarios. Part II focuses on flexibility support for pre-specified processes, the currently predominant paradigm in the field of business process management (BPM). Part III details flexibility support for loosely specified processes, which only partially specify the process model at build-time, while decisions regarding the exact specification of certain model parts are deferred to the run-time. Part IV deals with user- and data-driven processes, which aim at a tight integration of processes and data, and hence enable an increased flexibility compared to traditional PAIS. Part V introduces existing technologies and systems for the realization of a flexible PAIS. Finally, Part VI summarizes the main ideas of this book and gives an outlook on advanced flexibility issues. The bookstarget groups include researchers, PhD students and Master students in the field of information systems. After reading the book, they will better understand PAIS flexibility aspects. To support the easy use as a textbook, a series of exercises is provided at the end of each chapter and slides and further teaching material are available on the books web site www.flexible-processes.com. Professionals specializing in business process management (BPM) who want to obtain a good understanding of flexibility challenges in BPM and state-of-the-art solutions will also benefit from the presentations of open source as well as commercial process management systems and related practical scenarios.
403 citations
TL;DR: In this paper, the authors provide an updated and extended meta-analytic investigation of the factors affecting new product success (NPS) using Henard and Szymanski's meta-analysis as the most comprehensive recent summary of empirical findings.
TL;DR: It is shown that a non-linear iteration is necessary to bound the complexity of products by the fitness of the less competitive countries exporting them, and the correct and simplest approach to measure the competitiveness of countries is the one presented in this work.
Abstract: Classical economic theories prescribe specialization of countries industrial production. Inspection of the country databases of exported products shows that this is not the case: successful countries are extremely diversified, in analogy with biosystems evolving in a competitive dynamical environment. The challenge is assessing quantitatively the non-monetary competitive advantage of diversification which represents the hidden potential for development and growth. Here we develop a new statistical approach based on coupled non-linear maps, whose fixed point defines a new metrics for the country Fitness and product Complexity. We show that a non-linear iteration is necessary to bound the complexity of products by the fitness of the less competitive countries exporting them. We show that, given the paradigm of economic complexity, the correct and simplest approach to measure the competitiveness of countries is the one presented in this work. Furthermore our metrics appears to be economically well-grounded.
TL;DR: Wang et al. as discussed by the authors analyzed the effect of business and government ties on economic and operational performance of 20,212 organizations in Mainland China and overseas China, and found that business ties have a bigger impact on operational performance, whereas government ties exert larger effects on economic performance.
Abstract: Guanxi, a social network tie drawing on connections in business relations, has been identified as a powerful strategic tool helping organizations maintain competitive advantages and achieve superior performance. However, prior empirical studies on the guanxi–performance link provide indefinite conclusions. The purpose of this study is to systematically review and quantify the guanxi–performance link in a meta-analytic framework by decomposing guanxi into business ties (i.e., guanxi with business partners) and government ties (i.e., guanxi with government authorities) and organizational performance into economic performance and operational performance. Based on effect sizes from fifty-three studies encompassing 20,212 organizations, we estimate that the overall effect size of the guanxi–performance relationship is positive and significant, thus endorsing the argument that guanxi does enhance organizational performance. Specifically, our meta-analysis results demonstrate that both business and government ties lead to both economic and operational performance. However, business ties have a bigger impact on operational performance, whereas government ties exert larger effects on economic performance. Further meta-analytic regression results suggest that ownership (state-owned vs. non-state-owned) and location (Mainland vs. overseas China) explain some of the variations of the guanxi–performance link. Both business and government ties are more important to organizations in Mainland China than to those in overseas China. Government ties are more important to state-owned than to non-state-owned organizations. Lastly, while business ties remain a valuable strategic tool in China, the importance of government ties is time-variant and has been declining with the development of the institutional environment in China.
TL;DR: In this article, the authors examined the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity) and financial performance in SMEs and found that all specified capabilities are positively associated with adoption of proactive corporate social responsibility by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance.
Abstract: Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR.
TL;DR: In this paper, the authors use the technique of panel data in a sample of 320 American listed companies from 2003 to 2007 to estimate a model of corporate reputation, measured by the Fortune index.
Abstract: We use the technique of panel data in a sample of 320 American listed companies from 2003 to 2007 to estimate a model of corporate reputation, measured by the Fortune index. We propose that corporate social responsibility (CSR) is a key driver of corporate reputation given its potential to foster hard-to-duplicate competitive advantage. Our model embodies the multidimensional concept of CSR, presenting a five dimensional construct – employee relations, diversity issues, product issues, community relations, and environmental issues – and interact those with industrial effects. Our results indicate that the five dimensions of CSR have a significant impact on corporate reputation and this impact is moderated by the industry of the firm. The most salient dimensions were diversity of the work force – was positively relevant to eight of the nine industries; and product issues with a positive impact in five industries and negative in three. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.
TL;DR: In this article, a survey of nearly 400 enterprises showed that the main reason for acting responsibly is altruistic, although competitiveness reasons are also important, and that further implementation of these practices is necessary to achieve the full potential of competitive advantages.
TL;DR: In this paper, the authors describe the past and potential future contributions of family business research and conclude that it holds great promise to give back and provide meaningful contributions to the general field of management.
TL;DR: In this paper, the authors present a multi-level model illustrating how human resource management practices can effectively align organizational, group and individual factors with the organization's strategy, and propose that such alignment contributes to the creation of human capital and social capital, both of which are necessary to achieve and sustain superior performance.
TL;DR: In this article, the authors propose that organizational learning acts as a forerunner of a firm's ability to adapt to evolving market con- ditions (strategic flexibility), and that OL and flexibility simultaneously foster the implementation of differentiation and cost-leadership strategies.
01 Jan 2012
TL;DR: In this paper, the authors define the terms and principles of knowledge creation, diffusion, and use, and establish a theoretical framework for their study, through which government, academia, industry and civil society are seen as key actors promoting a democratic approach to innovation through which strategy development and decision-making are exposed to feedback from key stakeholders, resulting in socially accountable policies and practices.
Abstract: Developed and developing economies alike face increased resource scarcity and competitive rivalry. In this context, science and technology appear as an essential source of competitive and sustainable advantage at national and regional levels. However, the key determinant of their efficacy is the quality and quantity of entrepreneurship-enabled innovation that unlocks and captures the benefits of the science enterprise in the form of private, public, or hybrid goods. Linking basic and applied research with the market, via technology transfer and commercialization mechanisms, including government–university–industry partnerships and capital investments, constitutes the essential trigger mechanism and driving force of sustainable competitive advantage and prosperity. In this volume, the authors define the terms and principles of knowledge creation, diffusion, and use, and establish a theoretical framework for their study. In particular, they focus on the “Quadruple Helix” model, through which government, academia, industry, and civil society are seen as key actors promoting a democratic approach to innovation through which strategy development and decision-making are exposed to feedback from key stakeholders, resulting in socially accountable policies and practices.
TL;DR: Demand-side research has been used to explain and predict those managerial decisions that increase value creation within a value system as discussed by the authors, emphasizing product markets as key sources of value-creation strategies for firms.
TL;DR: This article devises an S-D orientation, specified as a portfolio of six strategic capabilities, namely individuated, relational, ethical, empowered, developmental, and concerted interaction capability, which constitute a cocreation capability.
Abstract: Service-dominant (S-D) logic can function as a strategic business logic that portrays creating superior value in conjunction with—rather than for—customers as a source of competitive advantage for ...
TL;DR: Wang et al. as discussed by the authors studied over 700 manufacturing firms in the Yangzi region of China and found that, through trial and error, entrepreneurs devised institutional innovations that enabled them to decouple from the established economic order and grow small, private manufacturing firms.
Abstract: More than 630 million Chinese have escaped poverty since the 1980s, reducing the fraction remaining from 82 to 10 percent of the population. This astonishing decline in poverty, the largest in history, coincided with the rapid growth of a private enterprise economy. Yet private enterprise in China emerged in spite of impediments set up by the Chinese government. How did private enterprise overcome these initial obstacles, to become the engine of China's economic miracle? Where did capitalism come from? Studying over 700 manufacturing firms in the Yangzi region, Victor Nee and Sonja Opper argue that China's private enterprise economy bubbled up from below. Through trial and error, entrepreneurs devised institutional innovations that enabled them to decouple from the established economic order to start up and grow small, private manufacturing firms. Barriers to entry motivated them to build their own networks of suppliers and distributors, and to develop competitive advantage in self-organized industrial clusters. Close-knit groups of like-minded people participated in the emergence of private enterprise by offering financing and establishing reliable business norms. This rapidly growing private enterprise economy diffused throughout the coastal regions of China and, passing through a series of tipping points, eroded the market share of state-owned firms. Only after this fledgling economy emerged as a dynamic engine of economic growth, wealth creation, and manufacturing jobs did the political elite legitimize it as a way to jump-start China's market society. Today, this private enterprise economy is one of the greatest success stories in the history of capitalism.
TL;DR: In this article, the knowledge-based view of strategy has significantly advanced understanding of the foundations of competitive advantage, but less is known about how knowledge becomes a strategic resource and how to use it.
Abstract: Although the knowledge-based view of strategy has significantly advanced understanding of the foundations of competitive advantage, less is known about how knowledge becomes a strategic resource. I...
TL;DR: In this paper, the authors combine fuzzy logic and analytic hierarchy process to form a decision-making model for different green initiatives in the fashion industry, which is used to analyse the associated risk of different alternatives, subject to different factors, be they deterministic or not.
TL;DR: A research model positing that IT resources and IT capabilities enhance a firm's performance by providing support to its competitive strategies and core competencies, and the strengths of these supports vary in accord with environmental dynamism is developed.
Abstract: This paper examines two ways to create business value of information technology BVIT: resource structuring and capability building. We develop a research model positing that IT resources and IT capabilities enhance a firm's performance by providing support to its competitive strategies and core competencies, and the strengths of these supports vary in accord with environmental dynamism. The model is empirically tested using data collected from 296 firms in China. It is found that IT resources generate more business effects in stable environments than in dynamic environments, while IT capabilities generate more business effects in dynamic environments than in stable environments. The results suggest that the BVIT creation mechanism in stable environments is primarily resource structuring while the mechanism in dynamic environments is primarily capability building.
TL;DR: The authors argue that one of the reasons these practices may be difficult to copy is that effective relational contracts must solve the twin problems of credibility and clarity and that although credibility might, in principle, be instantly acquired, clarity may take time to develop and may interact with credibility in complex ways.
Abstract: A large literature identifies unique organizational capabilities as a potent source of competitive advantage, yet our knowledge of why capabilities fail to diffuse more rapidly—particularly in situations in which competitors apparently have strong incentives to adopt them and a well-developed understanding of how they work—remains incomplete. In this paper we suggest that competitively significant capabilities often rest on managerial practices that in turn rely on relational contracts (i.e., informal agreements sustained by the shadow of the future). We argue that one of the reasons these practices may be difficult to copy is that effective relational contracts must solve the twin problems of credibility and clarity and that although credibility might, in principle, be instantly acquired, clarity may take time to develop and may interact with credibility in complex ways so that relational contracts may often be difficult to build.
TL;DR: In this article, the authors examine the drivers of sustainability and related key features based on extant literature and a case study, and two resultant frameworks emerge that display the interdependence of the triple bottom line and the essential elements required for a sustainable supply chain.
TL;DR: In this paper, the authors provide a comprehensive review and a critical assessment of the theoretical underpinnings and corporate governance issues in family business research and discuss possible directions for future research that might further contribute to building a comprehensive theory of the family business and its corporate governance.
Abstract: In recent years, increasing scholarly attention has been directed toward the field of family business research. Based on an exhaustive sample of 235 publications, this article provides a comprehensive review and a critical assessment of the theoretical underpinnings and corporate governance issues in family business research. Three predominant theoretical perspectives, namely principal–agent theory, stewardship theory and the resource-based view of the firm, have emerged and provide empirical evidence that family businesses significantly differ from non-family firms in important dimensions such as agency costs, competitive advantages or corporate governance structure. On their own, none of the aforementioned perspectives succeeds in addressing all complexities associated with family businesses and their corporate governance. Accordingly, joint approaches combining different theoretical frameworks can help to improve understanding of the family business. The article concludes by discussing possible directions for future research that might further contribute to building a comprehensive theory of the family business and its corporate governance.
TL;DR: The authors argue that resource-constrained product development approaches (alternatively labeled jugaad) that are observed in emerging countries such as China and India have the potential to change the traditional models of green product development and suggest that these practices have sustainability and supply chain benefits.