Tuesday, February 26, 2013

The Competitive Implications of the Deployment of Unique Resources

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Strategic Management Journal 34, 4 (2013) 445-463

The ‘resource-based’ view focuses on unique resources as the fundamental sources of competitive advantage and superior profits. We use a game-theoretic model to analyze the impact of the deployment of unique resources on product market competition, and the impact of unique resources and sustainable competitive advantages on profits when the competitive implications of resource deployment are taken into account. We find that some of the core propositions of the resource-based view do not necessarily hold when the impact of resource deployment on product market competition is explicitly considered. Specifically, the accumulation and deployment of unique resources does not necessarily increase the firm's profit and the difference between its profit and competitors' profits. Furthermore, achieving a sustainable competitive advantage does not necessarily lead to higher profits.