Resource Advantage
...C-EQUILIBRIUM COMPETITON ¡¤ DYNAMIC COMPETITION Firm¡¯s motivation is superior financial performance, i.e., more than, better than. The constant struggle among firms for comparative advantages in resources that will yield marketplace positions of competitive advantage and, thereby, superior financial performance. Renewal Competences: The firm¡¯s ability to renew itself based on (1) reacting to changes in its environment and/or (2) proactively changing its environment. ¡°Dynamic capabilities¡± (Teece and Pisano 1994) ¡°Higher order learning¡± (Dickson 1996) ¡°Industry foresight¡± (Hamel and Prahalad 1994) ¡¤ STATIC-EQUILIBRIUM COMPETITION Competition occurring in the ¡°parity¡± cell of the competitive position matrix. Requires homogeneous resources, homogeneous products, absence of endogenous innovation. R-A THEORY A GENERAL THEORY OF COMPETITION · R-A theory has greater explanatory and predictive power than neoclassical, perfect competition. · The foundational premises of R-A theory are the general case of competition; perfect competition’s premises are a special case. · R-A theory explains when the process of R-A competition might result in a static equilibrium situation. Therefore, it explains when perfect competition will be “close enough” (Friedman 1953) to predict well. · R-A theory preserves the cumulativeness of economic science. R-A THEORY AND ALDERSON’S DIFFERENTIAL ADVANTAGE (“D-A”) THEORY D-A Theory R-A Theory · Perfect competition not ideal · Competition (i.e., R-A competition) promotes resource allocation, resource creation, productivity, and economic growth · Industry demand is heterogeneous · Ditto · Competition matches segments of demand and supply · Ditto · Firm motivation is not profit max, but increased profits and survival · Superior financial performance· “more than,” “better than”· Superior rewards flow from superior performance · Competition is dynamic · “More than,” “better than” implies dynamic competition · Markets are discrepant (products wanted, not produced; products produced, not wanted) · Ditto · Competition is evolutionary, with ecological niches · Evolutionary, nonconsummatory, with niches· Units of selection are firms and resources· Competition is selection process · Differential Advantages · Competitive advantages in positions· Comparative advantages in resources · Competition neutralizes advantages · Neutralize or leapfrog by acquisition and/or reactive innovation· Thwarted when sustainable, competitive advantage· when resources are tacit, causally ambiguous, socially or technologically...