On the Origins of Competitive Advantage: Strategic Factor Markets and Heterogeneous Resource Complementarity
IESE Business School Working Paper No. 666
Academy of Management Review, Forthcoming
30 Pages Posted: 12 Oct 2006 Last revised: 1 Jun 2009
Date Written: September 1, 2007
Abstract
Strategic factor market theory suggests that in the absence of luck, asymmetric expectations are a necessary condition for firms to appropriate gains from valuable resources. I argue that this is only true in the absence of heterogeneous resource complementarity. Extending factor market theory, I show that firms can profit when they exhibit superior complementarity to target resources, even in the absence of asymmetric expectations, and I determine the components of appropriated value in such markets. I thus demonstrate the power and simplicity of coalitional analysis, while shedding light on central concepts in strategic management discourse.
Keywords: Strategic factor markets, value appropriation, resource-based view, bargaining perspective, cooperative game theory
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