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is implementing a value creating strategy not simultaneously being
implemented by any competitor”.
© Dr Adrian Kuah 2008
competitor .
Sustained: “When the competitors are unable to duplicate the benefits
of this strategy”.
Flaws in a strictly environmental
model
• If all firms have same resources, they all
have same strategically relevant capital.
• First-mover advantage is not conceivable
(asymmetry in information is not allowed).
• Barriers to entry are not conceivable.
© Dr Adrian Kuah 2008
Attribute of Resources
Not all resources can create sustained competitive
advantage. In order to do so, it has to meet the 4
following conditions:
􀂾It must be valuable. It is able to be exploited at the right time,
􀂾It has to be rare in origins. It id not readily available to competitors
􀂾It has to be imperfectly imitable. This can due to its unique history,
© Dr Adrian Kuah 2008
causal ambiguity and/or social complexity
􀂾It does not have any substitute : no alternatives
Theory
A firm can get a sustained competitive
advantage when it possesses resources
which are (the underlying theory assumes):
􀂾 Heterogeneous
Otherwise the competitors could easily introduce the same
strategies
© Dr Adrian Kuah 2008
􀂾 Immobile
Otherwise the competitors could easily get the needed resources to
copy the strategies
Objections
􀂾 First mover advantage
“Th fi t fi i i d t
􀂾 Entry/mobility barriers
“If th t t
Two main objections:
The first firm in an industry
to implement a strategy can
obtain a sustained
competitive advantage”.
there are strong entry or
mobility barriers, the firms
may be able to obtain a
sustained competitive
advantage”.
Th fi t t di B i l i tif
© Dr Adrian Kuah 2008
The first mover must dispose
of information, which is
considered as a resource of a
firm
Barriers can only exist if
competing firms dispose of
heterogeneous and immobile
resources
Framework
Firm Resource Heterogeneity and Immobility
+
=
Value Rareness Imperfect imitability Substitutability
+
=
© Dr Adrian Kuah 2008
Sustained Competitive Advantage
Theoretical Model
• Key assumption: firm’s resource must be
heterogeneous and immobile
• Framework: to achieve sustained competitive firm’s
resource must possess four key attributes.
• Attributes: Valuable, rare, imperfectly imitable and
Non-substitutable
© Dr Adrian Kuah 2008
Applications/I
• With this framework is it possible to analyze the
firm resources to understand if they can be
sources of sustained competitive advantage.
Example of resources:
• Strategic planning.
– Formal (not likely to be a source of SCA).
– Informal (likely a source of SCA).
• Information processing.
© Dr Adrian Kuah 2008
p g
– (not likely to be a source of SCA).
• Positive reputation.
– (likely a source of SCA).
Applications/II
It is possible to better understand the relationship
between strategic management theory and other
business disciplines.
• Social Welfare.
– The model is consistent with social welfare concerns.
• Organization theory and behavior.
Th d l h l i t t th i ti l d
© Dr Adri