Sustainable competitive advantage: combining institutional and resource‐based views

Sustainable competitive advantage: combining institutional and resource‐based views This article suggests that the context and process of resource selection have an important influence on firm heterogeneity and sustainable competitive advantage. It is argued that a firm’s sustainable advantage depends on its ability to manage the institutional context of its resource decisions. A firm’s institutional context includes its internal culture as well as broader influences from the state, society, and interfirm relations that define socially acceptable economic behavior. A process model of firm heterogeneity is proposed that combines the insights of a resource‐based view with the institutional perspective from organization theory. Normative rationality, institutional isolating mechanisms, and institutional sources of firm homogeneity are proposed as determinants of rent potential that complement and extend resource‐based explanations of firm variation and sustainable competitive advantage. The article suggests that both resource capital and institutional capital are indispensable to sustainable competitive advantage. © 1997 John Wiley & Sons, Ltd. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Management Journal Wiley

Sustainable competitive advantage: combining institutional and resource‐based views

Strategic Management Journal, Volume 18 (9) – Oct 1, 1997

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Publisher
Wiley
Copyright
Copyright © 1997 John Wiley & Sons, Ltd.
ISSN
0143-2095
eISSN
1097-0266
DOI
10.1002/(SICI)1097-0266(199710)18:9<697::AID-SMJ909>3.0.CO;2-C
Publisher site
See Article on Publisher Site

Abstract

This article suggests that the context and process of resource selection have an important influence on firm heterogeneity and sustainable competitive advantage. It is argued that a firm’s sustainable advantage depends on its ability to manage the institutional context of its resource decisions. A firm’s institutional context includes its internal culture as well as broader influences from the state, society, and interfirm relations that define socially acceptable economic behavior. A process model of firm heterogeneity is proposed that combines the insights of a resource‐based view with the institutional perspective from organization theory. Normative rationality, institutional isolating mechanisms, and institutional sources of firm homogeneity are proposed as determinants of rent potential that complement and extend resource‐based explanations of firm variation and sustainable competitive advantage. The article suggests that both resource capital and institutional capital are indispensable to sustainable competitive advantage. © 1997 John Wiley & Sons, Ltd.

Journal

Strategic Management JournalWiley

Published: Oct 1, 1997

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