Resource title

The Timing of resource development and sustainable competitive advantage

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Resource description

We deepen and extend resource-level theorizing about sustainable competitive advantage by developing a formal model of resource development in competitive markets. Our model incorporates three important barriers to imitation: time compression diseconomies, causal ambiguity and the magnitude of fixed investments. Time compression diseconomies are derived from a micro-model of resource development with diminishing returns to effort. We characterize two dimensions of sustainability: whether a resource is imitable and how long imitation takes. We identify conditions under which competitive advantage does not lead to superior performance and show that an imitator can sometimes benefit from increases in causal ambiguity. Despite recent criticisms, we reaffirm the usefulness of a resource-level of analysis, especially when the focus is on resources developed through internal projects with identifiable stopping times.

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Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2006/2006-13.pdf

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Copyright INSEAD. All rights reserved