Organizational strategy - Drs. N. Telg
PEST analysis (political, economic, social, and technological) is a management method whereby an
organization can assess major external factors that influence its operation in order to become more
competitive in the market.
Dieuwertje van de Wouw – Vrije Universiteit Amsterdam – Pre-master Program – PPMO – 2024 34
, 6. Firm Resources and Sustained Competitive Advantage
Abstract
Understanding sources of sustained competitive advantage has become a major area of research in
strategic management due to its pivotal role in the success and longevity of businesses operating in
competitive markets. In today's dynamic business environment, firms are constantly striving to
differentiate themselves from competitors and secure a lasting competitive edge. This pursuit is driven
by the recognition that sustained competitive advantage is closely linked to higher profitability and
financial performance, making it a key determinant of long-term success.
Building on the assumptions that strategic resources are heterogeneously distributed across firms and
that these differences are stable over time, this article examines the link between firm resources and
sustained competitive advantage and to specify under which conditions FR can be a source of SCA for a
firm. Four empirical indicators of the potential of firm resources to generate SCA – value, rareness,
imitability, and substitutability – are discussed.
Introduction
This model suggest that firms obtain sustained
competitive advantage (SCA) by implementing
strategies that exploit their internal strengths,
through responding to environmental
opportunities, while neutralizing external threats,
and avoiding internal weaknesses. Most research
on sources of SCA has focuses either on isolating
a firm’s opportunities and threats, describing its
strengths and weaknesses, or analyzing how
these are matched to choose strategies.
For example, ‘five forces model’ by Porter describes the attributes of an attractive
industry/environment and thus suggests that opportunities will be greater, and threats less, in these
kinds of industries. To help focus on the impact of a firm’s environment on its competitive position,
much of this type of strategic research has placed little emphasis on the impact of idiosyncratic firm
attributes on a firm’s competitive position.
- Idiosyncratic firm attributes represent the unique characteristics and qualities that define a firm's identity and
competitive position, shaping its ability to thrive and excel in a competitive business environment.
Dieuwertje van de Wouw – Vrije Universiteit Amsterdam – Pre-master Program – PPMO – 2024 35
, Implicitly, this work had adopted two simplifying assumptions:
1. These environmental models of CA have assumed that firms within an industry are identical in
terms of the strategically relevant sources they control and the strategies they pursue.
2. These environmental models assume that should resource heterogeneity develop in an
industry or group (perhaps first-mover advantages), that this heterogeneity will be very short
lived because the resources that firms use to implement their strategies are highly mobile
(easily to obtain by competing firms).
However, the resource-based view of competitive advantage, *The resource-based view of competitive
because it examines the link between a firm’s internal advantage differs from traditional models by
characteristics and performance, obviously cannot build on emphasizing a firm's internal characteristics
these 2 assumptions. The RBV substitutes two alternate and unique resources as key drivers of SCA.
assumptions in analyzing sources of competitive advantage: This perspective challenges the assumption of
1. This resource-based model assumes that firms within industry-wide resource homogeneity and
an industry may be heterogeneous with respect to the highlights the importance of leveraging
internal strengths for long-term success. By
strategic resources they control.
focusing on internal attributes rather than
2. This resource-based model assumes that these external factors, the resource-based view
resources may not be perfectly mobile across firms, underscores the strategic value of distinctive
and thus heterogeneity can be long lasting. and immobile resources in achieving a
competitive edge.
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