The co-evolution of competition and parasitism in the resource-based view: A risk model of product counterfeiting

The primary concern in the resource-based view of the firm has been competition. For many firms, however, the relevant ecology includes parasites as well as competitors – notably product counterfeiters who parasitically exploit a firm's reputational resource. This parasitic process both diminishes the reputational resource it exploits, and produces significant risk of harm as a by-product. This article extends the resource-based view, presenting an account of the mechanism by which competition and parasitism co-evolve and produce a distinctive form of resource erosion. It does so using a model which, because a firm's reputational resource exists distributedly in the minds of mutually-influencing but not centrally-coordinated consumers, takes an agent-based approach. This model then naturally forms a basis for the probabilistic risk assessment of the consequences of parasitism – particularly the harm that arises from the counterfeiting of safety critical products such as pharmaceuticals. The intended contribution is to show how the resource-based view can be extended to reflect the fact that heterogeneous resource distribution is implicated in parasitism as much as competition, and to show how a model of the underlying mechanisms can support risk analysis.