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Sustainable development and sustainability of competitive advantage: A dynamic and sustainable view of the firm

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Author Info

  • Ricart, Joan E.

    ()
    (IESE Business School)

  • Rodríguez, Miguel A.

    ()
    (IESE Business School)

  • Sanchez, Pablo

    ()
    (IESE Business School)

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    Abstract

    Does the need for sustainable development hinder businesses' ability to create value? Is firms' competitiveness negatively affected by considering that need? Evidence that many of today's economic development practices are causing negative environmental and social side-effects continues to pile up. Yet to change the belief that markets and prices by themselves can, must and will take care of any negative impact that companies have on society is a tough objective. To prove that it is possible to do well by doing right, and that, in the long term, the only way to do well is by doing right, is a Herculean task. The purpose of this paper is to contribute to this task. Since the core idea of the paper relates to the role of business in society at large, first of all the authors quickly review the literature concerning this issue. Then, drawing on the resource-based view of the firm and sustainable development literature, the paper presents a proposal for a dynamic and sustainable view of the firm, explaining the normative and instrumental character of its foundations. It shows how sustainable development changes the competitive landscape and in so doing influences the way in which companies develop their resources, capabilities and activities, fostering the persistence of competitive advantages based on knowledge and innovation. The authors conclude by highlighting the changes in corporate governance which inherently come with this new view of the firm.

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    Bibliographic Info

    Paper provided by IESE Business School in its series IESE Research Papers with number D/462.

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    Length: 20 pages
    Date of creation: 15 Apr 2002
    Date of revision:
    Handle: RePEc:ebg:iesewp:d-0462

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    Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
    Web page: http://www.iese.edu/
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    Keywords: Sustainable development; corporate governance; knowledge management;

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    References

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    1. Michael C. Jensen, 2001. "Value Maximization, Stakeholder Theory, And The Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, Morgan Stanley, vol. 14(3), pages 8-21.
    2. Kotha, Suresh & Rajgopal, Shivaram & Rindova, Violina, 2001. "Reputation Building and Performance: An Empirical Analysis of the Top-50 Pure Internet Firms," European Management Journal, Elsevier, Elsevier, vol. 19(6), pages 571-586, December.
    3. Edward Freeman, R. & Evan, William M., 1990. "Corporate governance: A stakeholder interpretation," Journal of Behavioral Economics, Elsevier, Elsevier, vol. 19(4), pages 337-359.
    4. Vergin, Roger C. & Qoronfleh, M. W., 1998. "Corporate reputation and the stock market," Business Horizons, Elsevier, Elsevier, vol. 41(1), pages 19-26.
    5. Frank Mueller, 1996. "Human Resources As Strategic Assets: An Evolutionary Resource-Based Theory," Journal of Management Studies, Wiley Blackwell, Wiley Blackwell, vol. 33(6), pages 757-785, November.
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    Cited by:
    1. Ricart, Joan E. & Rodriguez, Miguel A. & Sanchez, Pablo, 2004. "Sustainability in the boardroom: An empirical examination of Dow Jones sustainability world index leaders," IESE Research Papers, IESE Business School D/577, IESE Business School.

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