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Competitive advantage and performance: the impact of value creation and costliness of imitation

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  • Jovan Grahovac
  • Douglas J. Miller

Abstract

We create an industrial organization type model to relate resources to the spread between product market demand and marginal cost. We define competitive advantage as the cross‐sectional differential in this spread, and performance as the longitudinal differential between what a firm appropriates in the product market and what it paid in the factor market. With factor markets imposing different costs on the innovator and potential imitator(s), competitive advantage, performance, and high resource value do not necessarily coincide. Also, the interaction between resource value and the cost of imitation is complex and affected by the number of firms in the industry. Copyright © 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Jovan Grahovac & Douglas J. Miller, 2009. "Competitive advantage and performance: the impact of value creation and costliness of imitation," Strategic Management Journal, Wiley Blackwell, vol. 30(11), pages 1192-1212, November.
    • Handle: RePEc:bla:stratm:v:30:y:2009:i:11:p:1192-1212
    DOI: 10.1002/smj.778
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    Cited by:

    1. Segarra Blasco, Agustí, 1958- & Gombau, Verònica, 2013. "Young innovative firms and R&D strategies: is the Spanish case different?," Working Papers 2072/222200, Universitat Rovira i Virgili, Department of Economics.
    2. Mary Beth Rousseau & Blake D. Mathias & Laura T. Madden & T. Russell Crook, 2016. "Innovation, Firm Performance, And Appropriation: A Meta-Analysis," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-29, April.
    3. Roland Bel, 2018. "A property rights theory of competitive advantage," Strategic Management Journal, Wiley Blackwell, vol. 39(6), pages 1678-1703, June.
    4. Lillis, Bob & Sweeney, Mike, 2013. "Managing the fit between the views of competitive strategy and the strategic role of service operations," European Management Journal, Elsevier, vol. 31(6), pages 564-590.
    5. Riyan Harbi Valdiansyah & Yvonne Augustine, 2021. "Modelling of beyond budgeting, competitor accounting, transparency, competitive advantage, and organizational performance: The case of Indonesia SMEs," Technium Social Sciences Journal, Technium Science, vol. 22(1), pages 334-349, August.
    6. Christian Geisler Asmussen, 2015. "Strategic factor markets, scale free resources, and economic performance: The impact of product market rivalry," Strategic Management Journal, Wiley Blackwell, vol. 36(12), pages 1826-1844, December.
    7. Nayak, Bishwajit & Bhattacharyya, Som Sekhar & Krishnamoorthy, Bala, 2022. "Exploring the black box of competitive advantage – An integrated bibliometric and chronological literature review approach," Journal of Business Research, Elsevier, vol. 139(C), pages 964-982.
    8. Yuqiu Lu & Guowei Li & Zhe Luo & Muhammad Anwar & Yunju Zhang, 2021. "Does Intellectual Capital Spur Sustainable Competitive Advantage and Sustainable Growth?: A Study of Chinese and Pakistani Firms," SAGE Open, , vol. 11(1), pages 21582440219, February.
    9. Edi Suandi & Herri & Yulihasri & Syafrizal, 2023. "Evaluating the relationship between entrepreneurial marketing, competitive advantage, and Islamic banks performance," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(3), pages 599-614, September.
    10. Berger, Elisabeth S.C. & Wenzel, Matthias & Wohlgemuth, Veit, 2018. "Imitation-related performance outcomes in social trading: A configurational approach," Journal of Business Research, Elsevier, vol. 89(C), pages 322-327.
    11. repec:thr:techub:10022:y:2021:i:1:p:334-349 is not listed on IDEAS
    12. Mohammad Keyhani & Moren Lévesque & Anoop Madhok, 2015. "Toward a theory of entrepreneurial rents: A simulation of the market process," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 76-96, January.
    13. Olivier Chatain, 2014. "How do strategic factor markets respond to rivalry in the product market?," Strategic Management Journal, Wiley Blackwell, vol. 35(13), pages 1952-1971, December.
    14. Jens Schmidt & Richard Makadok & Thomas Keil, 2016. "Customer-specific synergies and market convergence," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 870-895, May.

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