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When Competitive Advantage Doesn't Lead to Performance: The Resource-Based View and Stakeholder Bargaining Power

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  • Russell W. Coff

    (Goizueta Business School, Emory University, 1300 Clifton Road, Atlanta, Georgia 30322)

Abstract

What if rent from a competitive advantage is appropriated so it cannot be observed in performance measures? The resource-based view was not formulated to examine who will get the rent. Yet, this essay argues that the factors leading to a resource-based advantage also predict who will appropriate rent. Knowledge-based assets are promising because firm-specificity, social complexity, and causal ambiguity make them hard to imitate. However, the roles of internal stakeholders may grant them a great deal of bargaining power especially relative to investors.This essay integrates the resource-based view with the bargaining power literature by defining the firm as a nexus of contracts. This new lens can help to explain when rent will be generated and, simultaneously, who will appropriate it. In doing so, it provides a more robust theory of firm performance than the resource-based view alone. It is also suggested that this lens might be useful for examining other theories of firm performance.

Suggested Citation

  • Russell W. Coff, 1999. "When Competitive Advantage Doesn't Lead to Performance: The Resource-Based View and Stakeholder Bargaining Power," Organization Science, INFORMS, vol. 10(2), pages 119-133, April.
  • Handle: RePEc:inm:ororsc:v:10:y:1999:i:2:p:119-133
    DOI: 10.1287/orsc.10.2.119
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    File URL: http://dx.doi.org/10.1287/orsc.10.2.119
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    References listed on IDEAS

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