The Timing of Resource Development and Sustainable Competitive Advantage

We develop a formal model of the timing of resource development by competing …rms. Our aim is to deepen and extend resource-level theorizing about sustainable competitive advantage. Our analysis formalizes the notion of barriers to imitation, particularly those based on time compression diseconomies where the faster a …rm develops a resource the greater the cost. Time compression diseconomies are derived from a micro-model of resource development with diminishing returns to e¤ort. We use a continuous time model of the ‡ows of development costs and market revenues, which allows us to integrate strategic and …nancial analyses of …rm investment problems. We examine two dimensions of sustainability: whether the resources underlying a …rm’s competitive advantage are economically imitable and, if so, how long imitation takes. Surprisingly, we show that sustainable competitive advantage does not necessarily lead to superior performance. We …nd that imitators sometimes beneâ€...

• Type: Journal
• Year: 2007
• Where: MANSCI
• Authors: Gonçalo Pacheco-de-Almeida, Peter Zemsky
• Keywords: Competitive Advantage, MANSCI 2007, Sustainable Competitive Advantage, Time Compression Diseconomies