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competitive advantage-what is it mostly about?

Teppo

The earlier post on 'political competitive advantage' reminds me of why I enjoy organization theory and strategic management so much – it implicates many disciplines in the social sciences including sociology, political science, economics etc. But (there's always a but), a question I have been wondering about is: what is competitive advantage (and by implication, strategy) mostly about? It is fine to say that inherently we are dealing with a multi-level phenomenon, but can and should we prioritize in terms of what should receive emphasis?

A quick scan of our journals suggests that matters such as institutions, alliances, networks, and industry are what it is all about. Really? With colleagues I have wondered about the 'organizational' of it all. And from my perspective, aren't organizations inherently made up of individuals, or can we essentially round them out of the analysis?

I quickly (this is not very scientific) looked at article citation rates (in the social science citation index) to find what appear to be emerging 'classics' in strategic management. Of late, the alliances literature seems to be a clear winner – Woody Powell et al.'s (1996) "Interorganizational collaboration and the locus of innovation" as of today has 418 citations to it, and Jeff Dyer and Harbir Singh's (1998) "The relational view" receives 320 citations. Undoubtedly good work – but it looks like sociology might be taking over! (There are numerous scholars here in this intersection of sociology and strategy – e.g., Ranjay Gulati and Brian Uzzi). It may even in large part be that strategy's emerging classics are also sociology's classics.

But, what about critical issues such as individual value appropriation and value creation? Russ Coff's (1999) classic (yes, you saw it here first) piece on rent appropriation gets a measly 28 citations – half of those from Russ himself! Jay Barney in his 2001 rebuttal to Priem and Butler called this area the most promising direction for strategic management, but work in this area still remains scant. I don't believe we can meaningfully or scientifically even talk about competitive advantage without careful consideration for individual-level factors such as appropriation.

One conference organized around trying to attack some of the 'fundamentals' of strategy is Rich Makadok's Atlanta Competitive Advantage conference – I recommend it.

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Written by teppo

April 28, 2006 at 12:08 am

Posted in strategy, teppo

5 Responses

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  1. I too study organizational competition, but it’s political rather than economic. Social movement theories offer many insights about what contributes to competitive advantage in that field and they are increasingly being applied by org theorists (e.g., see Davis et al. [2005]) to explain institutional change.
    Of course, the question is whether or not you think similar processes occur across these distinct domains. If we believe that institutions shape economic competition – particularly political institutions, as the earlier post on ‘political competitive advantage’ suggests – then maybe we should consider the broader implications of political sociology.
    Just thinking out loud.

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    Jeff

    April 28, 2006 at 12:09 pm

  2. […] competitive advantage-what is it mostly about? […]

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  3. […] competitive advantage-what is it mostly about? […]

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  4. Jeff – thanks – agreed. Again, the question for me is one of emphasis recognizing that all these matters are important (but how important). Thanks for visiting!

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    Teppo

    April 29, 2006 at 7:24 am

  5. Dear Mr Teppo, how to distribute “relational rent” /what ever between local partner and others partner in IJV?
    Surely I saw…. foreign investor afraid and always keep watching their technology, no spillover goes to others, but ..and but finally ‘profit’ goes to foreign investor… what’s your comment?? Thanks

    Lily Sudhartio

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    Lily Sudhartio

    February 14, 2007 at 1:49 am


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