Gerald (Jerry) Zezas

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Competitive Advantage and Globalization-R-A Theory


Competitive Advantage and Globalization

It has been said that a firm has competitive advantage when its creative strategy is not being implemented by a competitor, and sustained competitive advantage is when its competitors are unable to duplicate the benefits of this strategy (Barney, 1991).

Global competitive advantage can be elusive when there is homogeneity of resources among global competitors, without, in many cases, first mover advantages, which allows one particular company to gain early and/or exclusive access to distribution channels, develop early goodwill with customers and build a reputation of trust in the industry (Barney, 1991).

True advantage typically requires heterogeneous resources, (such as access to abundant, cheap labor, or inexpensive, plentiful natural resources), that are either not readily available to competitors or not sufficiently mobile for them to obtain it at reasonable cost (Barney, 1991).An example of this would be a steel mill whose competitors are closer to sources for iron ore and coke. This mill would need to find competitive advantage in other areas, such as human resources or access to inexpensive transportation of those other resources to its mill.

In order for a firm to achieve or retain competitive advantage within a global framework, knowledge of local market for resources is critical, as is the ability to leverage whatever other resources are available locally for the purpose of obtaining that advantage (Seggie, Griffith, 2008).

Resource-advantage, or R-A theory, views companies as combiners of heterogeneous and imperfectly mobile resources, addressing the methods through which companies obtain advantages over their competitors by leveraging these resources to their greatest benefit.

R-A theory suggests that most resources needed by competitive firms and heterogeneous and not readily mobile, therefore the firm that can access these resources either before their competitors or to the exclusion of these competitors in a particular area of the world will obtain a resource-based competitive advantage. An example of this would be a beer manufacturer purchasing exclusive rights to the water from a natural spring, thereby gaining a sustainable competitive advantage so long as it can exclude competitors from using that resource (Shelby, 1997).

Developing these resources on a global scale is a critical function of companies like soft drink and beer manufacturers (water), clothing manufacturers, (inexpensive labor, fabric, raw materials) petroleum producers, (access to underground oil reservoirs) and the like. The more heterogeneous and imperfectly mobile these resources are, the more critical to sustained competitive advantage.

Resources
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-99. Retrieved from http://search.proquest.com/docview/215258436?accountid=34899
Seggie, S. H., & Griffith, D. A. (2008). The resource matching foundations of competitive advantage. International Marketing Review, 25(3), 262-275. doi: http://dx.doi.org/10.1108/02651330810877207
Shelby, D. H. (1997). Resource-advantage theory: An evolutionary theory of competitive firm behavior? Journal of Economic Issues, 31(1), 59-77. Retrieved from http://search.proquest.com/docview/208840061?accountid=34899

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