Armed with a deﬁnition of sustained competitive advantage, it is now possible to explore the impact of resource heterogeneity and immobility on this concept. This is done by ﬁrst examining the possibility of sustained competitive advantage when ﬁrm resources are perfectly homogeneous and mobile. Then, the possibility of sustained competitive advantage under heterogeneity and immobility is examined.
Of course, the analysis of sustained competitive advantage under perfect ﬁrm homogeneity and mobility does not suggest that there are industries where the attributes of perfect homogeneity and mobility actually exist. Although this is ultimately an empirical question, it seems reasonable to expect that most industries will be characterized by at least some degree of resource heterogeneity and immobility (Barney and Hoskisson 1989). Thus, rather than making an assertion that ﬁrm resources are homoge- neous and mobile, the purpose of this analysis is to examine the possibility of discovering sources of sustained competitive advantage under these con- ditions. Not surprisingly, it is argued that ﬁrms, in general, cannot expect to obtain sustained competitive advantage when strategic resources are evenly distributed across all competing ﬁrms and highly mobile. This conclusion suggests that the search for sources of sustained competitive advantage must focus on ﬁrm resource heterogeneity and immobility.
Imagine an industry where ﬁrms possess exactly the same resources. This condition suggests that ﬁrms all have the same amount and kinds of strategically relevant physical, ﬁnancial, human, and organizational capital. Is there a strategy that could be conceived and implemented by any one of these ﬁrms that could not also be conceived and implemented by all other ﬁrms in this industry? The answer to this question must be no. The conception and implementation of strategies employs various ﬁrm resources (Wernerfelt 1984; Barney 1986a; Hatten and Hatten 1987). That one ﬁrm in an industry populated by identical ﬁrms has the resources to conceive and implement a strategy means that these other ﬁrms, because they possess the same resources, can also conceive and implement this strategy. Because these ﬁrms all implement the same strategies, they all will improve their eﬃciency and eﬀectiveness in the same way and to the same extent. Thus, in this kind of industry, it is not possible for ﬁrms to enjoy a competitive advantage.
One objection to this conclusion concerns so-called ‘ﬁrst-mover advan- tages’ (Lieberman and Montgomery 1988). In some circumstances, the ﬁrst ﬁrm in an industry to implement a strategy can obtain a sustained competitive advantage over other ﬁrms. These ﬁrms may gain access to distribution channels, develop goodwill with customers, or develop a posi- tive reputation, all before ﬁrms that implement their strategies later. Thus, ﬁrst-moving ﬁrms may obtain a competitive advantage which might also be sustained.
However, upon reﬂection, it seems clear that if competing ﬁrms are identical in the resources they control, it is not possible for any one ﬁrm to obtain a competitive advantage from ﬁrst moving. To be a ﬁrst mover by implementing a strategy before any competing ﬁrms, a particular ﬁrm must have insights about the opportunities associated with implementing a strategy that are not possessed by other ﬁrms in the industry, or by poten- tially entering ﬁrms (Lieberman and Montgomery 1988). This unique ﬁrm resource (information about an opportunity) makes it possible for the better-informed ﬁrm to implement its strategy before others. However, by deﬁnition, there are no unique ﬁrm resources in this kind of industry. If one ﬁrm in this type of industry is able to conceive and implement a strategy, then all other ﬁrms will also be able to conceive and implement that strategy, and these strategies will be conceived and implemented in parallel, as identical ﬁrms become aware of the same opportunities and exploit that opportunity in the same way.
It is not being suggested that there can never be ﬁrst-mover advantages in industries. It is being suggested that in order for there to be a ﬁrst-mover advantage, ﬁrms in an industry must be heterogeneous in terms of the resources they control.
A second objection to the conclusion that sustained competitive advan- tages cannot exist when ﬁrm resources in an industry are perfectly homo- geneous and mobile concerns the existence of ‘barriers to entry’ (Bain 1956) or more generally, ‘mobility barriers’ (Caves and Porter 1977). The argument here is that even if ﬁrms within an industry (group) are perfectly homogeneous, if there are strong entry or mobility barriers, these ﬁrms may be able to obtain a sustained competitive advantage vis-à-vis ﬁrms that are not in their industry (group).
However, from another point of view, barriers to entry or mobility are only possible if current and potentially competing ﬁrms are heterogeneous in terms of the resources they control and if these resources are not per- fectly mobile (Barney, McWilliams, and Turk 1989). The heterogeneity requirement is self-evident. For a barrier to entry or mobility to exist, ﬁrms protected by these barriers must be implementing diﬀerent strategies than ﬁrms seeking to enter these protected areas of competition. Firms restricted from entry are unable to implement the same strategies as ﬁrms within the industry or group. Because the implementation of strategy requires the application of ﬁrm resources, the inability of ﬁrms seeking to enter an industry or group to implement the same strategies as ﬁrms within that industry or group suggests that ﬁrms seeking to enter must not have the same strategically relevant resources as ﬁrms within the industry or group. Thus, barriers to entry and mobility only exist when competing ﬁrms are heterogeneous in terms of the strategically relevant resources they control. Indeed, this is the deﬁnition of strategic groups suggested by McGee and Thomas (1986).
The requirement that ﬁrm resources be immobile in order for barriers to entry or mobility to exist is also clear. If ﬁrm resources are perfectly mobile, then any resource that allows some ﬁrms to implement a strategy protected by entry or mobility barriers can easily be acquired by ﬁrms seeking to enter into this industry or group. Once these resources are acquired, the strategy in question can be conceived and implemented in the same way that other ﬁrms have conceived and implemented their strategies. These strategies are thus not a source of sustained competitive advantage.
Again, it is not being suggested that entry or mobility barriers do not exist. However, it is being suggested that these barriers only become sources of sustained competitive advantage when ﬁrm resources are not homoge- neously distributed across competing ﬁrms and when these resources are not perfectly mobile.
Research that has focused on the impact of opportunities and threats in a ﬁrm’s environment on competitive advantage has recognized the limi- tations inherent in analyzing competitive advantage with the assumption that ﬁrm resources are homogeneously distributed and highly mobile. In his work, Porter (1985) introduced the concept of the value chain to assist managers in isolating potential resource-based advantages for their ﬁrms. The resource-based theory developed here simply pushes this value chain logic further, by examining the attributes that resources isolated by value chain analyses must possess in order to be sources of sustained competitive advantage (Porter 1990).
Source: Barney Jay B., Clark Delwyn N. (2007), Resource-Based Theory: Creating and Sustaining Competitive Advantage, Oxford University Press; Illustrated edition.