| The sustainable competitive advantage of firms has become one of the focuses of strategic management and firm theory. With the outside-in research approach, Porter adopts the "S-C-P" paradigm of the Industrial Organization theory. Porter argues that the firm's performance is determined by its strategy, while the strategy itself is dependent upon the five forces in the industry. In line with this argument, the firm is seen to consist of a series of strategic activities. It seeks a defensible position so as to adapt to the environment. The existence of the protection mechanisms such as patents and copyrights, economies of scale, the specialized contracts with suppliers and the "trade-offs" assure the sustainable competitiveness of firms. Porter's framework acts as a useful tool for firms engaging in strategy decision-makings.In contrast, firm theory adopts a different method in explaining the competitive advantage of firms. This line of research begins with the assumption that firms are composed of idiosyncratic assets. Such assets, whether they be tangible or intangible, form the basis for choosing strategy, and those strategies based on firm's resources determine the performance of firms.As the paper has pointed out, these two schools of thoughts have successfully explained the sources of competitive advantages of firms from different angles. The complementary nature between these two views makes it possible to include them into an integrated framework.However, when explaining the sustainability of competitive advantages of firm, these two views have encountered difficulties. One possible reason is the two concepts, the competitive advantage and the sustainable competitive advantage, are used by theorists indifferently. In Porter's view, the sustainability of competitive advantages of firms may result from the sustainable strategic positioning, while the existence of "trade-offs" assures this possibility. As the paper has analyzed, the trade-offs argument provides a not-so-satisfactory answer. Barney( 1990) emphasizes the four characteristics of firm resources: valuable, rare, inimitable and lack of substitute. His arguments are largely based on the given attributes of firm resources. A paradoxical phenomenon arises that the firms with excellent performance are those which display timely responsiveness to changes in markets, rapid and flexible product innovation and utilization of managerial capabilities in integrating resources both in firms and outside environment. Also, firm's resources can be eroded by changing conditions outside the firm,such as shortening of patent protection, organizational inertia, and lock-in effects of path dependency.Schumpeter, in his famous book, Theory of Economic Development ,advanced the concept of innovation to explain the business cycles in the capital society. Schumpeter paid no attention the sustainability of firm's excellent performance, but his ideas shed lights on our analysis and pave the way for further research.For our purposes, Kline and Rosenberg's chain-linked model (1986) is useful in that it not only points out different paths for firm's innovating activities, but also includes insights on how to sustain the superior performance of firms. Our analysis is laid out in two lines: customers as a source of innovation and the resource-recombination within the firm. In the first aspect, Hippel's empirical research is helpful, at least customers are regarded as contributors to firms' competitiveness, as opposed to the roles customers play in Porter's five force theory, where bargaining power of customers is partly detrimental to firms' profits.As for the second aspect, our analysis is largely hypothetical. The paper attempts to examine the causal logic relationships between knowledge characteristics and firms' innovation capabilities. But the relationships are complex and empirical research are needed to test the hypotheses.Managerial implications are inferred from the discussion mentioned above and suggestions for future research conclude the... |
