A resource -advantage model of firm value creation: Taxonomy of strategic approaches within the prepackaged software industry, 1998--2004

Traditional frameworks for considering competitive advantage within the body of strategic management theory are encumbered with the unrealistic assumptions of neoclassical economic theory and focus on value-in-exchange to the exclusion of value-in-use. As a result, models which adopt the perspective that value (utility) is embedded in goods (e.g., Porter's Value Chain) suffer from clear inadequacies in explaining value creation through services, direct inordinate managerial attention to cost containment and operational efficiency, and fail to represent the importance of knowledge and relationships as fundamental sources of competitive advantage.;Alderson (1957) suggests "what is needed is not an interpretation of the utility created by marketing, but a marketing view of the whole process of creating utility." For the main part, this challenge has gone unanswered over the past five decades. However, Hunt and Morgan's (2003) recent Resource-Advantage Model of Value Creation offers an alluring framework for considering this problem. These authors propose the relative effectiveness and efficiency with which firms manage their resources determines its ability to create and appropriate value. Resource management activities include: acquiring and developing resources, bundling resources, creating market offerings, developing and implementing positioning strategies, and maintaining and improving resources.;This dissertation adds body to this new theory, providing a more substantial theoretical grounding that distinctly characterizes these processes. Further, this synthesis provides the basis for the development of a numerical taxonomy of firm value creation and appropriation strategies. Drawing secondary longitudinal data from leading software firms for the period 1998-2004, five classes of firm types were identified using finite mixture regression modeling. In contrast to most prior organizational taxonomies, which traditionally have relied upon cluster analytic approaches, finite mixture modeling is a model-based approach. As a result, this taxonomy benefited from more objective heuristics in determining the optimal number of classes, consisted of classes derived based on theoretical relationships between variables, and incorporated all determinant covariates within a single modeling framework.;The dissertation offers an alternative perspective on the processes by which firms create and appropriate value. Further, it provides one of the first empirical tests of Resource-Advantage Theory of Competition (Hunt and Morgan, 1995).