StrategicManagementJournalStrat.Mgmt.J.:745 - PDF document

StrategicManagementJournalStrat.Mgmt.J.:745–768(2008)Publishedonline23April2008inWileyInterScience(www.interscience.wiley.com)DOI:10.1002/smj.686Received23May2005Finalrevisionreceived16January2008 Keywords:competitiveadvantage;performance;rareness; S.L.Newbertmethodologicaldesign’sgreatestlimitation.Con-sider,forexample,thatallrmsinanindustrydonot(bothbyabilityandbychoice)competeonthesamebases.RolexandTimexhavebothachievedtremendoussuccessmakingtimepieceswhileemployingentirelydifferentbusinessmod-els.WhereasRolexcompetesonquality,status,andmarketing,Timexcompetesprimarilyonscale(Barney,1997:148).Therefore,althoughaspe-cicresourceorcapabilitymaybefoundtoexhibitastrongcorrelationwithcompetitiveadvantageand/orperformanceinaparticularcontext,thatresourceorcapabilitymaysimplynotwiththeenterprise-levelstrategiesofallrmsoperatinginthatcontext.Formanagersofthosermswhoendeavortocompeteonalternativebases,thereislittletobegleanedfromndingsofthissort.Whatmightbemoreusefultotheseman-agerswouldbendingsthatallowedthemtoautonomouslyidentify,andinturnseekoutandexploit,resourcesandcapabilitiesthatmightnotonlycontributetotheirrms’competitiveposi-tion,butalsotwiththeiridiosyncraticbusi-nessmodels.Onewaytoarriveatsuchnd-ingsisbyeschewingthetendencytopredeter-whichresourcesandcapabilitiesoughttobecorrelatedwithcompetitiveadvantageand/orperformance,andinsteadidentifywhichcharac-teristicsofresourcesandcapabilitiesarerelatedtotheseends.Scholarsemployingsuchamethod-ologicaldesign,referredtoasa‘conceptual-levelapproach,’typicallyoperationalizetheindependentvariablenotintermsofspecicresourcesorcapa-bilities,butratherintermsoftheirvalue,rareness,inimitability,and/ornon-substitutability(Newbert,2007).Findingsfromconceptual-levelstudiesareimportantastheyprovideinsightintothecharac-teristicsthatresourcesandcapabilitiesingeneralmustpossessinordertoimprovearm’scompet-itiveposition.Toillustratetheimportancethatndingsofthissortmightoffer,consider,forexample,HendersonandCockburn’s(1994)seminalstudyofpharma-ceuticalrms.Employingaresourceheterogeneityapproach,HendersonandCockburn(1994)arguethatorganizationalcompetence(operationalizedasthetotalnumberofpatentsgeneratedbyandtheimportanceofpublicationsforpromotionwithintherm)isavaluable,rareresourceandndthatitissignicantlyrelatedtocompetitiveadvan-tage.Althoughtheresultsofthisstudyclearlydemonstratethesignicanceofpatentsandpubli-cationstosuccessinthepharmaceuticalindustry,becausetheindependentvariableisoperationalizedasaspecicresourceratherthanasthatresource’svalueandrareness,HendersonandCockburn’s(1994)studyisnotinformativewithrespecttopre-patentsandpublicationsareimportant.Whileonemightspeculatethattheyowetheirsig-nicancetotheirinherentvalueandrareness,suchcannotbeconcludedwithanydegreeofcertainty.Infact,itmaybethatthesignicanceofpatentsandpublicationstoarm’scompetitiveadvan-tageisafunctionofsomeothercharacteristicnotaddressedbyHendersonandCockburn(1994).Indeed,CollisandMontgomery(1995)arguethatarm’scompetitiveadvantageisafunc-tionnotonlyofthevalue,inimitability,andnon-substitutabilityofitsresourcesandcapabil-ities(indicativeoftraditionalRBVlogic),butalsooftheirdurability,appropriability,andsupe-riority.WhenappliedtoHendersonandCock-burn’s(1994)ndings,CollisandMontgomery’s(1995)frameworksuggeststhatthereasonpatents,forexample,mayenablepharmaceuticalrmstoattainacompetitiveadvantageisbecausetheyaredurable(theyofferprotectionforupto20years),appropriable(theyarelegallyboundtotherm),andsuperior(theyoffergreatersecuritythanotherformsofintellectualpropertyprotection).Therefore,toconcludethatorganizationalcom-petenceisvaluableandraresimplybecauseitisrelatedtocompetitiveadvantageistoassumethattheRBVhypotheseslinkingvalueandrarenesstocompetitiveadvantagearefactualandrequirenoempiricalconrmation.Thesehypotheses,how-ever,arepurelytheoretical,orsynthetic,andcanonlybeknowntobetruecalinvestigation(PriemandButler,2001a).Inordertotrulyunderstandwhyaresourceorcapa-bilitycontributestoarm’scompetitiveposi-tion,itsunderlyingcharacteristicsmustbeexam-ined.Withoutsuchconceptual-levelinvestigation,advicetopractitionerstoseekoutandexploitvaluable,rare,inimitable,and/ornon-substitutableresourcesandcapabilitiesmaybeunfounded.Forexample,Markman,Espina,andPhan(2004),intheirconceptual-levelstudy,ndthatcompetitiveadvantageinthepharmaceuticalindustryisrelatedtotheinimitabilitybutthesubstitutabilityofpatents.SuchresultssuggestthattheRBVhypoth-esisrelatingnon-substitutabilityandcompetitive2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVadvantagemaybeinvalidandhintsatthepossi-bilitythatthecriteriabywhichmanagersshouldevaluateresourcesandcapabilitiesmayneedrevi-Giventheinsightstobegleanedfromconcep-tual-levelstudies,itisunfortunatethatthereisapaucityofresearchemployingthismethodologicalapproach,particularlywithrespecttothecharac-teristicsofvalueandrareness(Newbert,2007).Inresponsetothisgap,thisstudywillemployaconceptual-levelapproachintestingtheRBVhypothesesrelatingvalueandrarenesstocom-petitiveadvantageandperformance.Itishopedthatthesubsequentempiricalresultswilladdtoourunderstandingregardingwhetherandtowhatdegreeresourcesandcapabilitiespossessingthesecharacteristicsactuallyimprovearm’scompeti-tiveposition.Intestingthesehypotheses,thisstudyseekstoadheremorecloselytoRBVtheorythanpriorstudiesintwoimportantways.First,giventhatresourcesandcapabilitieshavelongbeenarguedtobeeffectiveonlywhendeployedincombi-nation(Penrose,1959),thisstudywillopera-tionalizetheindependentvariableasthevalueandrarenessofresource-capabilityratherthanofindividualresourcesorcapabilitiesasistypicalofresearchinthisarea(Newbert,2007).Second,giventhatcompetitiveadvantageishypothesizedtomediatetheresource/capability-performancerelationship,thisstudywillavoidthetendencytotestthedirecteffectofresourcesandcapabilitiesonperformance(Powell,2001),andinsteadexploretheinterveningeffectofcompeti-tiveadvantage.THERBVThoughtheRBVistheresultoftheeffortsofmanyscholars(cf.AmitandSchoemaker,1993;Bar-ney,1991;EisenhardtandMartin,2000;Hender-sonandCockburn,1994;Penrose,1959;Peteraf,1993;Rubin,1973;Teeceetal.,1997;Werner-felt,1984),Barneyisgenerallyacknowledgedasthersttoformalizetheresource-basedliteratureintoacomprehensivetheoreticalframework.Inhis1991article,Barneyarguedthatrmsthatpos-sessandexploitresourcesandcapabilitiesthatarevaluableandrarewillattainacompetitiveadvan-tage.Barneyfurtherreasonedthattheseadvantageswillultimatelymanifestinimprovedperformanceintheshortterm(seeFigure1).Today,theRBVisconsideredtobeoneofthemostwidelyacceptedtheoriesofstrategicmanagement(Powell,2001;PriemandButler,2001a).However,becausetherelationshipsdepictedinFigure1havereceivedonlylimitedattentionintheempiricalliterature,theRBV’sacceptanceappearstobegroundedmoreonthebasisoflogicandintuitionthanonempiricalevidence.Inlightofthiscondition,thefundamentallogicunderlyingtheRBVwillbedis-cussedandempiricallytestedherein.ValueAccordingtoBarney(1991),ifaresourceorcapa-bilityyieldsthepotentialtoenablearmtoreducecostsand/orrespondtoenvironmentalopportuni-tiesandthreats,itisvaluable,andtotheextentthatarmisabletoeffectivelydeploysucharesourceorcapability,itwillattainacompetitiveadvantage.Giventhisargument,itfollowsthatthemagnitudeofarm’scompetitiveadvantagewillbeafunc-tionofthevalueofitsresourcesandcapabilities.Inotherwords,rmswhoseresourcesandcapa-bilitiesareofmarginalvaluewillatbestattainonlyminorcompetitiveadvantages.Ontheotherhand,rmswhoseresourcesandcapabilitiesareofgreatvaluewilllikelyattainsizablecompetitiveadvantages.Whilesuchlogicisstraightforward,itneverthelessassumesthatthermisactuallycapa-bleofexploitingitsresourcesandcapabilities;for,onlyoncepotentiallyvaluableresourcesandcapa-bilitiesareeffectivelydeployedcanarmattainwhatevercompetitiveadvantagesthoseresources combination rareness combination value advantage Figure1.Conceptualmodel2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.Newbertandcapabilitiesmightsuggestareavailable.Inordertounderstandhowresourcesandcapabili-tiesmustbeexploited,thesymbioticrelationshipthatexistsamongthemmustbeacknowledged.AccordingtoPenrose,‘resourcesconsistofabundleofpotentialservices[T]heservicesyieldedbyresourcesareafunctionofthewayinwhichtheyareused’(Penrose,1959:25).Inordertoeffectivelyuse,orexploit,aresource,AmitandSchoemakerarguethatarmmusthaveaccesstotheappropriatecapabilities,which‘refertoarm’scapacitytodeployResources’(AmitandSchoemaker,1993:35,emphasisinoriginal).Inotherwords,whileagivenresourcemayhavethepotentialtoyieldavaluableservice,thatservicewillremainlatentuntildeployedviaarelevantClearly,resourcesandcapabilitiesareinextrica-blyboundtogetherintheattainmentofacom-petitiveadvantage.AsPenrosesuggests,‘[no]resources[orcapabilities]areofmuchusebythemselves;anyefcientuseforthemisalwaysviewedintermsofpossiblecombinationswithotherresources[orcapabilities]’(Penrose,1959:86).Insupport,Rubinaversthat‘rmsmustpro-cessrawresourcestomakethemuseful’(Rubin,1973:937).LikePenrose(1959),hearguesthatinordertoeffectivelyprocessresources,armmustusetheminsomeeffectivecombination.Morerecently,Makadok(2001)contendsthatrmsmaycreaterentsnotonlybypickingbetterresourcesthancompetingrms,butalsobyexploitingthemmoreeffectivelywiththepropercapabilities.Hecontinuesbysuggestingthat‘[n]omatterhowgreatarm’scapabilitiesmightbe,theydonotgener-ateeconomicprotifthermfailstoacquiretheresourceswhoseproductivitywouldbeenhancedbyitscapabilities’(Makadok,2001:389).Insummary,itseemsthatwhilearesource(orcapability)mayhavetremendousvalue,itsvaluecanonlyberealizedwhenitiscombinedwithacorrespondingcapability(orresource).Giventhatresourcesandcapabilitiesareessentiallyunproductiveinisolation,thekeytoattainingacompetitiveadvantageisnotsimplytheexploitationofavaluableresourceoravaluablecapability,butrathertheexploitationofavalu-ableresource-capabilitycombination.Moreover,themorevaluabletherm’sresource-capabilitycombinations,thegreatertheadvantageitwillenjoyasaresultoftheirexploitation.Hypothesis1:Thevalueoftheresource-capabilitycombinationsthataÞrmexploitswillbepositivelyrelatedtoitscompetitiveadvan-RarenessAsnotedabove,toattainacompetitiveadvan-tage,rmsmustachieveacostlevel,exploitamarketopportunity,and/orneutralizeathreatthattheircompetitorscannot.Giventhenoveltyasso-ciatedwithsuchaccomplishments,Barney(1991)reasonsthatrmsareunlikelytoachievetheseendsiftheresourcesandcapabilitiestheyexploitarewidelyheld.Instead,competitiveadvantagelikelyderivesfromtheexploitationofresourcesandcapabilitiesthatarerare,orpossessedbysomenumberofrmsinanindustrythatissmallenoughtoprohibitperfectcompetition(Barney,1991).Alongthisvein,itisimportanttonotethatbecauseresourcesandcapabilitiesmustbeexploitedincombination,totheextentthatrarenesscontributestocompetitiveadvantage,itlikelydoessonotatthelevelofindividualresourcesandcapabilitiesbutratheratthelevelofresource-capabilitycom-binations.Insupport,Barney(1991)acknowledgesthatthecriterionofrarenessappliesto‘resourcebundles,’suggestingthatifaparticularbundleofresources(andcapabilities)iscommon,thenlargenumbersofrmswillbeabletoimplementtheresultingstrategy,therebyreducingtheadvantagetobegleanedfromitbyeachrm.Giventhislogic,itseemsthatrmsneednotnecessarilypossessrareresourcesrarecapa-bilitiesinordertoattainacompetitiveadvantage.If,forexample,armpossessesacapabilitythatnootherrmdoes(suchasapatentedchemicalprocess),itisnotnecessaryforittopossessequallyrareresourcesinordertotranslatethatcapabil-ity’slatentvalueintoacompetitiveadvantage.Totheextentthatthispatentedprocessisdesignedtomanipulatewidelyavailablerawmaterials(suchasnaturallyoccurringchemicalcompounds),thermmaystillenjoyacompetitiveadvantageoveritscompetitorsgiventhatitsrarecapabilityallowsittoexploitcommonresourcesdifferentlythanotherrms.Thus,commonresources(orcapabilities)canbeessentialtotheattainmentofacompeti-tiveadvantageprovidedtheyarepairedwithothercapabilities(orresources)insuchawaythattheresultingcombinationinwhichtheyareexploitedisrare.2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVInsummary,iftheresource-capabilitycombina-tionsarmexploitsarerare,thenitoughttoattainacompetitiveadvantage.Moreover,therarerthesecombinationsare,thegreatertherm’sadvantageswillbe.Hypothesis2:Therarenessoftheresource-capabilitycombinationsthataÞrmexploitswillbepositivelyrelatedtoitscompetitiveadvan-CompetitiveadvantageThoughthetermscompetitiveadvantageareoftenusedinterchangeably(seePort-er[1985:11]forexample),thetwoconstructsareacknowledgedtobeconceptuallydistinct(Pow-ell,2001).Whereasacompetitiveadvantageisgenerallyconceptualizedastheimplementationofastrategynotcurrentlybeingimplementedbyotherrmsthatfacilitatesthereductionofcosts,theexploitationofmarketopportunities,and/ortheneutralizationofcompetitivethreats(Barney,1991),performanceisgenerallyconceptualizedastherentsarmaccruesasaresultoftheimple-mentationofitsstrategies(Rumelt,Schendel,andTeece,1994).AccordingtoPeterafandBarney(2003),armthathasattainedacompetitiveadvantagehascre-atedmoreeconomicvalue(thedifferencebetweentheperceivedbenetsofaresource-capabilitycombinationandtheeconomiccosttoexploitthem)thanitscompetitors.Theauthorscontinuebysuggestingthateconomicvalueisgenerallycre-atedbyproducingproductsand/orserviceswitheithergreaterbenetsatthesamecostcomparedtocompetitors(i.e.,differentiation-basedcompetitiveadvantage)orthesamebenetsatlowercostcom-paredtocompetitors(i.e.,efciency-basedcom-petitiveadvantage).Becausesuperiorbenetstendtoenhancecustomerloyaltyandperceivedqual-ity(Zou,Fang,andZhao,2003),armthatcanexploititsresource-capabilitycombinationstoeffectivelyattainadifferentiation-basedcom-petitiveadvantageshouldbeabletoimproveitsperformancecomparedtocompetitorsbysellingmoreunitsatthesamemargin(i.e.,parityprice)orbysellingthesamenumberofunitsatagreatermargin(i.e.,premiumprice).Furthermore,becauseasuperiorcoststructureenablesgreaterpricingexibilityaswellastheabilitytoincreaseavail-ablesurplus(Baruaetal.,2004;PorterandMillar,1985;Zouetal.,2003),armthatcanexploititsresource-capabilitycombinationstoeffectivelyattainanefciency-basedcompetitiveadvantageshouldbeabletoimproveitsperformancecom-paredtocompetitorsbysellingmoreunitsatthesamemargin(i.e.,lowprice)orbysellingthesamenumberofunitsatagreatermargin(i.e.,parityprice).Ineithercase,itislogicaltoassumethatarmthatattainsacompetitiveadvantage,whetherintheformofgreaterbenetsatthesamecostorthesamebenetsatlowercost,willbeabletoimproveitsperformanceinwaysthatitscompeti-torscannot.Thisassumption,however,shouldnotimplythatcompetitiveadvantageandperformancewillnec-essarilybeequivalentfromanempiricalstandpointforatleasttworeasons.First,althoughacompet-itiveadvantagemaybeasufcientconditionforimprovedperformance,itmayoftenbeunneces-sary(Durand,2002).Indeed,theimplementationofaresource-basedstrategyissimplyoneofmanymeansbywhicharmmightearnrents.Insup-port,thereisawealthofempiricalevidencesug-gestingthatmanyfactorsexogenoustothermsignicantlyaffectperformance(Brush,Bromiley,andHendrickx,1999;Datta,Guthrie,andWright,2005;McGahanandPorter,1997;Rumelt,1991;Schmalensee,1985;SpanosandLioukas,2001).Thus,arm’sperformancemayincreaseevenintheabsenceofawell-executedresource-basedSecond,evenwhenarmeffectivelyimplementaresource-basedstrategy,itmayoftennditselfunabletorecovertheresultingeconomicvalueatacostlowerthanthatrequiredtocreateit(Coff,1999;PeterafandBarney,2003).Teece(1987)arguesthatarm’sabilitytoappropri-ateeconomicvalueisprimarilyafunctionofthenatureofthetechnologiesuponwhichtheassoci-atedproductsandservicesarebasedandtheeffec-tivenessoftheavailableformsoflegalprotection.Giventheseconstraintsonvalueappropriation,anyimprovementinperformancearmexperiencesisunlikelytocorrelateperfectlywithitscompetitiveInsummary,whileitisexpectedthatcompeti-tiveadvantageandperformancewillbecorrelated,thetwoconstructsareclearlytheoreticallyandempiricallydistinct.Whereascompetitiveadvan-tagereferstotheeconomicvaluethathasbeencreatedfromtheexploitationofarm’sresource-capabilitycombinations,performancereferstothe2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.Newberteconomicvaluethatthermhascapturedfromtheircommercialization.Althougharm’sperfor-manceisinuencedbyahostofexogenouseffects,thecompetitiveadvantagesarmattainsarenodoubtanimportantantecedenttowardthisend.Thus,itisexpectedthattheperformanceofrmsthatareabletoattaincompetitiveadvantageswillbegreaterthantheperformanceofthosermsthatarenot.Hypothesis3:AÞrmÕscompetitiveadvantagewillbepositivelyrelatedtoitsperformance.AccordingtoBarney,‘rmsareabletoimprovetheirperformanceonlywhentheir[resource-based]strategiesexploitopportunitiesorneutralizethreats’(Barney,1991:106).Inotherwords,thebestperformingrmswillnotnecessarilybethosethatsimplyexploitthemostvaluableandrareresource-capabilitycombinations,butratherthosermsthatexploittheircombinationsmosteffec-tively.Insupport,CastaniasandHelfat(2001)arguethatrentsderivenotfromrandomand/ormisguidedinitiatives,butratherfromproperlymotivatedandwell-directedstrategiceffort.Thus,inordertoimproveperformance,rms(ormorespecically,rmactors)mustrstidentifyandimplementresource-basedstrategiesthatactuallyresultinthecreationofeconomicvalue.Unfortu-nately,the‘humanlimitationsincraftingrmstrat-egy’(AmitandSchoemaker,1993:34)arelikelytoresultinconsiderablevariationinthedegreeofskillfulnesswithwhichresource-capabilitycom-binationsareexploited.Forexample,PrahaladandBettis(1986)observethatindividualsoftenmakedecisionsbasedonthemostreadilyavail-able(ratherthanthemostaccurate)information,aheuristicthatinvariablyleadstotheselectionofstrategiesthathaveproveneffectiveinthepast.Theauthorscontendthatsuchcognitivebiasesmanifestintremendousvarianceintheeffective-nessofdecisionsregardingresourceutilization.Inotherwords,becausedecisionstendtobebasedonidiosyncraticandoftenerroneousinformation,rmsmayoftenimplementresource-basedstrate-giesthatdonotresultinimprovedperformance.Itseemsthenthatwhilesomermswillbeabletogainaccesstopotentiallyvaluableresourcesandcapabilitiesthatotherrmswillnot(Barney,1986;DierickxandCool,1989),theirmereexploitationcannotensuretheappropriationofpositiveeco-nomicrents.Inordertoreapanyperformancebenetsfromitsvaluable,rareresourcesandcapa-bilities,thermmustdeploythemincombinationsthatactuallyresultinthereductionofcosts,theexploitationofmarketopportunities,and/ortheneutralizationofenvironmentalthreats.Itispre-ciselybecauseofthefactthatarmmaynotnecessarilysucceedinattainingtheseendsthatitsperformanceisultimatelyafunctionoftheeffectivenesswithwhichitexploitsitsresource-capabilitycombinations,asopposedtotheirunder-lyingvalueandrareness.Theabovediscussionisnotintendedtosug-gestthatthevalueandrarenessoftheresource-capabilitycombinationsarmexploitsplayroleindeterminingitsperformance.Indeed,inordertodeliveraproductorservicewithuniquefeaturesand/oratlowercostthancompetitors,armmustexploitvaluableresource-capabilitycombinationsinwaysthatitscompetitorsdonot.Atthesametime,however,nomatterhowvalu-ableandrarethesecombinationsare,theywillnotdirectlypredictarm’sperformance.Inordertoearnrentsfromitsresource-capabilitycombi-nations,armmustsuccessfullyattainthecom-petitiveadvantagesthatresultfromtheirexploita-tion.Thus,whilearmmaynditselfunabletoimproveitsperformanceintheabsenceofvaluable,rareresource-capabilitycombinations,itisthecompetitiveadvantagesthatderivefromtheirexploitationthatwillultimatelydeterminetherm’slevelofperformance.Hypothesis4:AÞrmÕscompetitiveadvantagewillmediatetherelationshipbetweenthevalueoftheresource-capabilitycombinationsthattheÞrmexploitsanditsperformance.Hypothesis5:AÞrmÕscompetitiveadvantagewillmediatetherelationshipbetweentherare-nessoftheresource-capabilitycombinationsthattheÞrmexploitsanditsperformance.IntheirassessmentofwhathasbeenlearnedfromtheRBVliterature,BarneyandMackeyarguethat‘thebestresource-basedempiricalworkwillinvolvecollectingprimarydatafromrmsinacarefullydrawnsample’(BarneyandMackey,2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBV2005:5).Inresponsetothiscall,asampleofmicro-andnanotechnologyrmswassurveyedfromthefallof2003throughthespringof2004.Micro-andnanotechnologyrmswerechosenfortworeasons.First,scholarshavearguedthatcom-petitiveadvantagesareexceedinglydifcult,ifnotimpossible,tosustainindynamicmarkets(BrownandEisenhardt,1998;D’Aveni,1994;Lei,Hitt,andBettis,1996;Teeceetal.,1997).Insuchcases,scholarsarguethatthebestarmcanhopeforistoattain‘aseriesoftemporaryadvantages’(Eisen-hardtandMartin,2000:1118).Giventhatthisstudyseekstounderstandhowrmsmayattain(asopposedtosustain)competitiveadvantages,rmscompetinginadynamicenvironmentthatarecon-tinuouslyseekingtodosomakesforanappropriateSecond,becauseoftheinfancyofmicro-andnanotechnologies,theyhaveyettogainthelegit-imacynecessarytostimulatewidespreadadoptionbypotentialcustomers(AldrichandFiol,1994).Duetotheabsenceofaknowndemand,theattain-mentofacompetitiveadvantageinthissectormaynotalwaystranslateintoimprovedperformance.Therefore,thepresentsamplemayofferinsightswithregardtotheimportantmediatingrolecom-petitiveadvantageplaysintheresource/capability-performancerelationship.BecauseasizableproportionofU.S.rmsareprivatelyheld,analyzingasampleofpubliclytradedmicro-andnanotechnologyrmswouldonlyproducebiasedresults.Inordertoidentifyamorerepresentativesampleofrms,themailinglistfortheMicroandNanotechnologyCommer-cializationEducationFoundation(MANCEF),atradeorganizationdesignedtofacilitatethecom-mercializationofmicro-andnano-basedtechnolo-gies,wasobtained.Thislistconsistedofsenior-levelexecutivesatMANCEFmemberrms,30.8percentofwhichwerefoundtobeprivatelyheld.Ofthesenames,thosewithvalidmailingaddressesworkingatrmsdirectlyinvolvedinmicro-andnanotechnologysectorsatfor-protrmswereselected,yieldingausablesamplesizeof664.These664rmswerefoundtocompeteinavarietyofindustries,ofwhichsemiconductors,chemicals,electronics,computerequipment,communications,andaerospacewerethemostcommonlyrepre-sented.Becausemanyofthepublicrmsinthesamplewereknowntobemultidivisional,eachrespondentwasaskedtoconsideronlythedivisionthatcompetesdirectlyinthemicro-andnanotech-nologysectorwhenrespondingtothesurvey.VariablesCompetitiveadvantage,value,andrarenessGiventhatrmsarewidelyacknowledgedtobebundlesofresourcesandcapabilities(Bar-ney,1991;Penrose,1959;Rubin,1973;Wern-erfelt,1984),itisunlikelythatarm’scom-petitivepositionissolelyattributabletoanyonespecicresourceorcapability.Therefore,unlikepriorconceptual-levelstudies(i.e.,Markmanetal2004),afocusonspecicresourcesorcapabili-tieswasavoided.Instead,thisstudyfocusesonthevalueandrarenessofaswellasthecompeti-tiveadvantagesattainedfromtheexploitationoftherm’sentireresource/capabilitybase.Insodoing,itishopedthatanysubsequentndingswillbegeneralizabletoallresourcesandcapabilitiesexploitedbyallrmsinthecontext.Becauserespondentswouldlikelybeunabletoassessthevalueandrarenessofeachindivid-ualresourceandcapabilitycontrolledbythermduetoboundedrationality(Simon,1957),itwasdecidedthattheentireresource/capabilitybasemightbebestassessedbyaskingrespondentstocommentonseveralbroadcategoriesofresourcesandcapabilities.Duetoitswidespreaduse,Bar-ney’s(1997)typology(nancial,human,organiza-tional,andphysicalresourcesandcapabilities)wasidentiedbyateamoftwoacademicsasanappro-priatestartingpoint.Afterconsultingwithvesenior-levelexecutivesatvedifferenttechnol-ogyrms,thecategory‘intellectualresourcesandcapabilities’wasaddedtothetypologytomakeitmorecomprehensiveandrelevanttomicro-andnanotechnologyrms(seeAppendix).Itemswerethenconstructedwithcarefulatten-tiontothefactthateachrmcompeteswithauniquesetofcompetitors,maintainsanidiosyn-craticsetofstrategicobjectives,andissubjecttodifferentenvironmentalcontingencies.Therefore,respondentswereaskedtoassesstheresourcesandcapabilitiestheirrmsexploitedforthepurposesofreducingcoststoa‘competitive’level,exploit-ing‘targeted’opportunities,anddefendingagainst‘known’threats.Bypositioningtheitemsinthisfashion,anyaprioriassumptionsonthepartoftheresearcherregardingwhatoughttoconstituteanappropriatecoststructure,whatopportunities2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.Newbertoughttobeexploited,andwhatthreatsoughttowarrantaresponsewereavoided(seeAppendix).Competitiveadvantage.Barney(1991)denescompetitiveadvantageasthedegreetowhicharmhasreducedcosts,exploitedopportunities,andneutralizedthreats.Tomeasurecompetitiveadvantage,itemswereinitiallydevelopedbytheacademicteaminaccordwiththisoperationaldef-initionassuggestedbyKerlingerandLee(2000:chap.3).Theseitemswerethenreviewedbythepractitionerpanelinordertoensuretheirclar-ityandrelevancetonon-academics.Throughaniterativeraticationprocessbetweentheacademicteamandpractitionerpanel,asetofthreeitemsemerged(seeAppendix,itemsCA1–CA3).Theseitemsarepositivelycoded,suchthatthehighertheresponse,thegreatertherm’scompetitiveadvan-Inoperationalizingthisvariable,responsestothesethreeitemsweresummedforeachresource/capabilitycategory,resultinginvescoresthatreectedthecompetitiveadvantagesthermhadattainedfromtheexploitationofitsnancial,human,intellectual,organizational,orphysicalresource-capabilitycombinations.Forexample,thecompetitiveadvantageattainedfromarm’snan-cialresource-capabilitycombinationswascalcu-latedas:CA1aCA3a.Finally,acom-positescorereectingtheaveragelevelofcom-petitiveadvantageacrossallresource/capabilitycategorieswascreatedbyaveragingtheseveValue.Harrison,McLaughlin,andCoalter(1996)notethatwhentheconstructsunderempiricalexaminationaresimilarconceptually,thepoten-tialforhighlycorrelatedresponsesisincreased.Becausethedenitionsofvalueandcompetitiveadvantagehavebeenarguedtobetautological(PriemandButler,2001a,2001b),respondentbiasofthisnaturewasaconcern.Tomitigatethisissue,twostepsweretakenintheconstructionofthevalueitems.First,amulti-itemscalewasusedgivenevi-dencethatresponsebiasdecreasesasthenumberofitemsmeasuringeachconstructincreases(Har-etal.,1996).Second,respondentswereaskedtocommentindirectlyaboutthevalueoftheirrm’sresourcesandcapabilities.Indirectframingwasusedtoreducethelikelihoodthatrespondentswouldseektorationalizeresponsesdescribingthelevelofcompetitiveadvantagetheirrmshadattainedwiththevalueoftheunderlyingresourcesandcapabilities.Specically,itemsweredevel-opedthataskedrespondentstoconsider,regard-lessofwhetherortowhatdegreetheirrmshadattainedacompetitiveadvantage,ifaccesstoother(i.e.,morevaluable)resourcesorcapabilitiesmightenabletheirrmstoimproveanysuchadvantages.Byassessingvalueinthismanner,thepotentialforresponsebiasisreducedaspriorresponsesregardingtherm’scompetitiveadvantageneednojustication.Relyingonthislogic,sixitemsmeasuringvalueemergedfromtheiterativeraticationprocessdis-cussedabove(seeAppendix,itemsV1–V6).Intheirrawformtheseitemsarenegativelycodedsuchthatthehighertheresponse,themoreeffec-tivelythermcouldreducecosts,exploitoppor-tunities,and/orneutralizethreatswithaccesstoresourcesandcapabilitiesthatarecurrentlybeyondtherm’scontrol.Inotherwords,thehighertheresponse,thelessvaluablethoseresourcesandcapabilitiesthatthermdoescontrol.Oncethesurveyswerereturned,responsestotheseitemswererecoded(i.e.,positivelycoded)suchthatthehighertheresponse,themorevaluabletheresourcesandcapabilitiestowhichthermhasAsarguedabove,aresourceisexponentiallymorevaluablewhencombinedwiththeappropri-atecapability.Therefore,thevalueofaresource-capabilitycombinationoughttobeamultiplicative(asopposedtoadditive)functionofthevalueoftheindividualresourcesandcapabilitiesthatcompriseit.Giventhislogic,responsestoeachofthecapa-bilityvalueitems(V1,V3,V5)weremultipliedbythecorrespondingresourcevalueitems(V2,V4,V6,respectively),resultinginthreepreliminaryvaluescoresreectingtherm’sabilitytoreducecoststoacompetitivelevel,exploittargetedoppor-tunities,andneutralizeknownthreatswiththeresourcesandcapabilitiestowhichithasaccess.Thesepreliminaryscoreswerecomputedforeachresource/capabilitycategoryandthensummed,resultinginvescoresreectingtheoverallvalueofeachrm’snancial,human,intellectual,orga-nizational,orphysicalresource-capabilitycombi-nations.Forexample,thevalueofarm’snan-cialresource-capabilitycombinationswascalcu-latedas:V1aFinally,acompositescorereectingtheaverage2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVvalueofalloftherm’sresource-capabilitycom-binationswascomputedbyaveragingtheseveRareness.Inordertoconferacompetitiveadvan-tage,agivenresource-capabilitycombinationmustbeexploitedbyasmallnumberofrms.However,asnotedabove,commonresourcesandcapabili-tiesoftenplayanimportantroleintheattainmentofacompetitiveadvantage.Therefore,itemsmea-suringrarenessmustaccountforthedegreetowhicharmexploitsuniqueresource-capabilitycombinationsaswellasthedegreetowhichitexploitscommonresources(orcapabilities)withuniquecapabilities(orresources).Followingthislogic,threeitemsmeasuringrarenessweredevelopedconjointlybytheacademicteamandpractitionerpanel(seeAppendix,itemsR1–R3).Theseitemsarepositivelycodedsuchthatthehighertheresponse,therarertherm’sresource-capabilitycombinations.Inoperationalizingthisconstruct,responsestothesethreeitemsweresummedforeachresource/capabilitycategory,resultinginvescoresthatreectedtherarenessofeachrm’snancial,human,intellectual,organi-zational,orphysicalresource-capabilitycombina-tions.Forexample,therarenessofarm’snan-cialresource-capabilitycombinationswascalcu-latedas:R1aR3a.Finally,acompositescorereectingtheaveragerarenessofalloftherm’sresource-capabilitycombinationswascom-putedbyaveragingthesevescores.Illustrativeexample.Toillustratehowtheabovescalesmeasuretheconstructsatissue,considerasimpliedexampleinwhichapopulationoftwormsproduceoilfromseparatebutidenticaldepositsofbitumen,or‘oilsand,’ahighlyviscousformofpetroleum(aphysicalresource).SupposethatFirmApossesseshigh-qualitysurfaceminingcapabilities(aconventionaltechnologywherebythelandisstrip-minedtoextractbitumenatshal-lowdepths)andsteaminjectioncapabilities(aconventionaltechnologywherebysteamispumpedintothebitumenreservoirtoextractbitumendeepunderground).FurthersupposethatFirmBpos-sesseshigh-qualitysurfaceminingcapabilitiesandreoodcapabilities(anexperimentalandsigni-cantlymoreenergyefcienttechnologythansteaminjection,wherebythebitumenreservoirisignitedtoextractbitumendeepunderground).Becausebothrmsareproducingoil,eachhassuccessfullyexploitedatargetedopportunityand,thus,eachhasattainedacompetitiveadvantage.Yet,becauseFirmAlacksreoodcapabilities,ithasnotexploitedtheopportunityasefcientlyasFirmB,renderingFirmB’scompetitiveadvan-tagegreaterthanFirmA’s.Furthermore,becausenoadditionalcapabilitieswouldenableFirmBtobetterexploittheresource,itscapabilitiescanbeconsideredtobeextremelyvaluable.Conversely,becausegainingaccesstoreoodcapabilitieswouldenableFirmAtoexploittheresourcemoreefciently,itscurrentsetofcapabilitiescanbecon-sideredtobelessvaluablethanFirmB’s.Lastly,becauseeachrmcombinesacommonresourcewithonecommonandoneuniquecapability,theresource-capabilitycombinationsexploitedbyeachrmcanbeconsideredtobemoderatelyrare.Threetypesofperformancemeasuresareusedreg-ularlyinthestrategyliterature:objectivenancialperformance(CombsandKetchen,1999;Knott,2003;MaijoorandVanWitteloostuijn,1996;Makadok,1999;MillerandShamsie,1996;RobinsandWiersema,1995;RussoandFouts,1997),subjectivenancialperformance(Powell,1992a,1992b;1995;PowellandDent-Micallef,1997),andsubjectivenonnancialperformance(CombsandKetchen,1999;HendersonandCockburn,1994;Markmanetal.,2004;PowellandDent-Micallef,1997;YeohandRoth,1999).Duetotheprevalenceofprivatermsinthesample,dataonobjectivenancialperformancewerenotavailable.Thus,performancewasmeasuredviaDelaneyandHuselid’s(1996)widelyusedmarketperformancescale(Perry-SmithandBlum,2000;Richard,2000),asubjectivescalethatincludesbothnancial(sales,protability)andnonnan-cial(marketing,marketshare)indicatorsandhasawell-documentedreliabilityof0.86(seeAppendix,itemsP1–P4).Theseitemsarepositivelycodedsuchthatthehighertheresponse,thegreatertherm’sperformance.Thisvariableisoperational-izedbysummingtheresponsestothefouritems.Giventhatresearchsuggeststhatperceptualmea-suresofperformancecorrelatewellwithobjectivemeasures(Powell,1992a),coupledwiththeubiq-uityofaccountingirregularitiesintoday’smarket-place,itisbelievedthatthisscalewillserveasarigorousindicatorofrmperformance.2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.NewbertControlvariablesAuthorsengaginginRBVresearchtypicallycon-trolforrmsizeandtheenvironment.Inthisstudy,rmsizeisoperationalizedastherm’stotalnum-berofemployees.Thisvariablewashighlyskewedinitsrawform;thus,itslogwastakeninordertonormalizethedistribution.Insodoing,becauseseveralrespondentsindicatedhavingnoemploy-ees,avalueofonewasaddedtothisitempriortotakingitslog.Inlightofthefactthatmicro-andnanotech-nologyrmsdonotoperateinasingleindus-try,andbecauseindustryinformationonmanyoftheprivatermsinthesamplewereunob-tainable,Khandwalla’s(1976)environmentalhos-tilityscale(seeAppendix,itemsEH1–EH3)isusedtocontrolforenvironmentaleffectsinlieuofStandardIndustrialClassication-basedmea-sures.Thisscaleisdesignedtomeasurethedegreetowhichtherespondentperceivesthattherm’senvironmentischaracterizedbycompetitionandriskandhasawell-documentedreliabilityof0.73.Thisvariableisoperationalizedbysummingtheresponsestothethreeitems.PilotstudyInanattempttoassessthereliabilityandvalid-ityofthenewlydevelopedscales(value,rareness,andcompetitiveadvantage),apilotsurveywasadministeredto153ofthe664respondentsfol-lowingtheDillman(1978)TotalDesignMethod.Surveysandvariousaccompanimentsweresentoutinaseriesofthreemailingsandthreee-mailsfromNovember2003toDecember2003,fromwhich25completedsurveyswerereceived,reectingaresponserateof16.3percent.Cron-bachalphascomputedonallscaleswerefoundtobeaboveorapproaching0.700,suggestingthatthescalesareinternallyconsistent(Nunnally,1978).Theresultsofanexploratoryfactoranalysisofthesescalesshowthatallitemsconvergewithitemsmeasuringthesameconstructanddiscrimi-natefromitemsmeasuringotherconstructs.Whilesuchresultswouldordinarilyprovidestrongevi-denceinsupportofthescales’validity,becausethesample-to-variableratioof1.5:1islowerthanthatwhichisregardedasadequatetoderivestable Resultspertainingtothereliabilityandvalidityofpilotstudydataarenotreportedhereinbutareavailableuponrequest.factors(Cattell,1978;ConwayandHuffcutt,2003;Everitt,1975;Fabrigaretal.,1999),nocompellingconclusionsregardingvaliditycouldbedrawnatthisstage.FullstudyAlsofollowingtheDillman(1978)TotalDesignMethod,thecompletesurveyalongwithaccom-panimentsweresentoutinaseriesoffourmail-ingsandvee-mailsfromJanuary2004toMarch2004totheremaining511respondentsinthesam-plewhowerenotsentapilotsurvey.Fromthese511respondents,117completedsurveyswerereceived,reectingaresponserateof22.9percent,aresponseratethatcomparesfavorablywithsimi-larstudiesintheeld(AlreckandSettle,1985).Ofthese117respondents,73provideddataregardingtheirjobtitleindicatingthat24(33%)arepresi-dent,generalmanager,partner,and/orchiefofcer,23(32%)aresenior-leveldirectorsormanagers,16(22%)areengineers/scientists,and10(14%)arevicepresidents.Becausethoserespondingtothesurveyareallsenior-levelexecutivesorscientistsattheirrespectiverms,itisassumedthattheyareallhighlyqualiedtoprovideaccurateresponsestothesurveyitems.Inordertotestforthepresenceofbiasamongrespondents,severaltestswereconducted.chi-squaretestswereconductedtodetermineifrespondentsdifferedfromnonrespondentsbasedontheirgenderorthegeographiclocationoftheirrm.Allstatisticswereinsignicant,suggestingthatrespondentsandnonrespondentsdonotdifferonthesedimensions.Second,ANOVAtestswerethenconductedforeachsurveyitemtodetermineiftheanswersgivenbyearlyresponders(thosewhosesurveywasreceivedpriortothethirdmailing,ndifferedsignicantlyfromlateresponders(thosewhosesurveywasreceivedafterthethirdmailing,57).Ofthe68itemsonthesurvey,signi-cantdifferencesexistedbetweenthesetwogroupsforonlyfour(5.88%).Becausevepercentofthemeanresponsesareexpectedtobesignicantlydifferentatthe05levelbychancealone,thefactthatsignicantdifferenceswerefoundtoexistforonly5.88percentoftheitemsisnotentirelyunexpected.Thus,itisassumedthatanybiasthat Resultsoftestsofresponsebiasarenotreportedhereinbutareavailableuponrequest.2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVmayexistwithrespecttothetimeofresponseisduelargelytochanceandwillnotsubstantivelyimpactanysubsequentanalyses.Lastly,aHarman’ssingle-factortestwascon-ductedtoassessthedegreetowhichthedataissubjecttocommonmethodbias,anapproachthatisroutinelyusedintheliterature(Christmann,2004;KirkmanandShapiro,2001;Steensmaetal2005).Theunrotatedfactorsolutionproducedvefactorsthataccountfor23.1percent,18.3percent,11.4percent,7.6percent,and6.9percentofthevariance,respectively.Becauseasinglefactordidnotemergefromtheanalysisandbecausenosin-glefactoraccountedforasubstantialmajorityofthevariance,articialresponsebiasisnotassumedtoexistinthedata(PodsakoffandOrgan,1986).Inordertoassessthereliabilityofthedata,Cronbachalphaswerecomputedforeachscaleusedinthefullstudy(seeAppendixforreliabil-itycoefcients).Alphasforallscalesareaboveorapproaching0.700,suggestingthatthescalesareinternallyconsistent(Nunnally,1978).Inordertoassessthevalidityofthesescales,anexploratoryfactoranalysiswasconductedonthe19itemscom-prisingtheseconstructs(seeTable1forresults).Withausablesamplesizeof96,thisanaly-sisyieldsasample-to-variableratioof5.1:1.Scholarshavetraditionallyreliedonanecdotalevidencewhenproposingappropriatesample-to-varianceratios(MacCallumetal.,1999),resultinginwide-rangingrecommendations,fromalowof3:1(Cattell,1978)toahighof10:1(Everitt,1975).Morerecently,however,rigorousstatisti-calstudiesofexploratoryfactoranalysisndthataratioof4:1isadequatetoproducestablefac-tors(ConwayandHuffcutt,2003;Fabrigaretal1999).Inlightofsuchevidence,itisconcludedthatthefactorsreportedinTable1arestable.Fur-thermore,giventhattheitemsinTable1convergewithitemsmeasuringthesameconstructanddis-criminatefromitemsmeasuringotherconstructs(reafrmingtheinconclusivepilotstudyresults),Table1.Exploratoryfactoranalysis:fullstudy ValueRarenessCompetitivePerformanceEnvironmental SurveyItemCapabilitiesenablethreatresponse(V5)0.0250.0420.021Resourcesenablethreatresponse(V6)0.1480.1800.016Capabilitiesenableopportunityexploitation(V3)0.1760.107Resourcesenableopportunityexploitation(V4)0.1970.2960.090Capabilitiesenablecostreduction(V1)0.0540.0700.2500.124Resourcesenablecostreduction(V2)0.1490.1220.0250.263Combineresourceswithnovelcapabilities(R2)0.0170.0660.1890.097Combinenovelresourcesandcapabilities(R3)0.1260.1060.0740.077Combinecapabilitieswithnovelresources(R1)0.0770.3250.1230.001Threatsrespondedto(CA3)0.0470.1770.113Opportunitiescapitalizedon(CA2)0.1400.3150.1750.060Costshighlycompetitive(CA1)0.0540.4690.3790.023Growthinsales(P2)0.0600.0780.1200.188Protability(P3)0.0290.1380.1890.155Marketshare(P4)0.1330.0070.3540.096Marketing(P1)0.0510.203Safetyofenvironment(EH2)0.0840.0930.0200.037Richnessofopportunities(EH3)0.0330.0830.009Controloverenvironment(EH1)0.0830.304Eigenvalue4.3912.1681.4503.4811.307Varianceexplained17.87814.38210.47514.8499.772 Notethatthestatisticsreportedforthevalue,rarenessandcompetitiveadvantageitemsreectthefactorweightsfortheaverageresource/capabilitycategory.Exploratoryfactoranalysesforeachoftheindividualresource/capabilitycategoriesaresimilar,thoughtheyarenotreportedherein.Itemnumberinparentheses(seeAppendix).67.4%ofthevarianceexplained.2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.Newbertitisalsoconcludedthatthescalesusedinthisstudyareindeedvalidindicatorsoftheconstructstheyweredevelopedtomeasure.ANALYSISANDRESULTSDescriptivesandcorrelationsDescriptivestatisticsandcorrelationswerecom-putedforthemodelvariables(seeTable2).TwosetsofstatisticsareworthyofnoteinTable2.First,ofthecorrelationsamongvariablesthatwillappearconjointlyinsubsequentregressionanalyses(boldedstatistics),thosethataresig-nicantareallbelow0.500withtheexceptionofthatbetweenrareness(organizationalresourcesandcapabilities)andcompetitiveadvantage(orga-nizationalresourcesandcapabilities).However,becausethevarianceinationfactor(VIF)forthesetwotermsis1.452,wellbelowtheVIFof10thatKennedysuggestsisindicativeof‘harmfulcollinearity’(Kennedy,1992:183),itisassumedthatthiscorrelationwillnotconfoundtheresultsofanysubsequentstatisticaltests.Second,thecorre-lationsamongthevalueandcompetitiveadvantageitemsarerelativelylow(themaximumacrosstheveresource/capabilitycategoriesis0.358).Suchevidencesuggeststhateffortstomitigatebiasintheformofhighlycorrelatedresponsesforthesetwoconstructsweresuccessful.DeterminantsofcompetitiveadvantageHypotheses1and2weretestedusingsixhierarchi-calordinaryleastsquares(OLS)regressionmod-els,onepertainingtoeachoftheveindividualresource/capabilitycategories(nancial,human,intellectual,organizational,andphysical,respec-tively)andonepertainingtotheaverageforthesecategories.AscanbeseenfromtheresultsoftheseanalysesreportedinTable3,the-statisticsandthechangesinthe-statisticsforallsixregressionmodelsaresignicant,suggestingnotonlythatthefullmodelstthedatawell,butalsothattheaddi-tionoftheindependentvariablesproducesmodelsthattthedatasignicantlybetterthanthecon-trolvariablesmodels.Theresultsalsoshowthatthefullmodelsexplainaconsiderableamountofthevarianceincompetitiveadvantage(11.9%to TheVIFiscalculatedas132.6%acrossthesixmodels),whichineachcasereectsasubstantialincreasefromthecontrolvari-ablemodel.Theparametersforthecontrolvariablesshowthatrmsizeisinsignicantinallsixmodelsandthatenvironmentalhostilityissignicantinthenancialresourcesandcapabilitiesmodelonly,suggestingthatthesevariableshavelittleornoeffectoncompetitiveadvantage.Withrespecttothehypothesesatissue,theparameterestimateforvalueispositiveandsignicantinveofthesixmodels(allbutthephysicalresourcesandcapabili-tiesmodel).ThisndingofferssupportforHypoth-esis1,thatthevalueoftheresource-capabilitycombinationsthatarmexploitsispositivelyrelatedtoitscompetitiveadvantage.Additionally,theparameterestimateforrarenessissignicantandpositiveinallsixmodels.Thisndingsug-geststhattherarerarm’sresource-capabilitycombinations,thegreaterthecompetitiveadvan-tagesitwillattainfromtheirexploitation.Thus,supportisalsoconcludedforHypothesis2.DeterminantsofperformanceHypotheses3,4,and5weretestedusingsixhier-archicalOLSregressionmodelssimilartothosediscussedabove.AscanbeseenfromtheresultsoftheseanalysesreportedinTable4,allsixstatisticsandveofthesixchangesinthestatisticsaresignicantsuggestingthatthefullmodelnotonlytsthedatawell,butalsothattheadditionofcompetitiveadvantagetothemodelsignicantlyimprovesthetofthedataforallbutthephysicalresourcesandcapabilitiesmodel.Theresultsalsoshowthatthefullmodelsexplainaconsiderableamountoftheexplainedvarianceinperformance(11.8%to18.6%acrossthesixmod-elsforwhichtheinclusionofcompetitiveadvan-tageimprovesthemodel’st),whichineachcasereectsasubstantialincreasefromthecontrolvari-ablemodel.Theparameterestimatesforthecontrolvariablesshowthatenvironmentalhostilityissignicantlyandnegativelyrelatedtoperformanceinallsixregressionmodels.Thisnding,whichisconsis-tentwithpriorresearch(Dessetal.,2003),sug-geststhatthelesshostilearm’senvironment,thegreateritsperformance.Firmsize,ontheotherhand,isinsignicantinallmodels,suggestingthatthisvariableisunrelatedtoperformance.Theresultsalsoshowthattheparameterestimatefor2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVTable2.Descriptivesandcorrelations VariableMeanStd.dev.N123456789 1Environmentalhostility11.9383.1201122Firmsize(log)4.9113.0041053Value(nancial)21.87212.50010910404Value(human)22.05510.68310918900.4255Value(intellectual)22.79811.48010911700.3146Value(organizational)22.50011.24510815000.3847Value(physical)24.56011.06910901200.6968Value(average)22.3479.02610910700.7049Rareness(nancial)9.8602.22110714300.1210.0130.05110Rareness(human)10.3002.2241070.3390.1180.35611Rareness(intellectual)10.5902.5251070.4320.0780.21612Rareness(organizational)9.9102.2551070.1190.0890.0430.0770.0410.41213Rareness(physical)9.9002.1721070.0990.1450.0060.47014Rareness(average)10.1101.7481070.26115Competitiveadvantage(nancial)8.7222.531108158004400.0950.0540.1300.11516Competitiveadvantage(human)9.1102.4171090.0380.1570.2210.0080.1720.14617Competitiveadvantage(intellectual)9.4722.5781080.0980.0240.1690.0620.14118Competitiveadvantage(organizational)8.8992.33710902200.0530.0840.1660.1140.1380.25619Competitiveadvantage(physical)9.2842.2321090.1650.2260.1140.0860.20120Competitiveadvantage(average)9.0991.9661090.1270.1470.1410.20521Performance9.9552.9761120740089008400540100002300880 2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.NewbertTable2.( Variable1011121314151617181920 1Environmentalhostility2Firmsize(log)3Value(nancial)4Value(human)5Value(intellectual)6Value(organizational)7Value(physical)8Value(average)9Rareness(nancial)10Rareness(human)11Rareness(intellectual)0.75412Rareness(organizational)0.5960.53813Rareness(physical)0.5160.45514Rareness(average)0.8450.82215Competitiveadvantage(nancial)0.0010.0500.32916Competitiveadvantage(human)0.24617Competitiveadvantage(intellectual)0.36418Competitiveadvantage(organizational)0.2370.2710.1410.38219Competitiveadvantage(physical)0.1590.1370.3120.47420Competitiveadvantage(average)0.2700.2790.85321Performance0240052009601560 BoldedcoefcientsindicatethosecorrelationsamongvariablesthatwillappeartogetherinsubsequentOLSregressionsResource/capabilitytypeinparentheses(seeAppendix)2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVTable3.Determinantsofcompetitiveadvantage resourcesandandcapabilitiesresourcesandOrganizationalresourcesandResourcesandAverageResourcesand Environmentalhostility0.1910.0520.093Firmsize0.0110.0440.0330.0000.0080.0540.0560.0850.010Value0.3110.1450.187Rareness0.4490.4600.0170.3120.0190.1190.0410.2310.0210.3260.0100.2290.0090.195-Statistic1.80011.7730.0884.2520.00412.4820.5338.1200.5506.813Change20.97215.54112.936 StandardizedcoefcientsreportedTable4.Determinantsofperformance resourcesandresourcesandresourcesandOrganizationalresourcesandResourcesandAverageResourcesand Environmentalhostility0.2520.2390.2060.203Firmsize0.0750.0800.0680.0570.0830.1460.0520.0480.0950.0810.1020.097Value0.1390.0720.0040.0180.0790.0460.1120.0450.025Rareness0.1800.0220.1120.0070.1180.0210.3160.1470.0980.0190.2290.062Competitiveadvantage0.3540.3650.3610.0530.1300.0400.1180.0340.1260.1300.1860.0340.0680.0720.168-Statistic2.3111.9853.5431.8193.7191.8452.3974.823Change4.1243.9881.86211.446 Standardizedcoefcientsreported2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.Newbertcompetitiveadvantageissignicantandpositiveinallsixregressionmodels,therebysuggestingthatarm’scompetitiveadvantageisindeedanimpor-tantantecedenttoitsperformance.Thus,supportisconcludedforHypothesis3.Itwasarguedabovethatthemoderatelyhighcorrelationbetweenrarenessandcompetitivead-vantagewouldnotconfoundtheresultsfortheorganizationalresourcesandcapabilitiesmodelpresentedinTable4giventherelativelylowVIFfortheseconstructs.Inordertoconrmthisassumption,thismodelwasreruntwice,oncewithoutrarenessandoncewithoutcompetitiveadvantage,inordertoassesswhetherthereportedresultsmighthavebeenaffectedbythiscorrela-tion.Theseadditionalregressionsshowthatthesignicance,signs,andrelativeeffectsizesoftheparameterestimatesfortheremainingvariablesarevirtuallyidenticaltothosepresentedinTable4,conrmingthatthiscorrelationdoesnotconfoundtherelationshipsunderexamination.MediatingeffectofcompetitiveadvantageFollowingBaronandKenny’s(1986)analyticconsiderationsformediation,thefollowingfourconditionsmustbemetinordertoconcludesupportforHypotheses4and5:(1)valueandrarenessmustberelatedtocompetitiveadvan-tage,(2)competitiveadvantagemustberelatedtoperformance,(3)valueandrarenessmustberelatedtoperformanceintheabsenceofcompet-itiveadvantage,and(4)theeffectsofvalueandrarenessonperformancemustbereducedorelim-inatedupontheinclusionofcompetitiveadvan-tagetothemodel.Theresultshighlightedaboveshowthatthersttwooftheseconditionsaremet,namelythatvalueandrarenessarerelatedtocompetitiveadvantage(seeTable3)andthatcompetitiveadvantageisrelatedtoperformance(seeTable4).Unfortunately,BaronandKenny’s(1986)thirdconditionisnotsatisedwithrespecttovalue.AscanbeseeninTable4,theparame-terestimateforvalueisinsignicantinstageoneofeachofthesixmodels.Becausenorelationshipexistsbetweenvalueandperformance,thereisnorelationshipforcompetitiveadvantagetomediate;thus,Hypothesis4isnotsupported. Resultsoftheseregressionsnotincludedhereinbutareavail-ableuponrequest.Theresultsforrareness,ontheotherhand,aremorepromising.AsseeninTable4,theparam-eterestimatesforrarenessintherststageofthenancial,organizational,andaverageresourcesandcapabilitiesmodelsaresignicant,therebysatisfyingBaronandKenny’s(1986)thirdcon-dition.Table4alsoshowsthatthesignicanceofeachoftheseparameterestimatesiselimi-natedupontheinclusionofcompetitiveadvan-tagetothemodel,therebysatisfyingBaronandKenny’s(1986)fourthcondition.Takentogether,thesendingssuggestthatcompetitiveadvan-tagefullymediatestherareness-performancerela-tionshipforthesethreeresource/capabilitycate-Inordertomorerigorouslyassessthemediatingeffectofcompetitiveadvantageontherareness-performancerelationship,Sobel,Aroian,andGoodmantests,whicharedesignedtodeterminewhethertheinuencethatamediatingvariablehasontherelationshipbetweenanindependentanddependentvariableisstatisticallysignicant,wereconducted.AstheresultsinTable5show,eachoftheseteststatisticsissignicant,suggestingthatthemediatingeffectofcompetitiveadvantageisindeedsignicant.Becausethiseffectwasfoundforonlythreeofthesixmodelstested,Hypoth-esis5isonlypartialsupported.Itisimportanttonote,however,thatthismediatingeffectwasfoundtoexistfortheaverageresourcesandcapabilitiesmodel(suggestingthatthiseffectissignicantonaverage),therebystrengtheningthepartialsupportforthishypothesis.ThisstudywasconductedinordertotesttheRBVhypothesesthatthevalueandrarenessofarm’sresource-capabilitycombinationscontributetoitscompetitiveadvantageandthatsuchanadvantage,inturn,contributetoitsperformance.InndingsupportforHypotheses1and2—thatthemorevaluableandrarearm’sresource-capabilitycom-binations,themorelikelyitwillattainacom-petitiveadvantage—thisisoneofonlyasmallnumberofstudiesthatndsempiricalevidenceofdirectrelationshipsbetweenthevalueandrarenessofarm’sresource-capabilitycombinationsanditscompetitiveadvantage.Suchndingsmaybeofinteresttobothacademicsandpractitionersforseveralreasons.2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVFromanacademicstandpoint,byexaminingthesefundamentalRBVhypothesesatthecon-ceptuallevel,thisstudyllsanimportantgapintheempiricalliterature.Thendingthatvalueandrareness,ratherthanspecicresourcesandcapabilities,determinearm’scompetitiveadvan-tageprovidessupportforhypothesesthathaveuntilnowbeenacceptedalmostentirelyonthebasisoflogicandintuition.Thus,thepresentndingsshouldhelpstrengthentheRBV’saccep-tanceasarigoroustheoryofstrategicmanage-ment.Additionally,byframingtheindependentvariablesintermsofresource-capabilitycombina-tions(asopposedtoindividualresourcesorcapa-bilities),thepresentstudymoreaccuratelycapturesthedynamicsbywhichresourcesandcapabilitieshavelongbeenarguedtocontributetocompetitiveadvantagethanhasthemajorityofpriorresearchinthisarea.Fromapractitionerstandpoint,thendingthatacompetitiveadvantagestemsfromthecombi-nationofvaluable,rareresourcesandcapabilitiesmayinformthewayinwhichmanagersmakedeci-sionstoaltertheirrms’resource/capabilitybases.Consider,forexample,thatpriorresearchhassug-gestedthatresourcesandcapabilitiesmaybeval-uatedinisolation.Suchndingsimplythatiftheexploitationofagivenresourcehasnotresultedintheattainmentofacompetitiveadvantage,thentheresourceisnotvaluable.However,thepresentnd-ingssuggestthattheresourcemayindeedbehighlyvaluable,butthatitmustsimplybeexploitedviaadifferentcapability.Thus,beforejettisoningoracquiringagivenresource(orcapability),man-agersmaywishtorstassessthevalueofthecapabilities(orresources)withwhichithasbeenorcouldbecombined.Similarly,priorevidencethatonlyrareresourcesandcapabilitieswillenabletheattainmentofacompetitiveadvantagesuggeststhatmanagersoughttogainaccesstoresourcesandcapabil-itiesthatnoorfewotherrmspossess.Yet,becauserareresourcesaredifcultifnotimpossi-bletoattain,Miller(2003)theorizesthatrmsmayinsteadbeabletobuildacompetitiveadvantagefromtheresourcesandcapabilitiestheyalreadypossess.Theresultsreportedhereinsupportthisargument.Indeed,thendingthatitistheunique-nesswithwhichvaluable,thoughperhapscom-mon,resourcesandcapabilitiesarecombinedthatenablesarmtoattainacompetitiveadvantagesuggeststhatmanagersneednotnecessarilyseekoutnovelresourcesandcapabilities,butratherdevelopnovelwaysinwhichtocombinethoseresourcesandcapabilitiestowhichtheydohaveInconcludingsupportforHypothesis3,thisstudyndsevidenceinsupportofthenotionthatacompetitiveadvantageviatheimplementationofaresource-basedstrategyisanimportantmeansbywhicharmcanimproveitsperformance.Whenviewedinthecontextoftheresultsforthemedia-tionhypotheses(Hypotheses4and5),thecurrentndingsseemtoindicatethatalthoughvaluable,rareresource-capabilitycombinationsareimpor-tantindeterminingarm’slevelofperformance,theireffectonperformanceisneitherdirectnorinevitable.Because(1)valueandrarenesswerefoundtobesignicantlyrelatedtocompetitiveadvantage,(2)valuewasfoundtobeunrelatedtoperformance,and(3)competitiveadvantagewasfoundtofullymediatetherareness-performancerelationship,itseemsthatinordertoreapanyper-formancegainsfromitsresourcesandcapabilities,armmustrstattainthecompetitiveadvantagesthatresultfromtheircombinedexploitation.Inotherwords,thevalueandrarenessthatmightcharacterizearm’sresourcesandcapabilitiesmaynotnecessarilyconferimprovedperformance.SuchanendcanonlybeattainedifthermisableTable5.Mediatingeffectofcompetitiveadvantage MediatedrelationshipSobelAroianGoodman Resource-capabilitycombinationrareness(nancial)performance2.593Resource-capabilitycombinationrareness(organizational)performance2.465Resource-capabilitycombinationrareness(average)performance2.758 Resource/capabilitytypeinparentheses(seeAppendix).2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.Newberttoexploitthesevaluable,rareresourcesandcapa-bilitiesincombinationsthatenableittoeffectivelyreducecosts,exploitmarketopportunities,and/orneutralizecompetitivethreats.Thesendingsmayalsobeinformativetobothacademicsandpracti-Fromanacademicstandpoint,thesendingareimportantfortworeasons.First,byadheringmorecloselytotheory,theyrespondtocallstoacknowl-edgetheconceptualdifferencesbetweencom-petitiveadvantageandperformanceinempiricalresearch(Powell,2001).Second,bydemonstrat-ingthatcompetitiveadvantageplaysasignicantroleintheresource/capabilityexploitationprocess,theysuggestthatstudiesthattestthedirectrela-tionshipbetweenresources/capabilitiesandperfor-mancemaybeincomplete.Takentogetherwiththendingthatrmsizeisinsignicantinallbutoneofthe12regres-sionmodels,thesendingsmayalsobeofinter-esttopractitioners.Totheextentthatimprov-ingperformanceisnotdirectlyafunctionofthevalueorrarenessofarm’sresource-capabilitycombinationsbutratheroftheadvantagesitcre-atesfromtheirexploitation,allrms(boththosethathaveaccesstoawidearrayofresourcesandcapabilitiesandthosethatdonot)seemtohaveanequalopportunitytosucceed.Firmsseek-ingtoimprovetheirperformanceneednotnec-essarilyexploitonlythoseresourcesandcapa-bilitiesthathavebecometheacceptedasbasesofcompetitionintheirrespectiveindustryastheresultsofresourceheterogeneitystudiesmightoth-erwisesuggest.Instead,rmsneedonlydeploythoseresourcesandcapabilitiestowhichtheydohaveaccessinnovelcombinationssuchthattheyareabletoreducecostsand/orrespondtoenvironmentalconditions.Suchndingsoughttogivehopetoownersandmanagersofnewandsmallrmsaswellasthoseofolderrmslook-ingtodiversifyintonewmarketsthatmayhaveaccesstoresourcesandcapabilitiesthataredif-ferentfromthosetowhichestablishedcompeti-torsdo.LIMITATIONSANDDIRECTIONSFORFUTURERESEARCHThoughthepresentanalysismayprovidesomeinsightintotheresource/capability-competitivead-vantage-performancerelationship,itisnotentirelybeyondreproach.Aconcernofanystudythatcollectsself-reportdataisthatitmaybesubjecttocommonmethodbias.ItisimportanttonotethatsurveyresearchwasundertakeninlightofBarneyandMackey’s(2005)calltoconductpri-maryresearchontheRBVaswellasthefactthatthecontextchosenforanalysis(themicro-andnanotechnologysector)containsahighpercentageofprivatelyheldrmsforwhichsecondarydataisnotavailable.Althoughthestatisticalanalysesdescribedabovesuggestthatresponsebiasisnotpresentinthedata,scholarswishingtoreplicatethisstudymayneverthelesswishtoexaminepub-liclyheldrmsforwhichsecondarydatamaybemorereadilyobtainable.Alongthisvein,itisimportanttonotethatthedatawereprovidedbysinglerespondents.Althoughtheuseofsingleasopposedtomultiplerespondentshasbeenarguedtoincreasethelike-lihoodthatthedatawillbebiased,singlerespon-dentswereusedfortworeasons.First,becausetheMANCEFmailinglistwasusedtoidentifyageneralizablesampleofrms,thelistofpoten-tialrespondentswaslimited.Second,becausetherespondentsaresenior-levelexecutivesorscien-tistsattheirrespectiverms,theyarearguablybetterpositionedthananyoneelseinthermtoassesstherm’sinternaloperationsandcom-petitiveenvironment.Assuch,thedatacollectedarebelievedtobeaccurate.Nevertheless,schol-arsconductingresearchinthisareainthefuturemaywishtocorroboratetheirdatabysurveyingmultiplerespondentswithintherm.Lastly,oneofthemostseriouscritiquesoftheRBV,andonetowhichthisstudymaynotbeentirelyimmune,isthatofthetautologicalnatureofvalueandcompetitiveadvantage.Giventhetau-tologyinherentintheiroperationaldenitions,anempiricaltestoftherelationshipbetweenthemisadmittedlydifcult.Therefore,multi-itemscaleswerediligentlycreatedinconsultationwithprac-titionerswiththispotentialconfoundinmindinanattempttoavoidundulycorrelatedresponses.Basedonevidencethatthesemeasuresarebothreliableandvalid,thatrespondentbiasisnotpresentinthedata,andthatthecorrelationsamongthesetwovariablesarereasonablylow,attemptstoaccuratelymeasuretheseconstructswerearguablyNevertheless,becausethemeasurementofvalue,likethatofallunobservableconstructs,isinher-entlycomplicated(GodfreyandHill,1995),it2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVcannotbeconcludedwithcertaintythatnoerrorexistsinthemeasurementofthisconstruct.Indeed,thedecisiontomeasurevalueindirectlymayhaveresultedindatathatreectsthesubjectiveshadowpriceofarm’sexistingresourcesandcapabil-itiesasopposedtotheirtrue,objectivevalue.Tothedegreethatanysuchslippagedoesexist,theresultspertainingtovalueshouldbeacceptedguardedly.Additionally,futurescholarsmaywishtomeasurevalueviaalternativemetricsinanattempttofurtherreducethepotentialconfound-ingeffectsofthistautologywhileatthesametimecapturingtheessenceofthisimportantcon-Ultimately,thisstudyhasendeavoredtoexplorerelationshipsthatunderpinmanyofthefundamen-talhypothesesoftheRBVthathaveuntilnowbeenlargelyignoredintheempiricalliterature.Inndingsupportforthemajorityofthesehypothe-ses,thisstudymayhelpstrengthentheRBV’sperceptionasarigoroustheoryofstrategicman-agement.Ofcourse,duetothelackofresearchinthisarea,thendingspresentedhereinbeckonreplication;thus,futurescholarsareencouragedtocontinuetoconductconceptual-leveltestsoftheRBV.Insodoing,weasascholarlycommu-nitywillhavemorerigorousevidencebywhichtoconrm,rene,supplement,and/orrefutetheRBV’sfundamentalhypotheses,therebyenrichingourunderstandingoftherolethatresourcesandcapabilitiesplayinanorganization’ssuccessandTheauthorthanksBruceKirchhoff,TomBryant,SeungHoPark,MarkSomers,andShakerZahrafortheirhelpfulcommentsonearlierversionsofthismanuscript,andScottBryantattheMicroandNanotechnologyCommercializationEducationFoundation(MANCEF)forprovidingthemailinglistusedforthedatacollection.Anyremainingerrorsaresolelytheauthor’sresponsibility.TheauthoralsoacknowledgestheRutgersUniversityPh.D.PrograminManagementforpartiallyfund-ingthisresearch. 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S.L.NewbertAPPENDIX:SURVEYINSTRUCTIONSANDSCALESBelowaresomequestionsthatwillhelpuslearnhowyouuseyourCapabilitiesandResourcesforthepurposesofreducingcoststoacompet-itivelevel,exploitingtargetedmarketopportuni-ties,and/ordefendingagainstknowncompetitivethreats.Whenrespondingtothesequestions,pleaseselectyouranswerbasedonthefollowingdeni-Resources:thetangibleorintangiblearmpossessesorhasaccessto.ImportantclassesofResourcesareasfollows:1.FinancialResources:capital,cash,equity,re-tainedearnings,etc.2.HumanResources:training,experience,judg-ment,intelligence,relationships,etc.ofindivid-ualemployees.3.IntellectualResources:patents,copyrights,trademarks,tradesecrets,etc.4.OrganizationalResources:relationshipswithotherrms(suchaspartners,suppliers,buyers,creditors),channelsofdistribution,corporateculture,etc.5.PhysicalResources:physicaltechnology,plantandequipment,geographiclocation,rawmate-rials,etc.theintangibleprocesses(suchasskills,abilities,know-how,expertise,designs,management,etc.)withwhicharmexploitsResourcesintheexecutionofitsday-to-dayoper-Performance(DelaneyandHuselid,1996)Four-pointLikert-typescalerangingfrommuchworsetomuchbetter.Comparedtootherorganizationsthatdothesamekindofwork,howwouldyoucomparetheorganization’sperformanceoverthepast3yearsintermsofP1.Marketing?P2.Growthinsales?P3.Protability?P4.Marketshare?CompetitiveadvantageFive-pointLikert-typescalerangingfromstronglydisagreetostronglyagree.CA1.ThemannerinwhichmyrmcombinesResourcesandCapabilitiesenablesittoreduceitscoststoahighlycompetitivea.FinancialResourcesandCapabilitiesb.PhysicalResourcesandCapabilitiesc.HumanResourcesandCapabilitiesd.IntellectualResourcesandCapabilitiese.OrganizationalResourcesandCapabilitiesCA2.ThemannerinwhichmyrmcombinesRe-sourcesandCapabilitiesenablesittofullyexploitalltargetedmarketopportunities.a.FinancialResourcesandCapabilitiesb.PhysicalResourcesandCapabilitiesc.HumanResourcesandCapabilitiesd.IntellectualResourcesandCapabilitiese.OrganizationalResourcesandCapabilitiesCA3.ThemannerinwhichmyrmcombinesRe-sourcesandCapabilitiesenablesittodefendagainstallknowncompetitivethreats.a.FinancialResourcesandCapabilitiesb.PhysicalResourcesandCapabilitiesc.HumanResourcesandCapabilitiesd.IntellectualResourcesandCapabilitiese.OrganizationalResourcesandCapabilities737,0.691,0.755,0.717,and0.690fornancial,human,intellectual,organizational,andphysicalresources/capabilities,respectivelyValueFive-pointLikert-typescalerangingfromstronglydisagreetostronglyagree.V1.GiventheResourcesmyrmpossessesandhasaccessto,ifmyrmpossessedotherCapabilitiesitcouldreduceitscostsfurther.a.CapabilitiestoexploitFinancialResourcesb.CapabilitiestoexploitHumanResources2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj Conceptual-LevelTestoftheRBVc.CapabilitiestoexploitIntellectualResourcesd.CapabilitiestoexploitOrganizationalResourcese.CapabilitiestoexploitPhysicalResourcesV2.Givenmyrm’sCapabilities,ifmyrmpos-sessedorhadaccesstootherResourcesitcouldreduceitscostsfurther.a.FinancialResourcesb.HumanResourcesc.IntellectualResourcesd.OrganizationalResourcese.PhysicalResourcesV3.GiventheResourcesmyrmpossessesandhasaccessto,ifmyrmhadaccesstootherCapabilitiesitcouldbetterexploittargetedmarketopportunities.a.CapabilitiestoexploitFinancialResourcesb.CapabilitiestoexploitHumanResourcesc.CapabilitiestoexploitIntellectualResourcesd.CapabilitiestoexploitOrganizationalResourcese.CapabilitiestoexploitPhysicalResourcesV4.Givenmyrm’sCapabilities,ifmyrmpos-sessedorhadaccesstootherResourcesitcouldbetterexploittargetedmarketopportu-a.FinancialResourcesb.HumanResourcesc.IntellectualResourcesd.OrganizationalResourcese.PhysicalResourcesV5.GiventheResourcesmyrmpossessesandhasaccessto,ifmyrmhadaccesstootherCapabilitiesitcouldbetterdefendagainstknowncompetitivethreats.a.CapabilitiestoexploitFinancialResourcesb.CapabilitiestoexploitHumanResourcesc.CapabilitiestoexploitIntellectualResourcesd.CapabilitiestoexploitOrganizationalResourcese.CapabilitiestoexploitPhysicalResourcesV6.Givenmyrm’sCapabilities,ifmyrmpos-sessedorhadaccesstootherResourcesitcouldbetterdefendagainstknowncompeti-tivethreats.a.FinancialResourcesb.HumanResourcesc.IntellectualResourcesd.OrganizationalResourcese.PhysicalResources812,0.784,0.818,0.833,and0.812fornancial,human,intellectual,organizational,andphysicalresources/capabilities,respectivelyRarenessFive-pointLikert-typescalerangingfromstronglydisagreetostronglyagree.R1.ComparedtocompanieswithsimilarCapa-bilities,myrmusesthemtoexploitverydifferentResourceswhenattemptingtoreducecosts,exploitmarketopportunities,and/ordefendagainstcompetitivethreats.a.FinancialResourcesb.HumanResourcesc.IntellectualResourcesd.OrganizationalResourcese.PhysicalResourcesR2.ComparedtocompaniesthatpossessorhaveaccesstosimilarResources,myrmexploitsthemwithverydifferentCapabilitieswhenattemptingtoreducecosts,exploitmarketopportunities,and/ordefendagainstcompeti-tivethreats.a.CapabilitiestoexploitFinancialResourcesb.CapabilitiestoexploitHumanResourcesc.CapabilitiestoexploitIntellectualResourcesd.CapabilitiestoexploitOrganizationalResourcese.CapabilitiestoexploitPhysicalResourcesR3.Comparedtomyrm’scompetitors,myrmexploitsveryuniquecombinationsofRe-sourcesandCapabilitieswhenattemptingtoreducecosts,exploitmarketopportunities,and/ordefendagainstcompetitivethreats.a.FinancialResourcesandCapabilitiesb.PhysicalResourcesandCapabilitiesc.HumanResourcesandCapabilitiesd.IntellectualResourcesandCapabilitiese.OrganizationalResourcesandCapabilities778,0.806,0.848,0.811,and0.819fornancial,human,intellectual,organizational,andphysicalresources/capabilities,respectively2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj S.L.NewbertEnvironmentalhostility(Khandwalla,1976)Seven-pointscalereectingagreementwithoneoftwoopposingstatementsabouttherm’senviron-EH1.Verysafe,littlethreattothesurvivalandwell-beingofmyrm—Veryrisky,afalsestepcanmeanmyrm’sundoing.EH2.Richininvestmentsandmarketingoppor-tunities—Verystressful,exacting,hostile;veryhardtokeepaoat.EH3.Anenvironmentthatmyrmcancontrolandmanipulatetoitsownadvantage,suchasadominantrmhasinanindustrywithlittlecompetitionandfewhindrances—Adominatingenvironmentinwhichmyrm’sinitiativescountforverylittleagainstthetremendouscompetitive,political,ortech-nologicalforces.2008JohnWiley&Sons,Ltd.Strat.Mgmt.J.:745–768(2008)DOI:10.1002/smj