Abstract
The resource-based view of the firm (RBV) argues that valuable, rare, inimitable, and non-substitutable resources are the source of a firm’s sustained competitive advantage (SCA); this contention has been tested in an increasing number of studies. However, the extant empirical literature emphasizes the significance of resources and capabilities (R&Cs) played and few studies focus on SCA, the other end of the RBV logic. Therefore, this study aims to address this deficiency by focusing on the measurement of SCA. Further, SCA is traditionally measured by financial performance in the empirical studies, which is not only inconsistent with the theory but also proves to be practically difficult in access to the data. However, this paper argues that process performance is more appropriate to measure SCA and this theoretical idea is examined with the survey data collected in 2011/2012 using 209 valid responses from participants in the Chinese clothing companies. Structural equation modeling (SEM) was adopted to test hypothesized relationships between the endogenous construct of process performance and three exogenous constructs measuring R&Cs. The results suggest that process performance is an appropriate and effective method measuring SCA in terms of good construct validity and of consistency with the RBV expectations.
Highlights
A growing literature has contributed to empirical testing of resource-based view of the firm (RBV) theory since the 1990s
The extant empirical literature emphasizes the significance of resources and capabilities (R&Cs) played and few studies focus on sustained competitive advantage (SCA), the other end of the RBV logic
This paper argues that process performance is more appropriate to measure SCA and this theoretical idea is examined with the survey data collected in 2011/2012 using 209 valid responses from participants in the Chinese clothing companies
Summary
A growing literature has contributed to empirical testing of RBV theory since the 1990s. The empirical literature tests the relationship between R&Cs (i.e., the predictor variable) and organizational performance (i.e., the dependent variable). Most existing statistical tests of the theory have focused on identifying and operationalizing the predictor variable of R&Cs while the dependent variable, SCA, has rarely been explored. SCA is traditionally measured by financial performance in the empirical studies, which is inconsistent with the theory and proves to be practically difficult in access to the data. This study aims to fill this gap and to find out practical and effective measurement of SCA through both theoretical investigation and empirical test. The paper contributes and adds to the empirical research on RBV
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