Abstract
Each firm faces a unique set of competitors when similarities among products and resources are considered to identify competitors. Despite much debate in the strategy literature on strategic assets, competitive capabilities and firm performance, little consensus has been generated. Thus, the gap the current paper seeks to fill. The study’s objectives are as follows; to review the extant theoretical literature on strategic assets, competitive capabilities and firm performance, to review the extant empirical literature on strategic assets, competitive capabilities and firm performance, to identify the gaps in literature that will help in understanding the relationship between strategic assets, competitive capabilities and firm performance and to propose a theoretical framework based on the identified theoretical and empirical gaps. This study will be important in terms of empirical enhancement since past studies have limitation of the empirical research on strategic assets and competitiveness in regards to being imperfect comparability of results across different studies using different variables (features) describing competitiveness. This paper contributes to the theoretical research on strategic assets, competitive capabilities and firm performance not only by the synthesis of old and new writings as well as the findings of the exploratory studies, but also by concept synthesis. Since the concept of strategic assets and competitive capability can be reported to individual product/service, enterprise/farm, industry, economic sector, region, nation or international economic blocks, the attempts towards creating one common definition of strategic assets, competitive capabilities seem to be doomed to fail. This study is significance because it will be used in the developing of government policies on strategic assets, competitive capabilities and its links to performance which requires an understanding of the major factors that facilitate or impede firms’ ability to compete. These factors can, however, differ depending on a country, region or industry. This study will facilitate polices on public spending and taxes, exchange rates, interest rates, and government regulatory activities as some of the examples of key macroeconomic determinants of competitiveness.
Highlights
The issue of firm performance has been central in strategy research for decades and encompasses most other questions that have been raised in the field, as for instance, why firms differ, how they behave, how they choose strategies and how they are
Most resource-based view researchers choose to look within the enterprise and down to the factor market conditions that the enterprise must contend with, to search for some possible causes of sustainable competitive advantages holding constant all external environmental factors (Barney, 2012)
Eisenhardt and Martin argue that, Barney’s definition may be more precise theoretically, it is virtually impossible to meaningfully operationalize quantitatively. They explain that the time frame that determines the sustainability of competitive advantage may vary from industry to industry depending on such exogenous variables as product life cycles, patent protections, copyrights, or other variables specific to an industry [13]
Summary
The issue of firm performance has been central in strategy research for decades and encompasses most other questions that have been raised in the field, as for instance, why firms differ, how they behave, how they choose strategies and how they are. Eisenhardt and Martin argue that, Barney’s definition may be more precise theoretically, it is virtually impossible to meaningfully operationalize quantitatively They explain that the time frame that determines the sustainability of competitive advantage may vary from industry to industry depending on such exogenous variables as product life cycles, patent protections, copyrights, or other variables specific to an industry [13]. Firms may act upon the rent-producing potential of Science Journal of Business and Management 2017; 5(2): 45-53 these strategic assets by engaging in political strategies that restrict the set of substitutes available to competitors This explains why firms may engage in political activities to affect industry level regulations: these regulations will have a differential impact on the industry participants according to their bundles of strategic assets. Prescott (2011) observes that technology, accumulated consumer information, brand name, reputation and corporate culture are intangible assets which are invaluable to the firm’s competitive power, and the only real source of competitive edge that can be sustained over time
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