Durable Competitive Advantage Research Articles

Investors Meet Dynamic Strategy

Professor Ghemawat argues that commitment is key to gaining a competitive advantage, but can leave a firm vulnerable to rapid and disruptive changes. He and other leading strategy scholars explore the intricacies of developing and sustaining a dynamic competitive advantage. Yet, economists argues that most firms eventually fail to maintain competitiveness. Functionally efficient financial markets, by capitalizing innovative entrants and culling uncompetitive firms, sustain economy-level prosperity. Ghemawat (1991) highlights this tension: firm-level competitiveness can give investors high returns for years, while returns regress towards the mean. Applying this insight to well-documented historical episodes of rapid innovation in various industries, we show that leading U.S. firms in 1920s acquired durable competitive advantages, as did many in the 1960s, but that later entrants often felled early leaders in the 1990s IT boom, consistent with intensified creative destruction. Still, even these shorter-term winners paid well above average cumulative returns. Strategy research that could predict the durability of leading firms’ competitive advantages through an era of rapid innovation would have tremendous value to practitioners in finance.

The use of return on equity as a criterion for stock selection in the Indian equity markets

As per Dorsey, companies with a sustainable competitive advantage tend to outperform the market benchmarks over time. Companies which have a durable competitive advantage compared with their competitors manage to compound capital at attractive rates of return and such companies tend to grow sales and profits predictably and generate substantial free cash flows. This reflects in their share prices over time. In this paper we have used a measure of Return on Equity as an indicator that a company has a sustainable competitive advantage, and have studied the equity performance of such companies as compared with market performance. We find that companies which have attained Return on Equity greater than 15% each year for the past ten years tend to outperform the market benchmarks over the next five years.

Public Procurement as a Safeguard for Competition:

Through the adoption of the European Union’s Digital Strategy, the European Commission aims to tackle pressing issues specific to markets of data-intensive services. One of these issues is the substantial and durable competitive advantage that emerges from having exclusive access to large sets of data. The Digital Markets Act proposal, a prime pillar of the Digital Strategy, allows for the identification of gatekeepers. These gatekeepers would then be subject to additional obligations, for example enabling wider data access. This article focuses on the market for smart city services and proposes the adoption of a more proactive approach through public procurement. We argue the onus should be on preventing service providers from becoming gatekeepers, rather than attempting to repair a competitive space once a gatekeeper has arisen. Keywords: smart city, public procurement, data protection, data sharing, EU Digital Strategy

Integrating sustainability into strategic decision-making: A fuzzy AHP method for the selection of relevant sustainability issues

The United Nations aspirational agenda for sustainable development calls for the shared efforts of governments, business sector, society and stakeholders to promote prosperity while protecting the planet. In the business perspective, the joint pursuit of both durable competitive advantages and long-term benefits for society are not just the result of companies' reactions to goals of institutions or demands of stakeholders. Rather, they depend on a holistic integration of sustainability in companies' strategic decision-making.This paper proposes an application of the fuzzy Analytic Hierarchy Process (AHP) method for selecting those sustainability issues that are most relevant for creating shared value for both business and society, and that should be the focus of strategic planning and management. The integration of the ISO 26000 framework with the method permits a holistic treatment of all areas of sustainability. The paper also illustrates to managers how the method should be applied in practice through a step-by-step application to a medium-sized company operating in the water technology sector. Finally, its usefulness as a managerial tool for strategic decision-makers is discussed.

Policy competition in clean technology: Scaling up or innovating up?

AbstractGovernments support clean technologies to advance both environmental goals and national competitiveness. By adopting environmental policies early on, governments are argued to create durable competitive advantages for domestic companies that develop clean technologies for export to late adopters. This paper argues that policy competition between lead and follower markets conditions the ability of governments to create durable competitive advantages in low-carbon technologies. Depending on the complexity of the technology, we observe two patterns of green industrial policy competition. In low-complexity technologies, such as solar photovoltaics, follower markets are likely to adopt policies that support manufacturing capacity to rapidly achieve price advantages from economies of scale, with global supply chains intensifying this competition (“scaling up”). In high-complexity technologies, such as electric vehicles, follower markets are likely to adopt policies that support research and development to develop differentiated high-tech products for export (“innovating up”). We also suggest that new forms of interdependence in policy competition can affect the political sustainability of lead market policies. Competition in scaling-up is more likely to undermine political coalitions in favor of government support for low-carbon technologies, while innovating-up dynamics embed political coalitions that support lead market policies for low-carbon technologies.

India Equity Market Valuations: The Need to Exercise Prudence

While the earnings recovery has yet to realize itself, equity markets in India have continued to move up. As indices have moved up while earnings have largely failed to keep pace, valuations, to the extent that one bases them on the current earnings power of the business, have increasingly extended themselves in the overvalued zone. At Multi-Act EquiGlobe and at Sapphire Capital, we are primarily focused on a small sub-set of businesses. Our target investment universe is comprised of high quality businesses that possess durable competitive advantages. In our efforts to effectively answer the question of top-down valuations, we built a bottom-up model of companies in our investment universe; the India Moats Index. Our analysis covers 65 unique companies over the last 12 years. We take a deep dive into the profitability of these businesses as a group, levels of leverage employed, business reinvestments and share buybacks, and business valuations. Our findings suggest that the high-quality business sub-set is overvalued as well. We find that the valuation dispersion within the high quality business space is continuing to be wide allowing us to selectively construct a superior portfolio as compared to the wider investment universe.

“Service” in Luxury Retailing in the Twenty‐First Century: An Exploratory Look at the Pleasure Boating Sector

ABSTRACTThis study explores the most effective retailing strategies with which luxury retailers can achieve a competitive advantage. The central role of services in enhancing the consumption experience in the luxury segment has been analyzed considering the pleasure boating sector, with a focus on the role that the dealer may have, both in the integration of different services and in the development of a durable competitive advantage. A qualitative study has been carried out through semistructured, in‐depth, one‐to‐one interviews with representatives of companies that deal with the pleasure boating sector. The results show that in the luxury pleasure boating sector, the introduction of a better‐defined retail strategy focused on services and its integration within the entire distribution channel may be crucial but also difficult to achieve in contexts that lack a marketing orientation. The contribution to extant literature on service in the pleasure boating sector and in luxury retailing in general is outlined. The managerial implications for practitioners in the pleasure boating sector are also discussed.

Applying the green Embedded lean production model in developing countries: A case study of china

Academia and industry have become increasingly interested in how to employ environmental management (EM) to build a green competitive advantage. This study systematically investigates the logic, process, and mechanism of a “lean and green” deployment by firms in developing countries. To do so, we use a scenario-activated analysis and examine existing lean and green practices. Furthermore, we use a case study to examine the improvement of firms in China. Our findings show that the Green Embedded Lean Production Model (GELPM) illustrates the main advantages of “lean and green”-enabled profitability and green competitiveness for firms in developing countries, which enhance the competitiveness of such firms. The proposed GELPM comprises an operational strategy with which to implement a lean and green approach, as well as novel concepts, thoughts, and tools, and is structured according to theoretical and practical perspectives. Thus, firms in developing countries can use this model to enjoy long-term benefits by building a durable competitive advantage based on a lean and green deployment.

Designing dynamically “signature business model” that support durable competitive advantage

The paper provides an empirical research of the Samsung case. In particular, we study the case by adopting three frameworks: dynamic capabilities (DC, examined by using the sensing/seizing/transforming approach), business model (BM, examined by using the BM canvas), and customer value proposition (CVP), examined by using the PERFA ((Performance, Ease of use, Reliability, Flexibility, and Affectivity) framework. The aim is to demonstrate that three frameworks successfully explain Samsung competitive advantage. Research question has been defined as follows: how dynamic capabilities actually operate in Samsung Group and contribute to its competitive advantage? Dynamic capabilities enable a firm to identify and orchestrate the necessary resources for designing and implementing a business model that will, if employed in conjunction with a good strategy, be associated with high levels of sustainable profits. The selection/design of business models is a key micro foundation of dynamic capabilities - the sensing, seizing, and reconfiguring skills that the business enterprise needs if it is to stay in synch with changing market. However, there are few examples how successful ICT industry players design dynamically their “signature business model” by Teece (The Academy of Management Perspectives 28:(4)328–352, 2014) that can support durable competitive advantage. This proposed research seeks to explore critical aspects pertaining micro foundations of DC. In this research, two stages of research work will be involved. The first stage is deductive case studies research. We relied on an extensive archival search that included financial statements, annual reports, internal documents, industry publications, and CEO statements to get at a micro-level understanding (Barr et al., 1992), that really boosts our data and better understanding of micro foundation of DC. The second stage involves a demonstration of development process of new conceptual model of research. The research question of current paper has been answered empirically by using data of world leading ICT industry: Samsung Group. What we can learn beyond the ICT industry context from our analysis in terms of generalization of our research results is that the synchronization of business models with the business environment is a critical role of dynamic capabilities in successful organizations. The conversion of value delivered to the customer into value captured by the enterprise is arguably the essence of a business model. We carried out qualitative research of huge secondary data source that help us make sense of the casual links that connect DC, BM and CVP. We didn’t interview executives of those companies due to availability of actual interviews as a secondary data sources. Our contribution is a new conceptual model of competitive advantage paradigm as a product of dynamic capabilities, business models and customer value proposition. The paper also provides analysis, which could be productively used for a case study discussion in class.

Intelligence as a Factor of Production in the Post-Crisis Economy

Nowadays, a lot of information is becoming available to anyone around the world, thanks to the development of the internet and the increasingly rate of globalization. Concepts like business intelligence, data mining and, more recently, big data, gain an important role in the work of information management. However, the new knowledge based society needs the development of a more specific and competitor based type of information analysis, such as the one part of the Competitive Intelligence cycle. The result of the information analysis within the Competitive Intelligence activity is called intelligence, and it refers to useful and actionable information, which can be used by a decision maker within a firm in order to gain durable competitive advantages. Therefore, with the competitiveness playing an essential role in the new post-crisis economy, earning competitive advantages with the use of proper actionable information is mandatory. The sub-prime economic crisis hit firms and corporations all over the world and the period following this crisis was and still is a real test of survivability. Only the strongest and the most adaptable firms can thrive in a society with skeptical and more and more exigent consumers. This study brings information together with the other newer factors of production (besides labour, land and work), such as technological or entrepreneur’s ability, properly managing information analysis inside a firm being an important element of development in the new post-crisis economy. At the same time, it can be the base of a more thorough research regarding the importance intelligence for the competitive market and the role it can play in developing the business environment. The main answer this study gives refers to the importance of information analysis and of using its results inside a firm that aims to increase its competitiveness in the market.

Create durable competitive advantage for coaches of women's teams

Summer camps are big business in the United States. In fact, more than 12,000 camps (day and overnight) operate annually and generate $15 billion in annual revenues, according to the American Camp Association, a leading camp accreditation organization.

ACCOMPLISHMENT OF THE ECONOMICS OF SUSTAINABLE DEVELOPMENT AS AN OPPORTUNITY TO BUILD A COMPETITIVE ADVANTAGE

Currently creating economics of sustainable development is an alternative concept in relation to neoclassical economics. The aim of economics of sustainable development is sustainable management, which means to guarantee high economic, ecological and socio-cultural standards for present and future generations within the limits of environment’s natural resistance. The accomplishment of sustainable development concept requires the activeness of all socio-economic subjects, particulary the ones which should play a key role - enterprises. Although, more companies pay attention to social results of their activities, so the ones which really act in accordance with the principles of sustainable development, still constitute a minority on the market. The assumption of economics of sustainable development, in practice - enterprise management come to so called three strategic paths i.e. effectiveness, cohesion and sufficiency. It also leads to fulfill sustainability criteria, which can be divided into three main groups i.e. ecological, economic and socio-cultural ones. Accomplishment of sustainable development assumptions constitutes an opportunity to build a durable competitive advantage in enterprises. The purpose of this article is to characterize the assumptions of economics of sustainable development in relation to enterprise management and to point out a possibility to build a competitive advantage by enterprises acting in accordance with sustainable development principles.

Big data and competitive advantage at Nielsen

Purpose – The purpose of this paper is to illustrate how an international company, Nielsen Holdings, reacted to changes in their highly competitive industry brought about by advances in technology. This case presents the strategic management decisions that enabled Nielsen to regain its competitive advantage. This case further describes the functioning of the resource-based view (RBV) of strategy, dynamic capabilities framework, and digital data genesis (DDG), in a turbulent business environment. Design/methodology/approach – The case study is based primarily upon secondary data to include annual reports, press releases, company web site, as well as articles. Findings – The case study provides an example of the functioning of a once durable competitive advantage that was eroded due to advances in technology, and the steps the company took to regain that advantage. The paper illustrates the functioning of a capability and a dynamic capability in DDG. Practical implications – This case can be used for the teaching of decision making, business strategy, the RBV of strategy, dynamics capabilities, and DDG. Originality/value – This paper provides an example of the functioning of the capability and dynamic capability of DDG.

Knowledge Complexity and the Performance of Inter-unit Knowledge Transfer Structures

The most durable competitive advantage of a firm is likely to be embodied in its 'complex' knowledge because such knowledge is least imitable by its competitors. However, the challenge with such co...

The Regional Soul of Sustainability

Profits and social-environmental performance have always been perceived as in contrast with one another. Governments and super-national authorities felt that corporations were lacking the incentives to pursue sustainable practices, which then had to be imposed through regulation. Such situation opens space to (at least) two debates: the first one is about whether or not entrepreneurs can help regulations and policies to implement sustainable development; the second one concerns how the current economic context is going to affect sustainable development. This paper joins such debates arguing that a) the role of entrepreneurs in the implementation of sustainability is increasingly important and not just complementary to regulations and policies; b) changes in the economic contexts will give an increasingly regional character to sustainable development. There is emerging evidence that sustainability is becoming profitable for firms as a result of a dynamics involving consumer awareness, regulations, new cost structures and market-driven requests for sustainable business practices. This new-born profitability is the incentive which will make firms play their important part in the implementation of sustainability. Increased geographical proximity among activities and less global value chains will be the result of the efforts that companies will make in order to capture these profits through sustainable business model innovation. This will lead to invest in surrounding communities and territories (Porter and Kramer, 2011), to leverage circular economies (Fang, Cote, Qin, 2007) and to re-think logistics and transportation strategies. Entrepreneurs capable to relocate activities fitting with each other and to aggregate them properly in coherent bundles can realize durable competitive advantages (Porter, 1996). This is why sustainability has a regional soul.

Informational approach of family spin-offs in the funding process of innovative projects: an empirical verification

Abstract In recent years, the increase in competitiveness, as a result of the economic globalization and crisis, has caused the bankruptcy of many Italian small family businesses working in traditional industries. Meanwhile, family firms that have been working in a perspective of process and product innovation have been able to maintain a durable competitive advantage. In particular, enterprises that have shown a particular vitality are spin-offs, founded by an innovator entrepreneur with an academic background: these have often found their funding in self-financing and family and public resources in the pre-seed and seed stages of the project. However, these spin-offs often have difficulty financing the start-up phase of the project with external resources due to risk and informational opacity related to innovative processes. The literature grounded on innovation funding has highlighted the informative opacity problem mainly caused by family entrepreneurs' difficulty to communicate innovation characteristics and commercial potential to financial markets and by the inability to identify individuals who are more available to finance innovative investments. Therefore, it is particularly difficult for investors to assess family small- and medium-sized enterprises' economic feasibility of innovative projects. These difficulties have increased in recent years partly due to the economic crisis that, on the one hand, has made venture capitalists more risk averse and, on the other, has contributed to a gradual hardening of enterprises' creditworthiness system adopted by financial brokers. The research focuses on the analysis of the information problem that hinders the external financing aimed at innovation in family academic spin-offs. In particular, the authors intend to investigate the information dynamics between the innovator entrepreneur and external financiers. So, this research is useful to better identify what informative gaps impede innovative investments in Italy among innovator entrepreneurs and founders through venture capital and debt capital.

English

The knowledge about costs and their evolution represent an essential element in decision process. The priority given to the cost analysis in the decision process can be explained through the fact that often the main factor is the financial implication of the selected decision made by the manager. The management of a company can find in the cost information an important instrument for adjustment, orientation and optimization of the operational and future activity because the cost appears in all its activities. The paper presents some aspects regarding the costs and their role in the management of enterprise because the information concerning costs play a vital part in formulating more performing strategies to get lasting competitive advantage. We intend to highlight the importance of the strategic planning and the role of costs management in a business medium, because the costs structure can be really an advantage in establishing the way in which the performance can be obtained “a durable competitive advantage” (M. Porter, 2001). The recent evolution of the management accounting is essentially characterized by the passing from an information system to a whole bunch of instruments guided towards outward part, strategy and future. Under these conditions, our paper tries to point out the necessity of inclusion the principles of strategy into the management of costs. Therefore, we consider a necessity of a managerial, contemporary system. Such an approach lays down the premises of a new philosophy of costs and opens new perspectives of approaching the management accounting. As result of the recent theories regarding the costs and their determinants factors, theories that contradicted the dominated idea in the classical analytic theory accordingly whose production volume determine the costs, at present, the cost management should consider the variety and complexity of all factors. Considering the randomly character of these factors’ influence, for getting some rigorous results that can be the basis for adopting some efficient decisions, in the paper we propose statistical studies based on the influence of the determinant factors, studies based on the using of notions from probability theory and mathematical statistics. The main purpose of these studies is represented by the control of cost evolution, in the condition of incertitude and risk for the companies’ activity. Keywords: Costs, Management accounting, Strategic management of costs, Incertitude, Risk, Statistical studies, Mathematical statistics.

Information technology and collaboration tools within the e-supply chain management of the aviation industry

This paper investigates strategic actions and grand strategies in the aviation industry. To address this purpose, a review of main strategic change is conducted and information technology is considered as a key factor to identify behaviours of main players. In this context, collaboration emerges as one of the core aspects driving the e-supply chain management. A specific and increasing role is given to e-marketplaces where integration and co-operation seem to be the appropriate competences to create durable competitive advantages. This paper does not attempt to consider the full range of e-tools developed in the aviation industry, but at the same time it highlights the impact of information and communication technologies on customer relations and supply chain management.

A Noncatalytic, Ras-Independent Function of SHP-2 Is Essential in Hematopoietic Progenitors.

SHP-2 is a nonreceptor protein tyrosine phosphatase (PTPase) that is essential for embryonic hematopoiesis. SHP-2 acts as a signal relay molecule downstream of diverse growth factor receptors, and potentiates the activity of the Ras/Raf/MAPK pathway. Epistasis studies in model organisms indicate that SHP-2 can act upstream, downstream or parallel to Ras; however, most mammalian systems place SHP-2 upstream of Ras activation. Activating mutations in PTPN11, the gene encoding SHP-2, comprise the most common genetic lesion in juvenile myelomonocytic leukemia (JMML). Other etiologies of JMML include activating mutations in NRAS or KRAS2 and inactivation of the tumor suppressor NF1, which encodes a negative regulator of Ras, supporting a model in which SHP-2 activates Ras in hematopoietic progenitors. We tested the hypothesis that SHP-2 is essential in hematopoiesis because it is required for Ras activation. To do this, we bred mice with conditional hyperactive KrasG12Dand inactive Ptpn11floxalleles, in conjunction with the inducible Mx1-Cre transgene. Myeloid progenitors in LSL-KrasG12D; Ptpn11flox/flox; Mx1-Cre mice never deleted both Ptpn11 alleles despite efficient Cre induction and expression of activated K-RasG12D. This indicates selective pressure to retain SHP-2 despite Ras activation and implies that Ptpn11 loss is epistatic to KrasG12D. To test this directly, we acutely disrupted Ptpn11 and expressed KrasG12Din fetal liver cells using Cre-expressing retroviruses, and tested them for myeloid colony-forming activity. This confirmed the need for SHP-2 in myeloid progenitors, and KrasG12Dagain failed to alleviate this requirement. Surprisingly, expression of either wild type or PTPase-deficient SHP-2 rescued colony growth and restored the aberrant growth of KrasG12Dmutant cells. To test whether hematopoiesis in vivo is independent of SHP-2 PTPase function, we created chimeric Mx1-Cre, Ptpn11flox/floxmice in which a small fraction of bone marrow expressed exogenous SHP-2 and GFP. These mice were treated with a short course of pIpC to induce Cre and disrupt Ptpn11, and the contribution of SHP-2 expressing cells in the peripheral blood was monitored by flow cytometry. As expected, exogenous SHP-2 expression in Mx1-Cre, Ptpn11flox/floxbone marrow conferred a strong and durable (>16 wks) competitive advantage after pIpC treatment. Expression of PTPase-deficient SHP-2 also conferred a strong advantage lasting at least several weeks, and these mice are being aged to determine the duration of this response. These data indicate that SHP-2 is required for growth of both normal and neoplastic myeloid progenitors in vivo and in vitro, and suggest that SHP-2 is needed for maintenance of adult hematopoietic stem cells. In contrast to nearly all prior studies in mammalian cells, our data support a model in which SHP-2 has essential hematopoietic functions downstream or parallel to Ras activation. Furthermore, SHP-2 PTPase activity is not required in myeloid progenitors, a finding which also contradicts widely accepted models of SHP-2 function and may indicate that SHP-2 serves an adaptor role. Because PTPase activity is required by leukemogenic but not wild type SHP-2, pharmacologic PTPase inhibition may selectively target neoplastic hematopoietic progenitors.

Assessing the Impact of Learning Capability on Business Performance: Empirical Evidence from Spain

It is widely recognized that the development of learning capability is key to achieve a durable competitive advantage. However, the analysis of the relevance of learning capability to improve business performance and, thus, the organizational competence has been insufficiently developed in literature. Based on data from 111 Spanish companies, this article explores the link between learning capability and the improvement of business performance by comparing how the main dimensions of learning capability—stocks of knowledge and flows of learning—impact on performance, in terms of both non-financial and financial performance. The results show that those organizations with the highest levels in their knowledge stocks and learning flows obtain a superior performance.