7/30/2019 2. Sustainable Competitive Advantage

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DIAN ARIVANI (NPM.

1106112302)

[Sustainable competitive advantage: Combininginstitutional and Resource-based views By ChristineOliver]

This article describe that the context and process of resources selection have an important influence on firm

heterogeneity and sustainable competitive advantage. Two influence that can describe it, resource-based

perspective and institutional perspective.

The resources-based view proposes that resource selection and accumulation are a function of both within-

firm decision-making and external strategic factors. When strategic factor markets are imperfect or

incomplete, they create barrier to resources across competing firms. From a resources-based perspective,

sustainable competitive advantage is the outcome of discretionary rational managerial choices, selective

resources accumulation and deployment strategic industry factor and factor market imperfections.

Institutional perspective, describe firms operate within a social framework of norms, values, and taken-for-

granted assumption about what constitutes appropriate or acceptable economic behavior. The motives of

human behavior extend beyond economic optimization to social justification and social obligation. Its

conformity to social expectations contributes to organizational success and survival. The basic premise of

institutional theory then is that firm tendencies toward conformity with predominant norms, traditions, andsocial influences in their internal and external environments lead to homogeneity among firms in their

structures and activities, and that successful firms are those that gain support and legitimacy by conforming

to social pressures.

From this two perspective make different assumptions, TheInstitutional theoryassumes that individuals are

motivated to comply with external social pressures. The resource-based assumes that individuals are

motivated to optimize available economic choices. According to the model, managers make selective

strategic choices about the accumulation and acquisition of firm resources. They are :

Individual Level determinants of resource choices : Economic vs normative rationality; economic

rational resource decisions are value maximizing choices constrained by imperfect information and

uncertainty about future outcomes. Normative rationality generates the potential for cognitive sunk cost andtaken for granted conformity to established traditions. Firms will be more likely to make optimal use of

accumulated resources when the effectiveness of these resources is periodically and formally evaluated,

when employees are continually retrained to ensure that the full potential of the resources is being utilized,

and when personnel selection and orientation programs support the use and importance of the resources.

Firm-level determinants of resource choices : Strategic vs institutional factors; strategic can be explain

as the firm inabilities to acquire and imitate resources. The key in this factor is in the firms ability to mobilize

the necessary political and cultural support within the firm for use of the resources. And institutional factors

can be involuntary and exogenerous because of the external factor such as regulator, local citizen threaten

to withdraw support for the firm is unwillingness to acquire particular resources. These proportion also imply

that strategic and institutional isolating mechanisms may interact to explain competitive advantage.

Interfirm causes of heterogeneity : Market imperfections vs pressures for isomorphism; from a resources-

based view, imperfect and incomplete factor markets are the source of resources mobility barriers that give

rise to firm heterogeneity. From institutional perspective, social and economics interrelations among firms

and common dependencies on a range of external actors are sources of pressures for isomorphism or

conformity that give rise to firm heterogeneity. Isomorphism pressures refer to influences for conformity

exerted on firms by the government, professional associations and other external constituents that define or

prescribe socially acceptable economic behavior. Appliying institutional insights to a resource-based view

suggest five main homogeneity: regulatory pressures, strategic alliances, human capital transfers, social

and professional relations, and competency blueprints.

In conclusion, this article has proposed that the process of acquiring resources and sustaining economics

rents is not simply a function of imperfect or incomplete factor markets, but depends more fundamentally on

7/30/2019 2. Sustainable Competitive Advantage

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DIAN ARIVANI (NPM.

1106112302)

[Sustainable competitive advantage: Combininginstitutional and Resource-based views By ChristineOliver]

the social context of resource decisions. Also developed a model of sustainable advantage that combines

institutional and resource-based perspectives.