The Dynamic Interplay of Capability Strengths and Weaknesses: Investigating the Bases of Temporary Competitive Advantage

Strategic Management Journal, Vol. 31, p. 1386, 2010

25 Pages Posted: 31 Jan 2012

See all articles by David G. Sirmon

David G. Sirmon

Texas A&M University

Michael A. Hitt

Texas A&M University - Department of Management; Texas Christian University

Jean‐Luc Arregle

EM LYON Business School

Joanna Tochman Campbell

Texas A&M University - Department of Management

Date Written: July 1, 2010

Abstract

Foundational RBV work suggests that firms possess capabilities that represent strengths and others that represent weaknesses. In contrast, contemporary research has examined capability strengths while largely ignoring weaknesses. Addressing this oversight, we examine the direct and integrated effects of sets of capability strengths and capability weaknesses on competitive advantage and its empirical correlate — relative performance. Additionally, we explore how environmental and firm-specific factors influence change in these drivers of competitive advantage over time. Results suggest that weakness sets have a negative effect on relative performance, while strength sets have an increasingly positive effect. The integrative effects of strength and weakness sets affect relative performance in a complex manner. For example, while high strength/low weakness firms perform at high levels, firms integrating high strength with high weakness per- form well, but experience considerably more variance in their realized outcomes. Lastly, we find that the strength and weakness sets change significantly over time in markets where competition is more intense, thereby undermining the durability of competitive advantage. Our theory and results indicate that achieving temporary advantage is more difficult than previously thought and that the erosion of advantage occurs routinely as a result of dynamic and interactive rivalry.

Keywords: competitive advantage, capabilities, weakness, strength, durability

Suggested Citation

Sirmon, David G. and Hitt, Michael A. and Arregle, Jean-Luc and Campbell, Joanna Tochman, The Dynamic Interplay of Capability Strengths and Weaknesses: Investigating the Bases of Temporary Competitive Advantage (July 1, 2010). Strategic Management Journal, Vol. 31, p. 1386, 2010, Available at SSRN: https://ssrn.com/abstract=1994493

David G. Sirmon (Contact Author)

Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4218
United States

Michael A. Hitt

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-458-3393 (Phone)

Texas Christian University ( email )

Fort Worth, TX 76129
United States

Jean-Luc Arregle

EM LYON Business School ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

Joanna Tochman Campbell

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

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