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The Timing of Resource Development and Sustainable Competitive Advantage

Gonçalo Pacheco-de-Almeida

HEC Paris - Strategy & Business Policy

Peter B. Zemsky

INSEAD - Strategy; Centre for Economic Policy Research (CEPR)

November 14, 2006

Management Science, Vol. 53, No. 4, pp. 651–666, April 2007

We develop a formal model of the timing of resource development by competing firms. Our aim is to deepen and extend resource-level theorizing about sustainable competitive advantage. Our analysis formalizes the notion of barriers to imitation, particularly those based on time compression diseconomies where the faster a firm develops a resource the greater the cost. Time compression diseconomies are derived from a micro-model of resource development with diminishing returns to effort. We use a continuous time model of the flows of development costs and market revenues, which allows us to integrate strategic and financial analyses of firm investment problems.

We examine two dimensions of sustainability: whether the resources underlying a firm's competitive advantage are economically imitable and, if so, how long imitation takes. Surprisingly, we show that sustainable competitive advantage does not necessarily lead to superior performance. We find that imitators sometimes benefit from reductions in their absorptive capacity and that innovators should license either all or none of their knowledge. Despite recent criticisms, we reaffirm the usefulness of a resource-level of analysis for strategy research, especially when the focus is on resources developed through internal projects with identifiable stopping times.

Number of Pages in PDF File: 37

Keywords: Sustainability of Competitive Advantage, Imitation, Timing of Resource Development, Absorptive Capacity

JEL Classification: M20, M21

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Date posted: March 19, 2012  

Suggested Citation

Pacheco-de-Almeida, Gonçalo and Zemsky, Peter B., The Timing of Resource Development and Sustainable Competitive Advantage (November 14, 2006). Management Science, Vol. 53, No. 4, pp. 651–666, April 2007. Available at SSRN: https://ssrn.com/abstract=2025458

Contact Information

Gonçalo Pacheco-de-Almeida (Contact Author)
HEC Paris - Strategy & Business Policy ( email )
Jouy-en-Josas Cedex, 78351
(+33) (0)1 39 67 97 62 (Phone)
HOME PAGE: http://www.hec.edu/Faculty-Research/Faculty-Directory/PACHECO-DE-ALMEIDA-Goncalo

Peter B. Zemsky
INSEAD - Strategy ( email )
Boulevard de Constance
77305 Fontainebleau
+33 1 60 72 4162 (Phone)
+31 1 60 74 5500 (Fax)


Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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