Economies of Resource Accumulation

15 Pages Posted: 13 Dec 2012 Last revised: 17 Dec 2012

See all articles by Karel Cool

Karel Cool

INSEAD - Strategy

Ingemar Dierickx

I. D. Consulting Limited

Luis Almeida Costa

Nova School of Business and Economics, Universidade Nova de Lisboa

Date Written: December 12, 2012

Abstract

This paper discusses when firms may expect economies in the accumulation of resources (asset mass efficiencies). Specifically, we describe situations in which the accumulation of a resource benefits from a “success breeds success” dynamic that creates an exponentially growing gap between resource levels of early movers and imitators. Early movers can expect such an advantage where products or services have high evaluation costs, durability, trial costs, network value and cost, impulse characteristics, and dependence on complementary products. Where the accumulation of one resource depends on the level of another resource, accumulation economies may also be expected. The mechanisms are illustrated using stylized stocks-flows simulations with the iThink software.

Keywords: Resource Accumulation, Competitive Advantage, Asset Mass Efficiency, Resource Imitation, Resource Complementarity, Success-breeds-success, Exponential Advantage, Word-of-mouth

Suggested Citation

Cool, Karel and Dierickx, Ingemar and Costa, Luis Almeida, Economies of Resource Accumulation (December 12, 2012). INSEAD Working Paper No. 2012/127/ST. Available at SSRN: https://ssrn.com/abstract=2188284 or http://dx.doi.org/10.2139/ssrn.2188284

Karel Cool (Contact Author)

INSEAD - Strategy ( email )

Boulevard de Constance
77305 Fontainebleau
France
(33) (0)1 60 72 42 76 (Phone)
(33) (0)1 60 74 55 58 (Fax)

Ingemar Dierickx

I. D. Consulting Limited ( email )

C/- Duncan Cotterill, 1
Sir William Pickering Drive
Christchurch, 8053
New Zealand

Luis Almeida Costa

Nova School of Business and Economics, Universidade Nova de Lisboa ( email )

Lisbon
Portugal

Register to save articles to
your library

Register

Paper statistics

Downloads
97
rank
265,903
Abstract Views
2,087
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information