Position, leverage and opportunity: a typology of strategic logics linking resources with competitive advantage

MANAGERIAL AND DECISION ECONOMICS

Manage. Decis. Econ. 29: 241–256 (2008)

Published online 26 November 2007 in Wiley InterScience

(www.interscience.wiley.com) DOI: 10.1002/mde.1386

Position, Leverage and Opportunity: ATypology of Strategic Logics LinkingResources with Competitive Advantagey

Christopher B. Binghama,* and Kathleen M. Eisenhardtb

aUniversity of Maryland, MD, USAbStanford University, CA, USA

The resource-based view’s (RBVs) contribution toward understanding competitive advantage

remains unfulfilled. A reason is the confounding of the concept of resources with RBVsstrategic logic. We disentangle these by developing a typology of strategic logics (i.e.,

leverage, position, and opportunity) that specify alternative theoretical pathways linking

resources with competitive advantage. We clarify their market assumptions, relevant

performance objectives, and managerial challenges. Besides introducing the logic ofopportunity, we indicate the central insight that competitive advantage stems from the

linkages among resources, not just their attributes. Thus, while VRIN resources may be useful

for creating advantage, they may be neither necessary nor sufficient for competitive advantageto ensue. Copyright # 2007 John Wiley & Sons, Ltd.

INTRODUCTION

The resource-based view (RBV) is a majortheoretical framework that addresses the sourceof interfirm performance differences (Penrose,1959; Wernerfelt, 1984; Barney, 1991; Peteraf,1993; Makadok, 2001; Hoopes et al., 2003).Indeed, RBV has become one of the primarytheories for understanding the origins of competi-tive advantage and superior firm performance(Hoopes et al., 2003). However, despite its positionas a dominant conceptual frame, its contribution tothe strategy field remains controversial. On the onehand, some argue that RBV clarifies understandingabout why some firms continue to outperform

others in their industry. For example, firms createcompetitive advantage when managers developresources that are valuable, rare, inimitable, andnon-substitutable (VRIN) in a given market(Barney, 1991; Peteraf, 1993) and exploit them inadditional markets (Wernerfelt, 1984; Barney,1986; Amit and Schoemaker, 1993). RBV alsosuggests that competitive heterogeneity and advan-tage are sustainable to the extent that competitorsare unable to duplicate the benefits that firmsderived from these VRIN resources (Barney, 1991).

On the other hand, others suggest that RBVmay provide little theoretical insight regardingintraindustry performance differences. For exam-ple, some scholars assert that RBV lacks empiricalsupport (Hoopes et al., 2003) and boundaryconditions (Williamson, 1999), and that it cannotexplain competitive advantage in high-velocitymarkets (Eisenhardt and Martin, 2000). Some alsoargue that the theory is inherently tautological(Williamson, 1999; Priem and Butler, 2001a,b;

yWe appreciate the support of the National Science Founda-

tion, Grant #0323176.

*Correspondence to: Department of Management and Organi-zation, Robert H. Smith School of Business, University ofMaryland, 4519 Van Munching Hall, College Park, MA 20742,USA. E-mail: [email protected]

Copyright # 2007 John Wiley & Sons, Ltd.

Hansen et al., 2004). That is, competitive advan-tage is defined in terms of value and rarity, and theresource characteristics leading to competitiveadvantage are also described in terms of valueand rarity. This tautology makes disconfirmingRBV improbable, and therefore, limits its expla-natory power. Taken together, these argumentssuggest that while RBV is influential, its contribu-tion is not fully realized.

In our view, some of the confusion surroundingRBVs contribution to strategy centers on theconcept of resources. The perspective has aninsufficiently precise theoretical account of howfirms use resources to create and maintaincompetitive advantage. Specifically, we argue thatthe concept of resources is confounded with thestrategic logic of RBV.1 This confounding ob-scures the fact that the strategic logic of RBV isonly one of several strategic logics for howheterogeneous firm resources lead to intraindustryperformance differences. More crucial, the con-founding of the concept of resources with thestrategic logic of RBV obscures the fact that thetheoretical tie between resources and competitiveadvantage is affected not only by the nature of theresources per se as in RBV, but also by the linkagesamong resources. This elaborated view of re-sources leads to a typology of strategic logics.The central implication of this typology is that,while specific VRIN resources may lead tocompetitive advantage as argued within RBV,these resources are neither necessary nor sufficientconditions for that advantage to ensue.

The purpose of this paper is to disentanglethe concept of resources from the strategic logicof RBV and so extend our theoretical under-standing of resources and their tie to competitiveadvantage. In so doing, we attempt to makeseveral contributions to the literature. First, wedevelop a typology of strategic logics and compe-titive advantage. In particular, we outline howthe concept of resources can be disentangled fromthe strategic logic of RBV and usefully applied inmultiple strategic logics, which we term leverage,position, and opportunity. Further, we provide therelated insight that these strategic logics areassociated with distinct performance objectives(e.g, profit and growth). Thus, by delineatingalternative strategic logics that lead to competitiveadvantage, we shed light on how distinct strategiclogics are associated with different performanceobjectives.

Second, we contribute by fleshing out the strategiclogic of opportunity by noting the centrality oforganizational processes and ‘simple rules’ heuristicsfor capturing opportunities for strategy, and itsparticular relevance in highly dynamic markets andentrepreneurial firms. Specifically, we argue that,while the leverage strategic logic that underlies RBVis appropriate for moderately dynamic markets, it isinherently mismatched in both more stable and high-velocity markets. Rather, the appropriate strategiclogic and the related nature of competitive advantage(e.g., its duration and the predictability of itsduration) depend upon specific assumptions aboutmarket dynamism. Such clarity regarding assump-tions provides theoretical boundary conditions, acontribution particularly valuable for RBV (Priemand Butler, 2001a).

Most significant, we contribute the insight thatlinkages among resources are fundamental to thecreation of competitive advantage. Specifically, weargue that, while the nature of specific resourcesmay enable the creation of competitive advantage,specific characteristics of resources per se areneither necessary nor sufficient conditions forcompetitive advantage. Rather, competitive ad-vantage stems from both the characteristics ofindividual resources and the linkages amongresources. Further, we spotlight inimitability asthe most important resource attribute for compe-titive advantage by elaborating how different typesof resources and linkages among resources havedistinct sources of inimitability. Overall, wesuggest an elaborated conception of resourcesand their relationship to competitive advantagethat extends beyond the traditional view of RBV.

We begin by discussing the concept of resources.We then set forth a typology of strategic logicsthat distinctively ties resources and linkagesamong resources to competitive advantage. Wealso describe the strategy, nature of resources andlinkages among resources, sources of inimitability,and performance associated with the three strate-gic logics. We also include their underlyingassumptions regarding market dynamism and thechallenges of each logic.

RESOURCES, INIMITABILITY, AND

COMPETITIVE ADVANTAGE

There are two primary perspectives on strategy.One relies on the external exercise of power

C.B. BINGHAM AND K.M. EISENHARDT242

Copyright # 2007 John Wiley & Sons, Ltd. Manage. Decis. Econ. 29: 241–256 (2008)DOI: 10.1002/mde

(Porter, 1980; Santos and Eisenhardt, 2005) andthe other on the internal resources of the firm(Barney, 1991; Peteraf and Barney, 2003). Ourfocus is on the latter. From the internal perspec-tive, resources lie at the heart of corporate andbusiness strategy (Peteraf and Barney, 2003).Resources are fundamental to strategy becausethey shape many of the possible strategies thatexecutives can undertake. They are the ‘rawmaterial’ of strategy, and thus provide the basisupon which firms can distinguish themselves fromone another and from which they can developunique, inimitable, and value-creating strategies(Miller, 2003).

Several definitions of resources exist. Somescholars define resources as organizationalstrengths and weaknesses that are tied to firms(Wernerfelt, 1984). Others define them as allassets, attributes, and knowledge controlled by afirm that help improve efficiency and effectiveness(Barney, 1991). Consistent with these definitions,we define resources as the tangible assets (e.g.,location, plant, equipment), intangible assets (e.g.,patents, brands, technical knowledge), and orga-nizational processes (e.g., product development,country entry, partnering) from which managerscan develop value-creating strategies. Given thisdefinition, resources include tangible resourcessuch as the fabrication facilities of Intel and thestore locations of Starbucks, and intangibleresources such as the Virgin brand, Lilly’spharmaceutical patents, Pixar’s animation skills,and Honda’s understanding of engine technolo-gies. They also include organizational processesby which firms create, reconfigure or exit resources(often termed ‘dynamic capabilities’) such asCisco’s acquisition process, Yahoo’s allianceprocess, and Google’s product developmentprocess.

From the internal resources perspective, compe-titive advantage depends upon the deployment ofresources or combinations of resources that arevaluable (i.e., raise revenues or lower costs) in thecontext of a given market, rare (i.e., unique amongfirms in that market), inimitable (i.e., cannot bereadily copied), and non-substitutable (i.e., otherresources do not provide the same functionality)(Barney, 1991). Assuming non-substitutability, ifresources are only valuable, then firms are likely toachieve only parity with competitors. If resourcesare only valuable and rare, then firms are likely toachieve only temporary competitive advantage.

But if resources are valuable, rare, and inimitable,then firms have the potential to achieve long-termcompetitive advantage. Assuming substitutability,then advantage depends upon the relative costsand benefits of the two resources. Overall, thesearguments suggest that, while value, rarity, andnon-substitutability are important, inimitability ofresources is at the heart of competitive advantagebecause it limits the effects of competition oversome time horizon.2

As is well known, inimitability (a resourceattribute that is independent of both the marketand competition) can arise from one or severalsources. First, it can stem from property rights. Anorganization may have a specific ownership rightto a well-defined asset such as a patent or alocation that cannot be legally obtained by rivals,and therefore is inimitable. Second, inimitabilitycan arise if there are path dependencies and timecompression diseconomies in resource accumula-tion. That is, if building resources takes placeslowly over time and according to a sequence, theninimitability ensues. A new entrant in the soft-drink industry may, for instance, spend the sameamount of advertising dollars as Coca Cola, but isunlikely to be able to duplicate the brand-namerecognition that Coke has developed over theyears (Collis and Montgomery, 2005). Finally,inimitability can arise from causal ambiguity(Lippman and Rumelt, 1982; Barney, 1991). Forexample, resources that are based on complicatedorganizational processes are more likely to becausally ambiguous because they are difficult forcompetitors to observe from outside the firm,making their link to performance unclear. Simi-larly, resources that are tightly linked are alsolikely to be causally ambiguous because both theirprecise interrelationships and their synergisticeffects are difficult to observe, making their linkto performance unclear. Moreover, the barriers toimitation arising from causal ambiguity areprimarily knowledge based, not legal or temporal(Miller and Shamsie, 1996). Thus, while competi-tors might be able to understand some of theresources of a high performing firm, they are likelyto be unclear about which resources lead toadvantage and why when causal ambiguity ispresent.3 In the absence of this knowledge,competitors cannot effectively imitate.

We add to this argument in two ways. First, wesuggest an additional source of causal ambiguity,the simplicity of organizational processes that rely

POSITION, LEVERAGE AND OPPORTUNITY 243


on improvisation. That is, processes that consist ofsimple heuristics or rules are causally ambiguouswhen their intertwining with idiosyncratic andreal-time improvisation makes them particularlydifficult to observe directly and difficult to inferfrom outcomes (Eisenhardt and Tabrizi,1995; Miner et al., 2001). Second and moresignificant, we suggest that different types ofresources and linkages among those resourceshave distinct sources of inimitability, and solead to three distinct strategic logics that linkresources to competitive advantage. Specifically,competitive advantage may come from tightlylinking often mundane resources to form defen-sible strategic positions, moderately linking coreand complementary resources to maintain strengthin existing markets and to leverage these samecore resources with often different complementaryresources in related markets, or loosely linkingresources in the form of semi-structured organiza-tional processes composed of simple rules to seizefleeting market opportunities. The critical point isthat different types of resources and linkagesamong resources constitute distinct strategies.These strategies tie to competitive advantageand ultimately firm performance through differentsources of inimitability, with different marketassumptions, and therefore, through distinctstrategic logics.

LEVERAGE LOGIC

A key strategic logic by which executives use firmresources to create superior performance is lever-age. This strategic logic is most closely associatedwith RBV, particularly the strands suggested byCollis and Montgomery (1995) and Prahalad andHamel (1990). Leverage logic argues that compe-titive advantage derives from the ownership ofspecific core resources}i.e., particular resourcesthat are rare, inherently difficult to imitate, non-substitutable and highly valuable in one or severalmarkets (VRIN). These resources can reside at thebusiness unit level such as P&G’s Oral Care, or atthe corporate level such as Samsung’s expertise infiber optics. When core resources are combinedwith complementary resources, firms can produceproducts faster, better, and/or more cheaply thanthe competition (Collis and Montgomery, 1995,2005). Given the inimitability of core resources,

this is likely to result in competitive advantage andsuperior performance.

Under leverage logic, strategy consists ofidentifying, building, and exploiting a portfolioof core resources that is valuable and rare incurrent markets and deploying these core resourcesinto additional markets (e.g., segments and in-dustries) where they are also valuable and rare. Inthe case of current markets, strategy centers onupdating the portfolio of core resources as marketshifts occur (e.g., technological innovation occurs,government regulation is removed). This updatingenables the firm to maintain coevolutionarymatching of its portfolio of core resources to themarket, and so maintain its competitive advantageand superior performance. For example, Thomkeand Kuemmerle (2002) describe how Lilly execu-tives quickly attempted to develop two newprocess technologies (i.e., combi-chem and highthroughput screening) into core resources. Thesenovel technologies held the promise of improvingdrug discovery, especially when used in conjunc-tion with existing complementary resources intraditional drug discovery. Most important, thetime, expense, and effort associated with thisdevelopment and their process-oriented characterenhanced the inimitability of these potentiallycore resources. Lilly’s resource portfolio adjust-ment was particularly timely because severalpatent-related core resources were about to gooff patent. Similarly, in her study on technologicalinnovation in the type-setting industry, Tripsas(1997a) described how executives in severalcorporations repeatedly updated their technicalcore resources to keep pace with successivetypesetting innovations.

In the case of new markets, strategy consists ofdeploying core resources into markets where theyare also likely to be valuable and rare. Thus, underthe leverage logic, the value and rarity of coreresources in the new market, not the structuralcharacteristics of the market per se, guide thedirection of diversification. For example, Honda’sstrategy consists of leveraging its core enginetechnology resources into a wide variety ofmarkets such as automobiles, motorcycles, lawnmowers, and four-wheel off-road vehicles wherethese resources are both valuable and rare(Pralahad and Hamel, 1990). Likewise, the strat-egy of some petroleum firms involved deployingcore R&D processing technology resources thatwere developed in the oil refining market into the



synthetic fuels market where they were alsovaluable and rare (Helfat, 1994, 1997).

A related point is that the complementaryresources that enable value creation from coreresources may vary across markets. Thus, lever-aging core resources into a new market or addingcore resources to an existing market may alsorequire leveraging existing complementary re-sources or building new complementary ones. Anexample is Canon. While Canon has core resourcesin optics technology, the firm deploys theseresources in conjunction with a variety of com-plementary (but not necessarily core) resourcesbased upon the particular market. In the cameramarket, for example, Canon couples optics tech-nology with retail channel skills and precisionmanufacturing resources. In contrast, Canoncouples complementary resources related to theOEM channel and laser technology with their coreoptics resources in the print engine market (Brownand Eisenhardt, 1998). Similarly, Gilbert’s (2005)study of the newspaper industry indicates thatdifferent complementary resources were necessaryin the online and traditional newspaper markets.Finally, given that core resources may often beusefully leveraged into multiple and changingmarkets with different complementary resources,resources (both core and complementary) shouldbe only moderately linked with one another underleverage logic in order to retain recombinativeflexibility.

The gradual refreshing of the core resourceportfolio in coevolution with markets also suggeststhat strategy may sometimes involve de-emphasiz-ing or even leaving markets when the firm’s coreresources can be used to create higher performanceelsewhere. For example, Apple’s design skills wereonce best applied to the now maturing computerindustry. But now, these skills may be betterapplied to the rapidly growing online musicindustry. Likewise, NEC’s core expertise in elec-tromagnetic waves was once best applied in thedevelopment of vacuum tubes, broadcastingequipment, and transistors, but more recently isnow better utilized in other electronics relatedindustries such as microwave communicationtechnology and satellite communication systems(Helfat and Raubitschek, 2000).

Leverage logic is particularly effective when coreresources are knowledge based. The reason is thatknowledge-based resources are typically fungibleacross different markets and within the same

market at different times. In contrast, physicalresources often have specific and limited use. Thus,knowledge-based resources are likely to be valu-able in multiple markets. This fungibility adds tothe performance associated with deploying coreresources in a single market by creating economiesof scope across multiple markets. This leads, inturn, to greater profitability in current marketsand greater profitability and growth via expansioninto new markets. For example, a technology firmthat had core resources in the form of software forcreating customizable reporting for a specificmarket was able to raise profitability via lowercosts in that market, and create additional profitand growth by leveraging some of the samesoftware into a different market for which thesoftware was also valuable (Danneels, 2002).Similarly, executives at Denmark’s InternationalService System (ISS), a major industrial servicesfirm, profitably grew by expanding from cleaningslaughter houses to providing hospital services.Underlying this expansion was leverage of deepknowledge in chemicals, bacteria, sterilization, andother cleaning techniques that was fungible acrossmarkets, and valuable and rare within them(Miller, 2003). Overall, these examples are con-sistent with the argument that, while products mayrely on particular core resources, these sameresources are not product specific. Indeed, theymay be valuable across multiple products andmarkets. Therefore, the contribution of coreresources to firm performance ultimately lies‘upstream from the end product in a generalizablecapability which might well find a variety of finalproduct applications’ (Teece, 1982, p. 45).

Underlying the strategic logic of leverage is theassumption of a moderately dynamic market. Inthese settings, major disruptive shifts are rare.While change is a regular occurrence, it occurs inrelatively predictable ways, in incremental shifts,and along roughly linear paths (Eisenhardt andMartin, 2000). This means that the value andrarity of resources in any given market may changeover time, but that they do so in an incremental,predictable fashion that gives managers time toadjust their portfolio of core resources. Mechan-ical engineering skills, for example, are becomingless valuable in the automotive industry, whilecomputer science skills are becoming more valu-able. Given that this change is foreseeable, thestrategy of many automotive firms involves build-ing new core resources by hiring computer science



talent and developing effective software processes.As markets become more dynamic, changes withinthe resource portfolio occur more frequently. Inthis situation, organizational processes by whichmanagers acquire, alter, and release resources (i.e.,dynamic capabilities) are likely to become coreresources (Eisenhardt and Martin, 2000).

Under leverage logic, inimitability arises fromthe property rights that are associated with theownership of particular resources (e.g., patents,locations) and from the time diseconomies andpath dependencies of building core resources. Inthe case of the former, legal barriers surroundingcore resources block imitation. In the case of thelatter, organically building core resources isusually slow, challenging, and costly (Teeceet al., 1997). Although acquisition may acceleratebuilding core resources, acquisition may also becostly, pose difficult integration challenges, andmay be irrelevant if the resources do not exist ortheir owners do not wish to sell them (Graebner,2004; Graebner and Eisenhardt, 2004). To theextent that core resources involve complicatedorganizational processes, inimitability may alsoarise from causal ambiguity. Indeed, the difficultyof imitating core resources suggests that would-beimitators might be more effective by developingtheir own core resources rather than trying toimitate those of others (Miller, 2003).

Competitive advantage stems from the owner-ship and deployment of specific core (i.e., VRIN)resources within multiple markets. Given inherentlimits to the inimitability of many core resourcesand moderate market dynamism that may changethe value of resources, the duration of competitiveadvantage is likely to be medium term. Withsufficient time, competitors can often build func-tionally equivalent resources and/or differentresources that provide their own distinctive andperhaps superior value in the market. Alterna-tively, with sufficient time, a firm’s core resourcesare likely to become out-dated, thereby providinglittle value in existing markets and requiring thebuilding of new core resources (Tripsas, 1997a, b).

A major challenge of the leverage logic is theinherent difficulty of adjusting the portfolio of coreresources and deploying them in coevolution withmarkets. Developing new core resources requirestime, effort, and expense. A more subtle andimportant point is that existing belief structures orpolitical blocks may make executives slow todevelop these resources and/or to deploy them

(Tripsas, 1997b). Executives may also prefer short-term performance through exploitation of existingresources that is more certain and less remote intime and space rather than exploration of newresources (March, 1991). Alternatively, they mayhave difficulty recognizing the complementaryresources that are necessary in new markets(Gilbert, 2005) or may be emotionally attachedto existing resources (Sull, 1999). Overall, thesearguments suggest that individual and organiza-tional ability to build new core resources orabandon old ones may be low.

Tripsas (1997a, b), for example, described howseveral firms experienced difficulties in developinga new core resource after a major market shift.Intertype and Monotype, two of the largest andmost dominant typesetter firms in the early 1900s,possessed strong competencies in hot metal type-setter technology. However, when the marketchanged to phototypesetting technology, hot metaltypesetter technology became obsolete. Executivesat Intertype and Monotype tried to develop coreresources in phototypesetting, but their newproducts continued to build on the obsolete hotmetal typesetting technology. Thus, they failed todevelop a new core resource (i.e., phototypesettingtechnology) that became increasingly valuable.

POSITION LOGIC

A second strategic logic by which managerscan create superior performance from firm re-sources is position. Under position logic, compe-titive advantage stems from executing differentactivities than the competition or executing thesame activities in a differentiated way (Porter,1996). Superior performance is achieved when theresources comprising these activities becometightly linked to form a unique and valuablestrategic position from which managers canincrease revenue (i.e., differentiation) or decreasecosts (i.e., cost leadership).

Using position logic, strategy consists of tightlylinking resources together in mutually reinforcingconfigurations termed activity systems (Porter,1996; Rivkin, 2000; Siggelkow, 2002). Unlike thecore resources of leverage logic, the individualresources comprising activity systems may not beinherently VRIN (Hansen et al., 2004). Forexample, Southwest Airlines’ vaunted activity



system relies on readily obtainable resources suchas gates at less popular airports, zone assignedseating, and the use of a single type of aircraft.None of these resources is particularly valuable,rare or inimitable by itself. But, as these discreteresources becomes more connected to one another,more interdependent, and more mutually reinfor-cing, the activity system becomes increasinglyeffective at producing the desired products orservices, and doing so in a unique way (Miller andFreisen, 1980). Thus, the activity system exhibitssuper-modularity such that performing any oneactivity synergistically increases the value of theothers (Milgrom and Roberts, 1990).

An illustration of activity systems occurs inresearch by Carmeli and Tishler (2004). Using datafrom 99 Israeli government authorities, they foundthat linkages among resources reinforced oneanother. That is, managerial skills, human capital,internal auditing, labor relations, organizationalculture, and reputation complemented each othersuch that the value of any one of these resourceswas increased by the increased presence of theother resources. Specifically, although two re-sources were much more valuable on their ownthan the other four, all six resources mutuallyenhanced the value of the others (Carameli andTishler, 2004).

Central to position logic is building the activitysystem in a valuable and unoccupied (i.e., rare)strategic position. Thus, while strategy usingleverage logic focuses on building a few coreresources and deploying them in one or moremarkets in which they are valuable and rare,strategy using position logic involves the uniquelinkage of numerous, often mundane resources inways that are synergistic with one another. Theintent is to occupy a valuable strategic position ina given market. Such a position creates higherprofitability through the ability to charge higherprices (e.g., differentiation strategy of Apple in thecomputer industry) or to achieve lower costs (e.g.,low cost strategy of Dell in the computer industry).Executives at the mutual fund giant Vanguard, forexample, built an activity system that enabled thefirm to occupy the low cost position within theirindustry (Siggelkow, 2002). They focused onconservatively managed no-load funds, such asindex funds, with no retail branches and smallinvestments in information technology. They alsolinked these activities with others geared towardcost savings, such as no management perquisites,

moderate wages, avoidance of commission fees tobrokers, and word-of-mouth marketing instead ofexpensive advertising. The resultant synergyamong these linked activities provided an over-riding ‘value for money’ theme that pervaded allcorporate actions and fortified Vanguard’s lowcost strategic position (Siggelkow, 2002).

Over time, strategy under position logic centerson increasing and deepening the linkages amongresources in the activity system as well as addingnew resources to create an increasingly strength-ened strategic position. Executives in some Holly-wood film studios, for example, increased anddeepened the linkages among their resources overtime in order to increase the value and uniquenessof their activity systems. This strengthened theirstrategic positions. Between 1936 and 1950,MGM, Paramount, and United Artists relied onmutually reinforcing linkages among resourcessuch as exclusive long-term contracts with stars,technological patents, well-situated theaters, capi-tal-intensive equipment, and key geographic loca-tions of studios in order to build increasinglyvaluable and unique strategic positions (Miller andShamsie, 1996). These resources were added overtime to strengthen ones already in place, not assubstitutes for existing resources. Adding owner-ship of well-situated theaters, for example, createddistribution outlets that enhanced the value of thestudios’ films. In addition, this practice alsoenabled executives to centralize key activities suchas advertising, administration, and even popcornpurchases. Overall, the strategy of increasing thelinkages among resources and adding new re-sources enabled these Hollywood studios to setthemselves apart from the competition, exertpower over suppliers, and create high barriers toentry for many years (Miller and Shamsie, 1996).

Underlying the strategic logic of position is theassumption of a relatively stable market. That is,industry structure (e.g., buyer and supplier power,competitive rivalry, and threat of substitutes) isstable and unambiguous (Porter, 1980), andmarket disruptions are rare. In such markets,organizational boundaries are clear and long-termplanning is useful (Hamel and Prahalad, 1994;Lengnick-Hall and Wolff, 1999). This marketstability enables executives to elaborate increas-ingly strong strategic positions in an orderlyfashion. That is, they can add resources andsynergistic linkages to their activity systems in adeliberate and planned way that strengthens their



current strategic positions over time (Raff, 2000).Stability in the early motion picture industry, forexample, allowed executives to predict withsignificant certainty the specific stars, directors,and genres of films that would remain popular formany years, and so build corresponding activitysystems (Miller and Shamsie, 1996). Marketstability also ensures that a valuable and rarestrategic position will enjoy long-term competitiveadvantage and superior performance, and sojustifies extensive investment in building elabo-rated activity systems.

The numerous and tightly linked resources thatform activity systems are difficult to imitate. Theircomplexity in terms of the number of resourcesmakes them challenging for imitators to under-stand and time consuming to copy (Rivkin, 2000).The organizational processes of activity systemsare particularly difficult to observe from outsidethe firm. Even when imitators understand whichresources comprise the activity system, they maybe unable to understand the precise nature of thelinkages among them because they are oftennumerous and have unpredictable synergisticeffects (Rivkin, 2001). These complex and reinfor-cing linkages, therefore, make imitation slow andinaccurate because even small errors can throw itoff (Rivkin, 2000). Successful imitation oftenrequires not only knowing which resources andlinkages comprise the activity system, but alsodeciphering the proper sequence of their assembly(Brown and Eisenhardt, 1997). This additionalinformation further increases causal ambiguityand stymies imitation. Together, these argumentssuggest that imitators of strategies using positionlogic are unlikely to succeed (Rivkin, 2000).

Since competitive advantage stems from activitysystems of tightly linked, mutually reinforcingresources that are difficult to imitate and thatoccupy strategic positions within relatively stablemarkets, the duration of competitive advantage isoften long term. Consider, for example, thechallenge of imitating Lincoln Electric’s highlysuccessful human resources activity system (Mil-grom and Roberts, 1995). Even if competitorsunderstood how its value depended on mutuallyenhancing resources such as ownership structure,bonus incentives, and inventory policy, it would bechallenging to build those same resources in anappropriate order, and to do so quickly andwithout making mistakes. It might be easy, forexample, to copy piece rate pay. But, it would be

much more difficult for rivals to create thecredibility for a no-layoff policy and gain the trustof workers that Lincoln forged over 60 years. Itwould be even more challenging to build theseactivities while simultaneously shifting the work-force from employees fit to engage in traditionalwork activities to those able to excel in a uniqueactivity system such as Lincoln’s. In short, whenresources are tightly linked into activity systems, itis difficult to copy the activity system accurately,quickly, and in the correct sequence. Further, thebenchmark firm is probably also strengthening itsactivity system even as imitators attempt to copyit, and so is improving its competitive advantageand increasing its superior performance.

A major challenge to firms relying on positionlogic arises when markets change. Executives arelikely to have difficulty in initiating change whenresources are tightly linked. They may notrecognize the need to change because they arefocused on further elaborating their currentactivity systems. Even if they do recognize theneed to change, they may be reluctant to do sobecause change requires halting organizationalmomentum, changing direction, and modifyingmany resources simultaneously (Nadler et al.,1995; Lengnick-Hall and Wolff, 1999). In addition,executives often change ineffectively by modifyingonly a few resources in their current activitysystems. Since activity systems are often highlyinterdependent, piecemeal changes to some re-sources usually undermine the performance ofother resources by creating internally conflictingactivities (Miller and Friesen, 1980). Therefore,although changing only a few resources may seemeffective, it usually is not. Rather, it tends to upsetthe internal coherence of a firm’s current strategyand lower performance, without necessarily mov-ing the firm toward a more valuable strategicposition (Rivkin and Siggelkow, 2003). Finally, inorder to build an activity system in a new strategicposition within a changed market, performanceoften must become worse before its improves(Siggelkow, 2001). Executives usually must dis-mantle existing activity systems, and then rebuildresources and link them together in a new strategicposition. Besides being slow, this dismantling andrebuilding invariably lowers performance. Ironi-cally, performance often does not increase sig-nificantly until the end of the rebuilding because ofthe disproportionate effects of later linkages onperformance.



The response of apparel giant Liz Claiborne tochanges in the retail market highlights thechallenges of changing activity systems and shift-ing strategic positions (Siggelkow, 2001). Duringthe 1980s, Liz Claiborne’s production and dis-tribution, marketing, design, presentation, andselling processes were mutually reinforcing in atightly linked activity system that occupied adifferentiated strategic position that targetedworking women. In the early 1990s, changes indemand and in the company’s main distributionchannel (i.e., department stores) made Claiborne’sactivity system and related strategic position lessvaluable, and lowered performance. In an effort toimprove performance, Claiborne executives chan-ged specific resources such as the ‘no reordering’policy. However, because the company’s ‘noreordering’ policy was tightly linked with otherpolicies such as ‘no production to order’ andactivities like low spending on information anddistribution technologies, the reordering policycould not be undone without introducing internalconflicts with other resources. Consequently, thespecific change to the reordering policy destroyedsynergies within the existing activity system, andworsened financial performance. Only when Clai-borne executives dismantled their activity system,and began to build a new one did performanceimprove.

OPPORTUNITY LOGIC

A third strategic logic that enables the creation ofsuperior performance from firm resources isopportunity. Related to Austrian economics(Schumpeter, 1934; Schumpeter, 1942; Jacobsen,1992; Kirzner, 1997), a strategic logic of opportu-nity argues that competitive advantage and super-ior performance stem from entrepreneurial action(Roberts and Eisenhardt, 2003). In particular,superior performance under this strategic logicderives from the firm’s ability to capture attractive,fleeting market opportunities for creating revenueand profits sooner, faster and more effectively thancompetitors (Eisenhardt and Martin, 2000).

Given the logic of sensing and seizing opportu-nities, strategy consists of picking one or perhapsseveral organizational processes (e.g., acquisition,alliance, internationalization, and product innova-tion) that put the firm in an abundant flow of

attractive opportunities (Eisenhardt and Sull,2001). Attractive opportunities are those with thehighest potential for revenue and profit, and sotheir capture creates superior performance (Davis,Eisenhardt and Bingham, 2007). For example,Cisco’s strategy during the late 1990s was itsacquisition process. Cisco gained competitiveadvantage and superior performance by acquiringa series of technology-rich ventures sooner, morequickly and more effectively than its competitors.Similarly, Nokia’s strategy during the same timeperiod included its product innovation process bywhich the firm captured numerous, new productopportunities in the burgeoning market of wirelesscommunication.

A key point is that these organizational pro-cesses are semi-structured (Bingham and Eisen-hardt, 2005), and so are unlike the complicated,routine organizational processes of the leveragelogic (e.g., Nelson and Winter, 1982). Theirsimplicity or more formally, semi-structure enablesflexible opportunity capture by leaving room forspontaneous and improvisational action such thatmanagers can effectively seize attractive and yetunexpected opportunities (Brown and Eisenhardt,1997). If the processes were more structured,executives would not have the flexibility to adaptto unexpected opportunities, and yet, if they werecompletely unstructured, executives would nothave the coherence to adapt to opportunities(Brown and Eisenhardt, 1998; Davis et al., 2005).For example, Pisano (1994) found that a keyprocess for creating manufacturing innovationsamong biotechnology ventures was more effectivewhen it was semi-structured, and based onexperimentation and learning by doing. Similarly,Eisenhardt and Tabrizi (1995) observed that semi-structured, improvisational product developmentprocesses characterized successful firms in thehigh-velocity work station and personal computermarkets. In addition, these semi-structured orga-nizational processes are usually only loosely linkedwith one another, and so are unlike the tightlylinked organizational processes within activitysystems (e.g., Porter, 1996). For example, Ama-zon’s strategy during the later half of the 1990swas two processes, product category expansionand internationalization, that were almost com-pletely unlinked.

These semi-structured organizational processesare composed of a few, unique simple rules thatguide opportunity capture (Bingham, Eisenhardt



and Davis, 2007). These heuristics enable execu-tives to cope with situations about which they havevery little information (Eysenck and Keane, 1995).Specifically, they help executives to effectively andquickly capture fleeting opportunities via applyinga few rules of thumb while improvising the rest oftheir actions. These simple rules provide behavior-al shortcuts that reduce the complexity of captur-ing opportunities and improve the speed ofdecision making (Zimbardo and Gerrig, 1999).Simple rules act as guiding themes around whichreal-time adjustment or more accurately, improvi-sation can occur (Miner, Bassoff and Moorman,2001). In jazz improvisation, these rules are themesthat may take the form of pre-composed sequencesof harmonic chords (Weick, 1998). In strategy,these rules are the heuristics for identifying andexecuting opportunities within a given abundantflow of attractive opportunities.

A good example of simple rules is the heuristicsof the alliance process at Yahoo! (Rindova andKotha, 2001). In the early days of the company,the alliance process was a key strategy that placedYahoo! in an abundant flow of attractive oppor-tunities. These alliances accelerated the firm’sability to scale its number of products and sogrow rapidly. Specifically, executives relied onthree rules to capture attractive alliance opportu-nities: (1) the basic service or product provided bythe alliance must be free; (2) form an alliance onlyif the product or service enhances the customerexperience; and (3) create no exclusive alliances.These three simple rules provided direction toexecutives regarding the capture of alliance op-portunities, but did not tightly prescribe theiractions. This gave executives the flexibility toimprovise their alliances to fit with particularpartners and products, while giving their actionssome efficiency and coherence. Over time, theserules helped Yahoo! executives to create partner-ships for products such as e-mail, chat rooms, andelectronic commerce that, in turn, became compe-titive advantages and sources of high performance.

There are several types of rules that relate tospecific facets of opportunity capture. Theseinclude boundary rules for selecting opportunities,priority rules for ranking them, process rules forexecution, and timing rules for sequencing andpacing them. Bingham, Eisenhardt and Davis,(2007), for example, described how the simple rulesfor the internationalization processes of six tech-nology-based ventures emerged. At one young

security software firm, executives created severalrules to successfully guide the process includingthat target customers should: (1) be large andestablished; (2) possess extensive and highlyproprietary information; and (3) have the abilityto pay. Executives were then able to use the rulesas improvisational referents in each of the firm’ssubsequent entries. The rules provided directionabout the profile of target customers, and yet gaveexecutives the freedom to flexibly pursue a varietyof customers depending on local market condi-tions. Thus, executives improvised to captureattractive opportunities with big insurance com-panies in Malaysia, multinational manufacturingfirms in Japan, large state-owned enterprises inChina, and oil companies in Saudi Arabia, whilesimultaneously achieving some efficiency andcoherence.

Over time, strategy under opportunity logicrequires that executives are alert to changes inmarkets such that they maintain an optimalnumber of rules, with fewer rules in less predict-able markets and more rules when markets aremore predictable (Davis et al., 2005). This requiresexecutive actions such as adding rules, changinglevels of abstraction, deleting rules, and refiningthem. Occasionally, if an opportunity flowbecomes less attractive (e.g. greater competitionfor the opportunities, lower likely payoff from theopportunities) or if more attractive opportunityflows emerge, then executives should switch to asuperior flow and its related organizational pro-cess. Thus, changes in where to operate are drivenby the attractiveness of opportunity flows, and notby whether the core resources are valuable andrare in a given market as in leverage logic.

An assumption of a high-velocity market under-lies opportunity logic. Such markets are character-ized by abundant flows of unpredictable, oftenfast-moving and ambiguous opportunities of un-clear duration (Davis, Eisenhardt and Bingham,2007). Industry structure is often ambiguous,uncertain, and shifting as competitors come andgo, customers alter or clarify their preferences, andorganizational boundaries shift (Santos andEisenhardt, 2005). These shifts are often non-linear and unpredictable. This suggests that toomuch generalization from the past can negatively,not positively, impact performance (Haleblian andFinkelstein, 1999). Therefore, it is effective todiscard opportunity-specific learning, and to keepprocesses and rules appropriately simple.



Although it is not inherently difficult for firms touse the same processes and rules, a strategy basedon opportunity logic is difficult to copy because ofits simplicity. Surprisingly, a strategy of a few keyorganizational processes and few simple rules isoften difficult to imitate because the resultingemergent behavior is unpredictable and compli-cated. As Gell-Mann (1994) notes, the mostcomplicated system behavior emerges from partiallystructured systems within which extensive improvi-sational behavior occurs. Moreover, since eachopportunity is unique, its capture involves real-timelearning that is not necessarily used or useful forsubsequent opportunities. These features make itchallenging for competitors to infer the rulesassociated with the strategy. Timing is also animportant source of inimitability in opportunitylogic. Even when competitors figure out a strategybased on simple rules and imitate it, the exemplarfirm typically retains competitive advantage becauseof starting sooner and locking up the mostcompetitively advantaged opportunities beforeothers arrive (Eisenhardt and Martin, 2000). Forexample, while many competitors eventually imi-tated aspects of Cisco’s acquisition process, theycould not imitate many of the resources that Ciscohad already acquired. Thus, opportunity logic relieson two distinct sources of inimitability: the simpli-city of the organizational process itself and thetiming advantages associated with capturing oppor-tunities sooner and faster than competitors. Thistiming is, moreover, particularly powerful in high-velocity markets where networking and informationeffects that favor early movers often exist.

Given a high-velocity market, the duration andscale of competitive advantage are unpredictable(Eisenhardt and Martin, 2000). Opportunities mayunexpectedly emerge and then disappear, makingit impossible for managers to predict how longtheir competitive advantage may last and howlarge it will be. Given this unpredictability,executives often assume that their competitiveadvantage is transient, and thus emphasize flex-ibility and movement to new advantages. Indeed,the famous Intel axiom, ‘only the paranoidsurvive’ reflects Intel managers’ belief at any pointin time, that their competitive advantage could end(Grove, 1996). The result is often a series oftemporary competitive advantages (Makadok,1998; Roberts, 1999). Roberts (1999), as oneillustration, found that successful firms in theunpredictable pharmaceutical industry deftly used

their innovation processes to consistently developnew products that formed a series of temporaryadvantages. Likewise, Roberts and Amit (2003)discovered that successful firms in the deregulatedAustralian retail banking industry actively pur-sued a strategy focused on the capture of newopportunities. In particular, the banks that con-tinuously pursued new product opportunitiesachieved the highest performance.

A major challenge of opportunity logic ismaintaining an appropriate level of structure(termed ‘edge of chaos’) (Brown and Eisenhardt,1997, 1998). Too much structure renders thestrategy too rigid to capture opportunities effec-tively, while too little renders it too slow andinefficient (Okhuysen and Eisenhardt, 2002). Emer-ging research suggests that maintaining the optimallevel of simplicity requires constant and vigilanttinkering with the rules (Bingham et al., 2007).Moreover, this ‘edge of chaos’ becomes increasinglyprecarious as unpredictability increases (Daviset al., 2007). A second challenge is being tootentative. In the face of unpredictability andambiguity, individuals have a tendency to ‘waitand see’. But if they do so, they may be too late.For example, Lieberman and Montgomery (1998)found that firms that were more tentative incapturing emergent opportunities struggled becauseearly movers had become established. Similarly,Zott (2003) found that firms that hesitated whenseizing opportunities often failed to catch up withearlier movers. Tentativeness limits firms’ ability tocreate advantage because earlier competitors mayhave already captured the best opportunities, andperhaps even moved on to new opportunity flows(Ozcan and Eisenhardt, 2007).

DISCUSSION

We began by observing that, while the resource-based view (RBV) of the firm is a major theoreticalframework that addresses the source of interfirmperformance differences, its contribution is un-fulfilled. In our view, part of the confusionsurrounding RBV relates to the concept ofresources and its confounding with the strategiclogic of RBV. This confounding obscures theinsight that the tie between resources and compe-titive advantage involves not only the nature ofspecific resources, but also the linkages (i.e.,relationships) among the resources. In this paper,



we disentangle the concept of resources from thestrategic logic of RBV. Overall, we attempt tocontribute to several areas.

First, a primary contribution is a typology ofstrategic logics and competitive advantage that linksheterogeneous firm resources to competitive ad-vantage (Table 1). We term these strategic logicsleverage, position, and opportunity. Leverage logicfocuses on the ownership of specific core resources.Competitive advantage is achieved by leveragingthese core resources into markets where they arevaluable and rare. The linkage of these coreresources with one another and with complemen-tary resources is moderate in order to facilitateredeployment of core resources into new combina-tions that are more appropriate as new markets areentered and existing ones change. Over time, theportfolio of core resources is updated in coevolu-tion with changing markets in order to maintainthe highest performing resource portfolio andmost effective deployment of that portfolio.Leverage is the strategic logic that is most closelyassociated with RBV, particularly the strands

described by Collis and Montgomery (1995) andPrahalad and Hamel (1990).

Position logic in contrast focuses on building anactivity system of resources that are tightly linkedin synergistic relationships that occupy a unique,valuable strategic position. Unlike leverage logic,these resources need not be valuable or rare intheir own right. Also unlike the leverage logic, theyare tightly linked and so difficult to copy.Competitive advantage is achieved when thisactivity system provides either the lowest cost ora unique differentiation for which customers willpay a premium. Over time, new resources andlinkages are added and existing linkages aredeepened in order to increase inimitability, en-hance strategic position, and improve profitability.

Second, we introduce the logic of opportunity.Opportunity logic focuses on selecting a feworganizational processes (e.g., acquisition, alli-ance, new product development, or internationa-lization) that place the firm in abundant flows ofattractive, but often fleeting opportunities, anddeveloping a few heuristics to guide the fast and

Table 1. A Typology of Strategic Logics and Competitive Advantage

Strategic logic Leverage Position Opportunity

Basis of logic Ownership of specific core(VRIN) resources

Activity system that occupies aunique, valuable (costleadership or differentiated)strategic position

Entrepreneurial action tocapture attractive, fleetingopportunities faster, sooner,and more effectively than rivals

Strategy Identify, build, and exploitportfolio of core resourcesin current markets anddeploy into new markets

Build tightly linked, mutuallyreinforcing resourceconfiguration}i.e. activitysystem

Pick one or severalorganizational processes inabundant flows of attractiveopportunities and develop uniquesimple rules to capture them

Resources and linkages Moderately linked core andcomplementary resources

Many, often mundaneresources with tight mutuallyreinforcing linkages

Loosely linked, semi-structuredprocesses comprised of simplerules and improvised action

Sources of inimitability Property rights, pathdependencies, and timecompression diseconomies

Causal ambiguity due tonumerous, tightly coupledresources, path dependenciesand time compressiondiseconomies

Causal ambiguity due tochallenges in inferring strategyfrom simple rules and emergentimprovisational action and timingof early opportunity capture

Environment assumption Moderately dynamic Stable High velocity

Sustainability of advantage Medium term Long term Unpredictable duration andsize

Performance Profitability and growth Profitability (Ricardian rents) Growth (Schumpeterian rents)

Challenges Adjusting portfolio of coreresources hampered bycognitive inertia, preferencefor short-term performance,and political blocks

Adjusting activity systemhampered by dysfunction ofpiecemeal changes and threat ofsteep performance decline

Maintaining optimal (edge ofchaos) structure andtentativeness in opportunitycapture



effective capture of those opportunities yieldingthe highest payoff. Specifically, we argue thatheuristics act as improvisational referents. Theirsemi-structure keeps organizational behaviorbounded and thus partially coherent and some-what efficient. Yet it also permits adaptation andflexibility such that leaders can adjust the specificsof opportunity capture to the unique situation.Unlike leverage logic, these organizational pro-cesses are not necessarily rare. They are alsosimpler rather than highly detailed. Unlike posi-tion logic, these processes and their rules are onlyweakly linked. Competitive advantage is achievedwhen these organizational processes enable thecapture of attractive opportunities faster andbetter than competitors. Over time, the categor-ization, complexity, and abstraction heuristics maybe adjusted to allow more effective capture offlows of opportunities (Bingham et al., 2007).Likewise, focal organizational processes them-selves may be shifted and adjusted in order toremain within the opportunity flow that offers thegreatest potential for high performance. Overall,competitive advantage with this strategic logicensues from using heuristics of particular types toprofitably capture high value opportunitiesthrough a mix of real-time improvisation andmindful rule following (Bingham and Eisenhardt2007; Davis et al., 2007).

Third, we contribute conceptual clarity aboutthe influence of market dynamism as a boundarycondition. The absence of boundary conditionshas been a particular weakness of RBV. As Priemand Butler (2001 a, b: 32) note, ‘little effort toestablish appropriate contexts for the RBV hasbeen apparent’. Specifically, we suggest thatRBV’s logic of leverage is mismatched with bothstable and high-velocity markets. Rather, whenstable markets are assumed, competitive advan-tage comes from building a defensible low cost ordifferentiated strategic position with often mun-dane resources that are tightly and synergisticallylinked into activity systems. The result is oftenlong-term advantage. When high-velocity marketsare assumed, competitive advantage comes fromrelying on a few key organizational processes andtheir simple rules to capture attractive opportu-nities in flows that are often unpredictable,ambiguous, and fast-moving. These processesand rules enable extensive flexibility. Given thenature of the market, the result is often a series oftemporary advantages with unpredictable scale

and duration. Finally, when moderate marketdynamism is assumed, executives can predict theevolution of markets fairly accurately. Competi-tive advantage is achieved by maintaining aportfolio of core resources in coevolution withchanging markets, and deploying these coreresources in moderately linked configurations intomarkets where these core resources are valuableand rare. Given market change and the limits toinimitability, advantage is often medium term.

More broadly, these varying market assump-tions suggest that these different strategic logicsare useful at different stages of market evolutionand address distinct performance objectives. Forexample, opportunity logic is particularly usefulfor flexibly adapting to nascent markets, andcreating first mover competitive advantages. Whilehigh profitability may ensue, the performanceobjective is typically aggressive, risky and growthoriented. In contrast, position logic is particularlyuseful in more mature markets for deepening andreinforcing a unique, valuable (but relativelystationary) strategic position. While growth mayensue (especially if the market is expanding), theperformance objective is typically profitability.Finally, leverage logic is particularly useful ingrowing markets or for firms with diverse, butrelated businesses. Here, the performance objec-tive is likely to balance growth and profitability.

Fourth, we contribute an elaborated understand-ing of resources, especially the implications oflinkages among resources. We distinguish betweenmundane resources that are often not rare, inimi-table, or valuable in their own right (position), andcore resources per se that do possess thosecharacteristics (leverage). We also distinguish be-tween detailed and highly grooved organizationalprocesses that are designed to produce repeatableactions (position and leverage), and organizationalprocesses that consist of a few simple rules thatenable improvisation (opportunity). Most impor-tantly, we also distinguish between tight, moderate,and loose linkages among resources.

Our central argument is that these resource andlinkage distinctions have different sources ofinimitability. While rarity (or uniqueness or super-iority) is always determined relative to theresources of the competition and value is alwaysdetermined by the market context, inimitability isan inherent attribute of particular resources andresource configurations. As argued earlier, it isalso the resource attribute that most directly



relates to the sustainability of competitive advan-tage because it limits competition. Thus, sinceinimitability is the most important resourceattribute for creating and sustaining competitiveadvantage, these resource and linkage distinctionshave different theoretical pathways based ondifferent sources of inimitability that lead tocompetitive advantage.

Overall, the argument that specific VRINresources per se are themselves the source ofcompetitive advantage misidentifies the true sourceof advantage. That is, the specific characteristics ofresources per se are neither necessary nor sufficientconditions for competitive advantage. Rather,different types of resources and linkages amongresources lead to different sources of inimitability,and so to distinctive strategic logics. The centralinsight is, therefore, that the source for competitiveadvantage lies in the linkages among resources, notjust with their attributes. This observation suggestsa richer conception of resources and their tie toadvantage that goes beyond the usual view ofVRIN resource characteristics.

We conclude by noting that RBV is aninfluential perspective on strategy. But it is notthe only strategic logic that links heterogeneousfirm resources to competitive advantage andsuperior firm performance. Rather, there are threedistinct strategic logics that become apparentwhen the concept of resources is elaborated, andthe implications of different assumptions ofmarket dynamism are considered. By clarifyingthese three strategic logics, we hope to haveclarified and bolstered the significant role of RBV.

NOTES

1. Defined as the underlying rationale or theoreticalargument for why a particular resource or set ofresources creates competitive advantage.

2. As we will argue later, the nature of the competitiveadvantage that is achieved also depends upon marketdynamism.

3. Inimitability may also come from deterrence. Forexample, rivals may have the means to imitate aresource, but choose not to do so if the market istoo small or unprofitable to support more than theincumbents or if the focal firm is likely to escalatesubstantially their resource investment (Collisand Montgomery, 2005). Given that this source isrelated to market power considerations more than tointernal resources, we do not focus on this source inthis paper.

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Position, leverage and opportunity: a typology of strategic logics linking resources with competitive advantage