Theoretical Foundation and Literature Review
The previous chapter presented an overview of the study. This chapter introduces the theories that underpin the study through are view of relevant literature. Therefore the chapter establishes the foundation from which the conceptual framework and researc
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Theoretical Foundation and Literature Review
2.1
Introduction
The previous chapter presented an overview of the study. This chapter introduces the theories that underpin the study through are view of relevant literature. Therefore the chapter establishes the foundation from which the conceptual framework and research propositions are derived. The chapter starts with introducing Resource-based View (RBV) and Dynamic Capability Approach (DCA) as the main theoretical foundation of the study. Key organisational resources and capabilities in RBV literature that are sources of competitive advantage are identified. Their importance on establishing business partnership is also discussed. Next, the important role of integrative capability and relational capabilities in achieving superior firm performance in business partnerships is discussed. Lastly, four important dynamic capabilities are identified. Their importance on firms’ sustainable competitive advantage is discussed and their mediating role in the relationship between organisational resources, capabilities and firm performance is proposed.
Section I: Theoretical Foundation 2.2
The Pursuit of Competitive Advantage
Several studies investigating firm performance have drawn attention to the need for understanding the sources of sustainable competitive advantage. Such need is central to most firms’ mission, and has become a major area of research in the field of strategic management. For instance, Devan et al. (2005) studied 266 firms during the period of 1984–2004, and found only a small number of firms were financially successful. Similarly, in a longitudinal study of 25 years with 672 firms across
W. Jiang, Business Partnerships and Organizational Performance: The Role of Resources and Capabilities, Contributions to Management Science, DOI 10.1007/978-3-642-53989-3_2, © Springer-Verlag Berlin Heidelberg 2014
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2 Theoretical Foundation and Literature Review
40 industries, Wiggins and Ruefli (2002) found only a small portion of firms exhibited superior economic performance. Michael Porter firstly introduced the concept of competitive advantage in the late 1970s (Porter 1979, 1980). The concept of competitive advantage is built on the premise that firms can develop a differential advantage over their competitors. Thus, competitive advantage is discussed from a competitive perspective in the literature (Barney 1991; Dierickx and Cool 1989; Hunt and Morgan 1995). Barney (1991, p. 102) described competitive advantage as a ‘value creating’ strategy. Hoffman (2000, p. 1) followed this definition and defined competitive advantage as the ‘prolonged benefit of implementing some unique value-creating strategy not simultaneously being implemented by current or potential competitors along with the competitive inability to duplicate the benefits of this strategy’. Achieving competitive advantage should be the objective of a firm’s strategy with the outcome manifesting as above-average returns for the firm (Barney 1991; Grant 1991; Porter 1985). It is assumed that the
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