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Trade-Offs in Managing Resources and Capabilities

Bing-Sheng Teng and Jeffrey L. Cummings
The Academy of Management Executive (1993-2005)
Vol. 16, No. 2, Theme: Achieving Competitive Advantage (May, 2002), pp. 81-91
Published by: Academy of Management
Stable URL: http://www.jstor.org/stable/4165844
Page Count: 11
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Trade-Offs in Managing Resources and Capabilities
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Abstract

The resource-based view of the firm is a useful approach in determining the internal sources of competitive advantage. Nevertheless, managers need to note some caveats regarding this theory. Contrary to the guidance provided by the resource-based view, the values of certain resources and capabilities may actually be enhanced by seeking more rather than less competition, limiting rather than supporting functional successes, and destroying rather than protecting their exclusivity. We examine five situations in which certain processes may cause seemingly valuable resources and capabilities to lead instead to competitive disadvantages for firms as diverse as Hewlett-Packard, Food Lion, and AT&T. These trade-offs suggest that managers following the resource-based view as a guide may focus too narrowly on individual resources and capabilities, without adequately appreciating the interactions among multiple resources and capabilities and their interactions with the environment.

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