Strategic Competitive Advantage: Resource and Institutional Approach

Abstract

The article presents the multilevel model developed to describe the mechanisms of providing the firm with strategic competitive advantage. The author suggests the original two-dimensional approach to define competitive advantage and to analyze the mechanisms of its development. The technique of separating equilibrium is applied in order to find out conditions of sustainable competitive advantage. Within this framework the borders of variation of economic rent are clarified and the necessity of asymmetry in the transaction-specific investment costs between the firm and its competitors is proved. Then the fundamental sources of such asymmetry are reviewed and the importance of separating signaling about the properties of products to ensure the sustainable competitive advantage is analyzed. The author demonstrates also the benefits of applying the hostage mechanism in order to ensure the continuity and efficiency of transaction designed to provide competitive advantage. Finally, some considerations of the relational contract between owners of specific assets as a governance mechanism of such a transaction are suggested.