Competitive Advantage

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Competitive advantage in interfirm cooperation: old and new explanations

Paavo Ritala and Hanna-Kaisa Ellonen

Lappeenranta School of Business, Lappeenranta, Finland

Abstract

Purpose – The purpose of this paper is to examine how different strategy theories complement each other with respect to understanding competitive advantage of a single firm that utilizes interfirm cooperation. Design/methodology/approach – The paper provides an analytical review of three schools of strategy research in order to highlight their contributions, shortcomings, and interrelations with respect to sustainable competitive advantage and to clarify their explanations of competitive advantage in interfirm cooperation. On the basis of this analysis, an integrated perspective that captures industry, organization, and relationship attributes is proposed. Findings – The paper suggests that old and new paradigms in strategic management (industrial organization economics, resource-based theories, and the relational view) are applicable alongside each other when analyzing how a single firm gains competitive advantage by utilizing interfirm cooperation. It is argued here that no paradigm can be used to substitute others and thus an integrated perspective is needed. The paper provides a discussion and implications on how each paradigm complements others and illustrate this by sketching a refined strengths, weaknesses, opportunities, threats (SWOT) analysis framework. Practical implications – The paper gives a practical implication for managers who utilize traditional SWOT analysis in their decision making. By including relationship potential and limitations to the conceptual toolbox of thinking strategy through SWOT, managers can gain additional insight into internal strengths and weaknesses and external opportunities and threats analysis. Originality/value – The study increases...