Competitive Advantages of the Latecomer Firm: A Resource-Based Account of Industrial Catch-Up Strategies

Abstract

The resource-based view of the firm provides a satisfactory account of how firms go about sustaining their existing competitive advantages, but it is less successful in accounting for how firms create such advantages in the first place, or overcome incumbent advantages, when the firms start with few resources. The paper utilizes the case of latecomer firms from the Asia-Pacific region breaking into knowledge-intensive industries such as semiconductors, to illustrate the issues involved and the resource-targeting strategies utilized. This results in a strategic theory of the overcoming of competitive disadvantages through linkage, resource leverage, and learning. The dynamic capabilities of such firms are enhanced through repeated applications of linkage and leverage. The resources strategically targeted are characterized as being those most amenable to such linkage and leverage, namely those that are least rare and most imitable and transferable, i.e. as positive versions of the criteria utilized in the conventional resource-based view of the firm. It is argued that this adaptation of the RBV is potentially of wide applicability, and is the needed amendment that makes it of prime significance in accounting for latecomer success within the conceptual framework of strategic management.