Linking intangible resources and competition

It is argued that intangible resources contribute differently to competitive advantage depending on level of competition, and is illustrated through the pharmaceutical industry.

Abstract

Recent strategy literature suggests that intangible resources — in particular competencies and relationships — are critical drivers of competitive advantage. However, there seems to be a lack of understanding of when certain types of competencies and relationships are most critical. This paper introduces a framework consisting of three fundamental levels of resource-competition. The framework is illustrated through the pharmaceutical industry. We argue that (1) biotech firms mainly engage in entrepreneurial competition; (2) traditional pharmaceutical firms — here referred to as big-pharma — increasingly undertake contractual competition and, finally, (3) generic drug makers compete predominantly operationally. The paper argues that intangible resources contribute differently to competitive advantage depending on level of competition.