Firm resources and sustained competitive advantage*

Abstract Chapter 1 of this book defined and developed the strategic management question—Why do some firms outperform other firms?—and described the evolution of resource-based theory as one approach to answering this question. Chapter 2 introduced the concept of a strategic factor market to demonstrate that whether a firm gains competitive advantages does not depend just on strategies that create competitive imperfections in product markets, but on the total cost of implementing these strategies. This total cost is determined by the competitiveness of strategic factor markets. One of the central conclusions of this argument is that firms that exploit resources and capabilities they already control in choosing…