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CiteWeb id: 19890000040

CiteWeb score: 7738

Recently, a number of scholars have expressed the concern that much of the strategy literature focuses too narrowly on privileged product market positions as a basis for competitive advantage and above-normal returns ie.g., Gabel 1984; Wernerfelt 1984; Barney 1986). The fact that resource bundles need to be deployed to achieve or protect such privileged product market positions is often overlooked. This creates both analytical and managerial problems. The analytical problem stems from the fact that if a privileged product market position is achieved or protected by the deployment of scarce assets, it is necessary to account for the opportunity cost of those assets. Unless the opportunity cost of those scarce assets is properly accounted for, measured returns of product market activities will be inflated. The managerial problem stems from the fact that hidden crosssubsidization, in turn, distorts performance appraisal and capital allocation decisions. In addition, managers often fail to recognize that a bundle of assets, rather than the particular product market combination chosen for its deployment, lies at the heart of their firm's competitive position. In such cases, inadequate attention is given to protecting these assets from being imitated, bid away to competitors, or rendered valueless as a result of substitution by other assets. A recent statement reflecting this critique is presented by Barney (1986). To help analyze the cost of implementing product market strategies, Barney introduces the concept of a "strategic factor market" defined as "a market where the resources necessary to

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