Abstract:
Capitalizing on the Eisenhardt (1989) case study method, this research study explores the dynamics of competitive advantage development. Previous studies chiefly focussed on identifying sources of sustainable advantage, but not how or why portfolios of advantage evolve in the ways observed, including paths, order and rate of advantage development, and processes that may stimulate or impede successful evolution. This particular study looks at the evolutionary advantage development of two polar pairs of New Zealand manufacturing organisations, namely 1) Scott Technology Ltd. and 2) Fisher & Paykel Industries Ltd., and 3) LWR Industries Ltd. and 4) Bendon Industries Ltd.
Within-Case and Cross-Case analyses are conducted for each of the case organisations under study. Tentative results show that:
a) It is the interactions between an organisation and its environment that drives evolution (Baum and Singh, 1994).
b) Strongly interconnected multidimensional configurations are the most powerful advantages (Miller, 1986; Porter, 1996) under 'unstable' deregulatory conditions (in contrast to Miller, 1992).
c) Balanced development of advantage is required rather than sequential development (in contrast to Baden-Fuller and Stopford, 1994).
d) Constant rate of advantage development is more likely to give rise to balanced evolution than rapid 'surges' or forced recoveries.
e) Evolutionary paths are not necessarily smooth (Greiner, 1972; Romanelli and Tushman, 1994) or idiosyncratic (Dierickx and Cool, 1989; Noda and Bower, 1996).
f) Process dependency (Senge, 1990) and industry structure (Porter, 1985) advantages act either as regulating or destabilizing forces on evolutionary development. Organisational learning processes (Nonaka and Takeuchi, 1995) and precognition (Arthur, 1996) in particular, are key drivers of balanced evolution.
g) Adopting a narrow scope of business is more effective under 'unstable' deregulatory conditions than a generalist approach with a spread of businesses (in contrast to Hannan and Freeman, 1983)
h) Discontinuous transitions like deregulation may be opportunities as well as threats (Greiner, 1972; Romanelli and Tushman, 1994) and force configuration based advantage systems to be deconstructed rather than destroyed.
i) There are numerous barriers and drivers of advantage (both internal and external) and they often act in certain times only.
j) Advantages arising from barriers overcome are more powerful and durable than those that arise from riding a trend (Barnett and Hansen, 1996).
k) CEO duality has a positive effect on company performance (Boyd, 1995).
Consistent with the theory building nature of this study, the testing of these propositions will be left for subsequent research.
