A parametric investigation of resource endowments under varying strategic conditions
Description
The purpose of this research is to evaluate a parametric representation of the relationship between resource endowments and market share, and to evaluate the characteristics of this parameter in the United States market. In doing so, I develop a model using the parameter to measure and map a firm's resource competitive advantages and to test the relationship between market share and profitability The analysis was conducted on the Pharmaceutical, Automobile, Airline, and Grocery Store industries from 1978 to 1997. The firm's resource deployments were classified into three categories---Ambition, Creativity, and Efficiency---named the ACE model. The first function used to represent the relationship between firm's resource deployments and market share was the S Shape function suggested by Cook (1983, 1985), Chattoparday, Nedugngadi, and Chakravarti (1985), Hou and McGahan (1995), and Sterman (2000). The exploration of the empirical properties of the parameter (Beta) indicates that it is better to use another type of non-linear function to represent the relationship between share of resources and market share The findings show that the Beta parameter is normally distributed within industries and across time, that there are differences in the Beta parameter across industries, and that a Beta parameter equal to one can be used as line of reference or equilibrium in the relationship between resource deployments and market share. In addition, the Beta parameter provides a measure to identify, classify, and analyze an industry's and a firm's competitive advantages, and to illustrate differences in the firm's resource deployments strategies. Moreover, the relationship between market share and profitability was found to be moderated by other variables such as industry structure, war prices, and environmental variables