The strategy literature has long debated the relative contribution of firm versus industry related factors as the drivers of firm profitability.
The strategy literature has long debated the relative contribution of firm versus industry related factors as the drivers of firm profitability. The industrial organization perspective on this issue suggests that the structure of an industry is a key determinant of profitability (e.g., Porter, 1979). On the other hand, the resource-based view of the firm posits that strategic advantages conferred by firm-specific competencies translate into increased profitability (Prahalad & Hamel, 1990; Wernerfelt, 1984). These resources reside in unique and difficult to imitate tangible or intangible assets of the firm (Barney, 1991).
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