212 A.. Mauri and M. P. Michaels tation(Rumelt, 1991)and the inability of firms achieve the long-term goals and objectives of the to change their resource endowments over time enterprise( Chandler, 1962: 383 ). These resource (Carroll, 1993). In contrast, the dominance of allocation patterns(Mintzberg, 1978)underscore dustry effects over time shows the similarities the concept of strategic choice( Child, 1972) in response to industry conditions and the imi- Resources can be classified as financial, physi tation of successful strategies cal, human, technological, and organizati The emerging resource-based view of the firm (Grant, 1991). The proponents of the resource- (Wernerfelt, 1984: Barney, 1991; Conner, 1991; based view have concentrated on unique resources Grant, 1991; Mahoney and Pandian, 1992; Pet- from which companies may derive sustainable eraf, 1993)focuses on firm effects as the basis competitive advantage. According to them, only for sustainable competitive advantage. In this per- those resources that are valuable, rare, nonsubsti spective, unique resource and idiosyncratic proc- tutable, and difficult to imitate would provide esses drive heterogeneity among firms. Such competitive advantage and become the source of unique resources can provide competitive advan- economic rents(Barney, 1991; Peteraf, 1993) tage when protected from imitation and effective We term these key resources core resources, and 1982).Thus, the resource-based view suggests Interestingly, both the resource-based strategies isolating mechanisms (Lippman and Rumelt, the strategies based on them as core that firm-specific attributes drive both strategies industrial organization consider core and performance outcomes, which stands in sharp based on technological and marke contrast to the predominance of market structure tiation as determinants of performance(Dierickx in the industrial organization literature. and Cool, 1989; Scherer and Ross, 1990). The proponent of industry effects on following sections distinguish between firm- and strategies and performance is industrial organi- industry-level drivers of these strategies and per zation. Several schools within industrial organi- formance outcomes zation have proposed market structure as the prin- cipal explanation for the emergence of common Firm-level drivers terms of behavior and similar performance out- omes for firms in the same industry. However, The resource-based view inherently offers an some of its schools differ regarding the dynamics explanation for the firm effects on strategies and f industry structure. The traditional school performance outcomes within the same industry Bain/Mason)views market structure as exogen- The key dimension of differences in strategies ous and stable(Bain, 1972; Caves, 1980; Porter, and performance levels among competitors within 1981), while the Schumpeterian and Chicago an industry is the existence of unique firm charac- schools view market structure as dynamic and teristics capable of producing core resources that nstantly evolving. The Schumpeterian school are difficult to imitate(Wernerfelt, 1984; Barney, focuses on revolutionary innovations that make 1986: Peteraf, 1993). These core resources are rivals' positions obsolete and change industry developed internally (Dierickx and Cool, 1989) structure. Similarly, the Chicago school (Stigler, through sustained investments in difficult-to-copy 1968: Demsetz, 1973)believes in the convergence attributes( Barney, 1986) by managers commit- of competitive patterns over the long term when ting to irreversible strategic actions( Ghemawat, the less successful firms imitate the strategies of 1991). When acquired from the market, core more successful ones(Demsetz, 1973). Despite resource endowments fully captialize their rents these differences, the literature in industrial in the market price(Barney, 1986). Similarly, organization treats the industry as the unit of core strategies are characterized by lock-in, lock that firms with are homogeneous. imply unique decision-making conditions due to complexity, uncertainty, and conflict(Amit and Schoemaker, 1993 ). RELATIVE EFFECTS ON CORE These unique strategies and resources, in con STRATEGIES AND PERFORMANCE junction with causal ambiguity, create isolating mechanisms that protect the competitive positions lopment of new ones to 1982: Reed and DeFillipi, 1990). This heterogen- O 1998 John Wiley Sons, Ltd. Srat.MgmJ.vol.19,2-219(1998)