Deploying the Internet for Leveraging Strategic Assets

Introduction

In contrast to large companies small and medium-sized enterprises (SMEs) frequently suffer from ‘resource poverty’ (Welsh and White, 1981; Bharati and Chaudhury, 2009), which often affects strategy development and creates perceptual and physical barriers to growth (Fillis, Johansson and Wagner, 2004). For example, small companies usually have fewer financial and human resources (Chow, Haddad and Williamson, 1997; Ihlstrom and Nilsson, 2003; Gribbins and King, 2004, Montazemi, 2006). However, according to the resource-based view of the firm (RBV) the value of strategic assets can be increased if they are combined with other strategic assets, which is called complementarity. Complementarity can be defined as “an enhancement of resource value, [which] arises when a resource produces greater returns in the presence of another resource than it does alone” (Powell and Dent-Micallef 1997, p.379). Teece (1986, p.301) suggests that complementary assets are especially important for small companies because, in contrast to their larger competitors, they “are less likely to have the relevant specialized and cospecialized assets within their boundaries and so will either have to incur the expense of trying to build them, or of trying to develop coalitions with competitors/owners of the specialized assets”. However, the complementarity of strategic assets is typically taken for granted but has hardly been empirically scrutinised, and non-anecdotal studies analyzing the interaction effects of strategic assets within a firm are frequently inconclusive (Powell and Dent-Micallef 1997; Song, Droge, Hanvanich and Calantone 2005; Zhu and Kraemer 2002)ⁱⁱ. Therefore, Song et al. (p.271) conclude “clearly, resource combinations do not always lead to synergistic performance impact.”

This chapter seeks to analyze whether strategic assets are complementary with the Internet. It contributes to the underdeveloped research on complementarity by introducing the Internet as a complementary resource. The authors argue that the Internet can be extremely important for SMEs, and that it can be used to “level the playing field” (Wigand, Steinfeld and Markus, 2005). This research aims at providing SME managers with information about which strategic assets can be leveraged by the Internet. Based on the literature review and survey data the authors suggest that researchers should examine complementarity at research settings in which a clear distinction of strategic assets is feasible. This chapter is organized as follows. In the next section the literature on the resource-based view and complementarity is briefly reviewed and the hypotheses are presented. After that, the research methodology is described; followed by the results. And then the discussion, the conclusions, the limitations, and some suggestions for future research are offered.