Linking Intangible Resources and Competitive Advantage

Linking Intangible Resources and Competitive Advantage

Orlando Lima Rua (Polytechnic of Porto, Portugal)
Copyright: © 2019 |Pages: 13
DOI: 10.4018/978-1-5225-8906-8.ch015


The purpose of this chapter is to analyze the linkage between intangible resources and competitive advantage. The author uses a quantitative approach based on a survey data from 247 Portuguese small and medium-sized enterprises (SMEs) from the textile industry. Findings suggest that intangible resources have a positive and significant influence on competitive advantage, either by cost leadership or differentiation. This chapter presents further evidences of the strategies that SMEs managers should pursue and policy makers should promote. This study deepens our understanding and provides novel insights into strategic management literature, since it combines multiple factors and has obtained the importance of each construct in SMEs business growth.
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Penrose (1959) mentions that the Resourced-Based View (RBV) argues that the competitive advantage of any organization is based on the set of resources and the role they play in its strategy. It can then be said that competitive advantage is based not only on the final product or service placed on the market, but mostly on a clear identification of available resources (Wernerfelt, 1984), and on how they are optimized (Penrose, 1959).

The Industrial Revolution created a market where the success and value of a firm were established by its ability to obtain, use and sell physical resources (Tsai, Lu & Yen, 2012). However, the Information Society has brought with it a new reality in which physical goods give way to intangible values, such as knowledge, culture and technology (Fakhrutdinova et al., 2014), and in which the main source of value creation market is based on immaterial pillars (Tsai et al., 2012).

According to the Economic Theory, intangible resources are based on the relation between society and property, which in itself has neither a material form nor a recognizable value, but which has the capacity to generate profit and competitive advantage (Fakhrutdinova et al., 2014).

Exploring intangible resources among SMEs has inherent scholarly value, since these firms tend to be constrained in their tangible assets; possessing intangible resources take on particular strategic significance and can form the basis for competitive advantage (Anderson & Eshima, 2013).

Resource-based scholars argue that resources form the basis of firm strategies (Barney, 1991) and intangible resources are more likely than tangible resources to produce a competitive advantage, since they are often rare and socially complex, thereby making them difficult to imitate (Hitt, Bierman, Shimizu & Kochhar, 2001). Thus, intangible assets are considered strategic variables (Amit & Schoemaker, 1993) and can consequently create sustainable value. Firms with valuable, scarce, and nonsubstitutable resources can gain at least temporary advantages by using those resources to develop and implement product-market strategies (Hsu & Ziedonis, 2013).

Key Terms in this Chapter

Competitive advantage: Based on the strategies of broad cost leadership, broad differentiation, cost focus, and differentiation focus.

SME: Small and medium-sized enterprises.

Intangible Resources: Considered strategic resources, including six dimensions: reputational resources, access to financial resources, human resources, cultural resources, relational resources, and informational resources.

Resource-based view: Theory based on the assumption that the source of competitive advantage is obtained from firms’ resources.

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