Academic journal article Advances in Competitiveness Research

Successfully Competing in the Deregulated Trucking Industry: A Resource-Based Perspective

Academic journal article Advances in Competitiveness Research

Successfully Competing in the Deregulated Trucking Industry: A Resource-Based Perspective

Article excerpt

ABSTRACT

This paper uses the resource-based view of the firm to explain how firms grow in a deregulated environment. The study demonstrates that firms must utilize a specific sequencing of both acquisitions and internal development decisions to grow in a deregulated environment. A theoretical framework is developed which may explain firm growth in other deregulated industries.

Although the resource-based view of the firm began as a dynamic approach emphasizing change over time (Penrose, 1959; Wernerfelt, 1984; Dierickx and Cool, 1989), much of the subsequent literature has been static in concept (Priem and Butler, 2001). Dynamic research--where conditions under which resources are developed or acquired in one period have implications for the strategic advantages of firms in subsequent periods--is particularly important in studying resource-based theory (Barney, 1991; 2001; Priem and Butler, 2001).

This study will begin to fill this gap in resource-based theory by explaining how resources are developed and utilized over time to generate firm growth. While scholars agree that resources are developed in a complex path dependent process (Teece, Pisano, and Shuen, 1997; Barney and Zajac, 1994; Dierickx and Cool, 1989), predicting the resource development path that will result in highest firm growth represents a gap in resource-based theory. This study uses the resource-based view of the firm to explain the sequencing of diversification and internal development decisions that would generate the highest firm growth over time. Examining this temporal component is important because it could produce a deeper understanding in the strategy literature of complex interactions that occur over time between a firm's resources and its environment (Barney, 1991, 2001; Priem and Butler, 2001).

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RESOURCE-BASED GROWTH FRAMEWORK

Ansoff (1957) was one of the first scholars to address sequencing. Ansoff's product/market grid demonstrated that firms would, initially, grow by gaining more market share from its current products in their current markets. Second, firms would develop new markets for their existing products. Third, firms would develop new products that would be of interest to their current markets. Finally, firms would grow by developing new products for new markets. Since Wernerfelt (1984) views products and resources as "two sides of the same coin," resources could be substituted for products in Ansoff's original matrix.

Since diversification decisions represent different alternatives for market development, a diversification classification could be substituted for markets in Ansoff's (1957) matrix. Rumelt (1974), Palepu (1985), and Seth and Easterwood (1993) classified a firm's diversification decisions as single business, related business, and unrelated business. Based upon the substitution of resources and diversification decisions, the following matrix would result:

[ILLUSTRATION OMITTED]

Following Yip (1982), Chatterjee (1990), and Chang and Singh (1999) a firm may grow by either diversification, direct entry, or internal development. Direct entry and internal development represent alternative modes of growth to diversification (Yip, 1982; Chang and Singh, 1999). Adding the alternative modes of growth, internal development and direct investment, the final matrix is illustrated below:

[ILLUSTRATION OMITTED]

Resource-Based Sequencing

The resource-based view of the firm provides a prediction to explain the direction of diversification based upon the utilization of unused resources. These unused productive resources of the firm are the most selective force in determining direction of expansion (Penrose, 1959). The use of excess capacity gives the firm a mechanism for growth and provides the firm with the opportunity to extract the maximum leverage that its existing resource base can generate (Penrose, 1959; Teece, 1982). …

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