Compositional Advantage and Strategy

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Compositional Advantage and Strategy

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Title: Compositional Advantage and Strategy
Understanding How Resource-Poor Firms Survive and Thrive
Author: Li, Xin
Abstract: In this paper, I first critique the composition-based view of Yadong Luo and John Child for understanding how resource-poor firms survive and thrive. To remedy the deficiencies in their perspective, I then propose a dynamic theory of compositional advantage and strategy. Here, the compositional advantage is redefined as the attractiveness of the composition of the producer’s offering in terms of scope and perceived value/price ratio. I identify five ways or basic compositional strategies to improve the value/price ratio. A firm may have an overall compositional strategy that is composed of some or all of the five basic compositional strategies. I argue there are three indispensable key success factors for a composition-based competition, i.e., aspiration (ambition-position asymmetry), attitude (being ALERT), and action (turning asymmetry into advantage). I also discuss the particular relevance of the present theory to understanding Chinese firms. I conclude with managerial implications and suggestions for future research.
URI: http://hdl.handle.net/10398/9321
Date: 2016-06-27
Notes: This paper has been presented at the International Association for Chinese Management Research (IACMR) Seventh Biennial Conference held in Hangzhou, China on June 15-19, 2016 (conference paper ID: 16EMi0046).

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