Compositional Advantage and Strategy: Understanding How Resource-Poor Firms Survive and Thrive

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    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.
    Original languageEnglish
    Publication date2016
    Number of pages18
    Publication statusPublished - 2016
    EventThe Seventh Biennial International Association for Chinese Management Research Conference: Culture and Chinese Management - Hangzhou, China
    Duration: 15 Jun 201619 Jun 2016
    Conference number: 7
    http://www.iacmr.org/v2en/

    Conference

    ConferenceThe Seventh Biennial International Association for Chinese Management Research Conference
    Number7
    CountryChina
    CityHangzhou
    Period15/06/201619/06/2016
    Internet address

    Cite this

    Li, X. (2016). Compositional Advantage and Strategy: Understanding How Resource-Poor Firms Survive and Thrive. Paper presented at The Seventh Biennial International Association for Chinese Management Research Conference, Hangzhou, China.