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Strategic Resource Decay: The Overlooked Endogenous Threat

Reha Karadag, University of Nebraska - Lincoln


How the firm achieves and sustains competitive advantage is a central topic for the strategy research. In the resource-based view, strategic resources are the building blocks of competitive advantage and drivers of firm performance. On the flipside, negative changes in the value-creating potentials of strategic resources can threaten the firm. Owing to their common origins in the Schumpeterian evolutionary economics, the streams of research utilizing the resource-based logic have a consensus on the detrimental effects of exogenous changes on the sustainability of resource-driven competitive advantage. However, endogenous changes in the value-creating potentials of resources as well as the resulting limitations to lifespans of strategic resources remain largely unaddressed. Herein, I build and test theory to address this gap. First, I offer a typology of strategic resources that coherently connects the antecedents and consequences of what I call strategic resource decay, the endogenous degradation of strategic resources. Second, I conduct two empirical studies analyzing the relationship between endogenous degradation of strategic resources and two outcome variables (i.e., firm performance and utilization of innovative technologies). Challenging an implicit assumption held in the existing literature, I propose and find evidence that firms are not immune to the continuous and endogenous degradation of strategic resources and that strategic resource decay is positively related to firm actions involving the utilization of innovative technologies. Both empirical studies utilize archival data on the U.S. firms active in the oil and gas extraction sector (two-digit SIC code: 13). This dissertation offers a novel theoretical framework and connects ubiquitous yet overlooked phenomena with the resource-based logic. One of the propositions developed in the second chapter is linked to firm performance and tested in Chapter III followed by new hypotheses that are developed and tested in Chapters III and IV, taken together, pointing to new directions for the mainstream resource-based view research as well as the numerous other strands of strategy research that utilize the resource-based logic.

Subject Area

Management|Organizational behavior

Recommended Citation

Karadag, Reha, "Strategic Resource Decay: The Overlooked Endogenous Threat" (2021). ETD collection for University of Nebraska - Lincoln. AAI28652988.