Firms possess a diversified and wide range of resources and capabilities. But the strategically important resources and capabilities upon which firms can base their competitive advantage can be few. Bamey ( 199 1) identified the fact that a resource should have four attributes in order to claim its competitive advantage. Accordingly, resources must be valuable, rare, imperfectly imitable and there cannot be strategically equivalent substitutes. Similarly, Amit and Shoemaker (1993) categorised these strategically important assets as strategic assets. They defined strategic assets as a set of objects diffiCUlt to trade and imitate, scarce, appropriable and specialised resources and capabilities that bestow ajirm's competitive advantage. This clearly reveals that not all the resources and capabilities will contribute to competitive advantage. Some researchers have considered these strategically important resources as competencies (Ma, 2000), core competencies (Hamel, 1993), and superior skills (Bharadwaj, Varadarajan & Fahy, 1993). However, in this study strategically important resources will be considered as core resources (this term was used in order to have a consistency with the term core strategies). Similarly to core strategies, a number of previous studies have identified a common set of core resources upon which a firm can base its competitive advantage. These core resources can be identified under six broad dimensions: scale, skills, brand equity, managerial talent, experience effects and vertical integration. However, Campbell-Hunt (2000, p. 1 37), by conducting a meta-analysis pointed out that several elements of competitive strategies are now distinguished as elements of the firm's resource portfolio rather than as strategies. Accordingly, the use of firm's resource portfolio may be justified as proxies for the strategies. This reveals that there is no clear-cut definition in identifying which variable should be classified under which perspective. In order to avoid this confusion, in this study core resources
were considered as being "what the firm has" whereas core strategies have been considered as being "what the firm does" or the activities of a firm. The core resources identified for analysis, which were selected specifically from the tea industry in Sri Lanka, will be discussed - along with the analytical model - in the next chapter.
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Scale: The size of the firm is commonly used as a proxy for scale economies (De
Vasconcellos & Hambrick, 1989; Katsikeas, 1994; Bharadwaj, Varadarajan & Fahy, 1 993; Ma, 2000). From a marketing perspective, size can have a psychological impact - since a large firm can better project the image of a firm (Harling & Funk, 1987) and bigger firms typically indicate a strong market position (Ma, 2000). According to Bharadwaj, Varadarajan and Fahy (1993) firm size is an important indicator in determining the implications of the cost and differentiation advantages of a firm. Further, they pointed out that firm size relative to competitors can be a major determinant of the economic viability of investing in certain different features that can lead to the achievement of a competitive advantage. By supporting this view, Cohen and Klepper ( 1 996) concluded that larger firms have a greater advantage in research and development as they can apply the results and spread costs over a larger output than can small firms. Similarly, Wagner and Digman ( 1997), by considering five industries, concluded that organisational size explains a significant amount of the variance associated with return on assets and sales growth. Even though Wolff and Pett (2000), by considering small businesses, concluded that larger organisations possess a more broadly developed resource-base, their performance was not different from that of the very small firm group.
Previous researchers have used different parameters to capture firm size. Many studies used employee level (Zoltan & Andresch, 1987; Katsikeas, 1994; Hyvonen & Kola, 1995) and sales (Seifert & Ford, 1989; Cohen & Klepper, 1 996) to represent the firm size. Some studies used a combination of indicators. Nakos, Brouthers and Brouthers (1998) considered both total number of employees and a firm's annual sales as firm size. Further, Porter ( 1980) pointed out that the multibusiness nature of a firm could also be used as an indicator of scale. According to him, the multibusiness nature of a firm will reduce costs if it is able to share operations or functions with other businesses in the company. Firms that engage in multibusinesses can also become highly involved in price retaliatory activities of a given product, as the profits of other products can be used to overcome temporary losses. This can provide a highly competitive position over rivals. Further, Harling and Funk (1987) indicated that offering a complete product line would help to attract customers to achieve a competitive position. Their empirical analysis, based on USA business, strongly suggested that businesses diversified in terms of product and services are successful measured in terms of return on assets. However,
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Hyvonen (1995) showed that, in larger firms, differentiation based on fewer but stronger brands to focused segments would be more profitable than widening the product range.
Skills: Many researchers used employee skill to represent the expert skills of a firm. Porter ( 1998a) specifically pointed out that skilled employees reveal the pool of specialised knowledge of a firm and act as an important determinant in achieving competitive advantage. Day and Wensely (1988) considered superior skills owned by a firm as a superior resource of a firm, and Hyvonen and Kola (1995) considered skilled sales force as an important dimension of marketing differentiation. Further, technical skills and level of expertise of workforce in the manufacturing plant (De Vasconcellos & Hambrick, 1989) and employees in the export area (Nakos, Brouthers & Brouthers, 1 998) were considered in previous studies to represent the superior skills of a firm. The empirical analysis of De Vasconcellos and Hambrick (1989) revealed that both technical knowledge of sales and work force and the marketing knowledge of sales force are highly positively correlated with performance. Further, the analysis of Nakos, Brouthers and Brouthers (1998) showed that well-trained employees in the export area are positively related with firm performance.
Brand equity: According to Aaker (199 1 ) brand equity consists of brand loyalty, name awareness, perceived quality, strong brand associations and other assets such as
patents, trademarks, and channel relationships. Although a brand with strong brand equity is a valuable asset, the actual measurement is difficult (Kotler & Armstrong, 1 995). According to them, high brand equity provides a company with many competitive advantages. Similarly, Liyanage (1997) illustrated that branding creates several benefits. A brand name makes it easier for sellers to process orders and track down problems, it provides legal protection of unique product features, gives the seller the opportunity to attract a loyal and profitable set of consumers and helps the seller to segment the market. Therefore, a brand name can be considered as being a superior resource of a firm (Day & Wensely, 1988) and its image is one of the approaches that leads to product exclusivity (Govindarajan, 1989). Bharadwaj, Varadarajan and Fahy ( 1 993) considered brand equity as a potential source of competitive advantage. In addition, a number of studies have considered brand name as a strategic asset of a firm (Wemerfelt, 1 984; Collis & Montgomery, 1 995; Haanes & Fjeldstad, 2000).
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Managerial talent: According to Ma (2000) superior managerial talents create better value for customers and shareholders, and are considered to be important in co ordinating, integrating and reconfiguring multiple streams of competencies and deploying them strategically to exploit changing market opportunities. Specific managerial talent was considered as a capability (Amit & Shoemaker, 1 993) and as a unique resource of a firm (Penrose, 1995). Previous research has used different managerial characteristics as proxies among which experience and education are prominent. Gupta and Govindarajan (1984) raised the matter of the importance of managerial characteristics in implementing strategies. They concluded that greater marketing sales experience, willingness to take risks and tolerance for ambiguity contribute to effectiveness in the firms whose desire is to increase their market share. Management characteristics - among which experience and industry familiarity are considered to be beneficial in strategic decision-making (Govindarajan, 1 989) - are considered to be extremely important in organisational performance, He was of the view that there are no clear-cut theoretical arguments to say that age, education and organisational familiarity affect strategic decision-making behaviour. Castanias ( 199 1) pointed out that a manager has a greater influence in pricing, product form, promotion and other related activities in differentiated product industries rather than in commodity industries. He indicated also that such influence may be necessary for a firm to compete effectively in these industries. Nakos, Brouthers and Brouthers ( 1 998) considered education level, international experience, foreign language skills, age and commitment to international expansion as proxies for managerial talent in determining firm performance. They showed that foreign language skills, education level and perceived commitment of a firm in international markets are positively related with firm performance. However, the age of the manager was shown to have a significant negative relationship.
Experience effects: According to Porter ( 1980) the unit cost of production tends to decline as the firm gains more cumulative experience in producing a product. Similarly, industry familiarity as judged by the length of experience in current and closely related industries is an important determinant of firms' performance (Govindarajan, 1989) and this production experience supports experience curve strategy (Wenerfelt, 1984). However, Ma (2000) pointed out that it is not only which stage of the experience curve a firm has reached, or what the firm has learned but how quickly it can learn and adapt
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to a changing environment which is important. In contrast to these studies, Katsikeas ( 1994), by considering export competitive advantages, pointed out that the length of export market experience is not associated with the perceptions of competitive advantage. The author raised the point that regular exporting activities of the firms surveyed might be the main cause that has facilitated the attainment of sufficient knowledge. Similarly, Nakos, Brouthers and Brouthers ( 1998) considered a firm's age as a proxy for experience, and considered it to be important in determining the export competitive advantage. But firm age revealed a significant negative relationship with firm performance.
Vertical integration: A firm's integration can be either forward or backward. Porter
( 1980) considered that vertical integration is an important strategy in developing strengths over competitors. He pointed out that backward integration could allow the firm to enhance differentiation by gaining control over the production of key inputs. Control of inputs enables a firm to receive the inputs with correct specifications and can improve the final product over its competitors. Similarly, Cartwright ( 1 991) revealed that in land-based industries, linkage back to the land resource is an important source of competitive advantage and innovation. According to Buzzell, Gale and Sultan (1975) high market share businesses are, on average, somewhat more vertically integrated than those with smaller market shares. Further, many researchers have identified vertical integration as being an important factor that affects performance by acting as a mobility barrier (Porter, 1977; Harrigan, 1985; McGee & Thomas, 1 986).