On the Origins of Competitive Advantage: Strategic Factor Markets and Heterogeneous Resource Complementarity

Strategic factor market theory suggests that in the absence of luck, asymmetric expectations are a necessary condition for firms to appropriate gains from valuable resources. I argue that this is only true in the absence of heterogeneous resource complementarity. Extending factor market theory, I show that firms can profit when they exhibit superior complementarity to target resources, even in the absence of asymmetric expectations, and I determine the components of appropriated value in such markets. I thus demonstrate the power and simplicity of coalitional analysis, while shedding light on central concepts in strategic management discourse.