THE SUSTAINABILITY OF EXPLOITATION POSITIONS: A THEORETICAL ANALYSIS BASED ON TRANSACTION COST ECONOMICS, AUSTRIAN ECONOMICS AND THE RESOURCE BASED VIEW

Abstract

The aim of both marketing theorists and resource-based view proponents is to explain the creation and the sustainability of competitive advantages (Srivastava et al., 2001, p. 777). What has not been considered so far is the role of exploitation positions within the competitive game. The purpose of this article is to investigate the consequences of a strategy concerning the active creation of exploitation positions on the side of the customers. The reason for this is the observed tendency in several industries – elevators, paper machines, gas turbines – to actively create such positions. The underlying assumption is that this strategy leads to a competitive advantage for the initial transaction as well as to higher profits for the supplier taking into account the entire relationship. Mainly the second advantage of a higher profit depends heavily on the sustainability of an exploitation position. Therefore, this paper identifies the drivers controlling the sustainability of an exploitation position. In order to derive a broad understanding three different theoretical approaches – Transaction Cost Economics, the Resource-Based View, and Market Process Theory (Austrian Economics) – will be used to explain the effects of exploitation on the competitive position and the profit of the supplier. Finally, the outcome of this paper is threefold: First, the competitive consequences of an exploitation strategy will be identified. Second, the impact of each theoretical approach on the question of exploitation will be analyzed. Third, the integrative potential of the three different theoretical approaches will be examined. More precisely, we discuss institutional economics and information asymmetry in a truly dynamic setting and the impact of radical ignorance and alertness on the idea of isolating mechanisms. This will be done in a parallel discussion of the problems in general and along one case study which focuses on the elevator market.

Citation

Rese, M. and Engel, B. (2005), "THE SUSTAINABILITY OF EXPLOITATION POSITIONS: A THEORETICAL ANALYSIS BASED ON TRANSACTION COST ECONOMICS, AUSTRIAN ECONOMICS AND THE RESOURCE BASED VIEW", Sanchez, R. and Heene, A. (Ed.) Competence Perspectives on Managing Interfirm Interactions (Advances in Applied Business Strategy, Vol. 8), Emerald Group Publishing Limited, Leeds, pp. 253-279. https://doi.org/10.1016/S0749-6826(04)08011-4