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Book part
Publication date: 24 October 2023

Mark Anderson, Shahid Khan, Raj Mashruwala and Zhimin (Jimmy) Yu

To create and sustain a resource-based competitive advantage, managers acquire and develop specialized resources as they grow their firms. The authors argue that an important part…

Abstract

To create and sustain a resource-based competitive advantage, managers acquire and develop specialized resources as they grow their firms. The authors argue that an important part of committing to a resource-based strategy is a willingness to keep spending on specialized resources during periods when sales and profits are down. The authors seek to validate this conjecture by examining whether such resource-based commitment to a customer-centered strategy results in improved customer satisfaction. The authors use the stickiness of selling, general, and administrative (SG&A) expenses to capture this commitment empirically. The authors first document that future customer satisfaction is positively associated with SG&A cost stickiness, consistent with the premise that the retention of specialized SG&A resources during low demand periods helps firms to build and maintain relationships with customers over time. Next, the authors test whether expected future benefits of customer satisfaction are enhanced when SG&A cost stickiness is higher. The authors find that the positive relation between Tobin’s Q and customer satisfaction is positively moderated by SG&A cost stickiness. Finally, the authors test whether earnings persistence, a quality of earnings associated with sustained performance over time, is positively associated with the interaction between customer satisfaction and SG&A cost stickiness. The authors find that it is. Their evidence supporting these predictions is consistent with the conjecture that resource-based commitment reflected in cost stickiness is an important dimension of creating and sustaining a resource-based competitive advantage.

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Book part
Publication date: 24 October 2023

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Advances in Management Accounting
Type: Book
ISBN: 978-1-83753-917-8

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Book part
Publication date: 29 March 2016

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Advances in Management Accounting
Type: Book
ISBN: 978-1-78441-652-2

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Book part
Publication date: 23 November 2016

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Advances in Management Accounting
Type: Book
ISBN: 978-1-78560-972-5

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Book part
Publication date: 18 January 2023

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Advances in Management Accounting
Type: Book
ISBN: 978-1-80382-031-6

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Book part
Publication date: 13 August 2018

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Advances in Management Accounting
Type: Book
ISBN: 978-1-78756-440-4

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Book part
Publication date: 3 July 2017

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Advances in Management Accounting
Type: Book
ISBN: 978-1-78714-530-6

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Book part
Publication date: 28 October 2021

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Advances in Management Accounting
Type: Book
ISBN: 978-1-80043-627-5

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Book part
Publication date: 28 September 2020

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Advances in Management Accounting
Type: Book
ISBN: 978-1-83982-913-0

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Book part
Publication date: 20 October 2017

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Advances in Management Accounting
Type: Book
ISBN: 978-1-78743-297-0

1 – 10 of 11