Sustainable Competitive Advantage for Technology-based (Internet) Firms

Sustainable Competitive Advantage
Knowledge Center

Forum

New Topic

Chloe Xu
Director, Australia

Sustainable Competitive Advantage for Technology-based (Internet) Firms

A survey on all 29,688 companies listed on U.S. Stock market from 1960 to 2009 revealed that recent firms, listed from 2000 to 2009, are dying more quickly than older ones, listed before 1970.

On average, the recent firms spent more than twice as much as the older ones on organizational capital (such as patents, R&D, intellectual property, and personnel) but only half as much on physical assets. This does allow the newer firms to be nimbler, but leaves them more vulnerable to quick imitation. Life cycles are longer in the physical world, while they have shortened in the technology-based sectors.

What can newer firms do to increase their longevity? Govindarajan and Srivastava (2016) suggest 3 approaches as below:
  • Incorporate both technology and physical assets into your business model. This makes it harder for competitors to create a me-too service quickly. For example, Tesla has developed deep expertise in batteries and vehicle manufacturing as a competitive advantage that no one else in the market can copy easily.
  • Design strong network effects into your business model to prevent customer switching. Facebook's one billion users network discourages people to jump to a rival platform because they'd have to reconnect to friends and perhaps having to recreate the content they've created.
  • Focus on continual innovation. Manage your core business at peak profitability, convert breakthrough technologies into new products or services, and abandon ideas, practices, and attitudes that could inhibit innovation.
⇒ In what other ways can technology-based (internet) companies strengthen their longevity?

Source: Govindarajan, V. and Srivastava, A., Strategy When Creative Destruction Accelerates (September 7, 2016). Tuck School of Business Working Paper No. 2836135. Available at SSRN.

Participate and leave a comment
Exchanging your ideas stimulates your personal and professional development. And you can help other people! Please motivate your point of view. You can still edit your comment for 3 hours.

Start a new forum topic

 

More on Sustainable Competitive Advantage
Summary
Forum
🔥Sustaining your Competitive Advantage Means Ongoing Change
Sustainable Alignment?
Are you a Strategist? You have a Key Role in Creating Sustainable Competitive Advantage
How to Define SCA of a Business?
Sustainable Competitive Advantage for Technology-based (Internet) Firms
Can Customer Experience Create Sustainable Competitive Advantage?
2 Different Views Towards 'Sustainability'
Best Practices
Sustainable Competitive Advantage and Increasing Profit
Transient Advantage
Special Interest Group

Are you interested in Sustainable Competitive Advantage? Sign up for free

Notify your students

Copy this into your study materials:

and add a hyperlink to:

Link to this discussion

Copy this HTML code to your web site:

Sustainable Competitive Advantage
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 9-5-2021. All names of their owners.