In this essay we explore the curious symmetry between contestability theory (CT) and the resource-based view (RBV) of the firm. CT assumes away all distinctions between incumbent firms and potential competitors. By contrast, the RBV stresses the fundamental heterogeneity of firms and why such differences may be sustainable. The juxtaposition of the two theories highlights the potential trade-off between rigor and relevance in theory development and provides the opportunity to further our understanding of the RBV.
Bailey, E.E., & Friedlander, A.F. (1982). Market structure and multiproduct industries. Journal of Economic Literature, 20, 1024-1048.
2.
Bailey, E.E., Graham, D.R., & Kaplan, D.P. ( 1985). Deregulating the airlines. Cambridge : MIT Press.
3.
Barney, J.B. ( 1986). Strategic factor markets: X, luck and business strategy . Management Science, 32, 1231-1241.
4.
Barney, J.B. ( 1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.
5.
Barney, J.B. ( 2001). Is the resource-based "view" a useful perspective for strategic management research? Yes. Academy of Management Review, 26, 41-56.
6.
Baumol, W.J. ( 1982). Contestability: An uprising in the theory of industry structure. American Economic Review, 72, 1-15.
7.
Baumol, W.J., Panzar J.C., & Willig R.D. ( 1982). Contestable markets and the theory of industry structure . San Diego, CA: Harcourt Brace Jovanovich.
8.
Baumol W.J., Panzar J.C., & Willig R.D. ( 1983). Contestable markets: An uprising in the theory of industry structure: Reply. American Economic Review, 73, 491-496.
9.
Binggeli, U., & Pompeo, L. ( 2002). Hyped hopes for Europe’s low-cost airlines. McKinsey Quarterly, 4, 87-97.
10.
Bresnahan, T. ( 1998). New modes of competition: Implications for the future structure of the computer industry. In J. A. Eisenach & T. M. Lenard (Eds.), Competition, convergence, and the Microsoft monopoly: Anti-trust in the digital marketplace (pp. 155-208). Boston: Kluwer Academic.
11.
Demsetz, H. ( 1973). Industry structure, market rivalry and public policy . Journal of Law and Economics, 16, 1-10.
12.
Dierickx, I., & Cool, K. ( 1989). Asset stock accumulation and the sustainability of competitive advantage. Management Science, 35, 1504-1511.
13.
Godfrey, P.C., & Hill C. W. L. (1995). The problem of observables in strategic management research. Strategic Management Journal, 16, 519-533.
14.
Hurdle, G.J., Johnson, R.L., Joskow, A.S., Werden, G.J., & Williams, M.A. (1989). Concentration, potential entry and performance in the airline industry. Journal of Industrial Economics, 38, 119-140.
15.
Kay, J. ( 1993). Foundations of corporate success. New York: Oxford University Press.
16.
Levine, M.E. ( 1987). Airline competition in deregulated markets: Theory, firm strategy and public policy. Yale Journal of Regulation, 4, 393-494.
17.
Lippman, S., & Rumelt, R.P. ( 1982). Uncertain inimitability: An analysis of interfirm differences in efficiency under competition. Bell Journal of Economics , 13, 418-438.
18.
Lockett, A., & Thompson, S. ( 2001). The resource-based view and economics. Journal of Management, 27, 723-754.
McWilliams, A., & Smart D.L. ( 1993). Efficiency v structure-conduct-performance: Implications for strategy research and practice. Journal of Management , 19, 63-78.
21.
Moore, T.G., (1986). US airline deregulation: Its effects on passengers, capital and labor. Journal of Law and Economics, 29, 1-28.
22.
Morrison, S.A., & Winston, C. ( 1987). Empirical implications and tests of the contestability hypothesis. Journal of Law and Economics, 30, 53-66.
23.
Nelson, R.R., & Winter S.G. ( 1982). An evolutionary theory of economic change. New York: Belknap Press.
24.
Newbert, S.L. ( 2007). Empirical research on the resource-based view of the firm: An assessment and suggestions for future research. Strategic Management Journal, 28, 121-146.
25.
Penrose, E.T. ( 1959). The theory of growth of the firm. New York: Sharpe.
26.
Porter, M.E. ( 1980). Competitive strategy. New York: Free Press.
27.
Priem, R., & Butler, J.E. ( 2001a). Is the resource-based view a useful perspective? Academy of Management Review, 26, 22-40.
28.
Priem, R., & Butler, J.E. ( 2001b). Tautology in the resource-based view and the implications of externally determined resource value: Further comments. Academy of Management Review, 26, 57-65.
29.
Richardson, G.B. ( 1972). The organization of industry. Economic Journal, 82, 883-896.
30.
Schwartz, M., & Reynolds R.J. ( 1983). Contestable markets: An uprising in the theory of industry structure: Comment. American Economic Review, 73, 488-490.
31.
Shapiro, C., & Varian, H. ( 1999). The art of standards wars. Californian Management Review, 41, 8-32.
32.
Shepherd, W.G. ( 1984). Contestability versus competition. American Economic Review, 74, 572-587.
33.
Smith M. D., & Brynjolfsson, E. (2001). Consumer decision-making at an Internet shopbot: Brand still matters. Journal of Industrial Economics, 49, 541-558.
34.
Stiglitz, J. ( 1987). Technological change, sunk costs and competition. Brookings Papers on Economic Activity, 3, 883-937.
35.
Sturgeon, T.J. ( 2002). Modular production networks: A new American model of industrial organization. Industrial and Corporate Change, 11, 451-496.
36.
Teece, D.J. ( 1980). Economies of scope and the scope of the enterprise. Journal of Economic Behavior and Organization, 1, 223-247.
37.
Waldfogel, J., & Chen, L. ( 2006). Does information undermine brand? Information intermediary use and preference for branded web retailers. Journal of Industrial Economics, 54, 425-450.
38.
Weitzman, M.L. ( 1983). Contestable markets: An uprising in the theory of industry structure: A comment. American Economic Review, 73, 486-487.
39.
Wernerfelt, B. ( 1984). A resource-based view of the firm. Strategic Management Journal, 5, 171-180.
