Publication: The financial implications of the resource-based strategy: specificity, opacity and financial structure
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1998-06
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Abstract
In this work we develop an analytical framework to examine the effects of strategic investments on the financial policy of the firm. From the resource-based approach of the firm, non-tradeable and difficult-to-copy assets are the basis of a sustainable competitive advantage. However, imperfections in the resource markets can also be interpreted as sources of costs and/or restrictions from a finnacial point of view. Specificity and opacity are the features of strategic resources that enable us to identify the financial implications of the resource-based strategy. We have tested our theoretical framework using a sample of Spanish non-financial firms. Our results show that highly specific and opaque resources limit the borrowing capacity of the firm while other transparent strategic assets positive1y affect financial leverage. Our findings suggest two main implications for strategy formulation and implementation: (1) there are unobservable -financial- costs that must be considered for a correct evaluation of a sustainable competitive advantage based on strategic resources and (2) the financial policy of a "resource-driven" firm is partially determined by the features of its strategic resource bundle.