Surrendering Control to Gain Advantage: Reconciling Openness and the Resource-based View of the Firm
Conventional wisdom holds that firms must control scarce and valuable resources to obtain competitive advantage. That being said, over the past decade, many firms—among them Computer Associates, IBM, and Nokia—embarked on open strategies and made parts of their valuable resources available for free. These decisions pose an obvious conundrum, which we solve in our article. We use a mathematical model, grounded in principles of the resource‐based view, to show why and under what conditions open strategies will succeed. Firms significantly improve their performance when (a) opening resources reduces their cost base while (b) strongly increasing demand for their still‐proprietary resource(s). We also explain how openness can reshape markets by weakening competitors, particularly in highly rivalrous environments.
