Assessing the Resource Base of Japanese and U.s. Auto Producers

In recent years strategic management scholars have expressed enormous interest in the resource-based view (RBV) of the firm. Despite its appeal as a conceptual framework, the RBV has often been criticized for lack of an empirical base. Few researchers have been able to develop measures of resources and capabilities, identify their importance in a specific industry context, and link firms’ resource positions to dimensions of performance. In this paper we attempt such an investigation of Japanese and U.S. automobile companies from the 1960s through 1997. Our findings show long-lived differences in efficiency among the auto producers, which arguably are equivalent to sustained competitive advantage. Our methodology draws upon work by Battese and Coelli (1995) on the estimation of stochastic frontier production function (SFPF) models, which provide a framework for identifying the sources of inter-firm differences in efficiency. We demonstrate the potential of SFPF models for adding empirical content to the RBV.