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FROM RESOURCES TO VALUE AND BACK:
NORMAL AND COMPLEMENTARY ASSETS IN
20TH CENTURY POPULAR MUSIC
JOERI M. MOL
NACHOEM M. WIJNBERG
Faculty of Management and Organization,
University of Groningen, The Netherlands
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Resource based view (RBV)
Firm
Competitive
Advantage
Resources
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Resources
• valuable• scarce • inimitable• non-substitutable
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Some problems with RBV
• What is the meaning of ‘valuable’, apart from scarce, inimitable & non-substitutable?
• What are ‘resources’?• Are there different types of resources?• What is the relation between the value of
resources and the value of products?• How to make RBV a real theory?
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• Solving RBV’s problems by looking at value from the perspective of the selection system
• Which leads to new definitions of different types of resources
• And helps to use RBV as a real theory toanalyse problems such as the logic of payola
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Theory
• Value & competition• Selection systems• Teece on complementary assets• Assets & selection systems• Definitions of normal & complementary
assets
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Value & competition
• Creating value• Protecting value• Capturing value
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Competition, described in terminology of the selection
system• The selection system• The selected• The selectors
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Selection systems
• Market selection
• Peer selection
• Expert selection
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Actors in selection system
• Producers• Consumers• Experts
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Market selection
Producers
Consumers
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Peer selection
Producers
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Expert selectionProducers
Experts
Consumers
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Teece (1986)
• Makes a distinction between (formal) IPR and complementary assets that also serve to protect competitive advantage of innovator
• In doing so, links lateral competition with vertical competion
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Teece’s complementary assets?
• Assets for distribution & retail• Assets for marketing/publicity• Assets to enter (geographic) markets• Assets to set standards
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Teece’s complementary assetsare:
• Mainly value creating assets• Not invariant within the value system
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• Value means value in the eyes of a particular set of selectors.
• The value of inputs/assets that are used to make output/assets should be derived fromthe value of these output/assets.
• Other assets? Complementary assets
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– Normal Assets are those assets with which a firm produces the product-characteristics thathave value according to the set of criteria as defined by the relevant selectors.
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Ex-Ante Complementary Asssets
• Ex ante complementary assets are those assets that can be used by a producer to either effectively enter a particular selection system as one of the selected or prevent rivals from doing so.
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Ex Ante Complementary Assets
• Are not just to manage entry/no entry, they also can serve to increase level of entry & chances of valuation
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Ex-Post Complementary Assets
• Ex post complementary assets are those assets that enable a firm to either effectively prevent rivals or allow itself to engage in competitive imitation of the product characteristics for which the relevant selectors have defined a set of criteria.
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Complementary assets are those assets that can be used by a firm:to either
effectively enter a particular selection system as one of the selected or
prevent rivals from doing soas well as to either
effectively prevent rivals or
allow itself to engage in competitive imitation
of the product characteristics for which the relevant selectors have defined a set of criteria.
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Payola:
• Pay for play• “Bribes” from producers to relevant
selectors– First: bandleaders & famous singers– Later: radio dj’s– Later: dj’s & vj’s
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DJ’s/VJ’s
Consumers
producers
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Payola & the ability to payolize =
Ex-Ante Complementary assets
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Possesion of ex-ante complementary assets explains:
• Balance of power between large firms(“majors”) & small firms (“indies”)
• Balance of power within the value system(between artists, publishers, record-producers, retailers)
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Adds up to:
• Defining types of resources/assets• On the basis of their function in the
competitive process,• Creating, protecting and capturing value• In the relevant selection system.
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Moreover:
• Making RBV a real theory• With clearly-defined concepts• Which can be operationalized• And used to test hypotheses empirically
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With broader implications concerning:
• Industry life-cycles– Collective use of ex-ante complementary assets
to “legitimize” a new product category/industry• Barriers to Entry
– Deriving different types of natural/strategic barriers to entry from distribution of different types of assets
• International Entry
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International Entry
• Ex ante complementary assets to achieve international entry
• Ex post complementary assets to imitate international rivals or defend against imitation
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Distribution of complementary assets explains accessibility market to international entry
Which also helps to explain the (evolutionary) dynamics of the
relevant industry and its resultingcontribution to international trade