- Consulting Editors
- The Oxford Handbook of Managerial Economics
- Managerial Economics: Introduction and Overview
- Managerial Economics: Present And Future
- Market Power: How Does it Arise? How is it Measured?
- Advances in Cost Frontier Analysis of the Firm
- Supply Chain Design for Managing Disruptive Risks
- Combinatorial Auctions
- Game and Information Theory in Modern Managerial Economics
- Issues in the Analysis of Time, Risk, and Uncertainty
- Behavioral Economics and Strategic Decision Making
- Advances in Pricing Strategies and Tactics
- Product Distribution and Promotion: An Analytical Marketing Perspective
- Market Imperfections and Sustainable Competitive Advantage
- The New Managerial Economics of Firm Growth: The Role of Intangible Assets and Capabilities
- Strategies for Network Industries
- Internalization Theory as the General Theory of International Strategic Management Past, Present and Future
- Competitive Strategy in the Nonprofit Sector
- Organizational Design and Firm Performance
- Design and Implementation of Pay for Performance
- Vertical Merger
- The Evolving Modern Theory of the Firm
- Financing the Business Firm
- Corporate Governance and Firm Performance
- Managing Workplace Safety and Health
- Merger Strategies And Antitrust Concerns
- On the Profitability of Corporate Environmentalism
- Name Index
- Subject Index
Abstract and Keywords
This chapter reviews the main theories in strategic management that seek to explain persistent differences in profitability across companies. We argue that these differences are ultimately explained by market imperfections. Studying differences in financial performance through the lens of market imperfections provides several advantages. The framework allows executives to better understand the circumstances under which common strategic advice will in fact create a sustainable competitive advantage for their company. From a scholarly perspective, market imperfections help link seemingly disparate theories of strategic management to industrial organization and economics.
Felix Oberholzer-Gee is the Andreas Andresen Professor of Business Administration at Harvard University.
Dennis A. Yao is the Lawrence E. Fouraker Professor of Business Administration at Harvard University.
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