Resource-Based Advantages in an International Context†

Abstract

How universal are resource-based advantages? In this study, the authors suggest that differences in nations' institutional environments may influence the applicability of resource-based advantages; for this reason, the effectiveness of such advantages may vary cross-nationally. They hypothesize and find that adding the moderating influence of national institutional environment to a resource-based perspective better explains strategic decisions (entry mode choice) in an international context than does a mere resource-based approach. The analysis also shows that decisions predicted by a model incorporating both perspectives yield better subsidiary performance. Thus, results suggest that, at least in an international setting, resource-based advantages appear to be context specific. Based on these results, the authors conclude that considering country-specific contextual influences on the value of resource-based advantages allows firms to make strategic decisions that improve international subsidiary performance.