On the relationship between economic rent and profit

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Abstract

The question of who appropriates the economic rents created by resources and capabilities has remained largely unresolved in strategic management. The aim of this paper is to highlight the problem established strategic management theory faces in explaining value appropriation, and to propose a framework that addresses how R&C affect bargaining power and value appropriation. While resource-based theory focuses on the generation and sustainability of economic rents, the appropriation factor framework presented in this paper shows that particular resources and capabilities, termed appropriation factors, affect bargaining power, and thus the possibility for economic agents of appropriating a larger share of rents. Based on this framework, it is argued that investments in heterogeneous and immobile appropriation factors that facilitate value appropriation through elevated bargaining power can constitute an alternative avenue to sustained competitive advantage.
Original languageEnglish
PublisherLund Institute of Economic Research
Number of pages19
Volume2009
Publication statusPublished - 2009

Publication series

NameWorking paper series
No.2
Volume2009
ISSN (Print)1103-3010

Subject classification (UKÄ)

  • Economics and Business

Keywords

  • value appropriation
  • Appropriation factors
  • resource-based theory

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