Rare is Beautiful?The Relationship between the Rareness of Technological Resources and the Value of the Resources (presented by co-author)

Abstract

(Presented by co-author) We examine firms’ development of a rare technological resource and substantiate the mechanisms through which the development of a rare technological resource leads to the creation of valuable resources, a critical source of competitive advantage. In particular, we conceptualize value creation and its sustainability at the resource level, clarifying the link between resource development and value generation. We build our theory exploiting the fundamental tension in the strategic factor market, where firms obtain others’ resources to develop their own resources and at the same time, strive to isolate their resources from potential competitors. We argue that the degree of rareness of a technological resource has an inverted U-shape relationship with the value of the resource, and the sustainability of that value, as reflected by temporal duration and breadth of the adopted fields. Our analysis utilizing the topic modeling method to operationalize the rareness at the time of a resource development is based on over 4,000 U.S. nanotechnology patents. The result provides strong support for hypotheses. We contribute to literature by converting conceptual and empirical conflation between resource characteristics and resource-generated values in the resource-based view literature to testable hypotheses.