Competitive Advantage and Strategic Configuration of Knowledge-Intensive Small and Medium Sized Multinationals : A Modified Resource Based View

This study employs a modified resource-based approach to examine the competitive advantage enjoyed by knowledge-intensive, small- and medium-sized multinationals (KI-SMMs). While the resource-based view addresses superior capabilities only, this paper examines both superior and inferior capabilities and their resulting sustainable competitive advantage. Compared to larger knowledge-intensive multinationals, KI-SMMs possess more inferior than superior core capabilities. Despite this handicap, the paper demonstrates how KI-SMMs compete globally by leveraging their relatively superior R&D capabilities and by choosing a strategic configuration that allows them to compete internationally despite their relatively inferior capabilities in marketing and production activities. Our results show that KI-SMMs internalize R&D activities, which are their core capabilities, externalize production activities, in this case noncore capabilities, and internalize marketing activities, for which they have an inferior capacity, but which are, arguably, core capabilities. KI-SMMs compensate for their inferior capabilities in marketing activities through the use of a unique business model which focuses repeat sales to customers with whom a low number of high-value transactions can be maintained