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Shelby D. Hunt& RobertM.Morgan
Comparative AdvantageTheory of Competition
A new theory of competition is evolving in the strategy literature.The authors explicate the foundations of this new theory, the "comparative advantage theory of competition," and contrast them with the neoclassical theory of perfect competition. They argue that the new theory of competition explains key macro and micro phenomena better than neoclassical perfect competition theory. Finally, they further explicate the theory of comparative advantage by evaluating a market orientation as a potential resource for comparative advantage.
The emperorhas no clothes. -Hans ChristianAndersen
hree recent streamsof researchportendmajorchanges in marketing theory and practice: works addressing strategic issues in marketing theory and research and (Aaker 1988; Bharadwaj,Varadarajan, Fahy 1993; Day and Wensley 1988; McKee, Varadarajan, Pride 1989), and those advocatinga marketorientationfor superiorfirm performance (Day 1984; Day and Nedungadi 1994; Kohli and Jaworski1990; Narverand Slater 1990; Shapiro 1988; Webster 1994), and those emphasizing the desirability of relationship marketingin strategic network competition (Berry and Parasuraman 1991; Dwyer, Schurr,and Oh 1987; Morgan and Hunt 1994; Parvatiyar,Sheth, and Whittington 1992; Thorelli 1986; Webster 1992). However, not all marketers are sanguine about the prospects for these three streams.Day (1992, p. 324, 328) points out that"withinacademic circles, the contributionof marketingto the development, testing, and dissemination of strategy theories and concepts has been marginalizedover the past decade,"and he observes that "the marketingconcept is nowhere to be found in ... discussion[s] of competing principles of managementpresumedto be causally relatedto the effectiveness of organizations." Moreover,he concludes that "theprognosis for marketing ... is not encouraging" in the ongoing "strategydialogue"regardingnetworksand alliances. Ourcentralthesis is thatthe strategydialogue Day refers to is evolving towarda new theory of competition-one that has significant advantagesover neoclassical theory. Our article contributesto the developmentof this new theory and examines its implications for marketing. Specifically, we T D. is Hoskins P.W. Professor Marketing, and Horn of MarShelby Hunt J.B. of Texas Area, keting Administration, TechUniversity. College Business...