Critique of Market versus Resources Paradox

A closer look at the historical facts would suggest that the firm-level competitiveness has largely been influenced by a dualistic approach of internal as well as external perspectives. The focus was essentially on either the external environment of the firm or its internal capabilities of the firm define its overall competitiveness within an industry or a particular market. One perspective suggests that the markets have preferences over the resources as firms following such a perspective tend to tailor their strategies according to changes taking place in their external environment. However, on the other hand, the other perspective which emphasizes resources over the market and tends to focus on the internal capabilities of the firm.
The basic argument behind the market-based view of the firm-level competitiveness is based on the outside-in perspective. The outside-in perspective basically advocates that the firms are largely driven by their external environment and all their strategies and actions are the result of external influences. What is however, important is to note that firms following such an approach are quick to adapt to the changes in their external environment and take lesser time responding to external shocks Outside In perspective also allow firms to take up the opportunities much faster than other firms and develop necessary flexibility to respond to such opportunities in the most appropriate way. It is also critical to be important to understand that a market-based view also allows firms to develop abilities to anticipate the emerging changes in their target markets and allow themselves to develop strategies which potentially help them to either withstand the emerging external threats or take up opportunities. Such firms, therefore, tend to focus more on their customers as the key variables to decide about the potential changes to take place in the market place. (Brooks) and perform well into an environment which is more dynamic and fluid in nature.
Firms following such a perspective also need to develop its ability to continuously reposition itself and if a firm has a presence in many markets at the same time. it may be required to re-position it according to the market conditions prevailing in each market. Such firms, however, tend to lose sight of their distinctive competencies and rely upon less on their own individual capabilities i.e. strengths to gain a competitive advantage.
As discussed above that the firms develop competencies to anticipate external environment, therefore, they put in place the processes for collecting market intelligence regarding their potential as well as existing competitors and customers. Such capability further allows them to integrate such information into their strategic decision-making process to better position themselves into the market. (Hult and Ketchen Jr)
Such inflexibility does not, therefore, yield a long term competitive advantage for the firms, and they tend to be complacent by focusing on just one aspect of the competitiveness.&nbsp.