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"Appropriating Economic Rents from Resources: An Integrative Property Rights and Resource-Based Approach"

Jongwook Kim and Joseph T. Mahoney


First Author :

Jongwook Kim
College of Business and Economics, Management
Assistant Professor, Western Washington University
351 Parks Hall
516 High Street
Bellingham, WA 98225


Second Author :

Joseph T. Mahoney
College of Business, Dept. of Business Administration
Professor of Strategic Management, University of Illinois at Urbana-Champaign
350 Wohlers Hall
1206 S. Sixth Street
Champaign, IL 61820


Abstract :
Resource-based theory focuses on how economic value is created and sustained, providing the theoretical underpinnings for explaining and predicting sustainable competitive advantage. An implicit assumption of resource-based theory is that the firmís property rights to such resources are secure. However, where property rights to potentially value-creating resources are not fully secure, as in business contexts where multiple parties are jointly participating in creating economic value, potentially value-creating combinations of resources may not be realized. Similar difficulties may arise within the firm, where multiple stakeholders that supply factor inputs are jointly producing economic value. To address these theoretical issues, we map out a property rights theory of the firm that is grounded in resource-based theory on economic rents. We emphasize how firms create economic rents (ex ante) as well as how firms appropriate or capture economic rents (ex post).
Keywords :
appropriation, distribution, economic rents, externalities, institutions, property rights, stakeholders, value creation
Footnotes & Acknowledgements :
We thank Cheryl Carleton Asher, Hart Hodges, James Mahoney, Thomas Roehl, Steve Smith, Matthew Liao-Troth, and Kristi Tyran for their comments on earlier drafts of this paper. The usual disclaimer applies.
Manuscript Received : 2005
Manuscript Published : 2005
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