The coevolution of rent appropriation and capability development
Version of Record online: 28 JAN 2010
Copyright © 2010 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 31, Issue 7, pages 711–733, July 2010
How to Cite
Coff, R. W. (2010), The coevolution of rent appropriation and capability development. Strat. Mgmt. J., 31: 711–733. doi: 10.1002/smj.844
- Issue online: 25 MAY 2010
- Version of Record online: 28 JAN 2010
- Accepted manuscript online: 28 JAN 2010 12:00AM EST
- Manuscript Revised: 20 JAN 2010
- Manuscript Received: 23 JUL 2007
- competitive advantage;
- stakeholder view;
- capability development
Extant approaches to rent appropriation are static in that they explore bargaining power at a fixed point in time. This article contributes by examining how capabilities and bargaining power coevolve. As capabilities are developed, those who are favored by knowledge asymmetries make decisions that balance value creation potential against the rent appropriation regime, such as the organizational form in which the capability will be embedded. Using the example of Apple's development of the iPod, this article illustrates how stakeholders plan for rent appropriation as they assemble new capabilities—well before any value is actually created. Given that firm performance is an outcome of both capability development and rent appropriation, a robust theory must incorporate an understanding of how they coevolve. As such, the article highlights the need to integrate property rights theory with theories of value creation and governance costs as actors constantly make trade-offs along these dimensions. Copyright © 2010 John Wiley & Sons, Ltd.