Relationship-Based Competitive Advantage: The Role
of Relationship Marketing in Marketing Strategy
Robert M. Morgan
UNIVERSITY OF ALABAMA
Shelby Hunt
TEXAS TECH UNIVERSITY
Relationship marketing research to date has focused for the most part on
two sets of issues. First, what are the benefits of relationship marketing
adoption? Second, how are marketing relationships built and maintained?
Although these are important questions for researchers to address, we
believe an understanding of the strategic impact of relationship marketing
is equally important. We hold that relationship marketing should only be
adopted when it offers, or contributes to, a firm’s competitive advantage—a
competitive advantage that, it is hoped, proves sustainable. As a first step
toward better understanding the strategic role of relationship marketing,
adopting a resource-based approach, we first clarify the role that resources
gained through relationships may play in marketing relationships. Then
we isolate and discuss the various kinds of resources that might be gained
through relationships. Finally, we develop five propositions for assessing
the strategic worth of these resources in marketing relationships. J BUSN RES
1999. 46.281–290.  1999 Elsevier Science Inc. All rights reserved.
P
roponents of relationship marketing encourage firms to
seek partners for long-term marketing relationships;
for example, focusing on customer retention rather
than customer capture (Kotler, 1991; Vavra, 1992). However,
it is clear that enthusiasm for relationship marketing should
be tempered with concern for not only selecting appropriate
partners, but also for engaging in relationships only when it
is expected that relationship marketing is consistent with the
firm’s overall marketing strategy. In short, relationship mar-
keting should be practiced when it offers, or contributes to,
a firm’s strategy for achieving a competitive advantage—a
sustainable competitive advantage. These relationship-based
competitive advantages (RBCAs) drive the success of relation-
ship marketing. Indeed, as Ganesan (1994) notes, “most firms
Address correspondence to Robert M. Morgan, Associate Professor of Mar-
keting, Department of Management and Marketing, Culverhouse College
of Commerce and Business Administration, University of Alabama, P. O. Box
870225, Tuscaloosa, AL 35487-0225, USA.
Journal of Business Research 46, 281–290 (1999)
 1999 Elsevier Science Inc. All rights reserved.
655 Avenue of the Americas, New York, NY 10010
overlook the sustainable competitive advantage that can be
created through long-term relationships.” Similarly, we sug-
gest, academics have neglected the search for explanations as
to how to create sustainable competitive advantages based
on relationships. Therefore, it is important that relationship
marketing scholars begin to theorize how competitive advan-
tages can be built through marketing relationships.
Although the strategy literature offers a variety of ap-
proaches that might contribute to understanding RBCAs, re-
source-based theory (Conner, 1991; Penrose, 1959; Wer-
nerfelt, 1984) is especially promising. In the creation of
sustainable competitive advantages, resource-based theory
emphasizes the strategic importance of the firm’s own re-
sources, which are defined as any entity, tangible or intangible,
that the firm has at its disposal to “enable it to produce
efficiently and/or effectively a market offering that has value
for some market segment or segments” (Hunt and Morgan,
1995, p. 6). Basic resources—variously categorized as finan-
cial, legal, physical, human, organizational, informational, and
relational (Barney, 1991; Hofer and Schendel, 1978; Hunt
and Morgan, 1995)—are combined to create higher-order
resources, or competencies, from which the firm can achieve
a competitive advantage (Foss, 1993; Hunt and Morgan; Lang-
lois and Robertson, 1995; Prahalad and Hamel, 1990; Teece
and Pisano, 1994). Building on resource-based theory, schol-
ars have examined the potential competitive advantage of
competencies built on a variety of foundational resources.
In marketing specifically, competitive advantages in services
(Bharadwaj, Varadarajan, and Fahy, 1993) and market orienta-
tion (Hunt and Morgan, 1995) have been examined.
Problems arise, however, when the firm lacks a full comple-
ment of the basic resources necessary to create competencies
and, through them, marketplace positions of competitive ad-
vantage. As Levine and White (1961) have noted, resources
are often in scarce supply, creating the need for cooperative
interorganizational exchange. Thus, organizations must ac-
quire the resources through purchases in the marketplace
ISSN 0148-2963/99/$–see front matter
PII S0148-2963(98)00035-6
282 J Busn Res
1999:46:281–290
(transactional exchange), the acquisition of firms having re-
sources (vertical integration), creating or developing the re-
sources internally, or through partnership with other organiza-
tions (relational exchange). Resource-based theory, therefore,
can contribute to explaining the strategic nature of marketing
relationships. Specifically, firms engage in relationships when
compatible partners are identified whose complementary re-
sources, when combined with their own resources, provide
competitive advantages; that is, RBCAs.
There are numerous examples of marketing resource and
contexts wherein sharing resources might provide organiza-
tions with competitive advantage. For example, the retail out-
lets provided by a relationship partner, as in many interna-
tional alliances, may allow a firm to achieve geographical
coverage of critical markets that would not be readily available
outside of the relationship. Building relationship marketing
theory requires isolating the kinds of resources that can be
secured through marketing relationships, determining the po-
tential RBCAs, before assessing the sustainability of the individ-
ual RBCAs. Advantages are only sustainable to the extent that
the resources that produce them cannot be purchased; that
is, they are immobile, and/or they cannot be easily imitated,
or substitutes cannot be found (Barney, 1991; Dierickx and
Cool, 1989).
This paper enhances our understanding of relationship-
based competitive advantages. Drawing on the expanding lit-
erature of relationship marketing, interorganizational relation-
ship, and resource-based theories, we first clarify the strategic
role of resources in marketing’s cooperative relationships—
relationships characterized by commitment and trust. We then
isolate and discuss the potential resources to be gained from
such relationships and their contribution to the efficiency and
effectiveness of participating firms. Finally, we develop five
propositions for assessing the strategic worth of these re-
sources in marketing relationships.
Strategic Role of Resources in
Marketing Relationships
Theoretical discussions of interorganizational relationships
and resources often focus on transaction cost analysis (TCA)
or resource-dependence theory. For example, transaction cost
theory holds that idiosyncratic investments; that is, resources
whose value is relationship specific, necessarily risk opportu-
nistic behavior (Williamson, 1975). Because TCA assumes
universal opportunism, this negative view of the effects of
sharing valuable resources has been criticized by organiza-
tional scholars as “guilt by axiom,” at worst, or misguided, at
best (Donaldson, 1990; Ghoshal and Moran, 1996; Hill,
1990). Likewise, in resource-dependence theory, resources
are seen to provide their owners with power and control
(Achrol and Stern, 1988; Aldrich, 1979; Frazier, 1983a,b;
Pfeffer, 1981). As Oliver (1991, p. 943) notes, “resource de-
pendence theorists, in particular, propose that organizations
R. M. Morgan and S. Hunt
‘seek to avoid being controlled’ in exchange relations and that
an organization’s aversion to establishing interorganizational
connections will be proportional to the loss of autonomy
anticipated to result from relationship formation.” Simply put,
resource-dependence theory holds that firms enter relation-
ships not only cautiously, but reluctantly, because they view
relationships as liabilities and fear that participating in them
will result in a loss of power in their own decision making.
However, Oliver’s empirical test failed to support this funda-
mental tenet of resource-dependence theory.
Clearly, firms often enter relationships not reluctantly but
optimistically. They realize that, strategically, to be more com-
petitive, they must have access to valuable resources and that
relationships often offer the best route to obtaining these
resources. This strategic orientation toward resources, we argue,
differentiates the resource-based theory approach to under-
standing relationships from TCA in economics and resource-
dependence theory.
Treating resources strategically implies four managerial re-
quirements. Resources must be: (1) efficiently acquired or
developed; (2) combined skillfully to create complex re-
sources; (3) deliberately applied to competitive situations; and
(4) dutifully maintained and protected to ensure on-going
availability (Bharadwaj, Varadarajan, and Fahy, 1993; Day
and Wensley, 1988; Hunt and Morgan, 1995). Understanding
each of these requirements is critical to furthering theory on
the strategic nature of marketing relationships.
Efficiently Acquiring or Developing Resources
That Enhance Efficiency
Hunt and Morgan (1995) hold that a comparative advantage
in efficiency-enhancing resources is a major route to achieving
a marketplace position of competitive advantage (see their
Figure 1). As Barney (1986) notes, the financial performance
of the firm depends upon the cost of implementing strategies
as well as the returns enjoyed from those strategies. Similarly,
for resources to result in a truly comparative advantage, the
cost of acquiring them must be lower than the gains they
impart. As Peteraf (1993) argues, this typically implies that
competition for the resource is limited at the outset; limited
because outcomes of employing the resource are uncertain,
bringing about ex ante limits to competition. Efficiency of
resource acquisition is often a motive for relationship forma-
tion. For example, Ford realized that by using a small network
of suppliers in on-going relationships, resources could be
acquired more efficiently than by purchasing components
through multiple, short-term transactions or producing in-
house components (Taylor, 1994).
Combining Basic Resources to Create
Complex Resources
Outside of the relationship literature, several authors propose
that critical to the process of deploying resources is how the
Relationship-Based Competitive Advantage
firm combines its assortment of crucial resources to achieve
superior capabilities. For example, Hofer and Schendel (1978,
p. 25) contend that, in addition to the scope of its operations,
a firm’s competitive advantages depend upon the levels and
patterns of deployment of its resources and skills. They label
these patterns of deployment “distinctive competencies.” Simi-
larly, Prahalad and Hamel (1990) point to core competencies,
the combination of resources, as the immediate precursor of
competitive advantages. Fiol (1991, p. 191) notes that “com-
petency thus encompasses more than a firm’s stock of tangible
assets. It encompasses the cognitive processes by which the
stock is understood and translated into action.” Reed and
DeFillippi (1990, p. 89) review the conceptualization of “com-
petency” by several authors and conclude that two consistenc-
ies could be noted throughout: “(1) the source of a competency
is always internal to the firm; (2) competency is produced by
the way a firm utilizes its internal skills and resources relative
to the competition.” Reed and DeFillippi’s “internal thesis” is
too narrow, we argue.
It is certainly the case that simply accumulating valuable
asset stocks is insufficient to ensure a competitive advantage.
Indeed, competitive advantages are realized only when the
firm combines assortments of basic resources in such a way
that they achieve a unique competency or capability that is
valued in the marketplace. Furthermore, the value that this
capability provides puts the firm in a competitive positional
advantage. However, mountains of anecdotal evidence point
to the fact that these resources are not necessarily “internal
to the firm” as “internal” is traditionally conceived. Rather,
when firms have access to external resources through partner-
ships, such resources can be combined with the firm’s internal
resources to produce a competency that results in a competi-
tive advantage (Gummesson, 1994).
Positioning Resource Advantages in
Competitive Situations
Hunt and Morgan (1995, p. 8) note, “Sustained, superior
financial performance occurs only when a firm’s comparative
advantage in resources continues to yield a position of compet-
itive advantage despite the actions of competitors.” If the firm
enjoys a comparative advantage in resources over its competi-
tors, but its managers lack the ability to apply that advantage
toward a position of competitive advantage, resources are
wasted. The situation is further confounded by the fact that
the value of a particular resource is often specific to a market
segment (Hunt and Morgan, 1995). As Collis and Montgomery
(1995) note, unique capabilities that yield an advantage in
one product market may be of little use in another, despite
having the “rareness” characteristic identified by Barney
(1991). As with most resource issues, this task of competitive
positioning becomes even more complex when the efforts of
multiple firms must be coordinated. For example, members
of supply chains in the food industry have repeatedly experi-
enced the frustrations that this level of coordination requires
J Busn Res 283
1999:46:281–290
when attempting to establish competitive advantage through
implementation and practice of Efficient Consumer Response
programs (Fiorito, May, and Straughn, 1995).
Maintaining and Protecting Resources
Dierickx and Cool (1989) liken resources and resource main-
tenance to a draining bath tub with flowing faucets. As a
resource is used, it must constantly be replaced with new
flows to maintain the firm’s stock of the resource. If the re-
source stock is allowed to be exhausted before new flows of
the resource are introduced into the system, the organization
may find that insufficient levels of the resource exist to enjoy
the previously held advantage. Because the creation of resource
stocks is often time dependent, resource stocks must be main-
tained over time—not allowed to become exhausted before
efforts to refresh the stocks are initiated. Therefore, organiza-
tions must continuously reinvest in the resources that it antici-
pates will best serve its strategy (Peteraf, 1993). The implica-
tion for resources gained through relationships is clear.
Because resource-sharing relationships—relationships charac-
terized by commitment, trust, and cooperation—take time to
build (Morgan and Hunt, 1994), they must maintain timely
access to the resources they offer.
Types of Resources Gained in
Marketing Relationships
What types of resources can be shared and exchanged in
relationships? Based on the works of Alderson (1957), Barney
(1991), Day (1990), and Hofer and Schendel (1978), Hunt
and Morgan (1995) suggest that the resources of the firm can
be categorized as financial, legal, physical, human, organiza-
tional, relational, and informational. Building on that scheme,
we specify further how such resources might be shared and
exchanged in marketing’s various interorganizational relation-
ships. Our aim is to demonstrate the role of relationship
marketing in furthering the strategic efforts of the firm; that
is, in providing the firm with superior, efficient access to a
broad variety of needed resources.
Financial Resources
Financial resources are the capitalization that the firm has at
its disposal. It may exist as cash reserves or as cash available
through stock issues, loans, bonds, and other financial instru-
ments (Hofer and Schendel, 1978). The need for financial
resources of other firms is a common driver of many marketing
relationships, but it is clearly one of the main drivers of fran-
chising decisions. McDonald’s enjoys a clear advantage
through the financial strength of its over 9,000 outlets—whose
prosperity is owed, in large part, to the brand equity of the
McDonald’s brand, an organizational resource.
284 J Busn Res
1999:46:281–290
Legal Resources
Legal resources are those assets the firm uniquely possesses
because of governmental statute or a legally binding agreement
between the firm and another party (Alderson, 1965). In-
cluded among the firm’s legal resources would be contracts,
exclusionary licenses, and entitlements. In marketing, licenses
to rare and unique assets, such as innovative products, are
resources derived from relationships. In such a partnership,
licensing allows one firm to gain initial access to a foreign
market that would otherwise be difficult to penetrate (Cateora,
1993). In return, the foreign partner receives a valuable addi-
tion to its product line which improves its performance.
Physical Resources
Physical resources are the tangible assets, other than labor
and cash, that are used by the firm to produce and market
goods and services. Physical resources include raw materials
reserves, machinery, land, and production, storage, distribu-
tion, service, and retailing facilities (Alderson, 1957; Barney,
1991; Day, 1994; Hofer and Schendel, 1978). In marketing,
physical resources help drive manufacturers’ distribution deci-
sions, where retailers’ geographical coverage and infrastructure
are key.
Human Resources
Human resources encompass the skills, knowledge, and vision
of the firm’s employees (Barney, 1991; Day, 1994; Hofer and
Schendel, 1978). The selling skills, responsiveness, and
breadth of coverage of the sales force, and the ability of market-
ers to manage their markets can be extremely important among
manufacturers, wholesalers, and retailers in their relationships
with one another. These characteristics drive which manufac-
turers’ products are stocked, what trade allowances are offered,
and which retailers will be given the opportunity to carry
products in heavy demand.
Organizational Resources
Organizational resources are the assets the firm possesses that
arise from the organization itself, chief among these are the
corporate culture and climate, the organization’s structure,
valued brand names, and the administrative history of the
firm. Culture is important, because it affects decision making,
learning (Fiol and Lyles, 1985), and social behavior within
the organization. Other organizational resources include the
organizational “routines” (Nelson and Winter, 1982) and sys-
tematic processes that the firm acquires or develops that are
applied to the various functions of the firm, such as extraction
or acquisition of raw materials, production of goods and ser-
vices, strategic planning, or acquiring, storing, and communi-
cating information (Collis and Montgomery, 1995). Teece and
Pisano (1994) call attention to organizational competencies
that enable organizational metamorphosis—the ability to re-
R. M. Morgan and S. Hunt
spond rapidly to changes in the environment. In a relationship
marketing context, comarketing relationships might arise be-
cause one partner wants the other’s expertise at new product
development or production processes superior to their’s (Buck-
lin and Sengupta, 1993; Matthyssens and Van den Bulte, 1994).
In retailing, a manufacturer’s unique resources, such as high
demand, innovative products, brand loyalty, or quality in prod-
uct design, lead to retailers’ advances at establishing exclusive
relationships to obtain those resources (Ganesan, 1994).
Relational Resources
Relational resources consist of the relationships: (1) between
various constituencies within the organization; and (2) be-
tween the organization and its various external partners. For
example, in the U.S. automobile industry, manufacturers real-
ize the value of the relationships their dealers have with con-
sumers. Dealers’ relational resources translate into information
resources that manufacturers hope to acquire (Brandweek,
1995). In return, some automobile dealers benefit from the
relationships their manufacturers have with their employees;
for example, Saturn (Aaker, 1994). More commonly, market-
ers contemplating entry into unfamiliar markets seek relation-
ships with others who are more experienced in those markets.
Drawing on these partners’ existing relationships with con-
sumers enhances success in new market entry (Varadarajan and
Cunningham, 1995). These relationships—including retailers
with consumers, wholesalers with retailers, and manufacturers
with employees—offer unique, value-adding resources to the
fortunate firms whose partners secure them (Quinn, 1992;
Powell, 1990; Sethuraman, Anderson, and Narus, 1988).
Informational Resources
Although the knowledge held by individuals is a part of human
resources, the collective knowledge of the organization and
the processes developed for inducing organizational learning
comprise much of a firm’s informational resources (Child,
1987; Doz and Prahalad, 1991; Drucker, 1993; Sheth and
Parvatiyar, 1995). The importance of this last category to the
success of the organization is felt no more powerfully than it
is in marketing, where the on-going collection of information
and knowledge of markets (customers and competitors) is
crucial (Slater and Narver, 1995). Efficient consumer re-
sponse, electronic data interchange, just-in-time distribution,
and category management depend upon a devotion by market-
ers to building this resource and building partnerships with
others so to do.
By combining their resources with those gained and shared
in marketing relationships, organizations can build compara-
tive advantages that, when used properly, result in market-
place positions of competitive advantages for the firm. To the
extent that these advantages are sustainable, the organization
can enjoy tremendous gains by means of relationships.
Relationship-Based Competitive Advantage J Busn Res 285
1999:46:281–290

Table 1. Requirements of Resources to Provide Sustainable Advantage

Critical Requirement Explanation Authors

Efficiency/effectiveness
Heterogeneity
Imperfectly imitable
Imperfect substitutability
Imperfect mobility
The resources must continue to contribute to the firm’s ability to ef- Hunt and Morgan (1995)
ficiently/effectively produce valued market offerings for some mar-
ket segment(s)
Central to the resource-based view, heterogeneity acknowledges that Barney (1991), Hunt and
firms differ significantly in the resources that are at their dis- Morgan (1995),
posal; this heterogeneity arises from limited availability of these Peteraf (1993)
assets: although some are abundant, others are relatively rare
Resources should be difficult for competitors to imitate; this charac- Alderson (1965, p. 205),
teristic typically arises from the nature of the process required to Barney (1991),
create the assets Dierickx and Cool
(1989), Peteraf (1993)
It should be difficult to find replacements for resources Barney (1991),
Dierickx and Cool
(1989), Peteraf (1993)
Critical strategic assets must have limited tradeability among com- Collis (1991), Dierickx
petitors in the marketplace and Cool (1989),
Peteraf (1993)

Sustainability of Relationship-Based resource-based view. Unlike traditional industrial organiza-

Competitive Advantages: Critical
Requirements of Resources
Because firms have a multitude of resources, obtaining a com-
plete inventory is likely to be difficult for those responsible
for developing strategy. Nevertheless, as the resource-based
approach to analyzing sustainable competitive advantage has
progressed, theory has focused on developing a framework
for determining those that are crucial to achieving a sustainable
competitive advantage (Barney, 1991; Dierickx and Cool,
1989; Hunt and Morgan, 1995; Peteraf, 1993). Although no
consensus has been reached as to which of these frameworks
is most appropriate, a synthesis of their various components
shows several common features. Such a synthesis is shown
in Table 1.
Efficiency/Effectiveness
Resources should not only be acquired at an efficiency-enabling
price (Peteraf, 1993), resources must continue to contribute to
the firm’s ability to efficiently/effectively produce valued market
offerings for some market segment(s). As Hunt and Morgan
(1995) note in the case of IBM and their reputation for life-
long employment, resources that once afforded the firm efficient
and/or effective performance often may become a strategic hin-
drance or, even a “contraresource.” IBM found that their policy
of job security—which fostered employee loyalty and resulted
in strong, productive relationships—over time was transformed
an expected entitlement (Hays, 1994).
Heterogeneity
Identified by Peteraf (1993, p. 186) as “the sine-qua-non
of competitive advantage,” heterogeneity is the heart of the
tion economics, which assumes that all firms have access to
the same resources (Collis, 1991; Hunt and Morgan, 1995),
the resource-based view recognizes that this is not the case.
Because resources are only available in limited supply, advan-
tages accrue to firms able to acquire them (Peteraf). Studying
relationship marketing, Morgan and Hunt (1994) found that
the benefits and termination costs that firms attribute to spe-
cific relationships led to cooperation, commitment, and other
positive outcomes. We maintain that an appreciation of these
benefits and termination costs arise from the firm’s assessment
that the resources it gains from particular relationships are
either unique, or, at the minimum, would be difficult to find
elsewhere. Therefore, RBCAs should be highly sustainable and
valuable when built on resources that: (1) are unique; (2)
gained through relationships with partners who are unique in
owning them; or (3) are unique in combination with partners’
resources.
Imperfectly Imitable
To have continued value, competitive advantages must be
sustainable. Sustainability becomes problematic when the re-
sources that are used to create them are easily subject to
imitation or substitution by competitors. Factors that limit
imitation and substitution include: (1) causal ambiguity; (2)
producer learning; (3) buyer costs switching; (4) reputation;
(5) buyer search costs; (6) channel crowding; (7) economies
of scale; (8) unique historic conditions; (9) social complexity;
(10) time compression diseconomies; (11) asset mass efficien-
cies; (12) interconnectedness of asset stocks; and (13) asset
erosion. Certainly, we can easily see how many of these condi-
tions—especially economies of scale, social complexity, and
time compression diseconomies—might apply to resources
286 J Busn Res
1999:46:281–290
gained in marketing relationships. However, causal ambiguity
is especially pertinent.
Causal ambiguity results when it is unclear how a firm’s
competitive advantage was achieved. Typically, causal ambi-
guity is used to refer to this lack of clarity on the part of
competitors, but as Reed and DeFillippi (1990) note, causal
ambiguity may be so extreme in some cases that even the firm
that possesses the competitive advantage may be unaware
of its source. Arguably, competitive advantages arising from
competencies that are causally ambiguous are the most secure,
inimitable advantages that a firm can possess. Organizational
learning is an example of a causally ambiguous, highly valuable
competitive advantage. Strategists often argue that economies
of scope and the organizational learning that accompanies
participation in a broad scope of businesses stimulates organi-
zational learning. Similarly, we argue, such learning benefits
accrue to firms that are involved in true relationships with
others.
Causal ambiguity derives in large part from complexity.
Observing the complexities of relationships Gummesson
(1994) notes, “a network business requires continuous cre-
ation, transformation, and maintenance of networks.” Contin-
uing with the notion of network, rather than simple, dyadic
relationships, Anderson, Håkakansson, and Johanson (1994)
demonstrate that often it is not the firm’s own resources, but
those of its network partners, that make it an attractive partner.
As our conceptualization of relationships moves from dyads
to networks, tracing the transfer of resources between partners
becomes extremely difficult, if not impossible. In relation-
ships, business experiences are shared, friendly suggestions
are made, and it is unlikely that outside observers or partici-
pants will be able to trace or replicate this process outside of
the specific relationship; that is, the process is laden with
causal ambiguity.
Imperfect Substitutability
To remain sources of sustainable competitive advantage, re-
sources also must not be subject to substitution by other
resources. As Barney (1991) notes, such substitutes may be
similar or dissimilar. For example, in the early 1980s, the
distribution channels for personal computers were effectively
locked up by such large, established manufacturers as IBM,
Tandy, and Compaq. Michael Dell, founder of PC’s Limited
(later known as Dell Computer), who had been unsuccessful
at gaining access to traditional retail outlets, developed a mail
order channel for selling his merchandise; thereby, substitut-
ing one resource for another. When the source of these re-
sources is (are) relationship(s), substitution becomes unlikely
as the size and complexity of the resource combinations in-
creases.
Imperfect Mobility
As Dierickx and Cool (1989) note, strategic resources must
be nontradeable. Perhaps the most valuable resources are
R. M. Morgan and S. Hunt
those that are the least mobile, such as dealer loyalty, trust,
reputation, and R&D capability. Collis (1991) and Peteraf
(1993) see immobility as the most valuable characteristic,
because of the time and cost required to accumulate such
resources. Competitive advantages gained through relation-
ships with other organizations are especially immobile, be-
cause the resources involved are often either: (1) idiosyncratic,
offering little or no value outside of the relationship in ques-
tion; or (2) co-specialized resources—combinations of re-
sources that are co-dependent (Peteraf).
Propositions for Evaluating
Shared Resources
Once we have established a valid, rigorous classificational
scheme of firm resources and a framework for analyzing those
resources, we can postulate which resources in general offer
firms the best opportunity for achieving sustainable competi-
tive advantage. Therefore, our discussion now turns to an
analysis of the scheme using the framework developed above.
Table 2 offers examples of relationship marketing situations
in which RBCAs might arise from particular categories of
resources, alone or in combination with other basic resources.
In addition, the table provides a summary of our evaluation,
forming the basis for the propositions listed below. It is impor-
tant to realize that it is uncommon for RBCAs, as with competi-
tive advantages in general, to arise from a single resource.
Rather, RBCAs most often are created by bundling many differ-
ent types of resources across relationships—as the combina-
tions become more complicated, the ability of competitors to
purchase, imitate, invent around, or substitute for those
RBCAs diminishes.
Financial Resources
Financial resources are difficult to duplicate only to the degree
that it is rare for competitors to have significant access to
funds. Financial resources can be imitated by competitors
healthy enough to acquire debt or equity. For many uses of
capital, competitors can substitute other means to the ends
that financial resources would provide, thorough out-sourcing
or leasing. Financial resources are mobile, because they can
be obtained in the marketplace by trading other resources.
This reasoning holds in relationships also. Hagedoorn (1993)
found that among strategic alliances in high technology indus-
tries, financial resources were the least common motivation
for alliance formation. In the case of franchising, it is unlikely
that a competitor, with a similarly valuable business concept,
would be unable to secure the financial support of franchisees
as well. Therefore, we posit that relationships formed to ac-
quire financial resources are unlikely to result in a sustainable
competitive advantage, because of financial resources’ lack of
heterogeneity.
Relationship-Based Competitive Advantage
Table 2. Evaluation of Resources Potentially Gained in Cooperative Relationships
Resource Examples of Relationship Marketing Applications
Financial Franchising
Legal Licensing complementary products
Physical Distribution decisions; use of manufacturer’s excess
capacity for private label goods
Human Merchandise selection; distribution decisions
Organizational High-quality customer service driving choices of
partners for foreign market entry
Relational Retailers’ relationships with ultimate customers
driving manufacturers’ choice of retailers for
their products
Informational Foreign market entry partnering decisions; manufac-
turers’ relationships with Electronic Data Inter-
change (EDI) and Efficient Consumer Response
(ECR) partnering retailers and wholesalers
Legal Resources
The sustainability of advantages derived from contracts and
licenses is limited to: (1) the amount of time the contract or
licence allows for; or (2) the amount of time required before
the contract or the licensed assets can be “invented around.”
The most common legal resource gained in marketing relation-
ships is a license to a valuable product. However, such rela-
tionships are commonly initiated with a finite relationship
duration in mind, by definition lending limited sustainability
to the competitive advantage gained. Moreover, licensing is
only one of many ways that firms can enter new markets,
lending to the potential for substitutes. Finally, it is uncom-
mon that others could not imitate such a resource. Therefore,
we posit that relationships formed to gain legal resources will
not enjoy sustainable RBCAs.
Physical Resources
Land, factories, and other physical resources acquired through
relationships are also rarely the basis for sustainable competi-
tive advantages. Although geographic location can be a distinct
advantage in specific markets, given the lack of geographic
barriers to other markets, alternative locations of equal value
are quite common. Moreover, through such means as elec-
tronic commerce and direct marketing, spatial advantages that
derive from locations of outlets are rapidly becoming dimin-
ished; a complex combination of organizational and informa-
tional resources (e.g., a direct distribution system) is substi-
tuted for a simpler physical resource (e.g., an established retail
network). Therefore, we maintain that relationships initiated
to gain physical resources will not commonly result in sustain-
able RBCAs.
P1: In interfirm relationships, comparative advantages—
created singly or from combinations of resources of
J Busn Res 287
1999:46:281–290
Resource Evaluation Under Critical Requirements
Limited potential as source of RBCA because of wide
availability
Limited potential as source of RBCA because of imitabil-
ity, substitutability, and limited longevity
Limited potential as source of RBCA because of superior-
ity of substitute competencies based on combinations
of more complex resources
Moderate potential as source of RBCA—sustainability is
limited by mobility
High potential as source of RBCA because of the ambig-
uity and time dependence of their creation
High potential as source of RBCA resulting from time
dependence of their creation, coupled with perceived
ambiguity
High potential as a source of RBCA because of the complex-
ity of the resource mix required to build unique stocks
and flows of information
both partners—that are limited only to financial, legal,
and physical resources, will generally be unsustainable
and will offer little potential for RBCAs.
P2: In interfirm relationships, comparative advantages cre-
ated from combinations of resources of both partners
that include financial, legal, and physical resources,
will be more sustainable and offer greater potential
for RBCAs when they include human, organizational,
relational, and informational resources.
Human Resources
The focus of much research concerning the resource-based
view within the management area is the value of managerial
skills in creating a sustainable competitive advantage (Castan-
ias and Helfat, 1991). Managerial skills are valuable, because
they can be substituted for so many other resources. However,
as with scientists, engineers, and technicians, managers and
sales personnel can be bought away from the firm. The breadth
of coverage of a sales force, whose services are enjoyed by
relationship partners, is unsustainable to the extent that a
competitor may have the financial resources to develop their
own sales force and hire away sales manager. We propose
that RBCAs gained through a partner’s human resources are
moderately sustainable.
P3: In interfirm relationships, comparative advantages—
created singly or from combinations of resources of
both partners—that are limited to human resources
only, will generally be moderately sustainable and offer
moderate potential for RBCAs.
P4: In interfirm relationships, comparative advantages cre-
ated from combinations of resources of both partners
that include human resources, will be more sustainable
288 J Busn Res
1999:46:281–290
and offer greater potential for RBCAs when they in-
clude organizational, relational, and informational re-
sources.
Organizational Resources
Proprietary technologies, often gained through organizational
learning, are typically more sustainable than financial, legal,
and physical resources because of the ambiguity and time
dependence associated with their development. For example,
new product development or strategic planning superiority
may arise from a host of factors, all of which are not apparent
to the holder of the superior resource, not to mention outside
observers. We hold that RBCAs gained through the organiza-
tional resources of partners—including organizational culture
and routines, valuable brands, and quality control systems—
are highly sustainable, because they are often imperfectly imi-
table, imperfectly substitutable, and highly immobile.
Relational Resources
Hagedoorn (1993) found that potential partners’ access to
markets was the single most common motivation for strategic
alliances in high technology sectors of business. Firms having
long-standing relationships with customers—especially rela-
tionships characterized by trust, commitment, and loyalty—in
attractive markets become very desirable relationship partners
because of this resource they hold. Access to customers gained
through marketing relationships can be largely sustainable
when the firm holding the relationships with those customers
has built the relationships on trust and commitment, or loy-
alty. As Dierickx and Cool (1989) note, intangible relationship
assets, such as trust, are valuable, advantage-sustaining re-
sources, because they are cultivated only over long periods
of time and cannot be stolen away. Day and Wensley (1988),
in fact, proposed that loyalty may be the best measure of
competitive advantage in marketing contexts. We maintain
that RBCAs gained through partners’ relationship resources
will be highly sustainable.
Informational Resources
A firm’s inventory of informational resources is based largely
on its ability to learn. As the foundation of informational
resources, organizational learning, then, imparts strong sus-
tainability to these assets. In fact, many observers suggest that
organizational learning may be the only competitive advantage
open to a firm in the future (McKee, 1992). Information is
highly perishable, but the systems that organizations develop
to gather, disseminate, and apply information—all complex,
difficult to imitate informational resources—perpetuate the
possession of valuable information and knowledge. We posit
that RBCAs built on partners’ informational resources will be
highly sustainable.
P5: In interfirm relationships, comparative advantages—
created singly or from combinations of resources of
R. M. Morgan and S. Hunt
both partners—that arise from organizational, rela-
tional, or informational resources, will be highly sus-
tainable and will offer the highest potential for RBCAs.
Conclusions
Unfortunately, research into the strategic implications of rela-
tionship marketing has been largely neglected; therefore, little
direction can be offered to managers concerned with the long-
term, strategic impact of their firms’ adoption of relationship
marketing. Although strategy research in relationship market-
ing is greatly needed, initial efforts in relationship marketing
strategy, as with any scientific endeavor, must include identi-
fying and classifying the subject matter, establishing frame-
works, and developing basic research propositions (Hunt,
1991). Attempting to initiate those efforts, we adopt Hunt
and Morgan’s (1995) classification scheme of firm resources,
we draw upon literature from resource-based theory to estab-
lish a framework for analyzing combinations of those re-
sources, and we develop an initial set of research propositions
for relationship marketing strategy.
We began our discussion by warning that relationship mar-
keting should be adopted only when it offers, or contributes
to, a firm’s competitive advantage. As a word of caution,
therefore, it is important to mention two potential paths to
relationship marketing misadventures. First, managers are
cautioned to avoid allowing relationship-based resources from
becoming a “strategic hindrance” (Barney, 1991). This in-
cludes situations where resources acquired through relation-
ships become a strategic hindrance by leading the firm to make
poor decisions regarding investments or courses of action.
For example, enjoying access to markets gained through a
relationship partner may lull an organization into compla-
cency and prevent the firm from searching out new markets
for its products on its own. When the long-term costs of
existing relationships, and the resources shared in those rela-
tionships, outweigh the long-term benefits, we argue that
relationship marketing theory urges managers to assess how
the relationship can be salvaged. When salvaging the relation-
ship is not in the long-term best interest of all parties, efforts
must be taken to dissolve the relationship in such a way that
minimizes harm to all partners.
Second, despite the resource benefits that can be derived
from relationship marketing, managers should avoid allowing
exchanges to become nonreciprocal, resulting in an assymetri-
cal dependence upon the relationship for resources (Anderson
and Weitz, 1989). Ganesan (1994) argues that assymetrical
dependence allows the more powerful party to take advantage
of the dependent partner. Alternatively, D’Souza, Morgan, and
Zhao, (1997), in a study of joint ventures, found that the
unreciprocal contribution of resources—the source of assyme-
trical dependence—leads to relationship failure through erosion
of relationship commitment among the more resource-endowed
partners. When relationships fail, both partners will lose.
Relationship-Based Competitive Advantage
Relationship marketing is becoming increasingly important
to the overall marketing strategy of many firms. Crucial to
understanding this role is to recognize: (1) the resources
needed from the gained through marketing relationships; (2)
the suitability of various partners from economic, strategic,
and social perspectives; and (3) the sustainability of advan-
tages that arise when relationship marketing strategies, based
on specific resources, are pursued. The bulk of current re-
search in relationship marketing focuses on portions of this
second component. It is hoped that this paper will call atten-
tion to those issues that remain, so that a better understanding
of the role of relationship marketing in the firm’s marketing
strategy might be gained.
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