The Role of Resource Flexibility in Leveraging Strategic Resources

Recent advances in resource-based theory suggest that the ways managers use strategic actions to leverage resources has important influences on firms' resulting competitive advantages. However, theory dealing with the nature of leveraging remains underdeveloped. We develop the notion that strategic actions that successfully leverage one resource might not leverage another resource. In particular, our theorizing distinguishes between fiexibie resources that can be leveraged in new markets and rigid resources that must be leveraged in their current market. Using data from the restaurant industry, we find evidence that top management team experience (a flexible resource) can be profitably leveraged by franchising, but that attempting to leverage specific knowledge (a rigid resource) through either franchising or multi-chaining weakens performance. Our theory and results help explain how different types of resources can be leveraged using different strategic actions.