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Shogo Kimura: Shogo Kimura is Associate Professor, School of Life Studies, Department of Social Sciences, Sugiyama University, Japan.
Panos Mourdoukoutas: Panos Mourdoukoutas is Professor of Economics, Department of Economics, Long Island University, USA.
1. Introduction
As non-human resources have become increasingly transferable in global industries, many business strategists have come to recognize that sustainable competitive advantages can no longer be based on the acquisition of such resources. Conventional strategies that focus on the acquisition of technology and logistics for the purpose of cutting of costs or adding marginal features to existing products, for instance, are not sufficient to give a company a sustained edge over its competitors. Sooner or later they can be easily imitated by its competitors.
Instead, business strategies have been turning their attention to the acquisition of non-human resources, especially in the development of company-specific human capital that cannot be easily transferred across companies. But developing human capital and turning it into a source of sustainable competitive advantage takes effective management control systems, not just in the narrow sense of monitoring employee performance, but in the broad sense of a system of beliefs, boundary systems and incentives that cultivate both employee conformity and creativity (Simons, 1995).
Extending Simon's work, the remainder of the paper takes a close look at the conventional and modern competitive strategies and proposes an effective management control framework in three sections. The second section is a review of the conventional and modern competitive strategies. The third section is a discussion of the positive and the negative effects of management control systems, and the fourth section is a discussion of a proposed effective management control system.
2. Sustainable competitive advantages: resources and control
The intensification of competition in recent years has revived the interest in the concept of "sustainable competitive advantage", i.e. in the ways a company can develop competitive strategies that cannot be imitated by the competition. Traditionally business strategists have identified three alternative forms of competition:
(1) operational effectiveness (cost and quality competition);
(2) development of different products (product competition); and
(3) an in-between strategy, market focus (focus competition).
But as these strategies have by now become a standard for major competitors, business strategists have been trying to refine them into more subtle ways of competition, which...