In this essay we explore the curious symmetry between contestability theory (CT) and the resource-based view (RBV) of the firm. CT assumes away all distinctions between incumbent firms and potential competitors. By contrast, the RBV stresses the fundamental heterogeneity of firms and why such differences may be sustainable. The juxtaposition of the two theories highlights the potential trade-off between rigor and relevance in theory development and provides the opportunity to further our understanding of the RBV.
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