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...is problem by suggesting that firms can use superior resources and capabilities to generate rents. According to the resource-based view, these resource bundles and capabilities can vary across firms (=-=Barney, 1991-=-). Firms seeking competitive advantage should Key words: pricing; resource-based view; capability; organizational routines; ethnography *Correspondence to: Mark J. Zbaracki, The Wharton School, Univer...

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...irm’s ability to set prices. Following the resource-based view, we argue that these processes for setting or changing prices are capabilities that a firm can use as a basis for competitive advantage (=-=Wernerfelt, 1984-=-; Peteraf, 1993; Teece, Pisano, and Shuen, 1997). Given that a firm has created value, we argue that it is not a foregone conclusion that the firm will capture that added value by setting the right pr...

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...urces and capabilities that are absent in other firms. These resources must not be perfectly mobile; they must be resources that other firms cannot trade for, substitute other assets for, or imitate (=-=Dierickx and Cool, 1989-=-). From a resource-based view, a firm can enjoy a competitive advantage by ‘implementing a valuecreating strategy not simultaneously implemented by large numbers of other firms’ (Barney, 1991: 107). F...

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...interactions led to easier negotiations and better terms. The respect built on past exchanges made it easier to extract a share of the value created. Strong social ties translated into better prices (=-=Uzzi, 1999-=-). Given the variety of data and participants, the bargaining ability of the firm (Brandenburger and Stuart, 1996) required many interconnected resources and coordination mechanisms and thus can be de...

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...ging stream of research in macroeconomics that argues firms face costs of adjustment that sometimes inhibit price changes (Blinder et al., 1998; Carlton, 1986; Ball and Mankiw, 1994; Rotemberg, 1982; =-=Levy et al., 1997-=-). Taken together, these disparate streams of research suggest that a firm seeking to appropriate the value it has created may have to attend to the process by which it arrives at prices. None of this...

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...s a firm develops will define its ability to respond. Our resource-based perspective on pricing reinforces the notion that strategy is essential to the allocative and adaptive role that markets play (=-=Moran and Ghoshal, 1999-=-). If the price-setting processes are strategic choices managers make, a firm’s ability to allocate resources depends on the pricing process capabilities that managers choose to develop. From a strate...

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...ch firms set or change prices, perhaps because researchers assume that the processes by which prices are set or changed are relatively costless or simple and hence do not require strategic attention (=-=Rao, Bergen, and Davis, 2000-=-). For example, in the marketing literature, Rao (1984) argues that pricing is the only element in the marketing mix that does not require expenditure. This assumption is echoed in the strategy litera...