The creation of competitive advantage by producer service establishments

In this paper we focus on how competitive advantage is constructed by producer service businesses, how it varies among establishments with different characteristics, and how it affects establishment performance. Sources of competitive advantage stern from characteristics such as quality, price, creativity and innovation, flexibility, timeliness of delivery, and scope of services offered. We present a detailed evaluation of the competitive advantage model developed by Porter (1990) and review applications of this model to the producer services. We find this model to be partially successful in distinguishing between superior and inferior performance by producer service businesses, with important differences observed across age, organizational type, and size of business. We develop an expanded model of factors related to competitive advantage and performance, which includes not only factors contained in the Porter model, but dimensions particular to the information-oriented producer services, such as creativity, geographic proximity, R&D capabilities, and adaptability to client needs.