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Development of a Resource Allocation Model Using Competitive Advantage

Sangwon Lee, Suneung Ahn, Changsoon Park and You-Jin Park
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Sangwon Lee: Department of Interaction Science, Sungkyunkwan University, Seoul 03063, Korea
Suneung Ahn: Department of Industrial and Management Engineering, Hanyang University, Ansan 15588, Korea
Changsoon Park: Department of Mechanical Engineering, Hanyang University, Ansan 15588, Korea
You-Jin Park: School of Business Administration, Chung-Ang University, Seoul 06974, Korea

Sustainability, 2016, vol. 8, issue 3, 1-13

Abstract: In general, during decision making or negotiations, the investor and the investee may often have different opinions which result in conflicts. So, an objective standard to mitigate potential conflicts between investors and investees should be provided since it is highly important that rational decisions must be made when choosing investments from various options. However, the models currently used come with some problems for several reasons, for instance, the arbitrariness of the evaluator, the difficulty in understanding the relationships that exist among the various investment options (that is, alternatives to investments), inconsistency in priorities, and simply providing selection criteria without detailing the proportion of investment in each option or evaluating only a single investment option at a time without considering all options. Thus, in this research, we present a project selection model which can enable reasonable resource allocation or determination of return rates by considering the core competencies for various investment options. Here, core competency is based on both performance and ability to create a competitive advantage. For this, we deduce issue-specific structural power indicators and analyze quantitatively the resource allocation results based on negotiation power. Through this, it is possible to examine whether the proposed project selection model considers core competencies or not by comparing several project selection models currently used. Furthermore, the proposed model can be used on its own, or in combination with other methods. Consequently, the presented model can be used as a quantitative criterion for determining behavioral tactics, and also can be used to mitigate potential conflicts between the investor and the investee who are considering idiosyncratic investments, determined by an interplay between power and core competency.

Keywords: resource allocation; competitive advantages; idiosyncratic investments; power (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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