'Keep out- signs: The role of deterrence in the competition for resources

Gavin Clarkson, Puay Khoon Toh

Research output: Contribution to journalArticlepeer-review

64 Scopus citations


To explain resource heterogeneity, past research focuses on how rivals' resources are hidden from firms and firms accordingly have difficulties accessing them. We argue that resource heterogeneity may also arise when firms are deterred from a technological space upon being shown what resources rivals already possess within that space. To illustrate this deterrence effect, we use patent reexamination certificates, which indicate strategic stakes within a technological space without materially disclosing additional details of the underlying technologies and hence avoid the confounding effect of attracting competition through disclosure. We demonstrate how rivals' reexamination certificates within a technological space induce a firm to subsequently allocate less inventive effort in that space, based on two mechanisms-indications of rivals' developmental speed and exclusionary ability. We further develop these two mechanisms by arguing that the deterrence effect is stronger when rivals' speed is enhanced by their downstream capabilities, or when rivals' exclusion is enhanced by their litigation experiences. Findings suggest that a firm's path of resource accumulation evolves through avoidance of rivals' paths, and deterrence may constitute a viable alternative theory of resource heterogeneity.

Original languageEnglish (US)
Pages (from-to)1202-1225
Number of pages24
JournalStrategic Management Journal
Issue number11
StatePublished - Nov 2010


  • deterrence
  • disclosure
  • inventive effort
  • resource heterogeneity


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