The Effect of Mobility Barrier and Firm-specific Barrier on Profitability: A Development of Resource Based Theory through Financial Data Analysis

Abstract

Mobility barriers and firm-specific barriers are the resources that are more or less hard to imitate among firms within an industry. This paper analyzes financial data of firms of financial sector, service sector, and manufacturing. By comparing the average profitability of each strategic group and the deviation of profitability among firms of the group, it argues that the degrees of effects of mobility barriers and firm-specific barriers are different among industries. This paper is unique for distinguishing mobility barriers from firm-specific barriers to think that the former explains the difference of average profitability among strategic groups within an industry and the latter explains the deviation of profitability among firms within a group. This proposition is a development of resource based theory. The actuality of the financial data analysis implies the reasonability of the proposition. Lastly, the paper proposes additional hypotheses on the determinative power of mobility barriers and firm-specific barriers.