WHY GOOD THINGS NEVER SEEM TO LAST: A DIALECTIC
PERSPECTIVE FOR LoNG-TERM COMPETITIVE ADVANTAGE

John A. Parnell
Memphis State University

Memphis, Tennessee

Augustine Lado
Cleveland State University

Cleveland, Ohio

Peter Wright
Memphis State University

Memphis, Tennessee

Introduction

Central to much of the strategy literature is the concept of sustainable competitive
advantage ([4], [22], [23], [27]). However, a great deal of the research has adopted a
static equilibrium view of competitive advantage and does not address whether or not
competitive advantage can be sustained over time ([3], [7], [26]). This framework of
analysis has often led to the belief that certain strategies are optimal in and of
themselves and can lead to sustained superior perfonnance. Thus, scholars have
suggested that strategies emphasizing facets such as innovation [20], product
differentiation [22], and quality [5], are means through which fmns may achieve
sustained success.

However, there is no guarantee that today's successful strategy will continue to
yield benefits for the firm tomorrow. Competitive advantage that is realized through
the implementation of business strategy may not last indefinitely. While this
phenomenon has been observed in practice, extensive attempts have not been made to
explain why competitive advantage may not be sustained. This paper proposes that a
beneficial strategy itself may simultaneously start a process which will culminate in
the creation of its own disadvantage, leading to inferior perfonnance. That is, past or
present organizational strategies that generate advantage may become sources of
competitive disadvantage and organizational failure in the future.

A basic premise of this paper is that a beneficial strategy may not be sustainable
indefinitely. Further, the emphasis placed on short-run perfonnance by some managers
can actually prove counterproductive in the long run. The application of dialectical
logic to strategy provides a justification for these tenets. First, an overview of the
philosophy of dialectic inquiry is presented. Then, the dialectic logic is applied to
explanations of the notions of organizational strategy and sustained competitive
advantage. Finally, managerial implications are offered.



Spring 1992 Parnell, £ado, & Wright: Why Good Things Never Seem to Last 63

Dialectic Inquiry

Dialectic inquiry may be viewed as a correct means or manner for approaching
greater understanding of phenomena [24]. A central tenet of this philosophy is the
contention that there is no meaning without knowledge of an opposite [1]. Left takes
on meaning when it is viewed within the left-right context, good is only appreciated
within the good-evil context, and so on. However, opposing ideas, alternatively refened
to as thesis and antithesis, are predisposed to merge and become one, according to
the dialectic logic. The newly merged idea (synthesis) must, to obtain meaning,
subsequently create its own opposite. As is evident, this process continues, each
iteration bringing one closer to the truth. Absolute truth may never be attained but is
pursued through the dialectical contradictions of theses and antitheses with their
subsequent resolutions into syntheses [1].

Thus, in the dialectic system of thought, no state of being is sustainable, even when
managers might be aware of the environmental changes that may impact their strategies.
Although environmental scanning may enhance strategic decision making, it may place
too much emphasis on information acquisition for coordination and control. However,
since the procurement of infonnation about environmental changes does not prevent
these changes from occurring, a series of short run successes and failures is inevitable.
These short ron successes and failures are part of an essential process that will
culminate in long term success. However, a series of short-term organizational
successes may blind managers to the fact that "this prosperity, this pursuit of the good
life will eventually bend back on itself and fracture before [them]" [29, p. viii]. On a
broader philosophical front, Vandenbrook warns:
"But life, disconcertingly and reassuringly, is bigger than straight line logic; it confonns
with a kind of curved logic which turns things around and often, before you become
aware of it, turns them into their opposites.

Pacifists become militants.
Freedom fighters become tyrants.
Blessings become curses.
Labor saving devices become intolerable burdens.
Help becomes hindrance.
More becomes less." [29, p. viii].

Dialectics and Organizational Strategy

A number of studies have supported the application of dialectical inquiry to strategy
([10], [15], [17], [18]). These studies have typically involved the development and
presentation of conflicting strategies by management. Opposing strategic alternatives
are then integrated into a merged strategy which is supposedly superior to either of
the original strategic alternatives. The merging process results from a debate among
opposing parties and is facilitated by a third party, usually a manager, management
team, or consultant.



64 Journal ofBusiness Strategies Vol. 9. No.1

Dialectic logic offers an explanation as to why the high business perfonnance of
today may lead to poor perfonnance tomorrow. For example, a series of continued
successes with a particular technology may result in a feeling of grandeur and
invulnerability among members of the top management team [13]. This may lead to
an unyielding strategic commitment to that technology. The technology that has led
to success may tum out to be the organization's Achilles' heel. Thus, Underwood,
the leading player in mechanical typewriters, became so committed to the mechanical
technology that it was blinded to technology leading to the introduction of electric
typewriters and word processors. Success that is technology-based may result from
heightened innovation, but this may also lead to an over-commitment of organizational
resources to a technology that will eventually become obsolete. As another example,
Texas Instruments, once clearly the technological leader in the electronics and
semiconductor industry, became blinded by its technological prowess to new rules of
international competition (especially from Japanese firms). The finn became vulnerable
to the very technology that propelled it to its original leadership position.

As yet another example, consider the plight of the United States textile industry.
A common strategy has been for ftnns to establish plants in mrallocations to enjoy
total control over an economical labor force. These low labor costs translated into
success for a number of these firms. However, plants were often moved as low morale,
unionization efforts, and complaints of poor working conditions mounted. While these
finns were not pursuing process and quality-related innovations, foreign producers began
to capitalize on even lower labor costs abroad. Thus. the cost-driven strategy that
resulted in a series of short-run successes for many irrms in the textile industry
eventually led to the dissolution of many of these same finns.

To extend these thoughts, let us consider the concept of organizational culture.
Barney [3] has proposed that one such attribute, organizational culture, can be a source
of sustained competitive advantage, citing three characteristics of such a culture. Frrst,
the culture must be valuable to allow the ftnn to behave in ways that add ftnancial
value. Second, the culture must be rare and have attributes and characteristics not
typically found in other finns. Third, the culture must be imperfectly imitable. not
allowing for duplication by competitors. This perspective focuses on developing a rare
and valuable culture, with barriers to imitation that would result in sustainable
competitive advantage.

However, a culture that possesses these attributes may not generate sustainable
competitive advantage. As a point of illustration, a culture that drives a successful
diversification strategy may subsequently result in failure. That is, a finn that has
adopted a diversiftcation strategy may demonstrate superior perfonnance for a period
of time. As the company continues to grow, increased complexity associated with the
numerous acquisitions can ultimately lead to its lower perfonnance [14].

Alternatively, another ftnn· s culture that drives a successful internal growth strategy
would have focused on its core business. However, this may lead to the continuous
rejection of acquiring potentially profttable alternative businesses, leading to lower
perfonnance in the future. Thus, from a dialectic perspective. any strategy that provides
initial competitive advantage may also lead to its own demise. Dialectic logic requires



Spring 1992 Parnell, Lado, & Wright: Why Good Things Never Seem to Last 65

that competitive advantage be viewed as a long run ideal that can only be pursued
intermittently through short run successes that bring about failures that in turn lead to
subsequent intermittent successes.

Culture is but one of many attributes that has been linked to sustainable success.
Participative management techniques have also been linked to superior perfonnance in
the literature [9]. It has been suggested that subordinate participation improves decision-
making effectiveness( [7], [9]). Others have proposed that organizational effectiveness
increases as the firm evolves toward a consensus approach [16]. However, participative
decision making may lead to perceived managerial power loss and an inability to
effectively implement future decisions that may be difficult or unpopular ([20], [28]).
Thus, the notion of full consensus as a necessary requirement for effective decision
making may be flawed in that its realization can result in a decline in organizational
effectiveness.

Just as internal (dialectic) change can turn success into failure, external forces in
the environment, including competitors' strategies, can also undermine the prevailing
prosperity. Consider the tire manufacturer that develops and markets an economical
tire that never needs replacement. Competitors will likely follow suit with similar
versions while the lack of repeat business results in a smaller market for tires. Thus,
the initial success enjoyed by the innovative ftml is replaced by failure. However, a
manager who considers the likely long-term environmental and competitive responses
to strategic alternatives may choose to forego strategies with short-run prospects for
success in favor of those with long-run viability.

In sum, dialectics may be viewed as the underlying mechanism that transforms
successes into failures, and failures into successes. Therefore, an enhanced
understanding of this process is critical to the promotion of managerial behaviors that
will engender long-run firm success. For example, strategic managers of successful
businesses may become apathetic, ignorant of details, or may simply pay less attention
to customers. An innovative firm may be successful in the short term through its fluid
process, but may subsequently fail because an effective organizational structure is not
established to meet its need for structural growth. Likewise, another firm may also
reap success from the introduction of an innovative product line. However, if strategic
managers in the firm develop entrenched structures to support this product line, failure
is imminent when future innovations by competitors render the product line and the
accompanying structure obsolete.

Dialectics offers a key warning to strategic managers: Reliance on the factors
believed to have resulted in current organizational success will eventually lead to
organizational failure. The road to long-term success is not necessarily a replication
of short run successes. In the long run, dialectics is associated with success. However,
this success can only be realized through a of series short-run successes and failures.

Implications for Managers

From the application of the dialectic logic to organizational strategy and competitive
advantage, at least four managerial implications may be drawn. First, managers should



66 Journal ofBusiness Strategies Vol. 9, No.1

recognize the danger of commibnent to the status quo. Dialectic logic suggests that
the prevailing formula for superior performance may itself become the cause of
subsequent inferior performance. In other words, the assumption that implementation
of a previously successful strategy will continue to result in superior performance runs
counter to the dialectic perspective. Just as chickens do not mistrust the farmer who
has always fed and housed them, too many managers do not fear the roots of the
strategies that have initiated their present successes.

Second, continuous qualitative change in strategy is essential if competitive
advantage is to be enjoyed over the long term. Managers can be instrumental in
promoting qualitatively driven changes within their organizations [11]. The skeptics
among the managers should be reminded that the beginning of life also marks the
beginning of death, both in biological organisms and in organizations. However, at
least in the case of organizations it is possible to suspend the process of decline through
the managerial action leading to organizational renewal and revitalization. As Donun
and Byles [8, p. 67] stated, "Strategy formulation and implementation are more of a
complex and inexact art than a science."

Proactive managers, through questioning and testing their strategic assumptions, can
discern impending threats (antitheses), and translate them into opportunities. Through
"envisioning," they may steer their organizations toward new directions and new sets
of assumptions [12]. By channeling rewards to innovative members, managers can
assure organizational commibnent and engender organizational renewal and vitality [30].
Managers may also select prospective employees who are innovators and who will
actively promote the formulation and implementation of innovative strategies.

Third, according to the dialectic logic, prolonged success results from a series of
short-run failures and successes. Efforts to extend the factors that lead to short-run
prosperity inevitably lead instead to organizational decline. Thus, short-run failures
may be just as much a requirement for long-run success as short-run successes.

Finally, the dialectic logic implies that a disproportionate concern with short-run
profits can lead to organizational demise. Thus, strategic managers should consider
the long-term ramifications of their strategies. Managers should also anticipate that at
times, short-term losses may be necessary in order to invest in research and
development Upon their fruition, these invesbnents, as well as restructuring and efforts
in qualitative improvements, can enable the firm to prosper in the future ([2], [19]).

In summary, strategic managers should not panic in the face of short-run failures.
Conversely, they should not celebrate and become arrogant in the face of short-run
successes. In the context of a long-term orientation, short-run successes and failures
tend to be inevitable. The opposing forces of successes and failures can ultimately
lead to a renewed organization. Only by viewing success and failure within their
appropriate temporal context can managers unlock the potential for their organization's
renewal and vitality.



Spring 1992 Parnell, Lado, & Wright: Why Good Things Never Seem to Last 67

References

1. Adler, MJ. Dialectic. New York: Harcourt, Brace (1927).

2. Aiken. M. and Hage, J. "The Organic Organization and Innovation." Sociology, Vol.
5 (1971), pp. 63-82.

3. Barney, J.B. "Organizational Culture: Can it Be a Source of Sustained Competitive
Advantage?" Academy of Manasement Review. Vol. 11 (1986a), pp. 656-665.

4. Barney, J.B. "Strategic Factor Marlcets: Expectations, Luck, and Business Strategy."
Manaaement Science, Vol. 32 (1986b), pp. 1231-1241.

5. Buzzell, R. and Gale, B. The PIMS Principles. New York: Free Press (1987).

6. Camerer, C. and Vepsalainen, A. "The Economic Efficiency of Corporate Culture."
Strateeic Manaeement Journal, Vol. 9 (1988), pp. 115-126.

7. Dickson, J.W. ''Top Managers' Beliefs and Rationales for Employee Participation."
Human Relations, Vol. 35, No.3 (1982), pp. 203-217.

8. Domm, D.R., and Byles, C.M. "Strategic Success and Member Commitment." Journal
of Business Stratelies, Vol. 7 (1990), pp. 67-75.

9. Driscoll, J.W. ''Trust and Participation in Organizational Decision Making as
Predictors of Satisfaction." Academy of Management Journal. Vol. 21, No.1 (1978),
pp.44-56.

10. Emshoff, J.R. and Finnel, A "Defining Corporate Strategy: A Case Study Using
Strategic Assumptions Analysis." Working paper No. 8-78, University of Pennsylvania,
Philadelphia (1978).

11. Fiol, C.M. "Managing Culture as a Competitive Resource: An Identity-based View of
Sustainable Competitive Advantage." Journal of Management, Vol. 17 (1991),
pp. 191-211.

12. Hanna, D.P. Designine Or£anizations for High Performance. Reading, MA: Addison-
Wesley (1988).

13. Janis, IL. Victim!! of Groqpthink. Boston: Houghton-Mifflin (1972).

14. Kusewitt, I.B., Ir. "An Exploratory Study of Strategic Acquisition Factors Relating to
Performance." Strate&ic Management Iouma1 Vol. 6 (1985), pp. 151-169.

15. Laurenco, S.V. and Glidewell, I.C. "A Dialectical Analysis of Organizational
Conflict" Administrative Science Quarterly. Vol. 20 (1975), pp. 489-508.



68 Journal ofBusiness Strategies Vol. 9, No.1

16. Likert, J.G., and Araki, C.T. "Managing Without ~ Boss: System five." Leadership
and Organization Development Journal, Vol. 7, No.3 (1986), pp. 17-20.

17. Mason, RD. "A Dialectical Approach to Strategic Planning." Management Science,
Vol. 15 (1969), pp. B403-B414.

18. Mitroff, 1.1., Barabba, V.P., and Kilmann, RH. "The Application of Behavioral and
Philosophical Technologies to Strategic Planning: A Case Study of a Large Federal
Agency." Management Science, Vol. 24 (1977), pp. 44-58.

19. Pearce, J.L. and Delbecq, A.L. "Organization Structure, Individual Attitudes, and
Innovation." Academy of Management Review, Vol. 2 (1977), pp. 27-37.

20. Peters, T.J. and Watennan, R.H., Jr. In Search of Excellence. New York: Warner
Books (1982).

21. Pollock. M. and Colwill, N.L. "Participatory Decision Making in Review."
Leadership and Organization Development Journal. Vol. 8, No.2 (1987), pp. 7-10.

22. Porter, M.E. Competitive Advantage. New York: Free Press (1985).

23. Reed, R and DeFillippi, RI. "Causal Ambiguity, Barriers to Imitation, and
Sustainable Competitive Advantage." Academy of Management Review, Vol. 15
(1990), pp. 88-102.

24. Rychlak, J.F. (Ed.). Dialectic: Humanistic Rationale for Behavior and SevelQPment
New York: S. Krager (1976).

25. Schein, B.H. "Organizational Culture." American Psychologist. Vol. 45, No.2 (1990),
pp. 109-119.

26. Schoemaker, PJ.H. "Strategy, Complexity, and Economic Rent" Management
Science, Vol. 36 (1990), pp. 1178-1192.

27. Siehl, C. and Martin, J. "Organizational Culture: A Key to Financial Performance?"
In B. Schneider (Ed.), Organizational culture and climate. San Francisco: Jossey-Bass
(1990), pp. 241-281.

28. Tannenbaum, A.S. "Control Structure and Union Function." American Journal of
Sociology, Vol. 61 (1956), pp. 536-545.

29. Vandenbrook, G. (Ed.). Less is More: The Art of VoluntaIy Poverty. New York:
Harper & Row (1978).

30. Walton, R. Innovating to Compete. San Francisco: Jossey-Bass (1987).


	Why Good Things Never Seem to Last: A Dialectic Perspective for Long-Term Competitive Advantage