Asia Pacific Journal of Management, 19, 467–488, 2002 c  2002 Kluwer Academic Publishers. Manufactured in The Netherlands. Competitive Advantages of the Latecomer Firm: A Resource-Based Account of Industrial Catch-Up Strategies JOHN A. MATHEWS Macquarie Graduate School of Management, Macquarie University, Sydney NSW 2109, Australia Abstract. The resource-based view of the firm provides a satisfactory account of how firms go about sustaining their existing competitive advantages, but it is less successful in accounting for how firms create such advantages in the first place, or overcome incumbent advantages, when the firms start with few resources. The paper utilizes the case of latecomer firms from the Asia-Pacific region breaking into knowledge-intensive industries such as semiconductors, to illustrate the issues involved and the resource-targeting strategies utilized. This results in a strategic theory of the overcoming of competitive disadvantages through linkage, resource leverage, and learning. The dynamic capabilities of such firms are enhanced through repeated applications of linkage and leverage. The resources strategically targeted are characterized as being those most amenable to such linkage and leverage, namely those that are least rare and most imitable and transferable, i.e. as positive versions of the criteria utilized in the conventional resource-based view of the firm. It is argued that this adaptation of the RBV is potentially of wide applicability, and is the needed amendment that makes it of prime significance in accounting for latecomer success within the conceptual framework of strategic management. Keywords: latecomer firm, resource-based view of strategy industrial catch-up 1. Introduction The issue of world industrial development presents itself as a pressing concern in the 21st century, and one which turns on the successful creation of sophisticated and competitive firms within industrializing countries (UNIDO, 2002). The industrial developmental lit- erature is rich in economic analysis, and has acquired an extensive toolbox of concepts involving the development by firms of technological capabilities, technological effort and industrial upgrading (Enos, 1992; Lall, 2000; Amsden, 2001; Amsden and Chu, 2002; Hobday, 1995a, b). But this literature has yet to make much connection with the literature on strategic management, where an equally rich toolbox of concepts, such as resource lever- age, interfirm linkage and network advantages and the use of combinative capabilities, has been developed to make sense of firms’ competitive behavior (Prahalad and Hamel, 1990; Gulati, 1999; Gulati, Nohria and Zaheer, 2000; Kogut and Zander, 1992). It would seem to be a worthwhile project to explore the extent to which these conceptual frameworks overlap, and to investigate their mutual enrichment. In this paper a first, tentative step is taken in this direction. There are by now many cases of Asia-Pacific firms that have established themselves in high technology sectors such as IT and semiconductors—firms like Acer, Samsung, LG,