Contents lists available at ScienceDirect Journal of Retailing and Consumer Services journal homepage: www.elsevier.com/locate/jretconser Distinctive competencies and competency-based management in regulated sectors: A methodological proposal applied to the pharmaceutical retail sector in Spain Alberto Ibañez Fernandez a, ⁎ , Pedro Reinares Lara b , Monica Cortiñas Ugalde c , Gyanendra Singh Sisodia a a College of Business Administration, Ajman University, United Arab Emirates b Economics Department, Universidad Rey Juan Carlos, Spain c College of Business Administration, Universidad Publica de Navarra, Spain ARTICLE INFO Keywords: Competitive advantage Distinctive competencies Pharmaceutical distribution Small business Retail ABSTRACT To gain the competitive advantage needed to survive and compete in an environment led by large distribution chains, small-scale retailers need to develop distinctive competencies. This is particularly relevant in the case of retail pharmacies, which are already affected by continuously eroding profit margins, increasing liberalization of the sector and growing competition from new non-pharmaceutical outlets. Against this background, this paper contributes to identifying distinctive competencies with the potential to enhance business performance in retail pharmacies. Using structural equation modelling on a sample of Spanish pharmacies, it also establishes relationships between possession of certain distinctive competencies and success in building a sustainable competitive advantage. 1. Introduction The resource and capability theory, which has become a dominant paradigm in the management literature (Lavie, 2006), enjoys widespread theoretic and empirical support, albeit not in the same measure (Newbert, 2007). As part of a firm's resource base (Teece et al., 1997), distinctive competencies are the skills, knowledge and capabilities which, according to Mooney (2007) share the characteristics of being visible to customers, superior to those of rival firms and difficult to imitate. When strategically implemented, these distinctive competencies can lead to sustainable competitive advantages. Nevertheless, as Voigt et al. (2017) suggest in their research, competitive advantages are losing relevance within the current turbulent global economic environment. They propose to add in- novation processes as a way to preserve firms market position. There is an extensive literature on the relationships between dis- tinctive competencies and firm performance (e.g., Snow and Hrebiniak, 1980; Dess and Robinson, 1884; Conant et al., 1990; Martin et al., 2017) and between distinctive competencies and competitive ad- vantage (e.g., Stoner, 1987; Lado et al., 1992; Conant et al., 1993). However, most of the research evidence regarding these relationships relates to large firms and industrial companies (Neil, 1986; Dröge et al., 1994). Despite being one of the basic components of the social and economic structure of most cultures, the small-scale retail sector has rarely been the focus of interest in this respect. Most of the research on the relationships among distinctive competencies, firm performance and competitive advantage have concentrated on medium-sized and large firms (Hitt and Ireland, 1985; Miller et al., 1997). Still fewer attempts have been made to analyze the potential of distinctive competencies to create competitive advantages in regulated retail sectors. Competition is limited in these sectors, the environment is less aggressive, and thus, the incentives for management improvements have diminished (Carman and Dominguez, 2001). However, training and development for owners and employees within the pharmaceutical sector remains a key factor for the firm to survive and succeed (Srinivas and Suresh, 2014). Given the lack of scope in regulated markets for certain competitive advantages, such as the unrestricted siting of outlets, competency-based management and the development of distinctive competencies can still play an important role. Although these theories were adapted in the course of time to apply to small firms, the findings were largely limited and inconclusive, since the approach used to obtain the approximations failed to consider their spe- cific characteristics (Huck and McEwen, 1991). This premise motivates our desire to provide some insight on the key factors of success in small firms and small-scale retailers in particular. From the literature and pre- vious studies, it appears clear that success is closely linked to possessing and securing a competitive advantage (Wagner and Hollenbeck, 2014). This paper therefore focuses on analyzing the potential of distinctive competencies to generate competitive advantages in a strictly regulated environment, such as that of the retail distribution of pharmaceutical https://doi.org/10.1016/j.jretconser.2018.01.007 Received 14 September 2017; Received in revised form 8 December 2017; Accepted 13 January 2018 ⁎ Corresponding author. E-mail addresses: albertoif@yahoo.es, a.fenandez@ajman.ac.ae (A.I. Fernandez), pedro.reinares@urjc.es (P.R. Lara), mcortinas@unavarra.es (M.C. Ugalde), Singh_gis@yahoo.co.in, g.sisodia@ajman.ac.ae (G.S. Sisodia). Journal of Retailing and Consumer Services 42 (2018) 29–36 0969-6989/ © 2018 Elsevier Ltd. All rights reserved. T