Capital asymmetry: A lens for strategic analysis

Abstract

Capital asymmetry exists when an organization has an integrated set of resources that facilitates a competitive advantage. For example, Apple’s tight integration of software and hardware (organizational capital) and reputable brand (symbolic capital) enables it to earn around a 30% profit margin. Asymmetries are created by developing exceptional capital. A capital-based advantage might be emulated, but the successful first mover usually gains a market share increase that is difficult for the imitators to erode. The article identifies the types of capital asymmetries an organization can work toward. The disruptive effects of developing a capital asymmetry appear when we dissect critical transitions in automotive market share and profits via examining Ford, GM, Toyota, BMW, Tesla, and BYD. The automotive industry oscillates between relatively long periods of incremental modification and abrupt radical change when a new asymmetry emerges, and the redistribution of market share and profits persists until the next capital asymmetry arrives. As the automotive industry transitions from internal combustion engines to electric motors, incumbents and newcomers seeking a successful business model can learn from more than a century of capital asymmetry-based competition. Therefore, this article introduces a capital asymmetry analysis grid to assist an enterprise’s search for a competitive capital asymmetry and the planning and implementation of capital asymmetry.