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THE STUDY OF ISOLATING MECHANISMS AS FIRM’S SUSTAINABLE
COMPETITIVE ADVANTAGES
Yi-Pei Li, National Dong Hwa University, Taiwan, pn1880@ms23.hinet.net
Yuh-Yuan Tsai, National Dong Hwa University, Taiwan, yytsai@mail.ndhu.edu.tw
ABSTRACT
Isolating mechanisms can create barriers to impede competitors from imitating resources, capabilities and strategies. The purpose of this study is to define key characteristics that will contribute to effective isolating mechanisms and find out a typology of effective isolating mechanisms. This study identified two types of isolating mechanisms, competitive and customers-based isolating mechanisms. And examples of normative strategies are provided for each type of isolating mechanisms to facilitate their application.
Key words: Competitive advantage, Competitive isolating mechanisms, Customer-based isolating mechanisms
INTRODUCTION
The concept of isolating mechanisms has been developed in the literature to explain barriers that firms can establish to avoid imitation by competitors (Grant, 2005; Mahoney and
Panidan, 1992). Isolating mechanisms can create barriers to impede competitors from imitating resources, capabilities and strategies. Isolating mechanisms are also instrumental in influencing industry dynamics, as they provide competitive barriers to imitation for new strategies, adopted in response to environment changes ( Segars and Grovers, 1995). Through the establishment of isolating mechanisms, the firms can sustain their competitive advantage and performance. Therefore, they are a key for superior performing firms.
Mahoney and Pandian(1992) had identified a wide range of isolating mechanisms from the resource-based view, mainstream strategy, organizational economics and the industrial organization literature. Although the authors recognize that there are many organizational

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