Understanding Resource-based View

Resource-based View

A resource-based perspective (Barney, 1991; Penrose, 1959; Wernerfelt, 1984) is a new way of looking at a company through its resources, breaking away from the classic view that describes a company as a production organization with efficiency and effectiveness. Resource is a concept to identify the source of competitive advantages for the survival and growth of a company, and is defined as the totality of material and human assets possessed by a company (Penrose, 1959). In addition, Wernerfelt (1984) defined resources as assets held semi-permanently by a company, and everything that can be a company's strengths and weaknesses. Later, in Barney's (1991) study, resources were categorized into physical resources, human resources, and organizational resources. Thus, a conceptual extension was made.

The resource-based view, which assumes the firm as the totality of resources, is focused on the inside of the firm, and maintaining competitive advantages is the main concern (Eisenhardt and Martin, 2000). Therefore, the heterogeneity and immobility of resources determine the sustainability of competitive advantage (Barney, 1991; Penrose, 1959). Barney (1991) explained the heterogeneity and immobility of resources through the VRIO (Valuable, Rare, Inimitable, Well-Organized) model, and defined sustainable competitive advantages as a company's resources that satisfy all four requirements (VRIO). In addition, Barney's (2001) and Newbert's (2008) studies suggest that the presence or absence of imitability and substitutability determines the sustainability of competitive advantages, while sustainable competitive advantages cannot be found in the perspective of dynamic capabilities.

Schumpeterian theory of the firm > behavioral theory of the firm > resource-based approach > dynamic capabilities framework (Fitness)

Dynamic Capabilities View

The dynamic capability theory that considers the relationship between strategic choice and environmental conditions by breaking away from the static attributes of the resource-based view in the midst of rapidly changing market changes (Barreto, 2010; Helfat et al., 2007; Teece, Pisano and Shuen, 1997; Zahra and George, 2002; Zollo and Winter, 2002) was born. Teece, Pisano and Shuen (1997) defined the dynamic capability as 'the ability to integrate, build, and reconfigure the internal and external capabilities of a company to adapt to rapid environmental changes'. Therefore, dynamic capabilities are based on existing knowledge and experience through the process of sensing (Sense) opportunities and threats in the business environment, seizing opportunities (Seize), and enhancing, protecting, and combining the value of tangible and intangible assets of the company (Reconfigure). It is interpreted as an organization's ability to integrate knowledge flexibly in response to market changes (Leonard-Barton, 1992; Teece, Pisano and Shuen, 1997; Teece, 2007). In the same context, it is a common view among scholars that a competence has its meaning when applied and used, not in itself (Lin et al., 2013; Porter, 1991; Stalk, Evans, and Shulman, 1992). Thus, the dynamic capacity is understood in the 'logic of change' rather than the 'leverage logic' of the resource-based view (Garud and Nayyar, 1994).

References

Barney, J. B. (1991) ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99-120.

Barney, J. B. (2001) ‘Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view’, Journal of Management, 27(6), pp. 643-650.

Barreto, I. (2010) ‘Dynamic capabilities: A review of past research and an agenda for the future’, Journal of Management, 36(1), pp. 256-280.

Eisenhardt, K. M. and J. A. Martin (2000) ‘Dynamic capabilities: What are they?’, Strategic Management Journal, 21(10/11), pp. 1105-1121.

Garud, R. and P. R. Nayyar (1994) ‘Transformative Capacity: Continual Structuring by Intertemporal Technology Transfer’, Strategic Management Journal, 15(5), pp. 365-385.

Helfat, C. E., S. Finkelstein, W. Mitchell, M. Peteraf, H. Singh, D. Teece and S. Winter (eds.) (2007) Dynamic Capabilities: Understanding Strategic Change in Organizations. London: Blackwell.

Leonard-Barton, D. (1992) ‘Core capabilities and core rigidities: a paradox in managing new product development’, Strategic Management Journal, 13(Special Issue), pp. 111-125.

Lin, Hsing-Er, E. F. McDonough III, Shu-Jou Lin and C. Yeh-Yun Lin (2013) ‘Managing the Exploitation/Exploration Paradox: The Role of a Learning Capability and Innovation Ambidexterity’, The Journal of Product Innovation Management, 30(2), pp. 262-278.

Newbert, S. L. (2008) ‘Value, rareness, competitive advantage, and performance: a conceptual level empirical investigation of the resource based view of the firm’, Strategic Management Journal, 29(7), pp. 745-768.

Penrose, E. (1959) The theory of the growth of the firm. New York: John Wiley & Sons.

Porter, M.E. (1991) ‘Towards a dynamic theory of strategy’, Strategic Management Journal, 12(S2), pp. 95-117.

Stalk, G., P. Evans and L. E. Shulman (1992) ‘Competing on capabilities: The new rules of corporate strategy’, Harvard Business Review, 70(2), pp. 57-69.

Teece, D. J. (2007) ‘Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance’, Strategic Management Journal, 28(13), pp. 1319-1350.

Teece, D. J., G. Pisano and A. Shuen (1997) ‘Dynamic capabilities and strategic management’, Strategic Management Journal, 18(7), pp. 509-533.

Wernerfelt, B. (1984) ‘A resource-based view of the firm’, Strategic Management Journal, 5(2), pp. 171-180.

Zahra, S. A. and G. George (2002) ‘Absorptive capacity: a review, reconceptualization and extension’, Academy of Management Review, 27(2), pp. 185-203.

Zollo, M. and S. G. Winter (2002) ‘Deliberate learning and the evolution of dynamic capabilities’, Organization Science, 13(3), pp. 339-351.