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    Resource Based View

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    Rodric Marbaniang
    The document provides an overview of the Resource-Based View (RBV) of competitive advantage. It discusses three traditional perspectives on firm strengths and weaknesses, and describes the RBV as the dominant theory. The RBV focuses on a firm's internal resources and capabilities as the source of competitive advantage, rather than external factors. It defines resources as financial, physical, human, and organizational capital. The document also outlines Barney's VRIO framework for assessing whether resources can provide sustained competitive advantage based on their value, rarity, imitability, and the firm's organization.

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    Resource Based View

    Uploaded by

    Rodric Marbaniang
    791 views12 pages
    The document provides an overview of the Resource-Based View (RBV) of competitive advantage. It discusses three traditional perspectives on firm strengths and weaknesses, and describes the RBV as the dominant theory. The RBV focuses on a firm's internal resources and capabilities as the source of competitive advantage, rather than external factors. It defines resources as financial, physical, human, and organizational capital. The document also outlines Barney's VRIO framework for assessing whether resources can provide sustained competitive advantage based on their value, rarity, imitability, and the firm's organization.

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    The document provides an overview of the Resource-Based View (RBV) of competitive advantage. It discusses three traditional perspectives on firm strengths and weaknesses, and describes the RBV as the dominant theory. The RBV focuses on a firm's internal resources and capabilities as the source of competitive advantage, rather than external factors. It defines resources as financial, physical, human, and organizational capital. The document also outlines Barney's VRIO framework for assessing whether resources can provide sustained competitive advantage based on their value, rarity, imitability, and the firm's organization.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    791 views12 pages

    Resource Based View

    Uploaded by

    Rodric Marbaniang
    The document provides an overview of the Resource-Based View (RBV) of competitive advantage. It discusses three traditional perspectives on firm strengths and weaknesses, and describes the RBV as the dominant theory. The RBV focuses on a firm's internal resources and capabilities as the source of competitive advantage, rather than external factors. It defines resources as financial, physical, human, and organizational capital. The document also outlines Barney's VRIO framework for assessing whether resources can provide sustained competitive advantage based on their value, rarity, imitability, and the firm's organization.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 12

    Resource-Based View (RBV) of Competitive Advantage

    Learning Objectives: The RBV has become the dominant theory in strategic management. Our main interests are in understanding (1) the theoretical bases of the RBV, and (2) how managers might apply this framework in their pursuit of competitive advantage.

    Prior to RBV -- Three Traditional Perspectives on Firm Strengths and Weaknesses


    1. Theories of distinctive competence

    General managers their decisions have great impact Pros high appeal and validity Cons positive traits are ambiguous Institutional leadership - creates vision, organization and structure Pros intuition, strong appeal Cons sr. managers not only source of advantages

    Three Traditional Perspectives on Firm Strengths and Weaknesses


    2. Ricardian Economics

    Little role for management Original, indestructible gifts of nature (land) Inelastic supply function High quality factors of production quantitative, testable theory numerous resources are inelastic natural shift in demand curve other contributing factors

    Pros: Cons:

    Three Traditional Perspectives on Firm Strengths and Weaknesses


    3. Penroses Theory of Firm Growth

    administrative framework bundle of productive, heterogeneous resources


    Pros: Cons: introduced heterogeneity, broad definition of productive resource deemed important, but limited in scope

    Other theories of the firm Population Ecology Transaction cost Agency theory

    Firm Resources and Sustained Competitive Advantage According to J. Barney


    Relationship between traditional SWOT analysis and RBV models
    Internal Analysis Strengths Weaknesses External Analysis Opportunities Threats

    Resource-based model

    Environmental models

    What Determines Profitability of a Firm?

    Resource Based View of the Firm


    Dominant theoretical perspective Resources, capabilities, competencies may be more

    important than industry effects


    Assumptions

    Resource heterogeneity Resource immobility Firms are bundles of productive resources Financial capital Physical capital Human capital Organizational capital

    Resource Based View of the Firm: Some Definitions


    Firm resources Competitive advantage Sustained competitive advantage

    RBV Model:

    Value
    Heterogeneity Immobility Rare Imitability Substitutable VRIS or VRIO ?

    Sustained Competitive advantage

    Discovering Sustained Competitive Advantage: The VRIO Framework


    Value when resources and capabilities enable the firm to

    respond to threats and opportunities


    Rarity when resource is controlled by a small number of

    competing firms
    Imitability the degree that the resource can be duplicated

    or substituted unique history causal ambiguity (numerous small decision) social complexity Organization how the firm is structured, organized and managed to exploit valuable, rare and costly to imitate resources.

    Applying the VRIO Framework


    Costly to Imitate -Competitive Implication * Disadvantage Economic Performance Below Normal

    Valuable No

    Rare --

    Yes
    Yes Yes

    No
    Yes Yes

    -No Yes

    Parity
    Temporary Advantage Sustained Advantage

    Normal
    Above Normal Above Normal

    Assumes firm is organized to exploit resource

    Some Examples

    Applying the VRIO Framework: Some Examples

    Telephone systems ? Formal strategic planning systems ? Information processing systems ? Firm reputation ? Firm culture ?

    Strategy Implications of the Resource-based View


    Broader responsibility for competitive advantage Better to exploit firms existing valuable, rare and costly to

    imitate resources, rather than mimic other successful firms Relative cost of difficult to implement strategy should be compared to its value Socially complex resources can be source of competitive advantage Firms structure, control systems and compensation policies should change if they conflict with firm resources or capabilities

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