The resource-based approach is an emerging framework that has stimulated discussion between scholars from three research perspectives. First, the resource-based theory incorporates traditional strategy insights concerning a firm's distinctive competencies and heterogeneous capabilities. The resource-based approach also provides value-added theoretical propositions that are testable within the diversification strategy literature. Second, the resource-based view fits comfortably within the organizational economics paradigm. Third, the resource-based view is complementary to industrial organization research. The resource-based view provides a framework for increasing dialogue between scholars from these important research areas within the conversation of strategic management. Resource-based studies that give simultaneous attention to each of these research programs are suggested.

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The resource-based view within the conversation of strategic management

The management of resources and the resource of management

An Assessment of Resource-Based Theorizing on Firm Growth and Suggestions for the Future

This paper contains a review of alternative theories which have been developed in order to explain growth and change in the small manufacturing firm. Models of small-firm growth derived within the industrial economics literature are evaluated together with stage models of growth and stochastic models. Social and psychological perspectives on growth are reviewed and the spatial dimension is also considered. We argue that most previous theories of small-firm growth place too little emphasis upon the difficulties which small owner-managed firms have in meeting the competitive requirements of the marketplace.

Alternative Theories of Small-Firm Growth: A Critical Review:

We examine the relationship between growth along the product and international dimension in the short run. We argue that while the presence of fungible intangible resources and economies of scope may create opportunities for a firm to expand along both dimensions, the effect of short- run constraints may lead to a trade-off and a negative association between the two dimensions. In addition, we suggest that rather than being independent, decisions concerning the extent of growth along the two dimensions are likely to be made simultaneously and endogenously by firms after taking into consideration the availability of various resources. We test these propositions by observing a sample of 1,299 firms over the period of 1993–1997. Our results show strong evidence of endogeneity and a negative association between growth along the two dimensions. These findings provide important support for theories of firm growth that have long held that firms are limited in the number of opportunities they can exploit in the short run by various constraints. Copyright © 2008 John Wiley & Sons, Ltd.

The relationship between product and international diversification: the effects of short-run constraints and endogeneity

In the literature on the growth of firms, two factors on the supply side have received great emphasis. The first factor is economies of scale. Where economies of scale are present, growing firms reap greater profits and command the resources needed for further growth. In addition, growth is also induced for the profit-maximizing firm by the prospect of still higher profits. The second factor is the group of organization parameters constraining growth (Penrose 1959). These parameters are related to the history of the firm and in general cause a fast-growing firm in one period to slow down in the next. Evidently the actual growth of firms is partly explained by the balance of these two factors. More specifically, it may be hypothesized that the constraint by organization parameters is reflected by a negative correlation between the growth rates of firms in successive time periods. The negative correlation, however, is expected to be weaker in those industries where economies of scale are large. The objective of the present paper is to test empirically this hypothesis at the plant level, focusing on the intraplant basis of organization parameters and economies of scale. It turns out that the more important impact of economies of scale on growth of plants is indirect. Plants of different sizes have different input structures and are therefore affected in different ways by the secular changes in the relative prices of inputs and in technology. With this indirect factor taken into consideration, a positive relationship is found between the correlation of growth rates of plants in successive time periods and economies of scale. However, the implications of economies of scale on the growth behavior of plants were more than offset by the opposite impacts of organization parameters. As a consequence, rapidly growing plants in one period are compelled to slow down their growth

T. Y. Shen

Papers

Economies of Scale, Penrose Effect, Growth of Plants and Their Size Distribution