A Resource-Based View of the Firm

doi:10.1002/SMJ.4250050207

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A Resource-Based View of the Firm

Journal Article•DOI•

A Resource-Based View of the Firm

Birger Wernerfelt¹•Institutions (1)

University of Michigan¹

01 Apr 1984-Strategic Management Journal (STRATEGIC MANAGEMENT JOURNAL)-Vol. 5, Iss: 2, pp 171-180

TL;DR: In this paper, the authors explore the usefulness of analyzing firms from the resource side rather than from the product side, in analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested.

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Abstract: Summary The paper explores the usefulness of analysing firms from the resource side rather than from the product side. In analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested. These tools are then used to highlight the new strategic options which naturally emerge from the resource perspective.

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Book Chapter•DOI•

Firm Resources and Sustained Competitive Advantage

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Jay B. Barney¹•Institutions (1)

Texas A&M University¹

01 Mar 1991-Journal of Management

TL;DR: In this article, the authors examined the link between firm resources and sustained competitive advantage and analyzed the potential of several firm resources for generating sustained competitive advantages, including value, rareness, imitability, and substitutability.

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46,648 citations

Cites background from "A Resource-Based View of the Firm"

...The conception and implementation of strategies employs various fIrm resources (Barney, 1986a; Hatten & Hatten, 1987; Wernerfelt, 1984)....
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...These assumptions effectively eliminate firm resource heterogeneity and immobility as possible sources of competitive advantage (Penrose, 1958; Rumelt, 1984; Wernerfelt, 1984, 1989)....
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...1 cussion, firm resources (Wernerfelt, 1984 )....
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...However, those attributes of a firm's physical, human, and organizational capital that do enable a firm to conceive of and implement strategies that improve its efficiency and effectiveness are, for purposes of this discussion, firm resources (Wernerfelt, 1984)....
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Journal Article•DOI•

Dynamic capabilities and strategic management

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David J. Teece¹, Gary P. Pisano², Amy Shuen³•Institutions (3)

University of California, Berkeley¹, Harvard University², San Jose State University³

01 Aug 1997-Strategic Management Journal

TL;DR: The dynamic capabilities framework as mentioned in this paper analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change, and suggests that private wealth creation in regimes of rapid technology change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm.

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Abstract: The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.

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27,902 citations

Cites background from "A Resource-Based View of the Firm"

...Each section highlights the strategic performance (Penrose, 1959; Rumelt, 1984; Teece, 1984; Wernerfelt, 1984)....
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...See, for example, Teece (1992) and Link, plements. However, these insights do not flow uniquely from game theory and can be found in the organizational economics Teece and Finan (1996). 7 Accordingly, both approaches are dynamic, but in very literature (e....
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...The resource-based perspective is strongly at odds with this conceptualization. kets (Penrose, 1959; Williamson, 1975; Teece, 1980, 1982, 1986a, 1986b; Wernerfelt, 1984)....
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...…firm-specific capabilities, and developingand others appear to have followed a ‘resourc - based strategy’ of accumulating valuable tech- new ones is partially developed in Penrose (1959), Teece (1982), and Wernerfelt (1984).nology assets, often guarded by an aggressive intellectual property stance....
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...29 As we note in Teece t al. (1994), the conglomerate offers few if any efficiencies because there is little provided by 26 Needless to say, users need not be the current customers of the enterprise. Thus a capability can be the basis for the conglomerate form that shareholders cannot obtain for themselves simply by holding a diversified portfolio of stocks. diversification into new product markets. 27 Indeed, the essence of internal organization is that it is a 30 Owners’ equity may reflect, in part, certain historic capabilities. Recently, some scholars have begun to attempt to measdomain of unleveraged or low-powered incentives. By unleveraged we mean that rewards are determined at the group or ure organizational capability using financial statement data. See Baldwin and Clark (1991) and Lev and Sougiannis organization level, not primarily at the individual level, in an effort to encourage team behavior, not individual behavior....
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Journal Article•DOI•

Dynamic capabilities, what are they?

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Kathleen M. Eisenhardt¹, Jeffrey A. Martin¹•Institutions (1)

Stanford University¹

01 Oct 2000-Strategic Management Journal

TL;DR: Seeks to present a better understanding of dynamic capabilities and the resource-based view of the firm to help managers build using these dynamic capabilities.

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Abstract: This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.

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13,128 citations

Cites background from "A Resource-Based View of the Firm"

...In particular, RBV assumes that firms can be conceptualized as bundles of resources, that those resources are heterogeneously distributed across firms, and that resource differences persist over time (Amit and Schoemaker, 1993; Mahoney and Pandian, 1992; Penrose, 1959; Wernerfelt, 1984)....
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...(e.g., specialized equipment, geographic location), human (e.g., expertise in chemistry), and organizational (e.g., superior sales force) assets that can be used to implement value-creating strategies (Barney, 1986; Wernerfelt, 1984, 1995 )....
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...Based on these assumptions, researchers have theorized that when firms have resources that are valuable, rare, inimitable, and nonsubstitutable (i.e., so-called VRIN attributes), they can achieve sustainable competitive advantage by implementing fresh value-creating strategies that cannot be easily duplicated by competing firms (Barney, 1991; Conner and Prahalad, 1996; Nelson, 1991; Peteraf, 1993; Wernerfelt, 1984, 1995 )....
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...…theoretical framework for understanding how competitive advantage within firms is achieved and how that advantage might be sustained over time (Barney, 1991; Nelson, 1991; Penrose, 1959; Peteraf, 1993; Prahalad and Hamel, 1990; Schumpeter, 1934; Teece, Pisano, and Shuen, 1997; Wernerfelt, 1984)....
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...They are those specific physical (e.g., specialized equipment, geographic location), human (e.g., expertise in chemistry), and organizational (e.g., superior sales force) assets that can be used to implement value-creating strategies (Barney, 1986; Wernerfelt, 1984, 1995)....
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Journal Article•DOI•

The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage

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Jeffrey H. Dyer¹, Harbir Singh¹•Institutions (1)

University of Pennsylvania¹

01 Oct 1998-Academy of Management Review

TL;DR: In this paper, the authors argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: relation-specific assets, knowledge-sharing routines, complementary resources/capabilities, and effective governance.

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Abstract: In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.

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11,355 citations

Cites background from "A Resource-Based View of the Firm"

...The second view—the resource-based view (RBV) of the firm—argues that differential iirm performance is fundamentally due to firm heterogeneity rather than industry structure (Barney, 1991; Rumelt, 1984, 1991; Wernerfelt, 1984)....
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Journal Article•DOI•

The cornerstones of competitive advantage: A resource‐based view

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Margaret A. Peteraf¹•Institutions (1)

Northwestern University¹

01 Mar 1993-Strategic Management Journal

TL;DR: In this article, the underlying economics of the resource-based view of competitive advantage is elucidated, and existing perspectives are integrated into a parsimonious model of resources and firm performance.

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Abstract: This paper elucidates the underlying economics of the resource-based view of competitive advantage and integrates existing perspectives into a parsimonious model of resources and firm performance. The essence of this model is that four conditions underlie sustained competitive advantage, all of which must be met. These include superior resources (heterogeneity within an industry), ex post limits to competition, imperfect resource mobility, and ex ante limits to competition. In the concluding section, applications of the model for both single business strategy and corporate strategy are discussed.

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10,149 citations

Cites background from "A Resource-Based View of the Firm"

...Wernerfelt (1989) proposes some guidelines to help managers identify their critical resources and decide how to apply them....
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...Montgomery and Wernerfelt (1988) use the concept of switching costs to discuss how firmspecific investments may cement the trading relationship between a firm and the owners of factors employed by the firm....
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References

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Open Access

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Book•

The theory of the growth of the firm

[...]

Edith Penrose

01 Jan 1959

TL;DR: In this article, the authors studied the role of large and small firms in a growing economy and found that large firms are more likely to acquire and merge smaller firms in order to increase their size.

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Abstract: Introduction Preface 1. Introduction 2. The Firm in Theory 3. The Productive Opportunity of the Firm and the 'Entrepreneur' 4. Expansion Without Merger: The Receding Managerial Limit 5. 'Inherited' Resources and the Direction of Expansion 6. The Economies of Size and the Economies of Growth 7. The Economics of Diversification 8. Expansion Through Acquisition and Merger 9. The Rate of Growth of Firms Through Time 10. The Position of Large and Small Firms in a Growing Economy 11. Growing Firms in a Growing Economy: The Process of Industrial Concentration and the Pattern of Dominance

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14,137 citations

"A Resource-Based View of the Firm" refers background in this paper

...In the framework above, the optimal growth of the firm involves a balance between exploitation of existing resources and development of new ones (Penrose, 1959; Rubin, 1973; Wernerfelt, 1977)....
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Book•

The Concept of Corporate Strategy

[...]

Kenneth Richmond Andrews

01 Jan 1971

TL;DR: The concept of corporate strategy, The concept of Corporate Strategy, Corporate Strategy as discussed by the authors, Corporate Strategy and Corporate Strategy: The concepts of corporate strategies and corporate strategy in the context of business.

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Abstract: The concept of corporate strategy , The concept of corporate strategy , کتابخانه دیجیتال و فن آوری اطلاعات دانشگاه امام صادق(ع)

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3,660 citations

Book•

Positioning: The Battle for Your Mind

[...]

Al Ries, Jack Trout

01 Jan 1981

TL;DR: In Positioning, a company creates a position' in the prospect's mind, one that reflects the company's own strengths and weaknesses as well as those of its competitors.

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Abstract: Positioning, a concept developed by the authors, has changed the way people advertise. The reason? It's the first concept to deal with the problems of communicating in an overcommunicated society. With this approach, a company creates a position' in the prospect's mind, one that reflects the company's own strengths and weaknesses as well as those of its competitors. Witty and fast-paced, this book spells out how to position a leader so that it gets into the mind and stays there, position a follower in a way that finds a hole' not occupied by the leader, and avoid the pitfalls of letting a second product ride on the coattails of an established one. Revised to reflect significant developments in the five years since its original publication, Positioning reveals the fascinating case histories and anecdotes behind the campaigns of many stunning successes and failures in the world of advertising.

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1,224 citations

Book•

Economies of scope

[...]

John C. Panzar

01 Jan 1981

TL;DR: In this article, the authors define the conditions for the formation of multiproduct firms in perfectly competitive markets and show that the existence of a quasi-public input is a necessary and sufficient condition for the creation of such firms.

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Abstract: Several years ago we coined the term "economies of scope" to describe a basic and intuitively appealing property of production: cost savings which result from the scope (rather than the scale) of the enterprise. There are economies of scope where it is less costly to combine two or more product lines in one firm than to produce them separately. While the concept itself is not completely novel, especially since multiproduct firms are the rule rather than the exception in our economy, we have attempted to make this terminology precise, both in common parlance and in theoretical analyses. Although our definition of economies of scope does not correspond exactly to joint production in the Marshallian sense, we show, in Section I, that it precisely characterizes the conditions which lead to the formation of multiproduct firms in perfectly competitive markets. However, this formal equivalence, in and of itself, provides only limited insight into the tangible forces which make it feasible and profitable to form multiproduct enterprises. In the classic works of John Clark, Eli Clemens, and others, it was suggested that the origins of the multiproduct firm spring from the opportunity to exploit some type of excess capacity. This notion seems to imply that, when there are economies of scope, there exists some input (if only a factory building) which is shared by two or more product lines without complete congestion. Section II examines this issue in general and with a micro model of the technology which explicitly posits the presence of a sharable, "quasi-public" input. Whenever the costs of providing the services of the sharable input to two or more product lines are subadditive (i.e., less than the total costs of providing these services for each product line separately), the multiproduct cost function exhibits economies of scope. Nevertheless, the precise nature of such economies of sharing has profound implications for how the boundaries and scope of the firm may be affected by transactions costs, market failures, and other Coasian considerations. In general, the presence of a quasi-public input mandates the existence of multiproduct firms at some level in the chain of production, even if there are no imperfections in the market for the input itself. However, if the shared-input services are undifferentiated among end uses, multiproduct firms result from the failure of the market to sustain efficient vertical disintegration, as discussed by George Stigler.

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1,015 citations

Book Chapter•DOI•

Industrial Organization, Corporate Strategy and Structure

[...]

Richard E. Caves¹•Institutions (1)

Harvard University¹

01 Jan 1980-Journal of Economic Literature

TL;DR: In this paper, the authors surveyed the relationships between market structure and corporate strategy and found that market structure influences the economic performance of a large firm and the market in which it sells.

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Abstract: Let us start with a sketch of the relationships to be surveyed in this paper. The large firm sells1 in product markets having structural features that constrain its behaviour and define its options. ‘Market structure’ refers to certain stable attributes of the market that influence the firm’s conduct in the marketplace. Significant elements of market structure include the number and size distribution of sellers and buyers, height of barriers to entry and exit, extent and character of product differentiation, extent and character of international competition (if the market is defined no more broadly than the nation), and certain parameters of demand (elasticity, growth rate). The firm holds tangible or intangible semi-fixed assets or skills. The top managers’ perceptions of the market structure and the firm’s strengths and weaknesses jointly determine their choice of corporate strategy (its long-run plan for profit maximization) and organizational structure (the internal allocation of tasks, decision rules, and procedures for appraisal and reward, selected for the best pursuit of that strategy). Both corporate strategy and organizational structure influence the economic performance of the firm and the market in which it sells.2

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521 citations