The key points of the theory are:
1) Identify the firm’s potential key resources
2) Evaluate whether these resources fulfil the following (virn) criterion:
- Valuable - they enable a firm to implement strategies that improve its efficiency and effectiveness
- Rare - not available to other competitors
- Imperfectly imitable - not easily implemented by others
- Non-substitutable - not able to be replaced by some other non-rare resource
3) Care for and protect resources that pass these evaluations
Barney (1991, p101) - “firm resources include all Assets , Capabilities , organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness”
Kay (1999) – “Resources are inputs into a firm's production process, such as capital, equipment, the skills of individual employees, patents, finance, and talented managers. Resources are either tangible or intangible in nature.”
Barney (1991, p102) - A firm achieves Competitive Advantage when it is able to implement a “value creating strategy not simultaneously being implemented by any current or potential competitors”
Preim and Butler (2001) made four key criticisms:
- The RBV is Tautological
- Different resource configurations can generate the same value for firms and thus would not be competitive advantage
- The role of product markets is underdeveloped in the argument
- The theory has limited prescriptive implications
However, Barney (2001) proposed counter-arguments to these.
Further criticisms are:
- It is perhaps difficult (if not impossible) to find a resource which satisfies all of the Barney's VRIN criterion.
- There is the assumption that a firm can be profitable in a highly competitive market as long as it can exploit advantageous resources, but this may not necessarily be the case. It ignores external factors concerning the industry as a whole; Porter’s Industry Structure Analysis ought also be considered.
- Professor Ibrahim Musa Senior Lecturer Strategic Management, Unpublished books archives, The Driving Forces Of the business world page 102 -107
- Peteraf, M. A. (1993), "The cornerstones of competitive advantage: a resource-based view". Strategic Managment Journal, Vol. 14, No. 3, pp. 179-191
- Rumelt, R. P. (1991), "How much does industry matter?". Strategic Management Journal, Vol. 12, No. 3, pp. 167-185
- Teece, D., Pisano, G. and Shuen, A. (1997), "Dynamic Capabilities and Strategic Management". Strategic Management Journal, Vol. 18, No. 7, pp. 509-533
Porter's Five Forces
- Barney, Jay B. (1991), "Firm Resources and Sustained Competitive Advantage". Journal of Management, Vol. 17, No. 1, pp. 99-120
- Barney, Jay B. (2001), "Is the resource-based "view" a useful perspective for strategic management research? Yes". Academy of Management Review, Vol. 26, No. 1, pp. 41-55
- Todino A L. (2001) "Is Resource based view a useful tool in modern business". Journal for strategic management, vol 18 No 1, pp 77-103
|
