Rbv vs Positioning School

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RBV vs. Positioning School

* RBV may be seen as a response to the positioning school approach

Similarities

* Both see super normal returns as objective
* Both seek sources of competitive advantage
* Managers are rational
* Both models are prescriptive in nature
* There we recognize that much of the underlying concepts have great resemblance. For instance, non-substitutability of a resource in RBV is similar to the threat of substitution in five forces and inimitability of resources in RBV resembles the threat of new entrants in five forces. * Complementary when integrated. Werner felt(1984), Porter’s framework and the resource-based approach constitute the two sides of the same coin

Differences

Competitive advantage is sustained in Porters model when it provides above average returns in the long run. Whereas in RBV it is sustained when competitors have stopped trying to render the competitive advantage.

Porters Positioning school lacks empirical evidence to support his conclusion. In contrast, RBV is central to much empirical research. In middle of 1990s, a four-year longitudinal study of 2800US firms showed that, whilst industry conditions explained 4% of profitability variation, individual firm resources explained 44% of profitability variation across firms (Data Systems International, 2007)

RBV is concerned with Ricardian rents resulting from the scarcity of superior resources. Porter talks of monopoly type rents as the source of performance differential.

They do not have the same unit of analysis. Positioning school considers as industry as a unit while RBV considers a firm as a unit.

The position school says that a firm should position itself within its industry so that it is not in the middle of the five forces. In contrast, the resource based view says that firms should position themselves strategically based on their valuable, rare, inimitable and non-substitutable resources and capabilities rather...
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