Integrating Resource-Based Theory in a Practice-Relevant Form Paul Knott

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Integrating resource-based theory
in a practice-relevant form


Paul Knott
College of Business and Economics, University of Canterbury, Christchurch, New Zealand


Purpose – This paper aims to address the limited development of techniques to analyze firms’ internal sources of competitive performance. It seeks to enhance the contribution of the widely diffused value-rarity-imitability-organisation (VRIO) model to practical strategy making. Design/methodology/approach – The paper draws on the resource-based literature to assemble an integrated set of steps that evaluate a firm’s resources and competence. Findings – The paper proposes an expanded version of the VRIO model that represents resource and competence as a conditional outcome from attributes and asymmetries present in the firm. It shows how the conditions convert asymmetries between weaknesses, missed opportunities, rigidities and resources.

Research limitations/implications – By synthesising resource-based theory in a practice-relevant form, the paper delineates a concrete set of practices that relate to firms’ dynamic capability to manage resources and competence.

Practical implications – The paper details an approach to resource and competence analysis that leads directly to decisions about how a firm can manage the resources in question. The model gives a central role to the conditions under which a firm’s attributes give rise to a resource or competence, and hence suggests active management of these conditions.

Originality/value – The paper presents resource-based theory in a form that focuses on the doing of strategy, in contrast to the traditional focus of this literature. Keywords Resource management, Corporate strategy, Competitive strategy, Performance management Paper type Conceptual paper

One of the critical tasks in strategic analysis is for managers to understand the relationship between the resources they control and the performance of the firm. Strategy courses reflect this by giving prominent place to techniques and theories that attempt to structure this analysis. Prominent amongst these is the resource-based view of the firm (Wernerfelt, 1984, Barney, 1991). From the resource-based literature, the value-rarity-imitability-organisation (VRIO) technique (Barney, 2002) has become the most widely advocated method for assessing a particular firm’s resources. In common with other strategy tools, this technique originated in theory development (Barney, 1991) and not initially as a tool for practical application. Subsequent development as a means of understanding a firm’s resources (Barney, 2002) has helped VRIO to diffuse widely, but it is not clear that this has fully addressed the perceived imbalance in techniques available for the resource and market aspects of strategic analysis (Wernerfelt, 1995). This paper considers resource analysis from the perspective of the doing of strategy, or strategy-as-practice, centred on how managers undertake strategy activity (Whittington, 1996). In this perspective, strategy tools such as VRIO analysis represent one of the influences managers can draw on when carrying out strategy-making

Journal of Strategy and Management
Vol. 2 No. 2, 2009
pp. 163-174
q Emerald Group Publishing Limited
DOI 10.1108/17554250910965317



episodes (Whittington, 2006). Usually, managers use tools only as a guide or as a starting point for an activity. Often they use only parts of tools, and adapt them to suit their local needs (Jarzabkowski and Wilson, 2006). Surveys of managers show that core competencies remain popular as a concept (Rigby and Bilodeau, 2007). It is less clear that firms use associated analysis techniques such as VRIO. Teaching experience suggests that this technique has practical limitations in its...
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