Resource Based Value

Topics: Human resource management, Management, Organization Pages: 6 (2096 words) Published: February 25, 2012
Outline the RBV of the firm and show how this new concept offers HR opportunities to be a more strategic function.

The resource-based view (RBV) is a business management tool used to determine the strategic resources available to a company. The fundamental principle of the RBV is that the basis for a competitive advantage of a firm lies primarily in the application of the bundle of valuable resources at the firm's disposal. To transform a short-run competitive advantage into a sustained competitive advantage requires that these resources are heterogeneous in nature and not perfectly mobile. Resource-based view (RBV) emphasizes that if organizational resources are valuable, rare, difficult to imitate and non-substitutable, then organization can sustain competitive advantages. RBV is an important set of spectacles for viewing the strategic problems facing the firm. It focuses on the analysis of internal strengths and weaknesses, to help firms develop valuable resources and erect barriers to imitation of them. Resource will continuously create value to firm and market. Superior firms must have distinctive resources in order to identify themselves in the industry. Basically, resources can be divided into three broad categories which are tangible, intangible and capabilities. Tangible resources refer to physical assets that exist in the balance sheet such as buildings, facilities and machinery. It creates value to firm as in the following example: Toyota have different branches in over 28 countries, this resource helps Toyota serve a wide range of customers across the globe. Intangible resources refer to abstract assets in a firm such things as company reputations, brand names, cultures, technological knowledge, patents and trademarks, and accumulated learning and experience. These assets often lay an important role in competitive advantage (or disadvantage), and firm value. For example: Toyota is well-known for safety and price reasonable reputation after years in the automobile industry. This resource so called “branding” helps Toyota sustain competitive advantage over its competitor. For capabilities, it tends to more complex compare to tangible and intangible assets. They are complex combinations of assets people, and processes that organizations use to transform inputs into outputs. The list of organizational capabilities includes a set of abilities describing efficiency and effectiveness: low cost structure, “lean” manufacturing, high quality production, fast product development. Body

From the Human Resource Management (HRM) perspective, we note that RBV can help a firm to be stronger and competitive as well. Human resources vary in quality across nations and this variability affects the strengths that firms are capable of building. When developing Strategic HRM with RBV, it`s more related to human resource issues such as 1) acquisition of employees, 2) training and development, 3) organization change and development, 4) performance management, 5) rewards system and 6) organizational behavior & theory. 1) Acquisition of Employees

In the era of increasing globalization and the struggle to create sustainable competitive advantages, organizations are continuously evaluating their strategies to ensure that they have the expertise needed to help achieve the mission of the organization. The economic challenges continue to affect organizations’ financial position and subsequently on recruitment and selection strategies. Gatewood & Feild (2001) define selection as a “process of collecting and evaluating information about an individual in order to extend an offer of employment.” Fitz-enz (2002) described ways of measuring the cost per hire, source cost per hire, and interviewing cost. Indeed, these are critical metrics in deciding the cost in acquiring employees. Nevertheless, to fully understand the value and effectiveness of the selection process, one has to analyze the impact of the...
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