Resource Based View

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Resource Based View
Resource based view focuses on the resources and capabilities possessed by the firm to analyze the profitability and value (Wernerfelt, 1984, Barney, 1986, Makhija, 2003). Unlike to traditional strategic view, which considers the firm in terms of competitive environment, resource based view offers the assumption that how to out perform competitors based upon firm-specific resources and capabilities (Das and Teng, 2000). Wernerfelt (1984) gave the definition of resource as tangible and intangible assets that tied with the firm semipermanently. Grant (1991) considered resources as inputs available for firms in open markets to use and customize. Because of the general availability of resources, it is critical to possess firm-specific capacity to identify, develop and deploy key resources to lead to core competences (Fahy, 2000). According to resource based view theory, not all resources are equally important to the firm to obtain competitive advantage, and the key determents are: rareness, low tradability, inimitability, non-substantiality, durability and matching with strategic industry factors (Grant, 1991; Amit and Schoemaker, 1993; Barney, 1991; Fahy, 2000). The capacity of allocating and developing key recourses effectively can be viewed as the firm’s capability (Amit and Schoemaker, 1993), and the development of these capabilities is major task of strategic management (Fahy, 2000). According to Barney’s (1991) argument, resource based view emphasizes on the firm’s capabilities including firm-specific key resources, organizational business process and technological knowledge that allow effectiveness of strategic management. Strategic abilities, or core competences as Prahalad and Hamel (1990) believe, are borne out of a set of attributes that an organization possesses which allows it to achieve this competitive advantage having built on its effective and efficient use of its resources and capabilities. The benefits of identifying core...
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