In field of Strategic Management, Resource based view theories (RBV), is a business management tool used to determine that strategic resources available to a company. It stems from the principle that the source of the firms competitive advantage lies in their internal resources, as opposed to their positioning in the external environment. (Barney, 1995). In other word, RBV of the firm predicts that certain types of resources owned and controlled firm have the potential and promise to generate competitive advantage and eventually superior firm performance (Ainuddin et al, 2007). The fundamental principle of the RBV is that the basis of competitive advantage of a firm lies primarily in the application of valuable resources at the firm’s disposal (Warnerfelt, 1984)
The significance of RBV is giving the advantage for a starting point for analysis of the relative strength and weaknesses of firms. In some extent, RBV helps to explain why some resources are more advantage-generating than others and also why resources asymmetries and consequent competitive advantages persist even in competition of open competition. According to Fahy (2000), the essential element of RBV are as follows: (i) sustainable competitive advantage and superior performance; (ii) the characteristics and types of advantage-generating resources, and (iii) strategic choices by management.
In order to implement the RVB theory, there are depending on how the resources fulfill the VRIN criteria, which is Valuable, Rare, Imperfectly Imitable and Non-Substitutable. For Valuable, it about how a resource must enable a firm to employ a value-creating strategy by either outperforming its competitors or reduce its own weaknesses, while Rare means the valuable firm resources possessed by large numbers of competing firms cannot be sources of either a competitive advantage or a sustainable competitive advantage. Imperfectly Imitable... [continues]
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