International Strategic Management

Topics: Strategic management, Resource-based view, Business terms Pages: 12 (3639 words) Published: December 5, 2013


Table of Contents

1. Introduction………………………………………………..2

2. Literature review ………………………………………………...3

3. Discussion and Critical Analysis…………………………………11

4. Conclusion ……………………………………………….12

5. References ………………………………………………..13

1. Introduction

This paper is trying to present and combine the basic elements of Resource-based View that are discussed in three academic articles. A resource based view of the firm” by Wernerfelt, “At first, makes an effort to integrate important elements of sustainable competitive advantage from the Recourse-based view into a model of four conditions that underlie the sustained competitive advantage for a firm. It describes the first condition, heterogeneity, based on the notion that firms are fundamentally heterogeneous, in terms of their resources and internal capabilities. Then gives an insight on the second condition of this model, the ex post limits to competition, with a focus on the imperfect imitability and the imperfect substitutability of the resources and suggests isolated mechanisms for the firm to be protected and prevent its resources from imitation. Then, explains the third condition, imperfect mobility, and how recourses which can described as imperfectly mobile can be a source of sustained advantage. The last condition that is described as necessary for the firm to meet so as to gain competitive advantage is ex ante limits to competition. Later in this paper, insight is given in the perception of competitive advantage of the company from the resources view instead of the product view. The resources here are not always treated as the raw materials to make a product, but merely as the strategy that the firm uses in order to be the leader of a market. The strategy could be brand name, machinery, trade contacts, and etc. The resources will bring us into the profitability that the company will get. But, in what position and condition will the company get the profitability in the long-term period? In order to answer that question, literature make use of the Porter’s 5 Forces and the Competitive Advantage theories.

Then, a critical analysis on Barney’s 1991 Journal of Management article and his description of the resource based view is discussed, written by two authors, Priem and Butler. Barney as a defence examines each of the major issues raised by the two authors, and criticizes Priem and Butler’s view where he deems necessary. Barney later acknowledges that “Priem and Butler have provided an important service to the field of strategic management and to resource-based theorists in particular” and have given him a reason to go back and take a second look at an article that he wrote years ago and ask himself what he would do differently of he had another chance to write the same article, while in the same breath insisting that most of their criticisms are unfounded.

2. Literature Review

To begin with, the underlying resource-based model suggests four conditions that must be met by the firm in order to gain a sustainable competitive advantage. Those conditions are: 1.resource heterogeneity,

2.ex post limits to competition,
3.imperfect mobility and
4.ex ante limits to competition.

The first, resource heterogeneity, is present when the resource ties and capabilities, underlying production, are heterogeneous across firms. Firms with such productive factors are able to produce more economically and satisfy better customer desires. Heterogeneity implies the possibility of limited supply of superior resources to be present in an industry. The supply of this kind of resources cannot be expanded rapidly, and they are scarce in a way that they are not capable to satisfy demands for their services. The limited in supply resources are considered as a competitive advantage for a...

References: Barney, J., (2001), Is the Resource-Based View a Useful Perspective for Strategic
Management Research? Yes, Academy of Management Review, Vol.26, No.1, p.41
Wernerfelt, B., (1984), A Resource Based View of the Firm, Strategic Management
Journal, Vol.5, p.171
Margaret A. Peteraf, (Mar., 1993), Reviewed The Cornerstones of Competitive Advantage: A Resource-Based View, Strategic Management Journal, Vol. 14, No. 3 pp. 179-191
Alain Verbeke, International Business Strategy
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