review RBV

Topics: Strategic management, Management, Entrepreneurship Pages: 5 (1183 words) Published: June 4, 2014

Strategic Management & Business Analysis

“The Critical Assessment of the Resource-Based View of Strategic Management: The Source of Heterogeneity of the firm” Tokuda Akio

Ritsumeikan International Affairs Vol.3, pp125-150 (2005)

Paper Review

The paper in hand is discussing the resource based view (RBV) while highlighting the entrepreneurial view point as a competitive advantage. It also formulize the conceptual framework of the resource based view by contrasting it to with competitive force approach (CFA), as the CFA explores the source of sustainable competitive advantage in the external environment of the firm while the RBV pays attention to the internal resources of the firm.

The main objective of this paper is to amend the RBV from a dynamic point of view & incorporate the theory of entrepreneurship in the RBV of strategic management. As it is insufficient that most researchers have overlooked the entrepreneurial abilities and strategies as a crucial source of competitive advantage of a firm despite that the abilities of the entrepreneur are undoubtedly the principal human resource possessed by a firm. I. Strategy & External Environment of a Firm:

Researches has proven that the firm needs to seek strategic fit between the external environment (threats & opportunities) & the internal resources the firm (strength & weaknesses). In 1980s the CFA presented by Porter conceptual framework was based on the “structure – conduct – performance paradigm” of industrial organization, he examined the question of “how will a firm be able to get a competitive advantage over its competitors?”

The rules of competition and the strategies of a firm are strongly influenced by the CFA. Therefore the strategic issue of firm concerned their competitive positioning. Competitors tend to seek a better position in order to gain a monopoly rent and they avoid being involved into competition or practice pressure by influencing industry structure & their competitors’ behaviour. Porter’s “five force model” for firm to find that positioning: entry barriers, threat of substitution, bargaining power of supplier, bargaining power of buyer and rivalry among industry incumbents. However, surveys could not link the industrial structure with firm performance. As some studies pointed variance in firm performance between industries is substantially less than within industries while other studies pointed that systematic and significant performance differences among firms which belong to the same strategic group within an industry. Accordingly researches suggested that internal resources of a firm are the primary source of performance differences among firms rather than the external environment around the firm. II. Strategy & Internal Resources of a Firm:

RBV suggests that resources possessed by the firm are the primary determinants of its performance and may contribute to a sustainable competitive advantage of a firm. According to Barney resources includes all assets, capabilities, organizational process, firm attributes, information, knowledge, etc. controlled by a firm that enables it to implement strategies that improve its efficiency & effectiveness. Identifying the characteristics of resources that can’t be imitated by competitors was main concern of RBV because if a resource can be easily replicated by competitor even if the resource is a competitive advantage this advantage will not last long. III. Capability as source of the Heterogeneity:

Difference between resources & capabilities is : resources are inputs into production process while capabilities are the capacity for a team of resources to perform some task or activity. So, resources are stocks of available factors that are owned or controlled by the firm, which are converted into final products or services. Capabilities, in contrast, refer to a firm’s capacity to deploy resources, usually in combination, using organizational processes,...
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