RESOURCE-BASED VIEW
Resource-Based View (RBV) or Resource-Based Theory (RBT) argues that firms’ ability to
have a sustained competitive advantage stems from possession of the certain kind of
resources. By highlighting the role of internal resources, it distinguishes itself from Industrial
Organization theory (IO; e.g., Porter, 1980), which sees the source of competitive advantage
in privileged market position. RBV is arguably the most prominent strategic management
theory in the period of ’90s-’00s.
Keywords: resource-based view; resources; competitive advantage; dynamic capabilities; core
rigidities
THE THEORY
RBV sees the firm as a bundle of resources; the resources are tangible and intangible assets
tied semi-permanently to the firm (Wernerfelt, 1984). The firm “…is said to have a competitive
advantage when it is implementing a value creating strategy not simultaneously being
implemented by any current or potential competitors,” (Barney, 1991: 102). However, it is a
sustained competitive advantage that is of main interest to RBV scholars – and the
sustainability stems from the inability of competitors to duplicate benefits of the strategy over
time (Barney, 1991).
The possession of resources enables the firm to have a sustainable competitive advantage
that is a source of the long-term above-average returns. In order to bring it, resources need to
have the following properties, often abbreviated as VRIN (Barney, 1991): (i) must be valuable
– lead to improvements in efficiency and effectiveness; (ii) must be rare – not possessed by a
large number of existing or potential competitors; (iii) must be imperfectly imitable – cannot be
fully copied; (iv) must be non-substitutable – cannot be substituted by another resource. Later
on, Barney (2010) changed the acronym to VRIO by merging requirements of imperfect
imitability and non-substitutability of resources and adding the requirement of organization (O)
being able to exploit the resources. The ability of firms to deploy resources is another core
consideration of the theory (Amit and Schoemaker, 1993) important enough to be distinguished
from other VRIN/VRIO resources.
EXTENSIONS AND BOUNDARIES
Arguably, the most prominent extension of RBV is dynamic capabilities. The core RBV does
not explain the sustainability of competitive advantage under rapid and uncertain change of
the environment. Teece, Pisano, and Shuen (1997: 516) argue that the source of the
sustainability lies in dynamic capabilities by which firms “…integrate, build, and reconfigure
internal and external competences to address rapidly changing environments”. Therefore,
dynamic capabilities counter core rigidities of the firm (Leonard-Barton, 1992), i.e., currently
inappropriate resources that may have been VRIO in history, but now inhibiting the
development of the firm.
Eisenhardt and Martin (2000) note that while particular manifestations of dynamic capabilities
are diverse, they share commonalities and exhibit a high level of equifinality and substitutability
across firms. Therefore, dynamic capabilities are necessary, but not sufficient condition for
creating a sustainable competitive advantage. Dynamic capabilities correspond to specific
processes such as product development, alliancing and strategic decision-making (Eisenhardt
and Martin, 2000). Therefore, much research have been done in the corresponding fields
before the term itself was coined by Teece, Pisano, and Shuen (1997).
EMPIRICAL APPLICATIONS
While RBV inspired much theoretical and empirical research, its propositions are only rarely
directly tested. A notable exception is Newbert (2008) who shows that value and rareness of
resources are related to the firm’s competitive advantage that is by itself related to firm
performance. The wealth of empirical research using a number of qualitative and quantitative
methods combined with sometimes too abstract conceptualization and a broad array of
foundational papers lead to a high variety of research outcomes facing a number of issues
(Armstrong and Shimizu, 2007).
FURTHER READING
Armstrong and Shimuzu (2007) – review on empirical research in RBV field.
Barney (1991) – seminal conceptual paper on a sustained competitive advantage.
Barney, Ketchen, and Wright (2011) – paper summarizing the key development of RBV until
2011.
Eisenhardt and Martin (2000) – the other foundational paper on dynamic capabilities.
Teece, Pisano, and Shuen (1997) – foundational paper on dynamic capabilities.
REFERENCES
Amit, Raphael, and Paul J. H. Schoemaker. 1993. “Strategic Assets and Organizational Rent.”
Strategic Management Journal 14 (1): 33–46.
Armstrong, Craig E., and Katsuhiko Shimizu. 2007. “A Review of Approaches to Empirical
Research on the Resource-Based View of the Firm.” Journal of Management 33 (6): 959–86.
Barney, Jay. 1991. “Firm Resources and Sustained Competitive Advantage.” Journal of
Management 17 (1): 99–120.
———. 2010. Gaining and Sustaining Competitive Advantage. 4 edition. Upper Saddle River,
NJ: Pearson.
Barney, Jay B., David J. Ketchen, and Mike Wright. 2011. “The Future of Resource-Based
Theory: Revitalization or Decline?” Journal of Management 37 (5): 1299–1315.
Eisenhardt, Kathleen M., and Jeffrey A. Martin. 2000. “Dynamic Capabilities: What Are They?”
Strategic Management Journal 21 (10–11): 1105–21.
Leonard-Barton, Dorothy. 1992. “Core Capabilities and Core Rigidities: A Paradox in Managing
New Product Development.” Strategic Management Journal 13 (S1): 111–25.
Newbert, Scott L. 2008. “Value, Rareness, Competitive Advantage, and Performance: A
Conceptual-Level Empirical Investigation of the Resource-Based View of the Firm.” Strategic
Management Journal 29 (7): 745–68.
Porter, Michael E. 1980. Competitive Strategy: Techniques for Analyzing Industries and
Competitors. New York: Free Press.
Teece, David J., Gary Pisano, and Amy Shuen. 1997. “Dynamic Capabilities and Strategic
Management.” Strategic Management Journal 18 (7): 509–33.
Wernerfelt, Birger. 1984. “A Resource-Based View of the Firm.” Strategic Management Journal
5 (2): 171–80.