Renaissance of the Resource Based View: A Conceptual Solution
16 Pages Posted: 27 Feb 2012 Last revised: 4 Mar 2012
Date Written: February 26, 2012
The resource based view has emerged as a significant theoretical perspective in terms of contribution to Strategic management literature. It now is trying to emerge as a perspective which is in a position to develop a theory of the firm. Yet, it faces a serious limitation of poor empirical support for its main postulates. The main reason is poor or an inherent difficulty of operationalization of its main concepts of resources and Sustained competitive advantage. Reviews have suggested certain procedures to be followed for improved operationalization. This paper takes a view that the Field of Strategic management has been plagued by its reluctance to go for processual studies and shows an extreme emphasis on cross sectional studies. Further, it has neglected research of implementation and has shown extreme emphasis on strategy formulation research. These problems have also impacted research of RBV, especially in the operationalization of its concepts.
A resource is an input and can have multiple uses. There is a necessity to identify what use it is put to by linking the specific use to outcomes or utility. The key fact which emerges is that research on RBV has used aggregate outcome indicators and has not linked the use of resources to its utility. This processual disconnect between the inputs and output or performance is the root cause of the inability to operationalize its concepts.
This paper takes a view that the key to proper operationalization of RBV concepts lies in the proper understanding of the definitions of its key concepts. First it takes a Penrosian view that all resources are bundles of services and therefore VRIN qualities are a function of what utility a resource is put to and what is the degree of dependence on it. The key lies in defining the specificity of resources and their linkage to performance and therefore Sustained competitive advantage. It also means use of intervening outcome variables which explain such a linkage while avoiding use of aggregate performance indicators. Thus this paper suggests a way to revitalize the Resource based view.
Keywords: Penrose, productive services, VRIN type resources, operationalization, intervening variables
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