A Heterogeneous Resource Based View for Exploring Relationships between Firm Performance and Capabilities

Journal of Modeling in Management, Vol. 2, No. 2, pp. 103-130, 2007

28 Pages Posted: 28 Feb 2012 Last revised: 7 Jun 2016

See all articles by Wayne S. DeSarbo

Wayne S. DeSarbo

Pennsylvania State University

Anthony Di Benedetto

Temple University

Michael Song

Barclays Investment Bank

Date Written: 2007

Abstract

The resource-based view (RBV) of the firm has gained much attention in recent years as a means to understand how a strategic business unit obtains a sustainable competitive advantage. In this framework, several research studies have explored the relationships between resources/capabilities and firm performance. This paper seeks to extend this line of research by explicitly modeling the heterogeneity of such relations across firms in various different industries in exploring the interrelationships between capabilities and performance. A unique latent structure regression model is developed to provide a discrete representation of this heterogeneity in terms of different clusters or groups of firms who employ different paths to achieve firm performance vis-à-vis alternative capabilities. An application of the proposed methodology to a sample of 216 US firms were provided. The paper finds that the derived four group latent structure regression solution statistically dominates the one aggregate sample regression function. Substantive interpretation for the findings is provided. The paper contributes to the understanding of the performance effects of investing in capabilities in the RBV framework.

Suggested Citation

DeSarbo, Wayne S. and Di Benedetto, Anthony and Song, Michael, A Heterogeneous Resource Based View for Exploring Relationships between Firm Performance and Capabilities (2007). Journal of Modeling in Management, Vol. 2, No. 2, pp. 103-130, 2007. Available at SSRN: https://ssrn.com/abstract=2012660

Wayne S. DeSarbo

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Michael Song

Barclays Investment Bank ( email )

5 The North Colonnade
London, Canary Wharf E14 4BB
United Kingdom

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