For example, some industries rely on a certain manufacturing process. The resource based view has been a common interest for management researchers and numerous writings could be found for same.
Major concern in RBV is focused on the ability of the firm to maintain a combination of resources that cannot be possessed or built up in a similar manner by competitors.
Journal of Management, Vol. Sustainability of such advantage will be determined by the ability of competitors to imitate such resources. Barriers to imitation of resources Resources are the inputs or the factors available to a company which helps to perform its operations or carry out its activities Black and BoalGrant cited by Ordaz et al.
Apple competes with Samsung in tablets and smartphones markets, where Apple sells its products at much higher prices and, as a result, reaps higher profit margins.
Association for Computing Machinery. Further, it explains that the extent to which competitors understand what resources are underpinning the superior performance, will determine the sustainability strength of a competitive advantage.
Journal of Management, 17 1 Other concepts that were later integrated into the resource-based framework have been articulated by Lippman and Rumelt uncertain imitability,Rumelt isolating mechanisms, and Dierick and Cool inimitability and its causes, This focus appears to be closer to contemporary business realities, the latter being more "high-velocity" than the case in previous decades.
Is a resource currently controlled by only a small number of competing firms? The resources and capabilities that answer yes to all the questions are the sustained competitive advantages.
Barney has defined a competitive advantage as a value-creating strategy that is based on resources that are, among other characteristics, valuablep The two critical assumptions of RBV are that resources must also be heterogeneous and immobile. Intangible assets are everything else that has no physical presence but can still be owned by the company.
This ability of a firm to avoid imitation of their resources should be analyzed in depth to understand the sustainability strength of a competitive advantage. A competing firm can enter the market with a resource that has the ability to invalidate the prior firm's competitive advantage, which results in reduced read: Do firms without a resource face a cost disadvantage in obtaining or developing it?
In addition, management must invest in organisational learning to develop, nurture and maintain key resources and competencies. Resources are valuable if they help organizations to increase the value offered to the customers. Also, these authors state that resources, if considered as isolated factors, do not result in productivity; hence, coordination of resources is important.
Either the price of the resource will increase to the point that it equals the future above-average return, or other competitors will purchase the resource as well and use it in a value-increasing strategy that diminishes rents to zero Peteraf,p; Conner,p Further, they mention that except for legislative restrictions created through property rights, other three aspects are direct or indirect results of managerial practises.
Although, having heterogeneous and immobile resources is critical in achieving competitive advantage, it is not enough alone if the firm wants to sustain it.
Brand reputation, trademarks, intellectual property are all intangible assets. They argue on the basis that certain resources, even if imitated, may not bring the same impact, since the maximum impact of the same is achieved over longer periods of time.
Through barriers to imitation incumbents ensure that rivalry firms do not reach a level to perform in a similar manner to them. Because of the implications of the other concepts e.
A question summarizing RBV approach. As an example of resource diversity, consider the following: Dierickx and Cool argue that purchasable assets cannot be sources of sustained competitive advantage, just because they can be purchased. BarneyGeorge S. Resources that can only be acquired by one or few companies are considered rare.
If organizations would have the same amount and mix of resources, they could not employ different strategies to outcompete each other. I think Ford has aligned its companies other policies and procedures for the organization to exploit any valuable, rare and costly to imitate resources.
Rare - not available to other competitors. Although scholars debate the precise categories of competitive positions that are used, there is general agreement, within the literature, that the resource-based view is much more flexible than Porter's prescriptive approach to strategy formulation.
This paradigm shift from the narrow neoclassical focus to a broader rationale, and the coming closer of different academic fields industrial organization economics and organizational economics being most prominent was a particular important contribution Conner,p; Mahoney and Pandian, The resource based view of the firm (RBV) deals with the concept that by understanding the internal resource base and core competences, the management of a business will be able to employ this specific knowledge to create and sustain a competitive advantage.
Resource Based View (RBV) or Resource Based Theory (RBT) was originally introduced by Penrose in and is evolving to date as a management field study in particular on company performance.
Theories such as the resource-based view, dynamic capabilities, and transaction-cost economics appeared, and an avalanche of empirical work quickly followed. The resource based view of firms is based on two main assumptions: resource diversity and resource immobility (Barney, ; Mata et al., ).
According to Mata et. Resource-Based Theory, Dynamic Capabilities, and Real Options A lthough early contributions to resource-based theory and dynamic capabilities came from the discipline of economics (e.g., Demsetz. What is Resource-based view.
1. Supports that resources possessed by organisations allow the obtaining of competitive advantage, and lead to superior long-term performance.
Learn more in: Sustainable Competitive Advantage With the Balanced Scorecard Approach 2.Download