Notesale: Turn your study into money

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Internal analysis: resource-based view
RBV is an approach to achieving competitive advantage that emerged after the major
work published by Jay Barney in 1991
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It examines the link between firm resources
and sustained competitive advantage
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Barney (1991) states that firm resources include all assets, capabilities, organizational
processes, firm attributes, information, knowledge controlled by a firm that enable the
firm to conceive of and implement strategies that improve its efficiency and
effectiveness
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Firm resources can be classified into three categories: psychological capital
resources, human capital resources and organizational capital resources
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Moreover, a firm`s capabilities are the firm`s ability to use resources to achieve a desired
result
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The roots of many capabilities lies in the unique skills and
knowledge of a firm’s employees and the functional expertise of those employees
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Furthermore, a 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
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According to Barney not all firm resources hold the potential of sustained competitive
advantages
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Valuable Resources
Firm resources can only be a source of competitive advantage or sustained competitive
advantage when they are valuable
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Firm
attributes may have the other characteristics that could qualify them as sources of
competitive advantage (such as rareness or inimitability) but these attributes only
become resources when they exploit opportunities or neutralize threats in a firm’s

environment
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Thus,
these environmental models help specify which firm attributes can be considered as
resources
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If a
particular valuable firm re- source is possessed by large numbers of firms, then each of
these firms have the capability of exploiting that resource in the same way, thereby
implementing a common strategy that gives no one firm a competitive advantage
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if a firm’s valuable resources are absolutely unique, those resources will generate at
least a competitive advantage and may have the potential of generating a sustained
competitive advantage
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The resource-based view asserts that the ability to acquire and exploit some resources
depends upon their place in time and space
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Moreover, resources are imperfectly inimitable when causal ambiguity exists
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In the face of such causal ambiguity, imitating firms cannot
know the actions they should take in order to duplicate the strategies of firms with a
sustained competitive advantage
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When competitive advantages are based in such
complex social phenomena, the ability of other firms to imitate these resources is
significantly constrained
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Therefore, these socially
complex re- sources add value to a firm
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Two
valuable firm resources are strategically equivalent when they each can be exploited
separately to implement the same strategies
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However, if there
are equivalent firm resources, other competing firms can implement the same strategy
by using equivalent resources
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Thus, thanks to this framework we can formulate strategies that match an organisation’s
internal resources and capabilities to the external environment
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If a fit occurs, then the organisation
will likely be able to generate a competitive advantage that will hopefully be sustainable
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It is said that managers have real
problems identifying VRIO resources in practice
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Therefore, the RBV requires
further elaboration to explain the link between the management of resources and the
creation of value
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Moreover, they state the firm’s external environment on managing resources need to
be examined and that the RBV does not take into account the external environment
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All in all, these statements suggest that possessing valuable, rare, inimitable, and non
substitutable resources is a necessary but insufficient condition for value creation
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