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The Resource-Based View of the Firm

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Abstract

At present, the resource-based view of the firm is perhaps the most influential framework for understanding strategic management. In this editor's introduction, we briefly describe the contribu-tions to knowledge provided by the commentaries and articles contained in this issue. In addition, we outline some additional areas of research wherein the resource-based view can be gainfully deployed.
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Journal of Management
DOI: 10.1177/014920630102700601
2001; 27; 625 Journal of Management
Jay Barney, Mike Wright and David J. Ketchen, Jr. The resource-based view of the firm: Ten years after 1991
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From the special issue editors
The resource-based view of the firm: Ten years after 1991
Jay Barney
a
, Mike Wright
b
, David J. Ketchen, Jr.
c,
*
a
Fisher College of Business, The Ohio State University, Columbus, OH 43210,U.S.A.
b
Center for Management Buy-out Research, Nottingham University Business School, Jubilee Campus,
Nottingham NG8 1BB,England
c
Department of Management, Florida State University, Tallahassee, FL 32306-1110,U.S.A.
Accepted 20 September 2001
Abstract
At present, the resource-based view of the firm is perhaps the most influential framework for
understanding strategic management. In this editor’s introduction, we briefly describe the contribu-
tions to knowledge provided by the commentaries and articles contained in this issue. In addition, we
outline some additional areas of research wherein the resource-based view can be gainfully deployed.
© 2001 Elsevier Science Inc. All rights reserved.
1. Introduction
Ten years ago, Jay Barney edited a special forum in this journal on the Resource-Based
View of the Firm (Barney, 1991). In his article in the special issue, Barney argued that
sustained competitive advantage derives from the resources and capabilities a firm controls
that are valuable, rare, imperfectly imitable, and not substitutable. These resources and
capabilities can be viewed as bundles of tangible and intangible assets, including a firm’s
management skills, its organizational processes and routines, and the information and
knowledge it controls. In the intervening decade, the diffusion of the resource-based view
(RBV) in strategic management and related disciplines has been both dramatic and contro-
versial and has involved considerable theoretical development and empirical testing. As
such, it seemed timely to organize a new special issue that attempts to assess the past
contributions of the RBV as well as presenting forward-looking extensions.
* Corresponding author. Tel.: 1-850-644-7845; fax: 1-850-644-7843.
E-mail address: dketchen@cob.fsu.edu (D.J. Ketchen).
Pergamon
Journal of Management 27 (2001) 625–641
0149-2063/01/$ – see front matter © 2001 Elsevier Science Inc. All rights reserved.
PII: S0149-2063(01)00114-3
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To assess the impact of the RBV since 1991 we adopted a dual approach. First, contrib-
utors to the 1991 issue were asked to revisit their earlier articles and consider developments
over the intervening decade in short commentary papers. All but one of the original authors
was able to provide such an analysis. Second, new full-length papers analyzing the impact
of the RBV on specic subject areas were solicited. These subject areas included Human
Resource Management, Economics, Entrepreneurship, Marketing, and International Busi-
ness. All papers have been double blind reviewed. Our hope is that these papers will have
impacts that parallel those of the original offerings.
The purposes of this introductory paper are (1) to summarize and synthesize the contri-
butions of the articles offered in this issue and (2) to lay out a research agenda for important
areas not covered in the articles.
2. 1991 Revisited
Barneys 1991 article was positioned relative to the structure-conduct-performance (SCP)
paradigm in economics. Revisiting this article, Barney (2001a) discusses the implications of
linking the RBV to the neoclassical microeconomics and evolutionary economics literatures.
Situating the RBV in relation to neoclassical microeconomics would have helped address
issues concerning whether or not equilibrium analysis can be applied in resource-based
analyses, whether the RBV is tautological, and identication of attributes of resources and
capabilities that lead them to be inelastic in supply. Positioning the RBV against evolutionary
economics would have helped develop arguments concerning how routines and capabilities
change over time. Barney points out that all three perspectives have been developed over the
last decade and provide a body of related yet distinct resource-based theoretical tools that can
be applied in different ways in different contexts.
Mahoney (2001) revisits Conners (1991) paper to provide an alternative perspective on
the similarities and distinctions between RBV and transaction cost economics (TCE),
questioning Conners argument that the fundamental difference is that the former focuses on
the deployment and combination of specic inputs while the latter focuses on the avoidance
of opportunism. Mahoney argues that to continue to develop the RBV with the assumption
of no opportunism ignores key issues. With opportunism, the presence of the rm facilitates
superior knowledge transplantation relative to the market because of superior coding, better
control of opportunistic behavior due to the authority relationship and superior information.
RBV and TCE are viewed as complementary because the former is a theory of rm rents
whereas the latter is a theory of the existence of the rm. The set of market frictions that
explain sustainable rm-level rents would be sufcient market frictions to explain the
existence of the rm. The problem of opportunism, however, has also been closely associated
with recent literature on corporate restructuring, to which we return below.
Revisiting their managerial rents model, Castanias and Helfat (2001) present an expanded
classication of managerial resources and explain how it relates to (1) other classications
of managerial abilities such as those dealing with leadership qualities or functional area
experience and (2) the fundamental resource-based characteristics of scarcity, immobility,
and inimitability. The implications of this model for rm performance, appropriability of
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rents from managerial resources, and incentives for managers to generate rents are then
analyzed. The authors argue that managerial resources, which cannot be imitated quickly or
which may have imperfect substitutes, do not by denition generate rents, especially if effort
and motivation are lacking or misdirected. They also suggest that the nature of managerial
resources may need to change with the life-cycle of the rm and the industry for rents to be
generated.
In their 1991 paper, Harrison, Hitt, Hoskisson and Ireland presented evidence that
suggested resource complementarity, not similarity, was associated with higher performance
in acquisitions. Actions to gain complementary resources allow rms to learn new and
valuable capabilities. Their updated paper in this issue reviews more recent research. The
authors demonstrate that this research provides supportive evidence for their original hy-
potheses. They also show that strategic alliances may be an attractive alternative for
accessing complementary assets because the investment or long term commitment is less
than that required in acquisitions. Lockett and Thompson (2001) provide complementary
evidence from the economics literature that supports this aspect of the RBV.
Fiol (2001) revisits her identity-based view of sustainable competitive advantage (SCA)
by questioning the premise that it is possible to achieve a SCA based on any particular core
competency, no matter how inimitable. Fiol argues that in the current, more competitive
environment, the skills/resources of organizations and the way organizations use them must
constantly change to produce continuously changing temporary advantages. Therefore,
superior rents are likely to be derived from the ability to destroy and rebuild specialized,
inimitable resources or routines over time. This view is also seen in the recent work of
Eisenhardt and Martin (2000). One implication of this view is that there is a need to nurture
employeesconstantly shifting situated identications with ever changing organizational
identities grounded in a commitment to an unchanging set of values and outcomes, rather
than a stable fully elaborated culture.
These commentaries offer rare glimpses into the thinking and motivations that led a group
of scholars to propel a literature forward ten years ago. However, how the RBV has affected,
and is likely to affect, other research disciplines is also an important topic of discussion. The
remaining papers in the special issue deal with these topics.
3. The resource based view and five fields of study
3.1. Human resource management
Within the eld of human resource management (HRM), the RBV has made important
contributions in the rapidly growing area of strategic human resource management (SHRM)
(Wright, Dunford & Snell, 2001). The emphasis on people as strategically important to a
rms success has contributed to the interaction and convergence of strategy and HRM
issues. There has been considerable debate over whether HRM practices can provide SCA.
Individual HRM practices may be imitable but HRM systems and routines, which develop
over time, may be unique to a particular rm and contribute to the creation of specic human
capital skills. Employee behavior also forms an independent component of SHRM that
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affects SCA. The authors point out that as yet research has failed to test empirically whether
HRM practices are path dependent, causally ambiguous, or imitable. Similarly, there is a lack
of evidence that HRM practices impact the skills and behavior of the workforce, or that these
factors are linked to performance. Wright et al. provide a preliminary framework that
suggests core competence, dynamic capabilities, and knowledge serve as a bridge between
the emphasis in the strategy literature on who provides sources of competitive advantage and
the focus in the HRM literature on the process of attraction, development, motivation, and
retention of people.
3.2. Economics and finance
Historically there has been a strong link between the disciplines of strategy and econom-
ics, but as Lockett and Thompson (2001) show, explicit citations of key RBV papers have
been low in mainstream economics journals. They suggest that the explicit use of the RBV
in economics has been limited by the problems of causal ambiguity, tautology, and rm
heterogeneity. However, the authors argue that work on the consequences of path depen-
dency on rm behavior builds implicitly on the ideas of the RBV to explain a number of
different economic issues. Lockett and Thompson use the inuence of path dependency as
a unifying theme to examine patterns of diversication and entry, diversication and
performance, corporate refocusing and exit, innovative activity by rms, and industry
evolution in markets with rapidly evolving products. Potential areas for future research
include the interaction of the RBV and agency theory (especially in relation to corporate
governance), the RBV as a dynamic theory, and using the RBV to explain radical change.
Lockett and Thompson argue that the interplay between the RBV and agency theory has
been most important in the literature on corporate restructuring, where the two approaches
are both substitutes and complements. Their review of corporate refocusing studies provides
support for both strategy and governance hypotheses in explaining the phenomenon, includ-
ing support for strategy-governance interaction effects. Lockett and Thompsons arguments
parallels work by Combs and Ketchen (1999) who argue that transaction cost economics
(TCE) and the positive theory of agency have important implications for the RBV.
3.3. Entrepreneurship
Alvarez and Busenitz (2001) argue that the RBV can theoretically inform and extend
current research on entrepreneurship. They suggest that it is through the entrepreneurial
process of cognition, discovery, understanding market opportunities, and coordinated knowl-
edge that inputs become heterogeneous outputs. They attach particular importance to the role
of heuristics-based logic in enabling entrepreneurs to quickly learn about and assimilate the
implications of new changes for specic discoveries. Entrepreneurial opportunities emerge
when certain individuals have insights into the value of resources that others do not.
Entrepreneurial alertness, entrepreneurial knowledge, and ability to coordinate resources are
viewed as resources in their own right. Causal ambiguity is seen as the essence of entre-
preneurship because the entrepreneurs expanding knowledge base and absorptive capacity
through experience and learning are key to achieving a SCA. The authors also suggest that
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social complexity is central to entrepreneurship as it may be essential to the exploitation of
complex technologies and unique to certain types of entrepreneurs and hence difcult to
imitate. From the point of view of the rm, they suggest that the entrepreneur fullls a crucial
role in recognizing the value and opportunities presented by specialist knowledge and
integrating it to create rents.
3.4. Marketing
Srivastava, Fahey and Christensen (2001) argue that marketing scholars have devoted
remarkably little attention to applying the RBV as a frame of reference in advancing
marketing theory or in analyzing core challenges in marketing practice. By the same token,
they suggest that RBV proponents have downplayed the fundamental processes by which
resources are transformed through managerial guidance into something that is of value to
customers. They highlight the importance of the need for far more ne-grained analysis of
the resource-competitive advantage connection by examining the potential contribution of
marketing to the RBV. They suggest that RBV research needs to identify precisely how
customer value in the form of specic attributes, benets, attitudes and network effects is
intended, generated, and sustained. Also, marketing research must address how change in
market-based assets and capabilities contribute to customer value creation or deprecation.
The authors speak to the issue of the implementation and creation of a SCA by identifying
how marketing can shed light on the nature of resources. For example, marketing can help
understand the need for rare resources to be seen in terms of customer needs while
inimitability can be assessed in terms of rivalsimitation capacities and the rms ability to
enhance inimitability through cross-selling and bundling. They suggest that further work is
required to identify and document how particular market-based assets and capabilities
contribute to generating and sustaining specic forms of customer value. There needs to be
particular analysis of the interaction between market-based assets and market-facing pro-
cesses as well as their linkages to customer value dimensions. They also suggest the need for
the RBV and marketing to directly relate marketplace (i.e., customer) changes to the need for
changes in key resources.
3.5. International business
Peng (2001) asserts that the established research areas of multinational corporations
(MNCs) and market entries can be considered to have been enriched by the RBV while three
newer areas (strategic alliances, international entrepreneurship, and emerging market strat-
egies) have been propelled by the RBV. The RBV has helped to specify the nature of
resources required to overcome the liability of foreignness and provided a bridge to inves-
tigate the resources that provide the foundation for product and international diversication.
The RBV literature has also shown that subsidiary capability building facilitates more
knowledge ows within the MNC. There is, however, a need to ensure that subsidiary
managers are sufciently incentivized to undertake capability development.
Signicant international experience by top managers represents rm-specic tacit knowl-
edge that is difcult to imitate. The RBV contributes to foreign entry mode research by
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suggesting that such strategies are pulled by the resource capabilities of rms abroad as well
as being pushed by the rm-specic advantages possessed by the MNC. More recent research
from an RBV perspective casts doubt on the stage theory of internationalization by suggest-
ing that new and small rms may possess resource advantages that enable successful earlier
internationalization. Peng argues there remains a need to pay more attention to process and
implementation related resources in internationalization, especially within cross-border
mergers and acquisitions. With respect to emerging markets, RBV research has been
important in suggesting that local rms are interested in using foreign alliances to acquire
advantages over their domestic rivals, in emphasizing the importance of network ties as an
intangible resource for entrepreneurial start-ups, and in understanding the changing benets
of unrelated diversication as economic institutions develop. Peng argues that in transition
economies there is a need for further research on the problems in developing resource
capabilities by state-owned enterprises (SOEs) and with respect to the problems in attracting
more MNCs to invest in these countries to provide necessary resources.
4. The resource based view: A further research agenda
From the papers summarized above, a number of themes for further research emerge.
Beyond these themes, it is possible to identify several other areas of work that may benet
from incorporation of insights from the RBV. In this section, some of these research
questions are described.
4.1. Resources, dynamic capabilities, and knowledge
A number of papers in this special issue suggest that resources, dynamic capabilities, and
knowledge are closely interlinked. For example, Wright, Dunford and Snell (2001) discuss
the importance of these interrelationships for the bridge between strategic management and
HRM. Fiol (2001) considers these links with respect to the capacity to continually recon-
gure an organizations competitive advantage and concludes that, in some environments,
sustained competitive advantage may not be possible.
These observations are consistent with a growing literature on knowledge and competitive
advantage (e.g., Spender & Grant, 1996). Much of this literature focuses on the role of
dynamic capabilities, that is, specic processes rms use to alter their resource base, as
sources of competitive advantage (Eisenhardt & Martin, 2000). Like Fiol (2001), much of
this literature concludes that competitive advantages can exist in dynamic markets only
because of the ability of rms to continuously change, and that sustained competitive
advantages are not possible in these markets. Some of this work seems to suggest that a
dynamic capabilitiesperspective on competitive advantage contradicts the RBV, espe-
cially as it was developed in the 1991 special issue.
In fact, the logic developed in the 1991 special issue applies as well to rapidly changing
markets and dynamic capabilities as it does to stable markets and resources and capabilities.
Changing the words with which the theory is developed does not change the underlying
theory. Put differently, dynamic capabilitiesare simply capabilities that are dynamic.
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Consider, for example, Eisenhardt and Martins (2000) arguments. First, they suggest that
dynamic capabilities have been widely described in several different industries, and have
even become codied in the form of best practices. This is an empirical assertion that may
vary across industries. However, assuming this assertion is empirically correct, Eisenhardt
and Martin (2000) conclude that these dynamic capabilities, per se, cannot be a source of
competitive advantage. This, of course, is consistent with traditional resource-based logic.
Eisenhardt and Martin (2000, p. 1117) then suggest that the only way these dynamic
capabilities can be a source of competitive advantage is if they are applied sooner, more
astutely, or more fortuitously.Clearly, the ability to apply dynamic capabilities sooner or
more astutelyis itself a capability. Traditional resource-based logic can be used to evaluate
whether this ability can be a source of competitive advantages, sustained or not. That a rm
is more fortuitousin applying its dynamic capabilities is another way of saying that a rm
can be lucky, a conclusion presented in other RBV work (Barney, 1986a), but not highlighted
in the 1991 special issue. All of this is also consistent with traditional RBV logic.
Finally, Eisenhardt and Martin (2000), along with Fiol (2001), conclude that competitive
advantages cannot be sustained in dynamic, rapidly changing markets. These authors suggest
that these environments evolve so quickly that no sustained competitive advantage is
possible. However, Eisenhardt and Martin (2000) specically identify the conditions under
which sustained competitive advantage is possible in these settingswhen a particular rm
applies its dynamic capabilities sooner, more astutely, or more fortuitouslyin making its
strategic choices. Put differently, to the extent that some rms in a rapidly changing market
are more nimble, more able to change quickly, and more alert to changes in their competitive
environment, they will be able to adapt to changing market conditions more rapidly than
competitors, and thus can gain competitive advantage. To the extent that nimbleness, the
ability to change quickly, and alertness to changes in the market are costly for others to
imitate, these abilities can be a source of sustained competitive advantage. This competitive
advantage will continue as long as the ability to be nimble, change quickly, and to be alert
to changes in the market are economically valuable, that is, as long as the competitive
environment continues to change rapidly. Eisenhardt and Martins (2000) example of GE
Capital is only one of numerous rms that seem to be able to sustain competitive advantages
in very dynamic markets. Other examples can be seen in work by Henderson (e.g., Cockburn,
Henderson & Stern, 2000; Henderson & Cockburn, 1994) and others.
Obviously, this does not imply that the ability to deploy dynamic capabilities can be a
source of sustained competitive advantage in all market settings. For example, if a rm has
the ability to gain and sustain competitive advantages in a rapidly changing market and then
the market suddenly becomes stable and unchanging, the ability to be exible is not likely
to be valuable, and thus not a source of competitive advantage. Put more broadly, the value
of a particular set of capabilities must be evaluated in the market context within which a rm
is operating. If that market context changes radically, what were valuable capabilities may
no longer be valuable. Again, all of this is perfectly consistent with traditional RBV logic.
None of this suggests that work on dynamic capabilities is unimportant. Indeed, just the
opposite is true. As several of the papers in this issue suggest, the ability to learn and the
ability to change are likely to be among the most important capabilities that a rm can
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possess. Our understanding of these capabilities is limited and thus these capabilities, and the
way they can generate competitive advantages, deserve a great deal of empirical attention.
4.2. Corporate governance
The linkages between the RBV and corporate governance appear to offer much promise
for further research. Several contributors to this special issue identify such links. Castanias
and Helfat (2001) emphasize the importance of human capital arguments vis-a`-vis more
traditional agency theory arguments concerning corporate governance. Mahoney (2001)
argues that recognition of the problem of opportunism has important corporate governance
implications, because the implementation of a strategy to achieve an SCA is unlikely to
follow automatically (Barney, 2001b). Lockett and Thompson (2001) discuss the links
between RBV and agency theory, while Harrison et al. (2001) point to the importance of
incentivizing managers not to resist resource-enhancing acquisitions. With respect to inter-
national business, Peng (2001) points out issues concerning the monitoring of subsidiary
management. Wright et al. (2001) suggest that mismanagement may mean that human capital
is not deployed effectively.
Clearly, within the context of the RBV, an important question becomes: under what
conditions can corporate governance be a source of sustained competitive advantage? In
much the same way as the dynamic capabilities identied by Eisenhardt and Martin (2000)
that have become institutionalized as best practicesoften cannot, by themselves, be sources
of competitive advantage, it seems unlikely that corporate governance, by itself, can be a
source of competitive advantage. However, experience suggests that some rms are much
more skilled in how they implement otherwise common governance devices, and that these
skills may be heterogeneously distributed across rms (Barney, 2002, p. 216218). The
nature of these complementary skills is not yet well understood (Keasey & Wright, 1993;
Short, Keasey, Wright & Hull, 1999).
While governance, per se, may not be a source of competitive advantage, failure to
implement the correct governance in a situation can lead rms to not fully realize the benets
of the resources they control. Although the necessary resources may be present, a SCA may
not be created where the corporate governance system fails to incentivize and/or monitor
management to undertake the relevant actions.
Governance choices may have a signicant impact on how any rents created through the
use of valuable, rare, costly to imitate, and nonsubstitutable resources are appropriated. Work
in this area has just begun (Coff, 1999). This early work suggests that the bargaining power
of managers may mean that these stakeholders are able to appropriate a disproportionate
share of the rents a rm is able to generate. Alternatively, this payment to managers may
simply reect compensation for the substantial rm-specic investments these stakeholders
make in a rm, compared to other stakeholders (Wang & Barney, 2001). Moreover, such rent
sharing may actually reduce agency conicts between a rms managers and its equity
holders, and thus actually be consistent with the interests of equity holders (Castanias &
Helfat, 1991, 2001).
Within the corporate governance literature there is also considerable debate about the
operation and effectiveness of boards. Boards comprised of managerscronies, with limited
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access to information, infrequent meetings, and low levels of input by outside directors who
may themselves be CEOs of large corporations have all been cited as limitations to the
effectiveness of boards. Various recent proposals have been made for strengthening corpo-
rate boards that aim to overcome some of these problems (Kennedy, 2000; Short et al., 1999).
However, the RBV suggests a number of important research questions about these solutions.
For example, are these proposals designed to only minimize agency conicts between a rm
and its equity holders, or are they designed to help a rm fully realize any economic rents
it has the potential to realize? Minimizing agency costs suggests that a primary goal of any
board is to make information about a rms strategy and strategy execution available to the
market. However, this kind of information sharing may be inconsistent with maximizing the
rent generating potential of a rm. More broadly, are there important differences between the
structure and functioning of a board designed to minimize agency costs, and a board designed
to maximize a rms rent generating potential?
4.3. Management buy-outs and venture capital nancing
As suggested earlier, a particular dimension of corporate governance issues concerns the
generation and distribution of gains. Coff (1999) suggests that where managers are unable to
obtain a share of the gains that reect the contribution of their tacit knowledge, they may seek
to undertake a management buy-out (MBO) that would give them a signicant if not majority
equity stake. Castanias and Helfat (2001) also suggest that where managers are unable to gain
adequate compensation for their skills they may seek to take a rm private. Although
corporations have enhanced equity based compensation mechanisms in recent years (Holm-
strom & Kaplan, 2001), the extent to which these yield sufcient returns to managerial
knowledge is not known. This in turn raises a number of issues. For example, Wright,
Hoskisson, Busenitz and Dial (2000) have drawn attention to the importance of the specic
entrepreneurial skills of managers undertaking management buy-outs. This takes the analysis
of management buyouts beyond the dominant agency cost perspective (Jensen, 1993).
Managers engaging in a buy out also need to agree on a valuation of the business at which
existing shareholders will sell. Studies have indicated the nature of the mechanisms used to
value these kinds of transactions (Manigart et al. 2000, 2001). However, arriving at a
valuation may be problematic when tacit knowledge of managers is signicant. Outside
shareholders are faced with a severe asymmetric information problem, while managers are
in possession of valuable private information. This suggests the need for some form of
contingent valuation mechanism. Research is required to examine the scope of such mech-
anisms in buy-out transactions involving greater or less tacit knowledge on the part of managers.
Despite this asymmetric information problem, MBOs typically involve signicant external
funding. Some have suggested that venture capital investors are well positioned to value
rms when managers have signicant tacit knowledge in a rm (Wright, Hoskisson &
Busenitz, 2001). This too raises issues concerning valuations, the allocation of ownership
stakes between management and venture capital rms and hence potential future gains, and
the need for monitors with specialist monitoring expertise. Manigart et al. (2001) show that,
consistent with the RBV, venture capital rms with specialist skills can both add value as
well as being better placed to control risks. Yet, there remains some concern about whether
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venture capital rms add value in the longer term through their nonnancial assistance
(Steier & Greenwood, 1995).
The development of more entrepreneurial MBOs raises the research challenge of disen-
tangling the value protecting from the value enhancing aspects of venture capitalist involve-
ment. More generally, there is a need for research that examines the extent to which venture
capital rms possess effective specialist skills with respect to the selection of business
opportunities and the best entrepreneurs to exploit those opportunities.
4.4. Institutional environment
The institutional environment in which rms operate may have an important impact on the
strategies they pursue (Oliver, 1997). Peng (2001) emphasizes the importance of institutional
factors in developing versus emerging market contexts, with respect to the resources
involved in internationalization. Hoskisson, Eden, Lau and Wright (2000) identify the role of
the RBV in emerging economies. In former centrally planned economies, attributes of rms
that were resources under the previous regime, such as managerial skills and technology,
may not fulll this role in the transition to a market economy. This raises issues concerning
how rms can acquire the necessary resources and the barriers to doing so. At the same time,
incumbent rms with few resources are vulnerable to entry by foreign rms that do possess
the necessary resources. Joint ventures and alliances with foreign partners may have a role
to play in obtaining the necessary resources (Hitt, Dacin, Levitas, Arregle & Borza, 2000).
However, the process by which local rms can make themselves attractive to potential
foreign partners is less well-understood. Thus, research that details how hostscan develop
resources attractive to MNCs might be quite valuable.
4.5. Entrepreneurship
Much of the focus of RBV research has been on larger rms, yet smaller rms also face
the need to acquire critical resources to create a SCA. Rangone (1999) provides an interesting
RBV perspective on how a small-medium sized enterprise (SME) can develop a SCA based
on detailed analysis of 14 case studies, identifying the importance of three basic capabilities:
innovative capabilities, production capability, and market management capability. However,
although Rangone identies the entrepreneur as a special resource in SMEs, she fails to
develop the attributes of the individuals concerned that may strongly inuence whether the
steps required to achieve a SCA are actually implemented.
The approach adopted by Alvarez and Busenitz (2001) suggests a way to integrate the
crucial role of the entrepreneur with other important resources. Alvarez and Busenitz (2001)
argue that it is important to recognize that entrepreneurs are heterogeneous. Similarly,
Castanias and Helfat (2001) emphasize the importance of the nature of cognitive factors for
human capital, recognizing that not all managers possess the requisite combination or level
of skills to generate rents. A neglected aspect of the heterogeneity of entrepreneurs that may
have implications for the resources they contribute concerns the distinction between novice,
or one-time, entrepreneurs and habitual entrepreneurs, that is those individuals that engage
in multiple entrepreneurial ventures (Westhead & Wright, 1998). This raises important issues
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relating to the extent to which habitual entrepreneurs are able to create greater sustainable
competitive advantage. Do habitual entrepreneurs possess cognitive abilities that enable
them to repeatedly identify and exploit entrepreneurial opportunities? Does learning from
repeated entrepreneurial behavior lead to the identication and exploitation of better
opportunities or do entrepreneurs continue to repeat previous mistakes? In the context of the
emerging view that long-term advantage is infrequently achieved in dynamic markets,
analysis of habitual entrepreneurial behavior may contribute to understanding an important
aspect of the need for dynamic capabilities to achieve new resource congurations that
convey a series of temporary advantages (Eisenhardt & Martin, 2000).
A further emerging dimension of the entrepreneurship area where the RBV may be
applicable concerns the transfer of technology from universities via spin-out rms. Some
universities are considerably more successful at this process than others (Shane & Stuart,
forthcoming). The location of the entrepreneurial resource to identify and exploit opportu-
nities poses particular problems. Academics may develop novel innovations but may not
have the requisite attributes to turn these innovations into rms with a SCA in the market
place. Research has suggested that there is scope for surrogate entrepreneurs from outside
universities to perform this role (Franklin, Lockett & Wright, 2001), yet the process of
identifying and integrating individuals who can address these issues is not well understood.
4.6. Additional areas of work
In addition to strategic management and the academic areas represented in this special
issue, the RBV has implications for other disciplines. For organizational behavior, the RBV
represents an opportunity to link micro-organizational processes to the success or failure of
organizations. While extant RBV research has effectively identied the effects of resources
on outcomes (e.g., Combs & Ketchen, 1999; Miller & Shamsie, 1996), this research has
made much less progress in describing how resources are developed. This is a need that
organizational behavior researchers can help ll. For example, investigations of organiza-
tional citizenship behavior focus on why some employees engage in actions beyond their
normal responsibilities to help the rm prosper (Podsakoff, MacKenzie, Paine & Bacharach,
2000). Investigations of mentoring detail how superiors attempt to aid subordinates directly
and the rm indirectly via transferring tacit knowledge accumulated through years of
experience (Scandura, 1998). These literatures seldom examine the implications of their
focal concept for organizational level outcomes. Yet, their focal concepts hold much promise
for detailing how strong cultures that constitute unique resources can develop (Barney,
1986b). While calls for increased dialogue between scholars in strategic management and
organizational behavior are not new (e.g., Meyer, 1991; Staw, 1991), past calls have not
fostered dramatic exchanges. Perhaps the prospect of untangling key issues in the RBV will
prove enticing to both groups.
Researchers in the eld of ethics and corporate social responsibility have long struggled
to identify if and when a rms approach to social responsibility inuences its bottom line
(McWilliams & Siegel, 2001). The RBV suggests that attention to how a rms ethical
stances shape and are shaped by the rms culture may be fruitful (cf. Barney, 1986b). Russo
and Fouts (1997) analyze corporate social responsibility from a RBV perspective and assert
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that the social performance of rms (especially environmental performance) can constitute
a source of competitive advantage, particularly in high-growth industries. For rms such as
Ben and Jerrys, Johnson & Johnson, and the Body Shop, concern for ethics can become
embedded in a culture in ways that are inimitable. As the diverging track records of these
three rms illustrate, however, a uniquely ethical culture does not necessarily translate into
nancial success. Thus, future researchers might investigate the factors that differentiate
between ethical cultures that also generate sustained excellent performance (e.g., Johnson &
Johnson) and cultures that only provide above average spiritual returns (e.g., Ben and Jerrys).
The RBV also has important implications for the study of management information
systems. Information and communication technologies (ICTs) have exploded in power and
availability over the last quarter century. This has led to increased academic attention on the
issue of whether or not a rm can gain a SCA through deploying ICTs. The available
evidence suggests that ICTs cannot generate rents. Instead, rms often must deploy the most
recent ICTs to simply keep pace with competitors (Powell & Dent-Micallef, 1997). From the
perspective of the RBV, this is not surprising. Technologies that can be readily transferred
should not generate rents. However, the RBV does hint at a potential source of SCA in the
context of ICTs. The interface between skilled users and ICTs might prove to be inimitable.
In other words, an organization highly procient in translating computing power into
knowledge might develop a substantial edge over less skilled competitors.
As these brief discussions illustrate, the RBV has the potential to shed new light on
important dilemmas within a variety of academic endeavors. We are optimistic that the ideas
developed in this special issue will inspire scholars in a variety of elds to capitalize on the
RBVs potential.
4.7. Methodological issues
Although more robust strategic management studies are now emerging (Hoskisson, Hitt,
Wan & Yiu, 1999), a recurrent theme in the RBV literature concerns methodological
challenges (e.g., Miller & Shamsie, 1996; Priem & Butler, 2001). Several papers in this issue
point to methodological problems with RBV. Peng notes that none of the internationalization
studies he reviewed directly measures organizational learning as an intangible resource.
Wright et al. point out that much of the research on the link between RBV and HRM suffers
from serious methodological shortcomings, producing spurious relationships or even reverse
causation. Lockett and Thompson argue that robust large-scale quantitative studies of the
RBV may only be feasible in homogeneous environments, such as regulated industries.
Researchers have struggled to measure resources because many are intangible (Godfrey &
Hill, 1995). Some scholars use archival proxies. For example, Miller and Shamsie (1996)
assessed movie studioscreative resources by tracking the amount of Academy awards won
by each studio. Such proxies allow for large sample empirical investigations, but they are
subject to concerns about construct validity. Indeed, Miller and Shamsie acknowledge that
their proxy could also serve as a performance measure. Given such limitations, Rouse and
Daellenbach (1999) argue that intangible resources should be diagnosed via qualitative
methods. They suggest, for example, that because culture involves tacit knowledge, orga-
nizational members cannot easily communicate cultures role in developing a SCA. Yet
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while techniques such as ethnography and participant observation facilitate rich depictions of
organizational phenomena, they are not adept at generating empirically robust conclusions.
Despite the strengths of each of these approaches, the challenges inherent in measuring
resources have generated concern about the testability of the RBV (e.g., Priem & Butler,
2001). A third approach to assessing resources is emerging that addresses this concern by
building on Godfrey and Hills (1995) suggestion to focus on observables that collectively
shed light on unobservables. Specically, Hult and Ketchen (2001) and Hult, Ketchen, and
Nichols (forthcoming) assess observable variables that collectively reveal an unobservable
resource using the latent construct detection capabilities of structural equation modeling.
This indirect assessment of a higher-order intangible resource ts with the RBVs premises
while facilitating hypothesis testing and effect size estimation.
Given that each of the three approaches to assessing resources has distinct strengths, we
encourage future scholars to craft studies incorporating multiple approaches (cf. Hoskisson
et al., 1999; Jick, 1979). For example, a qualitative study of an intangible resource could
elicit a set of tangible indicators. A large-scale deductive investigation could subsequently
examine a latent construct to ascertain the importance of each indicator under various
contingencies. Beyond the potential value to research, there are practical implications of such
studies. To the extent that relationships among tangible and latent constructs are uncovered,
managers might glean insight about how to slowly but systematically shape intangible
resources over time.
A second methodological area concerns the time period of analysis. The notion of
sustained competitive advantage strongly implies a need for longitudinal analysis, involving
both quantitative and qualitative approaches. This poses formidable challenges for research-
ers in terms of nancial and time costs. Indeed, graduate students mindful of graduating in
a timely fashion and assistant professors facing tenure decisions may be reluctant to engage
in such research. Thus, perhaps we must look to senior scholars to take the lead in addressing
these crucial issues.
Anal challenge may require many of us to step beyond methods with which we are
comfortable and condent. In order for the different disciplines encompassed here to further
develop the RBV, scholars may need to adopt methodologies with which they are not
familiar. For example, Lockett and Thompson suggest that economics as a discipline might
usefully make greater use of qualitative case study methodologies. Similarly, while human
resource management researchers have made extensive use of quantitative analysis, ethnog-
raphy and participant observation may be required to build models of how employees can
constitute strategic resources. Thus, while we offer a call to additional elds to embrace the
RBV, we also encourage experienced RBV researchers to deploy new methodologies when
the state of knowledge requires it.
5. Conclusion
Sir Isaac Newton is often quoted as proclaiming if I have seen far, it is because I have
stood on the shoulders of giants.The passage of time has demonstrated that the articles in
the 1991 special issue have made giant contributions to the study of management. We hope
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that ten years from now, the papers offered in this special issue will be judged similarly. We
also hope that readers of this issue will be inspired to offer potentially giant contributions of
their own.
Acknowledgments
Thanks to Don Siegel, Steve Thompson, and Andy Lockett for comments on a previous
version.
Jay B. Barney received his Ph.D. in Administrative Sciences and Sociology from Yale
University in 1982. He is currently Professor of Management and the Bank One Chair for
Excellence in Corporate Strategy at The Ohio State University as well as the Academic
Program Director of the MBA program. His research interest is the resource-based view of
the rm, focusing on the relationship between rm skills and capabilities and sustained
competitive advantage. He has published in the Academy of Management Review, the
Strategic Management Journal,Management Science, the Journal of Management, and the
Sloan Management Review, among other journals, and the second edition of his book,
Gaining and Sustaining Competitive Advantage, has recently been published. Professor
Barney has also delivered scholarly papers at many universities worldwide, and has con-
sulted with a wide variety of public and private organizations.
Mike Wright received his PhD from the University of Nottingham in 1985. Mike is currently
professor of nancial studies, and director of the Center for Management Buy-out Research
and of the Center for Enterprise in Emerging Markets at Nottingham University Business
School. He is a visiting professor at INSEAD, Erasmus University and the University of
Siena. Mikes research interests focus on corporate governance, management buy-outs and
divestment, privatization, venture capital and habitual entrepreneurs, his publications ap-
pearing in Academy of Management Journal,Academy of Management Review,Strategic
Management Journal,Journal of Management Studies,Journal of International Business
Studies,Economic Journal,Journal of Industrial Economics,International Journal of
Industrial Organization,California Management Review,Journal of Business Venturing,
and so forth. He is the author of over twenty books and was an editor of Entrepreneurship
Theory and Practice from 1994 through 1999.
David J. Ketchen, Jr. is an Associate Professor of Management at Florida State University.
He earned his doctorate from the Pennsylvania State University. His research interests
include the determinants of superior organization performance, franchising and entrepre-
neurial strategies, and the strategic management of supply chains. His research has appeared
in a variety of journals including the Strategic Management Journal, the Academy of
Management Journal, and the Journal of Management.
638 Editorial /Journal of Management 27 (2001) 625641
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Disasters (e.g., natural catastrophes, pandemics/epidemics, mass violence events, and human/technological errors) are becoming increasingly common due to factors such as growing population density and accelerated climate change. Exposure to any type of disaster is damaging for both individuals and organizations. Disasters deprive individuals of their livelihoods, alter how employees perform their work, and harm individual well-being. For organizations, disasters compromise functioning and profitability, often resulting in organizational failure. As a result, there is growing interest in research linking disaster events to the workplace. Based on an analysis of 260 disaster articles, we offer a comprehensive, systematic, interdisciplinary review of the disaster literature with organizational implications. Employing a resource-based perspective, embedded within an ecological systems framework, we suggest that disaster exposure depletes (or prompts investment of) individual, team, and organizational resources and subsequently impacts organizational outcomes. This theoretical framework can be used to identify the critical research gaps that exist in the literature and offers a promising agenda for future research.
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This chapter is about corporate social responsibility. Corporate social responsibility is defined as the actions and decisions taken for reasons at least partly away from the company's direct technical or economic interest. This chapter highlights the definition of corporate social responsibility, the objectives of corporate social responsibility, the benefits of corporate social responsibility, and the limitations of corporate social responsibility. The chapter concludes with some of the best practices.
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This paper begins to reconcile competing perspectives on the origins of competitive advantage by examining the adoption of ‘science‐driven’ drug discovery, a performance‐enhancing organizational practice. Science‐driven drug discovery diffused slowly, allowing us to disentangle alternative theories of organizational heterogeneity. Adoption is driven by initial conditions, time‐varying internal and external environmental conditions, and convergence (firms positioned least favorably adopt most aggressively). While accounting for initial conditions is critical, managers are sensitive to idiosyncratic environmental cues. The origins of competitive advantage may therefore lie in the ability to identify and respond to environmental cues well in advance of observing performance‐oriented pay‐offs. Copyright © 2000 John Wiley & Sons, Ltd.
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This paper focuses on dynamic capabilities and, more generally, the resource‐based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high‐velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well‐known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high‐velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long‐term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high‐velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.
Article
This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.