There are two underlying assumptions of the RBT related to the explanation of how firm-based resources generate sustained competitive advantage and why some organisations may continually outperform others by gaining higher competitiveness (Helfat & Peteraf, 2003). First, the bundles of resources owned by firms are different from each other (Helfat & Peteraf, 2003). One of the cornerstones of RBT is the heterogeneity of resources and capabilities in a population of firms, which differentiate the competitive advantage of each firm. The heterogeneity of resources assumes that a firm possesses unique resources in a specific situation can potentially be more skilled to perform particular activities and create competitive advantage. Second, the complexities of trading resources across firms may create persistence in differences in resources (the assumption of resource immobility).
The RBT framework presented in Figure 2 provides the relationship between the organisation resource heterogeneity and immobility and the four critical parameters for resource-based analysis (VRIO) to achieve sustained competitive advantage (Barney, 2007). This revised version of the RBT framework bringing in the critical criteria of VRIO can help understand the return potential associated with exploring any organisation's capabilities and resources. Figure 3 describes the implications of how these four critical resource criteria may affect a firm's competitive advantage and economic performance. Based on this figure, we can analyse how an organisation's operation adjusts to these factors in the VRIO model (Barney, 2007). This framework facilitates understanding whether a specific organisation resource is a source for sustained competitive advantage. It helps answer the kinds of questions that need to be addressed, whether a particular resource is valuable? Rare? Imperfectly imitable? And, is the organisation organised to exploit this resource? Figure 3 : The VRIO framework
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The application of RBT in various disciplines apart from its popularity amongst strategic management literature that emphasises its resource-base has supplied the footing for the RBT framework or an extension. The theory has been used to study business resource and capability strategy by adjusting recent business environment developments such as technology and innovation. Using big data analytics to see firm performance (Akter et al., 2016) or to use it for innovation in marketing (Wright et al., 2019) are examples of the influence of RBT in business and management studies. The study by Akter et al. (2016) showed that big data analytics could be aligned with the business strategy to enhance firm performance by using the RBT model, such as based on the entanglement perspective of socio-culturalism. The firm capabilities in technology, management, and talent capability may serve as the analytics capability business strategy alignment to investigate the firm performance by using big data analytics capability under the RBT model. In marketing subjects, the exploration of firm capability through the role of big data technology for innovation as the components of RBT are employed to explore market leadership by evaluating the resources needed by the organisation for big data application (Wright et al., 2019). From a marketing perspective, firm innovation capabilities require four sources of resources concerning equipment availability, expertise and skills, and innovation capability to exploit big data investment. The firm capability in innovation involves an appropriate system or IT expertise to operate big data adoption. The potential of innovation through the firm capability in big data technology may be positioned as an investment for sustained competitive advantage. The adoption of the RBT model has been used to support the study on marketing innovation through diverse market-based resources, such as technology and innovation, to sensing the changes in the business environment and responding to them (Kozlenkova, Samaha & Palmatier, 2014).
RBT has attracted criticisms on four key fronts. First, the traditional RBT is limited when it comes to explaining why and how some organisations gain a competitive advantage in an unpredictable and rapidly changing business environment (Kleinschmidt, de Brentani & Salomo, 2007). Second, the value creation idea that has been proposed based on this theory regarding valuable resources is tautological and static (Kozlenkova, Samaha & Palmatier, 2014; Priem & Butler, 2001), which means the theory is self-verifying and is not empirically testable (Barney, 2001), which may possibly relate to some poor quality RBT research (Kozlenkova, Samaha & Palmatier, 2014). The theory has also been criticised for being static and for failing to tackle the effect of organisational activities on resource effectiveness over time (Kozlenkova, Samaha & Palmatier, 2014). However, this criticism has been addressed by later theory refinements, such as by decoupling the direct relationship between VRI resources (valuable-rare-imperfectly imitable) and outcomes by defining organisational processes applied to exploit resources (Peteraf & Barney, 2003;Barney, 2007). Third, as the concept primarily refers to the work by Barney (1991), the support for the resource condition of being rare may be redundant, as any resource that meets the requirement of value, non-substitutability and inimitability is rare (Priem & Butler, 2001). Finally, RBT tends to ignore exogenous resources and assumes that only endogenous factors are essential to driving competitive advantage, although exogenous factors may otherwise offer potential as advantageous capabilities (Lewis et al., 2010). Despite the limitation of RBT, the rapid development of RBT and the innovation to the theory through adjustment, clarification and modification continue to improve its applicability and scope (Kozlenkova, Samaha & Palmatier, 2014).
Abstract:Following the resource-based view, this research empirically explores the role of formal and informal management control in mobilizing export resources to develop export capabilities, influencing the export performance of small and medium-sized enterprises (SMEs) in an interorganizational relationship context. Empirical data were collected using a survey administrated online to finance managers in Spanish SMEs which use foreign intermediaries to access export markets. In this setting, evidence mainly suggests, first, that management control systems (MCSs) play a relevant mediating role between the effect of, on the one hand, resources on capabilities, and, on the other hand, resources and capabilities on performance. Second, that MCSs and capabilities play a interrelated double mediating effect between the impact of resources on performance; more specifically, a significant double indirect effect is found (1) between financial resources, behavior control, customer relationship building capability and performance, and (2) between physical resources, behavior control, customer relationship building capability and performance.Keywords: management control systems; resource-based theory; export performance; SMEs
The lesson for managers is that conclusions about critical resources should be based on objective data from the market. In our experience, managers often treat core competence as an exercise in intuition and skip the thorough research and detailed analysis needed to get the right answer.
Similarly, if competitors are ignored, the profits that could result from a successful resource-based strategy will dissipate in the struggle to acquire those resources. Consider the value of the cable wire into your house as a source of competitive advantage in the multimedia industry. Companies such as Time Warner have been forced by competitors, who can also see the value of that wire, to bid billions of dollars to acquire control of even modest cable systems. As a result, they may never realize substantial returns on their investment. This is true not only for resources acquired on the market but also for those core competencies that many competitors are simultaneously trying to develop internally.
Whether a company is building a strategy based on core competencies, is developing a learning organization, or is in the middle of a transformation process, those concepts can all be interpreted as a mandate to build a unique set of resources and capabilities. However, this must be done with a sharp eye on the dynamic industry context and competitive situation, rigorously applying market tests to those resources. Strategy that blends two powerful sets of insights about capabilities and competition represents an enduring logic that transcends management fads.
That this approach pays off is demonstrated by the impressive performance of companies such as Newell, Cooper, Disney, and Sharp. Although these companies may not have set out explicitly to craft resource-based strategies, they nonetheless capture the power of this logic and the returns that come to those who do.
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